Takano v Shirono

[1992] FCA 487

IN THE FEDERAL COURT OF AUSTRALIA	)	JUDGMENT NO.
)
QUEENSLAND DISTRICT REGISTRY	)	No QG 67 of 1990
1
GENERAL DIVISION	1

- -

BETWEEN: MOT0 HIRO TAKANO

(Applicant)

m:	MASAKI SHIRONO (First Respondent)
m:	JOHN FREDERICK JOHNSON (Second Respondent)
AND :	DELAEAST PTY LTD (Third Respondent)

Corm:	Ryan J.
Date:	13 July 1992

Place: Brisbane

REASONS FOR JUDGMENT

Rvan J: The applicant, a Japanese national who was then aged 25 years, arrived in Australia on 3 December 1987 to take up a position as manager of the newly-established Southern Cross Duty Free Store at Surfers Paradise. Early in 1988 he was minded to explore the possibility of investing in real estate in Australia on behalf of relatives and former business associates in Japan. He was recommended by an accountant in the Gold Coast Office of Touche Ross & CO, Chartered Accountants, to consult the first respondent who was described

=I

Avenue, and another Japanese national, M r Harry Watenabe.

as a good estate agent working with Nihon Realty in Orchid

Shortly afterwards M r Watenabe made an unsolicited telephone

!	call to the applicant and arranged a luncheon meeting with him at which, in the course of discussion, $Cc Watenabe expressed the view that it was then a very good time for investment in
I	real estate.
I
A few days later, Mr Watenabe took the applicant, M r Takano, to the office of Nihon Realty, a business name of Delaeast pty. Ltd. ("Delaeast") where he introduced him to the first respondent, M r Shirono, whom he also commended as a good

and one who could help M r Takano in making a

yea1 estate investment.

. .

1       /

I ' I *

6

1. .t	De&a,'r?s$, had'been registered as the proprietor of Nihon Realty	. * I
\ 1: .

.	,
' . s&ncki? ('"Sep,&mber	1987, and on 11 November 1987 it entered

. ,	.- J W ? ~ .-.	*-- ?
'	. intrb.'a "koniract to buy eight lots on Deposited Plan No. 14895	4
" l . .	.:	'

b k g pkrt of the land comprised in Certificate of Title
Volume 15476 Folio 50 ("the sub~ect land") from Kevin Brindle

and Desmond George Rainbow. The subject land was apparently

purposes" giving directly on to the beachfront at Cudgen,	the eastern side a reserve "for roadway and other public part of a subdivision of some 204 lots, of which 34 fronted at	south of Kingscliff on the far north coast of New South Wales.
A reservation one chain wide designated as "Lorna Street" was
on the western frontage of those 34 lots. On the other side of Lorna Street were a further 34 lots including the subject land, six lots of which were at the southern end of Lorna Street and the other two of which were the northernmost but one on the western side of Lorna Street. The second
respondent, Mr Johnson, who with Mr Shirono was a director of Delaeast, explained in evidence that the Tweed Shire Council had some time earlier published a list of properties, including the subject land, on which arrears of municipal rates were due, and which would be sold compulsorily if the rates were not paid. Mr Johnson upon inquiry learned that the subject land was part of a deceased estate. The executors of the estate then agreed to sell the subject land for $48,000, being an amount necessary to discharge the arrears of rates and other expenses and liabilities which the executors had incurred in respect of the subject land. Mr Johnson had earlier sold for $100,000 three one-quarter acre blocks on the same subdivision which he had inherited from his grandfather. He therefore regarded $48,000 as a "good price" for the subject land and had persuaded his partner, Mr Shirono, to buy it in the name of Delaeast.
The purchase by Delaeast was completed notwithstanding advice
diary note in these terms:  from its solicitorsf Tweed Heads agent which was embodied in a "At 12 p.m. on Monday 7th December, 1987, I spoke with a person

i n t h e Town Planning s e c t i o n of t h e Tweed Sh i re Councll. I

advised t h e Council t h a t I was	i n t h e process of	purchasing
l o t s 1 t o 6 and l o t s 14 and 16 of D.P.	14895.	I advised t h e

C o u n c ~ l t h a t I had not ~ n s p e c t e d t h e l o t s and was purchasing

them without s ~ g h t i n g t h e area .

The o f f i c e r advised me t o c o n t a c t my s o l i c i t o r s and r n s t r u c t

them t o make w r i t t e n app l i ca t ion t o Tweed Sh i re Council, t o

obtarn t h e information t h a t I wanted. The o f f ~ c e r indica ted

t h a t he would not purchase t h e b locks i f m my p o s l t ~ o n .

The o f f i c e r a d v i ~ e d t h a t Tweed S h ~ r e C o u n c ~ l was not approving

anything on	t h e s i t e s o r anything	i n t h e development	i n which
t h e s e	s ~ t e s	a r e contamed.	The development has no water, no

sewerage and no roads. Before anythrng would be agproved the blocks must have water, sewerage and roads. The officer advrsed that the nearest sewerage and water connection 1s ln excess of 4 krlometres from the sltes.

The development was originally commenced but due to some difficulties was left and never finalised and therefore the Council has not approved the development. The officer suggested that the only person chat would posslbly be able to construct a dwell~ng or buildrng on the lots, was the orlginal proprietor of the land prior to the commencement of the development.

The offlcer was reluctant to release more information over the telephone and reiterated that a letter be sent by my solicitors requesting further ~nformatlon.

The offrcer during the whole of the telephone conversatron gave the impressron that he would not purchase the blocks and suggested that I shouldn't without slghtmg the development and belng fully aware of the restrictions mposed on it".

A copy of that diary note was forwarded to the directors of

Delaeast under cover of a letter from its solicitors, Messrs Steindls, dated 8 December 1987. In the meantime, Messrs ' Steindls had been instructed on 30 November 1987 by Mr Johnson to advise how an interest in the subject land could be conferred on a "partner" who was prepared to pay $50,000 that day and a balance of $200,000 on or before 15 Deceinber 1987 in return for an entitlement to a half share of the net proceeds from any later sale of the subject land. Messrs Steindls	apparently advised that Delaeast should constitute itself a	trustee of the subject land for itself and the proposed
"partner" as tenants in common in equal shares. Consistently with that advice they prepared a form of declaration of trust in which the name of the proposed partner was left blank. That draft document was subsequently filled up, amended and engrossed in the Nihon Realty office. It was then executed by Delaeast and two other named beneficiaries, Kenichi Takama and

T a k a f u m l Yoshida, on 1 December 1987. T h e operat ive par ts of

t h a t document as executed w e r e :

"WHEREAS DELAEAST PTY LTD of 76 Appel S t r e e t , Sur fe r s Paradise

i n t h e S t a t e of Queensland ( h e r e i n a f t e r c a l l e d ' t he Trus tee ' )

by a c e r t a r n Agreement f o r S a l e da ted t h e 11th day of November 1987 agreed t o purchase t h e lands described i n t h e Schedule he re to whrch Agreement a s due f o r completion wathin 30 days t h e r e a f t e r ;

AND WHEREAS	KENICHI TAKAMA AND TAKAFUMI YOSHIDA has [ s i c ]
agreed t o pay t o t h e Trustee t h e sum of TWO HUNDRED	AND FIFTY

THOUSAND DOLLARS ($250,000.00) f o r a one-half i n t e r e s t i n t h e

lands, a s follows:

i.         The sum of FIFTY THOUSAND DOLLARS ($50,000.00) on t h e 1st day of December, 1987

ii.       The sum of FIFTY THOUSAND DOLLARS ($50,000.00) on t h e 4 th day of December 1987

iii.    The sum of ONE HUNDRED AND FIFTY THOUSAND DOLLARS

($150,000.00) on t h e 15 th day of December, 1987.

NOW THIS DEED WITNESSETH a s follows:-

1.         The Trustee does hereby i r revocably acknowledge and dec la re t h a t it w i l l hold t h e s a i d lands of i t s e l f and KENICHI TAKAMA and TAKAFUMI YOSHIDA and each of t h e i r Executors, Adminrstrators and Assigns a s t e n a n t s i n

common i n equal shares.
2.	The Trustee w i l l bear a l l of t h e c o s t s assocra ted wi th
t h e purchase of t h e s a i d lands pursuant t o t h e
aforementroned Agreement f o r Sa le .
3.	The Trustee w i l l a t t h e reques t of KENICHI TAKAMA and
TAiCAFUMI YOSHIDA cause t o be t r a n s f e r r e d t o m N I C H I
TAKAMA and TAKAFUMI YOSHIDA a one-half share i n t h e lands
a s t e n a n t s i n common and i n t h a t event agrees t o pay a l l
atamp duty, r e g i s t r a t i o n f e e s and l e g a l c o s t s associa ted
with t h e sa rd t r a n s f e r .

4. T h e . ~ r u s t e e agrees t h a t upon t h e s a l e of t h e sa rd land

t h a t t h e n e t t sale proceeds a f t e r deductron of

commission, i f any, and a l l l e q a l c o s t s w i l l be drvided equal ly between DELAEAST PTY LTD and KENICHI TAKAMA AND

TAKAFUMI YOSHIDA.

5.          KENICHI TAKAMA AND TAKAFUMI YOSHIDA agrees [ s i c ] t o pay a l l stamp duty assoc ia ted wrth t h i s Declarat ion of Trust .

6. This Declaratron of Trus t wxll have no e f f e c t and no

r r g h t s o r ob l iga t ions w r l l a r i s e therefrom u n t i l t h e successful completron of t h e aforementroned Agreement f o r Sale of Land and a l l o r any monies paid thereunder w i l l be refunded without deductron i f t h e s a l e does no t proceed. "

The conversations between 1-W Shlrono and Mr Takano were, it is common ground, conducted in Japanese. There is a direct conflict of evidence at a number of points about the substance of those conversations and indeed about when and how often they occurred. The following resum6 embodies findings which I make on the basis of my assessment of the respective credibility of Mr Takano, Mr Shirono and Mr Johnson, about which I shall say more later in these reasons. I have also had regard in making findings in this area of the case to the corroboration or lack of it afforded by the evidence of other witnesses and contemporaneous documents. I accept M r Johnson's evidence that he had no direct conversation with Mr Takano in Japanese. However, I am satisfied that Mr Shirono who was aware that Mr .. Takano had a reasonable grasp of written and spoken English, applied in English, in Takano's presence, to Johnson for confirmation or amplification of parts of what had been said by Shirono to Takano in Japanese. The statements which later in these reasons are attributed to Mr Johnson were then made by him in English in the belief, and

with the intent, that they would be understood by Mr Takano.

At their first meeting, Mr Shirono told Mr Takano that then was the best time to invest in real estate and described what he regarded as the three main types of investment which could

l

I	be made. The first involved purchase of an existing building
!	and leasing it to derive rental income with some prospect of capital growth. The second was a speculative investment in a
!	property which could be "flicked" or turned over quickly at a

profit. The third type of investment was to develop or redevelop a site for resale at a price reflecting the enhanced value as a result of the investor's development. Mr Shirono went on to say he had two properties which were good vehicles for investment of the second and third types. One was a potential site for a unit development, night club or restaurant on the corner of Vista Street and the Gold Coast Highway, Surfers Paradise, which was an example of the third type of investment whlch he had instanced. The other, said to be a beachfront property at Kingscliff on the far north coast of New South Wales, was the subject land. That was said to be an investment of the second, "flicking" type. There is a dispute on the evidence about the number of times Mr Takano met with M r Shirono and the proximity of those meetings to 8 March 1988 when Mr Takano obtained an option, exercisable within twenty-four hours, to purchase the subject land and 9 March when he signed a contract to purchase. At all events I am satisfied that at some time during their discussions M r Shirono obtained from Mr Johnson and gave to M r Takano folders

containing descriptive and other matter in respect of each of	those investment properties. The number of documents which
were devoted to the subject land was not clear from the evidence. However I prefer the evidence of Mr Johnson on this point, that two folders were related to the Kingscliff property, the more recently prepared of which bore the title "Tweed Coast Resort Development". On its first page was the following disclaimer:

"ALL NIHON REALTY AUSTRALIA EMPLOYEES AND PRINCIPALS FOR THEMSELVES AND THE VENDORS OF THESE PROPERTIES FOR WHOM THEY ACT GIVE NOTICE THAT (1) ALL INFORMATION GIVEN IN RELATION TO THESE PROPERTIES, WHETHER CONTAINED IN THIS DOCUMENT OR GIVEN ORALLY IS GIVEN WITHOUT RESPONSIBILITY (2) INTENDING PURCILASER SHOULD SATISFY THEMSELVES [Sic] AS TO THE TRUTH OR ACCURACY OF ALL INFORMATION GIVEN BY THEIR OWN INSPECTIONS, SEARCHES, INQUIRIES, ADVICE OR AS IS OTHERWISE NECESSARY. (3) NO PERSON IN THE EMPLOYMENT OF NIHON REALTY HAS ANY AUTHORITY TO MAKE OR GIVE ANY REPRESENTATION OR

WARRANTY WHATEVER. "

Then followed these two pages of typescript descriptive

matter:

"THE AREA IN QUESTION IS LOCATED ON THE ABSOLUTE BEACHFRONT BETWEEN KINGSCLIFFE [sic] AND CABARITA ON NEW SOUTH WALES FAR NORTH COAST.

FOUR LARGE TRACTS OF LAND ARE CURRENTLY CLASSIFIED AS A
DEVELOPMENT INVESTIGATION ZONE.

1.    24.5 HECTARES OF BEACH FRONT LAND BORDERED TO THE WEST BY

CUDGEN CREEK IS LAND WHICH HAS BEEN FREEHOLDED TO THE FAR EAST HOTELS GROUP, HONG KONG LIMITED FOR AN INTERNATIONAL HOTEL AND TOURIST CONDOMINIUM STYLE COMPLEX WITH FACILITIES TO CATER FOR A LICENSED CASINO.

2.    53 ACRES OF LAND ALONGSIDE OF AFOREMENTIONED AREA

PRIVATELY OWNED BY PIVOT PTY. LTD., (THE OWNERS OF

SEAWORLD - GOLD COAST.) THIS LAND WAS ACQUIRED WHEN PIVOT

ABSORBED MURPHYORES, WHO HAVE TAKEN OVER MINING LEASES

OVER THE PAST 20 ODD YEARS. (PIVOT HAVE PROPOSED ANOTHER

SEAWORLD TYPE COMPLEX AND BEACHFRONT HOLIDAY VILLAGE TYPE -

ACCOMMODATION.)

OUR INTERESTS OWN 2 ACRES IN PIVOT'S 53 ACRES AND THIS 2 ACRES FRONT THE FURTHERMOST EASTEF'LY POINT OF PIVOT'S - - -

DEVELOPMENT.

3.    FOR APPROXIMATELY 1 KM SOUTH OF PIVOT'S SOUTHERN BOUNDARY AND WEST TO CUDGEN CREEK IS OWNED BY BARCLAYS. RESIDENTIAL AND SMALL COMMERCIAL COMPONENT IS PROPOSED FOR THIS AREA.

4.    TO THE WEST OF THE CUDGEN CREEK AND EXTENDING WEST TO THE FOOTHILLS IS A MUCH LARGER BUT LESS VALUABLE TRACT OF LAND KNOWN AS KINGS FOREST (800 HA) FULLY APPROVED FOR RESIDENTIAL DEVELOPKENT. (PRIVATE TREATY OFFERS ARE

CURRENTLY BEING CALLED FOR OR JOINT VENTURE PARTNERS. )

THE NEW SOUTH WALES GOVERNMENT HAVE INSTALLED A SEWERAGE TREATMENT PLANT IN THE AREA CAPABLE OF HANDLING TEE WASTE OF THIS DEVELOPMENT. THE MAINS FROM THIS PLANT HAVE ALREADY BEEN LAID TO THE THREE (3) BEACH FRONT TRACTS. ELECTRICITY AND RETICULATED WATER- SUPPLY ARE ALSO IN THE PROCESS OF BEING UPGRADED.

THE MAIN ROADS DEPLqTMENT ARE RUNNING A FOUR LANE HIGHWAY FROM THE TWEED HEADS - COOLANGATTA BYPASS ACROSS THE - TERWLNORRA INLET AND TWEED RIVER TO PASS THROUGH THIS

DZVELOPMENT AND THUS JOIN IT WITH FREEWAY CONDITION TO - ~

BRISBANE AND THE INTERNATION+ AIRPORT.

COUNCIL AUTHORITIES ARE MEETING WITH THE FOUR DEVELOPMENT PROPERTY OWNERS AND THE DEPARTMENT OF PLANNING AND ENVIRONMENT THIS WEEK TO SORT OUT FINAL SUBMISSIONS.

THE LAND HELD BY OUR INTERESTS FORMS AN IMPORTANT KEY SOFARAS THIS DEVELOPMENT IS CONCERNED AS PIVOT IS STRATEGICALLY LOCATED SMACK BANG IN THE MIDDLE OF THE TOTAL PROJECT, THE COMMISSION IS SEEKING ALL PARTIES TO COMMENCE SIMULTANEOUSLY AS COST SHARING OF THE WATER SEWERAGE AND ELECTRICITY HEADWORKS MUST BE TAKEN ON A JOINT AND PRO RATA BASIS."

The next item in the later folder was a newspaper clipping of a reported announcement by the then New South Wales Tourism Minister, M r Cleary, that "a principal agreement giving [a

Hong Kong-based company, Far East Hotels and Entertainment

Ltd] two years to obtain council approvals" for the construction of a 400-room resort hotel at Kingscliff. The article further recited that "the NSW Cabinet yesterday agreed

to give the company a 99-year lease on 24.5 hectares of crown

land overlooking the beach."

The later folder also contained a clipplng from the "Gold

Coast Bulletin" of 22 January 1988 which reported on the

unveiling by the Tweed Council's Shire Engineer of plans for a "huge tourist and residential project". That clipping includes

these paragraphs:

"A new resort-style town whlch could rival Surfers Paradise is

earmarked for the Tweed coast.

The plan throws open an eight-kilometre stretch of unspoilt

coastline for resort-style development between Kingscliff and

Cabarlta.

Three main pockets for urban development wlth a population capacrty more than twlce that of Murwlllumbah are slted inland.

[Shrre Engineer Mr Border] sald most of the land was owned by three companaes who were all keen to see substantral development within two to three years.

Development could be spearheaded by the Far East Hotels group whrch has long been plannlng a multl-mlllron resort complex south of Kmgscliff.

Mr Border said top-level talks between the company and the

Tourism Comm~ssion were taking place.

'We are expecting offrcrals from the commlsslon here next week
to discuss further details.'

He said the coastal stretch was the last in the shire and probably in the state which was privately owned but yet undeveloped.

'We have a chance to build a total new town which could support

up to 18,000 people,' he sald.

'If done the raght way it will be an outstanding attractaon for
the whole area.'

He sald the unique stretch of coast would be a major drawcard for developers who could get dlrect access to beaches."

The later folder contained as well an extract of a statement of editorial opinion from the same newspaper recounting the proposed development incorporating the tourist hotel and

.. expressing the opinions that:

"The Tweed is perhaps fortunate that it has to a large extent langu~shed ln the development shade while, north of the border, the bustlang Gold Coast experienced the rnevrtable shortcom~ngs

of explosive progress.

Gold Coast planning in recent years has sought to avoid or minimise the mistakes of the past, but some of them cannot now be retrieved.

Tweed Sh~re has a wonderful opportunity to gain from the Gold

Coast experience.

It has the chance to blend development with the environment and carefully preserved natural attractions."

Then followed two leaflets apparently prepared by estate agents other than Nihon Realty promoting the sale of lots on

an 800 hectare (2000 acres) subdivision known as Kings Forest
in the viclnity of Kingscliff.

The later folder concluded wlth a single page photocopy of part of a plan of subdivision and a photocopy of part of a plan of the Tweed Shire. The extract from the plan of subdivision included lots 1 to 6 in Section 2 and lots 14 and 15 in Section 6 being the subject land, all of which had been coloured yellow. Across the part plan of subdivision a band had been roughly part-hatched by hand and inscribed, also by hand, "PIVOT HOLDING". The part plan of the Tweed Shire had various coloured sections including Cudgen Lake, the Cudgen Creek apparently flowing into it and the sea at the line of the beach between Kingscliff and Norries all of which were coloured blue. A section of beachfront land a short distance south of Kingscliff was coloured green and labelled "FREEHOLD CROWN LAND FAR EAST HOTEL HONG KONG LTD". Immediately south of the land coloured green was a section of land coloured pink and labelled "PIVOT HOLDINGS". Immediately south of this

Hastings Point which was coloured yellow and labelled in three	section of land was a long section of land extending past
places "BARCLAY".
The earlier folder related to the subject land, which had also been prepared by Mr. Johnson and was entitled "Surfside Subdivision, Cudgen N.S.W.". It contained a description of the whole of the land comprised in Deposited Plan No. 14895, and referred to a proposal by the Pivot Group for rezoning.

It also included a valuation report dated 26 April 1984 which had been prepared for Mr. Johnson on 26 April 1984 by John R. Meyers and Associates, Valuers. That report dealt with the three blocks whlch Mr. Johnson had sold for $100,000 after inheriting them from his grandfather and valued them at $180,000. The earlier folder contained, as well, a series of clippings from 1984 issues of newspapers and concluded with another copy of the plan of subdivision on which the lots comprised in the subject land were hatched pink.

Mr Shirono told Mr Takano, by reference to the map in the

later folder, that the subject land was in the middle of land owned by Pivot Group Ltd. ["Pivot"] the owner of the Seaworld Tourist Park. He went on to say that Pivot was trying to develop or rezone its land and required the subject land to obtain Government approval.

Mr Shirono pointed out, still using the map in the later

folder, that to the north of the subject land was an area

owned by Far East Hotel (Hong Kong) Ltd. which had applied for

a rezoning permit to build a hotel and casino. As well, he

indicated that the area of land coloured yellow on the map, which was to the south of the subject land, was owned by an English construction company, Barclays, which was seeking to build a big hotel complex on it. M r Shirono also said that the Far East Hotel company and Barclays were both likely to receive approval for their projects shortly. He told Mr Takano that Pivot had been planning the rezoning of its land

for ten years and was hoping to get Government approval within six months, but if it did not own the subject land the Government would not give its approval. In the same context,

M r Shirono said that the board of Pivot had recently decided

to buy the subject land for $3.5 million. He told Mr Takano that he would not get another chance like this in his life. He explained why the subject land was available for purchase by Mr Takano by saying that a Japanese man who had bought it about a year earlier for 40 million yen (about $A400,000) had lost a lot of money in the stocharket crash of October 1987 and wanted to sell the land very quickly.

Mr Shirono further indicated that another company, Trikon

Corporation Ltd. ("Trikon"), had made an offer or expressed interest in buying the subject land for $2 million and that his partner, Mr Johnson, had information about Trikon's interest. Mr Shirono explained the opportunity being offered to Mr Takano by saying that he liked to help Japanese businessmen like Mr Takano and went on to say that if Mr

be bought by Trikon.	Takano did not buy the land within twenty-four hours it would
Whether or not the statements detailed above were all made, as
Mr Takano asserted, on 7 March 1988 during his first meeting
with Mr Shirono, it is clear that by that date Mr Takano was strongly attracted to the idea of purchasing the subject land. I am satisfied that on that date, if not earlier, i5.r Shirono described what he was offering as a "unique opportunity" or

"the chance of a lifetime", and went on to say that if M r Takano did not buy the land wlthin twenty-four hours it would be bought by Trikon.

On the next day, 8 March, Mr Takano returned to the office of Nihon Realty where he again spoke to Mr Shirono, telling him that he had not been able to decide whether to purchase the subject land and requesting further information. Mr Shirono replied that as an offer had already come from Trikon he must hurry. Mr Shirono then showed Mr Takano a document in these

terms	:
"Dear Pivot Security Holder,
YOU have recently recerved Q-West Pty. Limited's ('Q-West') offers to purchase all your shares, options and convertrble notes in Prvot Group Ltd. ('Pivot'). THESE OPFBRS HAVE NOW
BEEN DECIXRBD UNCONDITIONAL. AS AT APRIL 21, 1988 Q.WEST WAS ENTITLED TO 62.18% OF THE SBARES IN PIVOT.
Accorn~anvina O-West's offers vou will have also received ~ i v o t ~ s -par% Statement, i n c i u d ~ n ~ a report from Wardley Australia Ltd. i'wardlev'). Wardlev's conclusions resardins Pivotas shares 'and opt'ions are, ie believe, inapproprrate because they fail to give adequate recognition to:
a) The trading record of Pivot ordinary shares w h ~ c h historically have traded at a discount to their net tangible asset backmg.

b)	The recent share market envrromlent in which Pivot shares traded at up to a 60% discount to their purported net tangible asset backing.
c)	The fact that the optlons expire if not exercised by the payment of 50 cents by 30th June, 1988.
d)	The requrrernent for consrderable additional funds to complete Pivot's property developments.

As a result, Q-West's offers represent your best short term opportunity to convert your Prvot equrtres to cash. This view is shared by your independent drrectors who in their recommendation contalned m Pivot's Part B Statement say:

'... it should be pornted out that in our opinion, any

shareholder wishrng to sell h ~ s shares on market could not expect to recelve a price commensurate wrth, or greater than the offer. Any shareholder not wrshrng to accept that offer

would be prudent t o consrder has holdrng a s a long t e r m
anvestment ...'

I f you hold l e s s than 1,000 sha res whrch a s an 'unmarketable pa rce l ' ~t a s d a f f i c u l t and c o s t l y f o r you t o sell your shares

and opt ions on market. Accordrngly, I urge you t o accept t h e

Q-West o f f e r s which obvaate t h e s e problems and save you stamp duty and brokerage fees .

I f you a r e unable t o f rnd your c e r t ~ f r c a t e s , p l ease execute t h e Acceptance Form and r e t u r n a t i n t h e envelope provided and t h e missing c e r t i f i c a t e s wal l b e t r a c e d o r replaced l a t e r . W e

emphasrse t h a t t h e o f f e r s are now uncondit ional and c l o s e on

Tuesday, 3rd May, 1988, s o you should t ake m e d i a t e act lon.

Yours f a i t h f u l l y ,

(Signed)

P.M. Laurance.

Direc tor ,

Q-West Pty. Limited."

On the copy shown to I Takano, sub-paragraph (d) of the second paragraph was highlighted in yellow and Mr Shirono pointed to this passage as evidence that Pivot was gathering money together to further its property development. He reiterated that Pivot had decided to buy the subject land for $3.5 million and that that would have to be done in two or three months in order to obtain rezoning approval within six months.

Mr Shirono then said that if Mr Takano could not make up his

mind then and there, he could tie up the rights for twenty- four hours by means of an option agreement which would prevent Trikon from getting in ahead of him. Mr. Johnson had earlier that day found after enqulry from Mr Epstein of Steindls that until a fresh certificate under s.149 of the Environmental Planninu and Assessment Act 1979 could be obtained from the Tweed Shire Council, a binding contract for the sale of the

subject land could not be concluded. A c c o r d i n g l y , a form of

option w a s	prepared	i n d r a f t by	Messrs	S t e i n d l s	and	e n g r o s s e d
i n Nihon	Realty's	o f f i ce w i t h M r T a k a n o ' s	name	inserted	as	-

grantee . As executed by M r T a k a n o and Delaeast, t h a t document

was i n these tens:

" I N CONSIDERATION of t h e sum of $10,000 (Ten Thousand Dol lars )

t h i s day paid t o it by Motohrro TAKANO sum i s hereby acknowledged DOES HEREBY GRANT t o t h e Purchaser an Option of purchasing f r e e from a l l encumbrances t h e property s i t u a t e d a t Surfsrde Sub-Drvrsron Cudgen, NEW SOUTH WALES descrrbed a s Lots 1, 2, 3, 4, 5, 6 of Sect ion 2 r n deposi ted Plan No. 14895 and Lots 14 and 15 of Sectron 6 i n deposrted Plan No. 14895 C e r t i f i c a t e T i t l e of Volume 15476 Fol io 50 together with a l l improvements thereon upon and subjec t t o t h e conditrons

h e r e i n a f t e r - mentioned:-

1. The s a i d Option t o Purchase is granted f o r a pe r iod of

one day comencrng from t h e 8 t h March 1988 and expir ing a t

12:OO midnlght on t h e 9 th March 1988.

2 . The purchase p r rce of t h e s a i d property i n respect of

which t h e sa rd option t o purchase is granted i s t h e sum of

[ s i c ] whrch s h a l l be payable a s follows:

( a ) A deposi t of $200,000.00 (Two Hundred thousand d o l l a r s )

t o be paid t o t h e vendor's S o l r c r t o r s Messrs S te ind l & Co.,

Appel S t r e e t , SURFERS PARADISE a fo resa id within t e n days of t h e

taking up of t h e Optron; of t h r s deposi t t h e sum of pard i n

respect of t i s [ s i c ] Option s h a l l form p a r t .

( b ) The balance of purchase money namely t h e sum of

$1,800,000 (One MrllFon Eight Hundred Thousand Dol lars ) s h a l l

be pa id 54 days of t h e t a k l n g up of t h e option r n exchange f o r vacant possessron of t h e s a r d land and a Memorandum of Transfer over an e s t a t e i n f r e e [ s r c ] s ~ m p l e i n t h e lands i n favour of

t h e purchasers capable of m e d i a t e r e g r s t r a t i o n toge the r with

t h e r e l evan t C e r t ~ f i c a t e of T r t l e f r e e from encumbrances.

3. Upon t h e exerc ise of t h e Option a s aforesa id t h e vendor

s h a l l cause t o be prepared and produce t o t h e purchaser f o r

s rgnature a Contract f o r S a l e embodyrng t h e condrtrons of sale

a s here in set out but i n a l l o t h e r r e spec t s conta in ing t h e

Conditiona of Sale a s set o u t i n t h e Real Es ta te I n s t ~ t u t e Form

of Contract f o r Sale, a copy of whrch rs annexed hereto.

4. I n t h e event of t h e s a i d purchaser not exe rc i s ing t h e

Option wrthin t h e perrod here inbefore s t a t e d then t h e s a i d sum

of	$10,000.00	(Ten Thousand Dol la r s ) so paid a s consrderat ion
f o r t h e Option	s h a l l be	f o r f e i t e d t o t h e vendor.

5.          The Notice of Exercrse of Optron may be served personally

o r may be served by prepard r e g r s t e r e d pos t by forwarding t h e

same	t o t h e vendor a t t h e i r address hereinbefore given.
6.	The c o s t s of and r n c r d e n t a l t o t h e prepara t ron and

stamping of t h i s option and t h e preparatron of any Memorandum of Transfer thereon and a l l Stamp Duties and r e g i s t r a t r o n fees

payable on the Contract of Sale and/or the Memorandum of
Transfer shall be borne and pard by the purchaser.

7. The vendor warrants that it has full right and trtle to grant thrs option.

8. This Optron being grven for valuable consrderation is

hereby agreed to be rrrovacable [SE] durrng the perrod as
hereinbefore set out.

9. Except to the extent that followrng rnterpretation shall be excluded by or be repugnant to the context, wherever herein used the word 'vendor' shall ~f the vendor be an individual or indrvrduals mean and rnclude the vendor, his or thelr and each of therr respective executors, admrnistrators and assigns or if the vendor be a body corporate or bodies corporate, its or their and each of their respectrve successors and assigns; the word 'purchaser' shall if the purchaser be an indivrdual or individuals mean and rnclude the purchaser, hrs or their and each of their respective executors, adm~nrstrators and assrgns or if the purchaser be a body corporate or bodies corporate, ~ t s or their and each of their respectrve successors and assigns; the word 'person' shall rnclude a body corporate; words importing the singular number or plural number shall be deemed to include the plural and singular number respectively, words rmportlng any gender shall include the other genders; and when two or more vendors and/or purchasers are parties hereto, the agreements or their part and each of therr parts herein contarned or implred shall brnd them and every two or greater number of them jorntly and each of them separately".

Before that document was signed by 14r Takano, Mr Shirono explained that the option fee of $10,000 would be lost if M r Takano did not purchase the subject land within the twenty- four hour period. Mr Takano drew a cheque for the option fee of $10,000 which Mr Johnson caused to be paid into Messrs

urgent clearance of the cheque.	Steindls' trust account on 9 March 1 9 8 8 wlth a request for an
On the following day, 9 March, Mr Takano returned to the office of Nihon Realty where he was introduced by Mr Shirono to Mr Johnson. Mr Takano then indicated that he had been unable to make up his mind to purchase the subject land and would like to give up the deal. Mr Shirono replied that Mr Takano's decision was very disappointing and that he (Takano)

was glving up a once-in-a-lifetime opportunity. 1 - Shirono went on to say that if Mr Takano could not raise the $2m himself, he (Shirono) would put up half of it. Mr Johnson then reiterated that a simllar chance would not arise again as Trikon was already making an offer of $2m, and went on to say that the subject land could probably be resold to Pivot for $4 million. In addition Mr Shirono told Mr Takano that if he could not gain approval of the purchase from the Foreign Investment Review Board, he (Shirono) would lend him his name.

Mr Takano's meetlng with Mr Shirono and Mr Johnson on 9 March

concluded at about 6.00pm with his signing a contract of sale.

Mr Takano indicated that he proposed to instruct a Japanese

solicitor, Mr Matsuda of Williams and Williams, to act for him on the purchase. Mr Shirono dissuaded him from that course, saying that M r Matsuda was slow and that it would be best to retain a local solicitor, Mr Mark Fitz-Walter who was known to

Mr Shirono. Mr Takano agreed with that suggestion, as had

been anticipated when the contract was prepared recording

Messrs Fitz-Walter & CO as solicitors for the purchaser.

Earlier on 9 March, Mr Johnson had driven to Tweed Heads and collected the certificate under s.149 either from the office of Messrs Steindls' agents, or directly from the Tweed Shire Offices at Murwillumbah. He delivered that document to Messrs Steindl's office on the same day. It was then bound in with a form of contract between Mr Takano as purchaser and Delaeast as vendor of the subject land.

The contract had been prepared by Messrs Steindls on

!

;

instructions from M r Johnson glven on 8 >larch. It was on a

l:,

I

standard printed "Agreement for Sale of Land - 1986 Edition"	I
form and stipulated a purchase price of $2,000,000 payable by	I
a deposit of $200,000 payable as to $10,000 on the date of
, m
signing the contract and as to the balance of $190,000 on or	I.
t .'
before ten days from the date of the contract. The balance of	1
!
the purchase price of $1,800,000 was payable "in cash or by	1
unendorsed bank cheque on completion which shall take place on	4 -
1,'
or before 64 days of the date hereof and time shall be in	i
[all] cases and in every respect, deemed essence of this	:
contract". In addition to the standard printed conditions of	t -
- .

- -

sale the contract einbodied *he following special conditions: !

"The Purchaser acknowledges that the whole of the deposit monies m the amount of $200,000.00 may be released by Steandls to the Vendor within 14 days of the date hereof.

The Purchaser acknowledges that the Vendor is a licensed real estate agent and is carrying on business in the State of Queensland and the Purchaser also acknowledges that the Vendor

ao the reg~etered Proprietor of the land."

i s

The contract also identified Messrs Steindls as solicitors for -

the vendor and, as I have already noted, nominated Messrs	I ,
8
Fitz-Walter & CO as solicltors for the purchaser.
The cheque for $10,000 which had been paid into Steindls'
L T
, .
trust account earlier on 9 March was applied in payment of the preliminary deposit of $10,000. In the meantime M r Takano had
i -
gone back to Japan on 10 March to advise his family and
associates of the purchase. Before leaving or immediately on	I
I
i . .
his return to Australia he executed a declaration dated 9
I
. .
'_ .

March 1992 prepared by Mr Fitz-Walter to the effect that his interest in the subject land pursuant to the contract with Delaeast was held on trust for "the Company Hokkaidou- Suisan Seizou Co., Ltd." which was apparently controlled by his father. Mr Takano returned to Australia on 12 March and, as already noted arranged for Messrs Fitz-Walter to pay the balance of the deposit of $200,000 on 18 March 1988. That sum, namely $190,000, was forwarded under cover of a letter dated 18 March 1988 to the vendor's solicitors who remitted to their principal on 23 March 1988 a bank cheque in the sum of $200,000 being the full amount of the deposit. That cheque was paid on the same day to the credit of Nihon Realty's

working or office account at the Surfers Paradise branch of
the Westpac Bank.

Subsequently, Mr Fitz-Walter investigated the earlier dealings with the subject land and the shareholdings in Delaeast and conveyed the results of those investigations to Mr Takano in this letter dated 10 May 1988:

"Re: Your Purchase from Delaeast Ptv. Ltd.

After my recent drscusslons wrth you on matters that concern me about this purchase, I thought lt best to formalise theae in writing.

To date our searches show that the Company Delaeast Pty. Ltd. purchased thrs land for $48,000.00 on the 18th of December, 1987.

The Directors of Delaeast are Masakr Sh~rono	and John Johnson
who as you know, are the pr~ncipals	of Nlhon Realty, the Agents
who sold you this land.

The Shareholders of that Company are shown as D. & G. Vansleve. To my knowledge these people set up the Shelf Company m the first place. There are probably Share Transfers across to Mr. Shirono and Mr. Johnson whlch have not been regrstered.

From t h e Requisi t ions on T l t l e received yesterday I am t o l d t h a t t h e Vendors do not hold t h e property l n a Trus t capacity.

I have asked f o r c l a r ~ f i c a t i o n on t h i s .

I n l i n e wrth your rns t ruc t rons , be applred t o t h e Department of

Treasury f o r F.I.R.B. approval.

Copies of t h e l e t t e r s de l ive red t o t h e F.I.R.B. dated 29th

Aprrl , 1988 and 4th May,	1988 are enclosed.	Also enclosed i s
letter from F.I.R.B.	dated 5 th May,	1988 approving your

purchase sublec t t o development commencing wi th in 12 months.

To d a t e you have t o t a l l y performed your ob l iga t ions under t h i s

con t rac t . These included t h e unconditional r e l e a s e of

$200,000.00 t o t h e Vendor. My Agent has Stamped t h e Contract

i n Sydney and it is being re turned.

Our Trus t account r e c e i p t i n t h e sum	of	$1,907,515.50,	moneys
received yesterday i s enclosed.

I note from our d i s c u s s ~ o n s wlth you t h a t t h e Agents, M r . Shirono and Mr Johnson-have made a number of representa t ions t o you about t h e va lue and worth of t h i s land a r i s i n g from major

developments	by	t h e Pavot Group o r o the r developers	i n t h i s
a rea .

My Sydney Agent, Mr Tony Walker tells me he i s unable t o f l n d evidence of	t h e Pivot Group o r any o the r malor Company having
lodged with t h e Council p lans f o r a major re-development	i n
t h r s area.
I a l s o note from our discussions t h a t t o t h l s tune you	have

been prepared t o accept t h e r ep resen ta t ions made	by	t h e Agents
despr t e your knowledge of	t h e r r involvement	i n t h e sale and t h e
p r i o r	purchase	p r i ce .

I am of t h e oplnron t h a t you a r e a b l e t o have t h i s Contract

overturned on t h e s t r eng th of our inves t iga t ions . I a l s o note

t h a t I was introduced t o you by M r Shirono a f t e r t h e Contracts

haC been executed and exchanged.

I f you wish me t o proceed wi th t h e se t t lement on Thursday, w i l l

you p lease s i g n t h e enclosed statement and Trus t account

au thor i ty .

I f you have any queries, p l e a s e t a l k t o m e m e d i a t e l y . "

T h e enclosed statement and t r u s t account au thor i ty w a s i n

these terms and w a s r e tu rned t o M r F i t z - W a l t e r ' s off ice dated

1 2 May	1988	and	signed	by	Mr	T a k a n o	i n t h e	t w o	spaces
indicated:

"TRUST ACCOUNT AUTHORITY

re:  Purchase from Delaeast Pty. Ltd.

"THE TRUST ACCOUNTS ACT - 1973-74"

SECTION 8 l(cL [SrC]

In accordance wrth the provisions of Sectron 8 l(c) [sic] of "The Trust Accounts Act 1973-74" I, the undersrgned, hereby authorrse and direct you to transfer from your Trust Account to your General Account on my behalf your professronal costs and outlays which I acknowledge to be due to you for professional costs, statutory duties and charges.

DATED thrs 12th day of May 1988

l sianedl

Mr. Takano

I have read your letter of the 10th of May, 1988 and I instruct

you to proceed with the conveyance on Thursday the 12th May,

1988.

l sianedl

Mr. Takano"

Mr Fitz-Walter on or about 10 May 1988 had also warned Mr

Epstein of Steindls that settlement by way of payment of the balance of the purchase price might not take place because he (Fitz-Walter) had advised against it. However Mr Fitz-Walter was put in funds by Mr Takano and settlement was effected on 12 May 1988.

A reconciliation of Delaeast's dealings with the subject land which was prepared by Messrs KPMG Peat Marwick, Accountants, discloses the following receipts and disbursements:-

DELAEAST PTY LTD

SUMMARY OF CIJDGEN LAND

Contract Price

Add Joint Venture Recerpt

Less Expenses

Rates
Land Cost

T. Yoshida 200,000

K Takama	850.000	l,050,000.00	( 3 )
Other	c o s t s l e g a l s ,	e t c	4,959.55

P r o f r t per Accounts

Notes:

1.            A payment of $25,000 was made t o H. Watanabe on 27 May 1988.

This was t r e a t e d as a genera l consultancy fee .

2.          Those funds were pa id a s follows:

Loan from M. Shirono $10,000.00

Delaeast Pty Ltd chq 945
12 December 1988 - Ste rnd l s
Trus t A/C - balance of

se t t lement monres 39,538.24

3.          These expenses were pard as follows:

Touche Ross & CO Trus t Account  i n t r u s t fo r :

K Takama	$300,000
S Mrsaki	230,000
T Yoshlda	100.000

K Takama

K Takama

T Yoshida

(The payment to Mr Yoshida apparently reflected a share of the

which had acquired a half-interest in the subject land for	profit attributable to him as a member of the "partnership"	$250,000, and a consultancy fee for arranging that
acquisition. The fee of $25,000 paid to Mr Watenabe was acknowledged by M r Shlrono to have been for Watenabe's introducing Mr Takano, although it was said that there had been no prior agreement with Watenabe that any such fee would be paid. Mr Shigeru Misaki was an undisclosed member of the

"partnership" which M r Yoshida had arranged to acquire the half-interest for $250,000. The three sums paid to Touche Ross & Co. in trust for each of Messrs Takama, Misaki and Yoshida were to defray the respective liability of each of them for tax arising out of the sale to Mr Takano. On 13 May

1988 Mr Johnson resigned as a director of Delaeast and

transferred his shares in that company to Mr Shirono or his wife. On the same day he received a cheque for $58,109 reflecting his equity in Delaeast after tax, including its share of the profit on the sale of the subject land).

After the subject land had been transferred to him Mr Takano instructed M r Yoshida (to whom he had been introduced by M r Fitz-Walter) to try to sell it to Pivot. However M r Yoshida reported to him that the subject land was noi essential for any development which Pivot might have contemplated for the Cudgen area. Any lingering hopes which 3lr ~akano may have entertained of Pivot as a prospective purchaser must have been dispelled by 7 June 1988 when he received a letter form a firm

of estate agents offering on behalf of Pivot to sell the whole of its holding to him. That letter was in these terms:

"RE: SEASIDE SUBDIVISION - KINGSCLIFF.

My name as Car1 Petersen and I am one of two principals of

Haywood & Petersen Real Estate at Kingscliff and Murwallumbah.

Our firm has been appointed the marketing agent for the Pivot Group whach holds a large parcel of land Lnmedrately south of Kingsclrff in Northern New South Wales.

The land is more particularly described as:

Section 1 lots 4/6, 10, 14/15
Section 2 lots 10/36
Sectlon 3 lots J/36

Sectron 4 lots 1/18 Sectron 5 lots 4/12 Section 6 lots 1/4, 9/13, 16/32

Section 7 lots 1/32 Section 8 lots 1/16

The total area of the property is approxmately 29.539 hectares inclusrve of the land between the subdivisron and the creek .

I have appended a map for your rnformation indicating the above lots by the dark shading.

The Pivot Group are considerrng the possrble sale of thrs Kingscliff holdrng and would be prepared to consrder reasonable offers from any rnterested partaes.

Should you have any interest in this holding please contact me for a meeting to drscuss the matter."

In September 1989, M r Takano retained his present solicitors and on 8 June 1990 this application was issued.

The statement of claim in this action alleges that some twenty-three representations variously made by M r Shirono and Mr Johnson on behalf of Delaeast were false or misleading and deceptive in contravention of S. 52 and S .53A(1) (b) of the Trade Practrces Act. It is further alleged that in reliance on those representations M r Takano paid the sum of $10,030 stipulated in the option agreement and:

"(a) on 9th March 1988 signed a document styled 'Agreement for Sale of Land - 1986 Edition' providing for the sale of the sub~ect land by the third respondent as vendor to the applicant as purchaser;
(b)	on 18th March 1988 pard the sum of $190,000 berng the balance of a deposit of $200,000 payable pursuant to the agreement referred to in paragraph 8(a) hereof to the third respondent's solicitors Messrs Sterndl & Co.;

(C) on 12th May 1988 paid to the third respondent the sum of $1,800,260.53 being the balance payable pursuant to the agreement referred to in paragraph 8(a) hereof;

(d)	on 9th May 1988 pard stamp duty an the sum of $95,690.50 in respect of the agreement referred to in paragraph 8(a) hereof;
(e)	by 12th May 1988 paid solicitors' fees and charges totallrng $11,564.47."

As will soon become apparent it is unnecessary for me to examine separately each of the twenty-three representations pleaded by the applicant and to make a specific finding as to its truth or falsity. However, the scrutiny to which some of those representations were subjected in the course of the trial provided a useful guide to the reliability of the evidence of each of Mr Takano, Mr Shirono and Mr Johnson on the narrow range of issues which eventually became crucial.

It was alleged, for instance, that it had been represented to

M r Takano that the subject land was owned by a Japanese person

resident in Japan who had purchased the property for $400,000 approximately twelve months previously. The original defence of Mr Shirono and Delaeast after denying that allegation went on to "say further that the first respondent in fact informed the applicant that the subject land was owned 50% by the third respondent and. 50% by a Japanese investor who had paid $400,000.00 for his 50% interest." Later, that part of the defence was amended to substitute $250,000 for the amount of

Delaeast and Messrs Takama and Yoshida which clearly recited	the coming to light of the declaration of trust between $400,000. I am satisfied that the amendment was prompted by
that the beneficiaries had paid only $250,000 for their half- share in the subject land. I believe that 1-fr Shirono in his discussions with Mr Takano had been concerned to indicate the price paid by the Japanese investors and to represent that their investment had been much earlier than it had actually been made. On this issue, therefore, I prefer the recollection of Mr Takano and regard the assertion by M r Shirono in hls evidence-in-chief, that he had told Takano that Japanese people had pald $250,000 for a half share so the subject land was worth between $400,000 and $500,000, as a transparent attempt to reconcile the discrepancy between his original defence and the incontrovertible evidence of the declaration of trust.
Another representation alleged in paragraph 4 of the statement of claim was that "if the applicant offered the owner $2 million to purchase the subject land without delay, and preferably within 24 hours, then the applicant might be able
to secure the land prior to the Pivot Group Limited offering
to purchase for $3.5 million . . ." That allegation was denied
in the defence of the first and third respondents. Mr Shirono's explanation of the option arrangement was that Takano needed time to gather together a substantial deposit and paid the more or less nominal amount of $10,000 to gain that time. That explanation is contradicted by the fact that
the option period was restricted to twenty-fodr hours and the balance of the deposit was not made payable until ten days
after the contract of sale was executed on 9 March 1988. I conclude that the device of the option agreement was adopted because, as Mr Johnson knew, an ordinary contract of sale could not be prepared and executed until the s.149 certificate had been obtained. Accordingly, the option agreement was used to obtain a significant immediate commitment from Mr Takano, and representations as to the need for urgency were made to

persuade him to enter lnto the option agreement and pay the
fee, or preliminary deposit, of $10,000.

I am satisfied that i.lr Takano was told that the purchase of the subject land for $2 million was a good investment likely to yield a substantial profit in a relatively short time because its acquisition by Pivot was necessary or desirable to effect that company's plans for the development of the area. I am also satisfied that it was conveyed to M r Takano that there was a need for him to conclude'the purchase quickly because Trikon remained actively interested, in or about early March 1992, in purchasing the subject land at, or close to, the asking price of $2 million.

Insofar as the representation that the purchase of the subject land for $2m was a good investment embodied a prediction that it would yield a substantial profit on resale, that representation was one as to a future matter within s.51A of the Trade Practices Act, sub-ss(1) and (2) of which provide:

"(1) For the purposes of t h ~ s Davrsron, where a corporation

makes a representation w ~ t h respect to any future matter (includang the doang of, or the refusang to do, any act) and the corporatron does not have reasonable grounds for mak~ng the representation, the representation shall be taken to be masleadrng.

(2) For the purposes of the applacatron of sub-section (1) Ln relation to a proceeding concerning a representation made by a corporation wath respect to any future matter, the corporatron shall, unless at adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representataon."

Another instructive divergence of evldence went to the question of whether Mr Takano inspected the subject land before he signed the contract of sale on 9 March 1988. According to Mr Shirono he took Mr Takano to the Cudgen area in his red sports car in the latter half of February. Significantly, in the cross-examination of Mr Takano which occurred before Mr Shirono gave evidence, no mention was made of the red sports car. Mr Johnson, moreover, gave evidence that he saw Mr Shirono in company with Mr Fltz-Walter in Mr Shirono's office and offered to take them both to inspect the subject land. That would have been unusual had Mr Johnson known of Mr Takano's earlier inspection with Mr Shirono. Had he not known of it, it is likely that Mr Takano would have told him, but no such statement was attributed by 14r Johnson to Mr Takano. This part of Mr Johnson's evidence was not corroborated at all by Mr Fitz-Walter. Although it reveals a naive lack of astuteness in Mr Takano as an investor in real estate, I accept his evidence that he did not inspect the subject land before agreeing to purchase it. That acceptance

Mr Johnson on what I regard as the crucial issues.	redounds adversely against the credit of both Mr Shirono and
A related issue which reflects on the credibility of the three principal witnesses goes to the retainer of M r Fitz-Walter as
M r Takano's solicitor, and when, and by whom, they were
introduced to each other. Mr Johnson, as I have already indicated, has sworn that he saw Mr Takano with Mr Fitz-Walter in Mr Shirono's office before 8 March 1988. Mr Shirono denied

having introduced Mr Takano to Mr Fitz-Walter but that denial is contradicted by the documentary evidence of a note by Mr Fitz-Walter of the fees payable by Mr Takano which was made on the back of one of :.ir Shlrono's business cards. Both LW

Johnson and Mr Shirono claimed that late on 9 March Mr Takano took the contract to show to his solicitor before signing it. Mr Fitz-Walter however testified that he took instructions in his own office from Mr Takano and it was never suggested to him that he did so late on the afternoon or early in the

!

evening of 9 March.

I therefore accept Mr Takano's evidence that he retained Mr Fitz-Walter on Mr Shirono's recommendation and that Mr Fitz- Walter commenced to act for him on 10 March. That acceptance has adverse implications for my assessment of the credit of Mr Shirono and Mr Johnson generally, as I consider that both were at pains to create the impression that Mr Takano had the benefit of advice from an independently retained solicitor before signing the contract on 9 March. No support for that

Japanese speaking receptionist who was present in the Nihon's	impression was afforded by the evidence of Mrs Moto Waters, a
office at the relevant time, and who witnessed Mr Takano's signature on the contract. It is for these reasons that I have preferred the evidence of Mr Takano to that of Mr Shirono and Mr Johnson, except where their evidence is supported by

I	contemporaneous documents or the evidence of some other, more
I
I	or less independent, witness.
I I

The element of futurlty required by s.51A(l) was clearly present in each of what I have called the crucial representations. It must be borne in mind that it is common ground that Mr Takano was introduced to Mr Shirono for the purpose of obtaining his advice about investment in real estate in the Gold Coast area. He was not merely a purchaser taking a price offered by an estate agent after making enquiries elsewhere or otherwise forming an independent judgment as to the value of the land. The role of adviser, in the circumstances in which Mr Shirono and Delaeast assumed it, necessarily involved the making of predictions as to future matters including whether the land could be resold at a profit. Related to those predictions was an assessment of how vital the subject land would be to Pivot's plans for the development of its own holding and how much Pivot would be prepared to pay for the subject land. The representation of the need for M r Takano to act quickly to secure the subject land also involved a predictive exercise over a much shorter period as to whether Trikon would pay the asking price of $2

million or something fairly close to it.

I am satisfied that there was never any basis in fact for believing that Pivot would pay $3.5 million or any amount in excess of $2 million for the subject land. Although m McHugh, the Company Secretary of Pivot, gave evidence that his company had been in negotiation wlth the Tweed Shire Council to maximise the potential for development of the Cudgen land, that is a far cry from the suggestion made to Mr Takano that

Pivot was on the brink of undertaking a multl-mlllion dollar development itself and had to own the subject land to obtain approval for the necessary rezoning. Mr McBugh made it clear that the Board of Pivot had never resolved to purchase the subject land for $3.5 million or any other price. Indeed, when Pivot had earlier bought other lots on the same subdivision it had paid prices of between $5,000 and $10,000 each and had declined offers from owners of other lots to sell for prices in excess of $20,000 a lot.

~t is equally clear that by early March Mr Shirono and Mr Johnson knew, or should have known, that Trikon was no longer interested in acquiring the subject land, if it ever had been.

Mr Harper, who had been a director of Trikon early in 1988 had

no knowledge of any negotiations by his company at that time to buy land in the Cudgen area. He acknowledged that Trikon had made acquisltlons in the past of sites of strategic significance to proposed developments. He also conceded that a telephone call may have been made by a representative of

and Mr Dean Day, another director of Trikon, when they were	Nihon Realty to Mr Norris Blanks (the Chairman of Directors)
both staying at the Brisbane Parkroyal Hotel on 10 February 1988. Mr Lindsay Howard, who had been a freelance salesman on commission for Nihon Realty at the relevant time, gave evidence of contact with executives of Trikon between 4 January and 10 February 1988 in the course of which it was indicated that Trikon would look further into the subject land which had been offered to it. However, there was nothing in hls evidence to justify imputlng to Trikon on 8 March 1988 any pressing, or indeed continuing, interest in buying the subject land for $2 million or any other substantial price.
The only evidence from an expert valuer as to the worth of the subject land was adduced on behalf of the applicant from Mr Parsons who valued it as at March 1988 at $160,000.
It will be clear from the findlngs of fact which I have made and any available inferences from those facts or the evidence summarised above in relation to the crucial representations that Delaeast has signally failed to discharge the onus imposed on it by s.51A(l) and (2). It follows that the representations that the subject land could quickly be resold at a profit, that Pivot would be prepared to pay in the vicinity of $3.5 million for it, and that Trikon would quickly acquire the subject land if Mr Takano did not secure it, must be taken to have been misleading. I am also satisfied that a representation that the present value of the subject land was
Takano after he sought Mr Shirono's advice. That $2 million arose by implication from what was said to Mr
representation of a matter of opinion or other existing fact was misleading and deceptive in contravention of s.52 of the Trade Practices Act.
It will also have emerged clearly from the findings of fact that I have made that each of the respondents Shirono and Johnson was directly, knowingly concerned in Delaeast's

contraventions of Part V of the Trade Practices Act. Since Mr Takano was induced by what I have called the crucial representations to enter into the contract of 9 March 1988, he is accordingly entitled under s.82 to recover damages from each of the respondents.

I consider that the measure of damages to be applied in this

case is that indicated in this passage from the judgment of Dixon J (as he then was) in Toteff v Antonas (1952) 87 C.L.R 647 at 650:

"In an actlon of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered m consequence of his altering his posltlon under the inducement of the fraudulent mrsrepresentatlons made by the defendant. When what he has been lnduced to do rs to make a purchase from the defendant and part wlth his money to him in payment of the price, then, rf the transaction stands and is not drsaffirmed or rescrnded, what is recoverable rs "the

difference between the real value of the orooertv. and the sum - -

which the plaintiff was rnduced to give for Lt.. per Abbott L.C.J. Pearson v. Wheeler (1825) Ry. & Mood. 303, ath.304 [l71 E.R. 1028, at p.10291. As Slr James Hannen P. in Peek v. Derry (1887) 37 Ch.D. 541, at D.594; Cf. (1889) 14 ADD. CaS. 337 - -

pointed out, the is how much .worse off is the

plaintiff than if he had not entered into the transaction. If he had not done so he would have had the purchase money m his pocket. To ascertain his loss you must deduct from the amount he paid the real value of the thrng he got."

The application of that measure to actions of this kind under	the Trade Practices Act has been approved on several occasions
in this Court (see e.g. Gates v Citv Mutual Life Assurance Societv Ltd (1982) 43 A.L.R. 313 at 331 and the cases there cited.
Since the applicant has not disaffirmed or rescinded the contract of 9 March 1988, he should recover the difference

between the real value of the subject land which I find, on the evidence of 1 Parsons to have been $160,000, plus the stamp duty which would have been charged on a purchase at that price, and the net amount actually paid including stamp duty on the inflated price of $2 million.

I shall hear Counsel at a mutually convenient time later this

week on the questions of the money amount at which damages
should be assessed, interest and costs.

I certify that this and the preceding (34) thirty-four pages are a true copy of the reasons for judgment herein of M r Justice Ryan

Associate: W Date: 13 July 1992

Counsel for the Applicant:  Mr T.W. Quinn

Solicitor for the Applicant: Witheriff Nyst

Counsel for the Respondent:	Mr J. Batch
Solicitor for the Respondent: Steindls
Date of Hearing:	15 April - 26 April 1991 8 July - 15 July 1991
Date of Judgment:	13 July 1992