Tomlin v Ford Credit Australia Ltd

[2005] NSWSC 540

CITATION:	Tomlin & Ors v Ford Credit Australia [2005] NSWSC 540
HEARING DATE(S):	14/2/05, 15/2/05, 16/2/05, 17/2/05, 18/2/05, 21/2/05, 22/2/05, 23/2/05, 24/2/05, 25/2/05, 28/2/05, 1/3/05, 2/3/05, 3/3/05, 4/3/05, 9/3/05, 10/3/05, 11/3/05, 29/3/05, 15/5/05, 16/5/05, 18/5/05
JUDGMENT DATE :	10 June 2005
JURISDICTION:	Common Law Division
JUDGMENT OF:	McDougall J at 1
DECISION:	See para [263] of judgment

CATCHWORDS:	CONTRACT - whether defendant failed correctly to calculate shortfall under Bailment Plan Agreements on 12 August and 2 September 1998 - whether any failure amounted to breach of agreements - whether defendant breached agreements by failing properly to calculate discounted wholesale value of stock on 2 September 1998 - whether defendant entitled to terminate agreements - whether defendant breached agreements by demanding about $650,000 - whether there was implied duty of good faith in agreements - what was the content of alleged duty of good faith - whether alleged duty of good faith breached - whether plaintiffs entitled to damages - TRADE PRACTICES - whether defendant breached s 51AC Trade Practices Act - whether defendant engaged in misleading or deceptive conduct - whether plaintiffs entitled to damages - TORT - whether defendant owed duty of care - what was the content of alleged duty - whether defendant breached alleged duty - whether Ford Credit made negligent misstatements on and after 2 September 1998 - whether plaintiffs entitled to damages
LEGISLATION CITED:	Trade Practices Act 1974 (Cth)
CASES CITED:	Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 Astley v Austrust Ltd (1999) 197 CLR 1 Houghton v Immer [No 155] Pty Ltd (1997) 44 NSWLR 46 Simms, Jones Ltd v Protochem Trading NZ Ltd [1993] 3 NZLR 369 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15
PARTIES:	Mario Tomlin and Sonia Tomlin (First Plaintiff) Tomlin Motor Corporation Pty Limited (Second Plaintiff) Tomlin Corporation Pty Limited (Third Plaintiff) Ford Credit Australia Limited (Defendant)
FILE NUMBER(S):	SC 10879/01
COUNSEL:	B H K Donovan QC/ R N Gye/ S Shepherd (Plaintiffs) D R Pritchard/E C Muston (Defendant)
SOLICITORS:	Baker Love Wallsend (Plaintiffs) Corrs Chambers Westgarth (Defendant)

LOWER COURT JURISDICTION:

Tomlin & Ors v Ford Credit Australia [2005] NSWSC 540

Index to Judgment

Para

Background	2
Floor plan finance	9
Ford Credit extends its facility	16
The August audit and drawdown	19
The 2 September audit	24
Blue noting	26
The issues	31
The relevant contractual terms	33
Credibility	42
Mr Tomlin	43
Mr Buckton	52
Mr Chalker	53
Mr Butler	54
Mr Moores	55
Mr Bradstreet	57
Other witnesses for the plaintiffs	67
Mr Esh	68
Mr Turton	72
Mr Sultana	74
Mr Conlon	77
Mr Green	85
Other witnesses of fact for Ford Credit	89
Postscript on credit	93
The contractual issues	94
Clauses 5.7 and 5.8	95
Clause 10.6	109
Clause 19	110
Implied obligation of good faith	113
The alleged duty of care	123
The 12 August audit	133
The events of 17 and 18 August 1998	149
The 2 September audit	151
Bluenoting	174
Events up until 2 October 1998	179
The behaviour of Ford Credit’s staff at the premises	181
The decision to take control of the car keys	182
Requirement for payment of proceeds of sale	184
Change in commercial arrangements	185
Termination of the bailment plan agreements	187
Chaining up the premises	190
The negotiations with Kloster Ford	192
Alleged failure to supply information	202
The deal with Mr Bradstreet	211
Valuation issues	219
Unconscionable conduct	230
Damages	232
Causation	234
No damage in any event	243
Conclusions on the issues	262

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

McDOUGALL J

10 June 2005

FORD CREDIT AUSTRALIA LIMITED

JUDGMENT

1 HIS HONOUR: The corporate plaintiffs (Tomlin Motor and Tomlin Corporation respectively) carried on business in Cessnock selling new motor vehicles and buying and selling used motor vehicles. The first plaintiff (Mr Tomlin) was the principal of that business. He controlled the companies. The defendant (Ford Credit) provided floor plan finance for that business. On 11 September 1998, it terminated the floor plan facilities and required the full outstanding balance to be repaid. The plaintiffs characterise those, and other, actions as wrongful; and they say that they have suffered very substantial loss as a result. In these proceedings, they seek to recover their alleged loss.

Background

2 Mr Tomlin has worked in the motor vehicle sales industry for more than 20 years, mostly in the Hunter region. From about 1989, he carried on business, selling used vehicles, through Tomlin Motor. That company traded at Mayfield until 1992, when it moved to Toronto.

3 In 1995, Tomlin Motor bought from Messrs Wayne Roddy and David Chalker a motor vehicle dealership (the Vintage business) at Cessnock. The dealership sold new Ford and Hyundai vehicles under the trading names “Vintage Ford” and “Vintage Hyundai”. It also sold used vehicles and provided service and mechanical facilities. It operated out of premises known as 246 Maitland Road, Cessnock (the premises). Those premises were leased from Felton Motors Pty Ltd. Later in 1995, Mr and Mrs Tomlin bought the reversion of the premises.

4 Australian Guarantee Corporation Ltd (AGC) provided floor plan finance for the Vintage business when it was operated by Messrs Roddy and Chalker. When Mr Tomlin, through Tomlin Motor, took over the business, AGC provided a floor plan facility for Tomlin Motor.

5 For the first year after purchase, Tomlin Motor operated two businesses, namely the used car business hitherto carried on by it at Toronto (and at Mayfield before then) and the Vintage business. After 30 June 1996 (when, apparently, the lease of the Toronto premises expired), the used car business was moved to the premises.

6 In late 1996, Ford Credit offered to take over the role of floor plan financier hitherto performed by AGC. Negotiations were finalised in mid 1996. Ford Credit paid out the AGC facility and provided floor plan finance to the business.

7 At the beginning of 1997, Tomlin Corporation acquired a business known as “Cessnock Nissan”. That business was conducted from premises known as 258 Maitland Road, Cessnock (258 Maitland Road). Cessnock Nissan sold new Nissan motor vehicles and used vehicles. Floor plan finance was provided by Nissan Finance Corporation Ltd (Nissan Finance).

8 Not surprisingly, Mr Tomlin thought that economies could be achieved by combining all his businesses at the one site, with substantially common employees. Accordingly, in about April 1998, Tomlin Corporation transferred the Cessnock Nissan business to the premises. However, Nissan Finance continued to provide floor plan finance for that business.

Floor plan finance

9 The floor plan finance provided by AGC and Nissan Finance was on a “note by note” basis. Every time the relevant entity acquired a motor vehicle (new or used), the purchase was funded in whole or in part by the floor plan financier. When the vehicle was sold, the amount advanced in respect of it was paid out. For new vehicles, the amount advanced was the full wholesale price. For used vehicles, the amount advanced was calculated as a percentage of its wholesale value. That wholesale value was determined by reference to a trade publication known as the “Red Book”, which was published monthly. For vehicles no more than six (or later seven) years old, the financier would advance 90% of the wholesale value thus determined. For vehicles seven (or later eight) to ten years old, it would advance 60% of the amount so determined. Floor plan finance was not provided for vehicles more than ten years old.

10 The floor plan finance offered by Ford Credit was significantly different in one respect. The finance facility for used vehicles was a “come and go” facility, not dissimilar to a revolving credit facility. Tomlin Motor (which appears to have been the entity that operated the combined used car business) could draw funds up to the agreed limit for the purchase of motor vehicles. If, however, the scaled value of the motor vehicles (determined in the manner set out in the preceding paragraph) were less than the amount drawn under the come and go facility – a situation referred to as a “shortfall” – the balance had to be paid in cash. The facility offered by Ford Credit for new vehicles was essentially the same as that hitherto offered by AGC: on a note by note basis for the full wholesale value of the vehicle.

11 In substance, what happened was that Tomlin Motor, or Tomlin Corporation as the case may be, would acquire vehicles. Where a vehicle met the basic criteria for the applicable floor plan (ie, new vehicles or used vehicles no more than ten years old), it was acquired on behalf of the financier. The financier then bailed the vehicle to Tomlin Motor or Tomlin Corporation for the purpose of sale. When a vehicle that was individually financed (ie, on a note by note basis) was sold, the amount advanced in respect of it was required to be repaid within an agreed time. Where a vehicle acquired under the come and go facility was sold, the scaled wholesale value attributed to it was required to be repaid within an agreed time. In the latter case, however, the amount so paid was available to be redrawn. There were conditions attached to this, including that a current stock list, showing the vehicles to be paid for by a drawdown on the come and go facility, be supplied to Ford Credit.

12 After the Ford Credit floor plan facilities were put in place in mid 1996, representatives of Ford Credit conducted monthly “audits”. The purposes of such audits included:

(1) ensuring that the Tomlin companies had accounted to Ford Credit for the amounts owing on new and used vehicles sold by them; and

(2) valuing the used vehicle stock that was subject to the floor plan finance facility and bailed by Ford Credit to Tomlin Motor.

13 In essence, the vehicles physically in stock were identified against a stock list. Used vehicles were then valued by reference to the current Red Book and the scaling process already described. Any shortfall was required to be paid forthwith. A shortfall could arise where a new or used vehicle had been sold and delivered prior to the audit, but the amount owing on it had not been remitted to Ford Credit at the time of the audit. It could also arise because the total scaled value of the used car stock was less than the amount drawn under the come and go facility.

14 From time to time, witnesses referred to vehicles that were “sold out of trust”, and documents described such vehicles as “SOT”. Apparently, in the industry, a vehicle that is subject to floor plan finance (ie, that is the property of the financier, but bailed to a dealer for the purposes of sale) is said to be “sold out of trust” if the dealer, having sold it to a customer, does not make payment to the financier, within the time agreed, of the amount owing in respect of the vehicle. I think that the concept is relevant only to note by note facilities, not to come and go facilities, but if there is a distinction, it is of no present relevance.

15 One of the allegations made by Ford Credit in these proceedings is that, on a number of occasions during audits, it was ascertained that the Tomlin companies had sold vehicles out of trust. As I understand it, that reflected a situation where sufficient time had elapsed between sale and delivery (payment being made on delivery) and the audit to enable the relevant company to account to Ford Credit for the proceeds of sale: ie, a vehicle would not be said to have been sold out of trust where (for example) delivery of the vehicle, following receipt of the sale price, had been effected the day before the audit.

Ford Credit extends its facility

16 In June 1998, Ford Credit offered to take over the floor plan facility provided by Nissan Finance to the Cessnock Nissan business. Mr and Mrs Tomlin and their companies reached agreement on this with Ford Credit and the relevant documentation was executed in July 1998. In essence, the proposal was that Ford Credit would pay out the amount owing by Tomlin Corporation to Nissan Finance, extend note by note facilities for new Nissan vehicles, and increase the amount of the come and go facility for used vehicles.

17 What the parties called a “trial audit” was carried out on 23 July 1998, before Ford Credit took over the Nissan Finance facility. The auditor was Mr John Sultana. The come and go limit at the time was $1,600,000; and that facility was fully drawn. The total value of the used car stock was estimated at $1,743,140. Its scaled value was $1,568,826. The shortfall, of about $32,000, was paid that day.

18 The takeover then proceeded. The amount that Nissan Finance required to pay out its facility included an amount of $197,550 for used cars. I shall return to the detail of the events relevant to that amount.

The August audit and drawdown

19 Ford Credit conducted an audit on 12 August 1998. The auditors were Messrs John Sultana and Peter Esh. The amount drawn under the Ford Credit facility was $1,568,000. In addition, Ford Credit claimed, there was a further amount to be added to that sum of $197,550 (the amount payable to Nissan Finance for used vehicles). Messrs Sultana and Esh calculated the scaled value of the used car stock at $1,433,427. Thus, they calculated a shortfall of $332,123.

20 Mr Tomlin protested vehemently at this. He spoke to his dealer account manager at Ford Credit, Mr Nicholas Turton. Mr Tomlin’s position was that the scaled value of his used car stock was $1,714,971, and that there was other stock that was available for valuation if required. (The “other stock” was what was known as “reserved stock”: stock earmarked for, or agreed to be sold to, others but for which payment had not been made.) The outcome was that on 13 August 1998, Tomlin Motor paid the amount claimed by Ford Credit.

21 On about 13 August 1998, Mr Tomlin wished to buy some used cars at auction. He rang Mr Turton to ensure that credit would be available under the come and go facility. The next day, 14 August 1998, he bought a number of vehicles at auction with a total value of $156,250.

22 On 17 August 1998, Mr Chalker (who by then was an employee of Tomlin Motor or Tomlin Corporation) faxed a request to Mr Turton for a drawdown under the come and go facility up to the then limit of $1,600,000. The request was supported by a current stock list and copies of the invoices for the vehicles bought at auction.

23 On 18 August 1998, Ford Credit made a direct deposit of $364,123 into Tomlin Motor’s account with the Colonial State Bank. Ford Credit claims that there was an overpayment of $197,550. It says that it had remitted that amount to Nissan Finance to pay out the used car facility hitherto provided by Nissan Finance, but that the payment had not been posted to the come and go account when the funds were transferred to Tomlin Motor. Thus, Ford Credit says, it thought that the amount available to be drawn under the come and go facility was $197,550 greater than was in fact the case.

The 2 September audit

24 Messrs Sultana and Esh conducted a further audit on 2 September 1998. They claimed that there was a shortfall of, in round figures, $650,000. Again, Mr Tomlin protested vehemently. He spoke to Mr Turton. He also spoke to Mr Chalker and to Mr George Buckton, who had recently been appointed as Tomlin Motor’s financial controller. Between them, Messrs Tomlin, Buckton or Chalker identified an amount of $434,810 that might be owing to Ford Credit. The balance was disputed. In substance, Ford Credit’s position was that the balance was explained by the overpayment of $197,550 made on 18 August 1998.

25 Tomlin Motor paid the sum of $434,810. It could not, and did not, pay the balance. That was not done until 2 October 2000 when Mr T J “Boy” Bradstreet, a well known, substantial and successful motor vehicle dealer in the Hunter region, provided financial assistance to Tomlin Motor through a company controlled by him so that the balance then owing to Ford Credit could be paid out.

Blue noting

26 On 3 September 1998, Ford Credit decided to cancel the come and go facility, and to finance the Tomlin companies’ used vehicle stock on a note-by-note basis. That process involved what is called “blue noting”.

27 Blue notes were documents styled “ACKNOWLEDGEMENT OF DELIVERY”. They were prepared in duplicate and kept, serially numbered, in books. In form, a blue note was an acknowledgment addressed to Ford Credit by a dealer. The dealer acknowledged “to have received delivery of the goods described below which goods are to be held by me/us as bailee from you under the provisions of our Bailment Plan Agreement”.

28 The blue note enabled the relevant identifying details of the vehicle to be stated. It provided also for statements of the vehicle’s “Book Value” and “True Wholesale Value”. The former is the relevant Red Book figure; the latter is the applicable (if any) scaled figure.

29 On 4 and 5 September 1998, Ford Credit employees blue noted the used vehicle stock of the Tomlin companies. They identified the vehicles that were held as bailee pursuant to the bailment plan agreement. The identifying details of each vehicle were entered onto a blue note. By reference to the Red Book, the “Book Value” was ascertained and entered. Where the vehicle was no more than 10 years old, the “True Wholesale Value” was, or should have been, stated as the relevant percentage of the “Book Value”. Where the vehicle was more than 10 years old, the “True Wholesale Value” was, or should have been, stated at zero.

30 After the initial blue noting was completed, further used vehicles were blue noted as they were acquired by one or other of the Tomlin companies. That process continued until the debt to Ford Credit was paid out on 2 October 1998.

The issues

31 The parties agreed upon the issues by which these proceedings were to be decided. I set out the issues so agreed:

(1) Whether Ford Credit failed to correctly calculate the amount of shortfall owed to it (having regard to the discounted wholesale value of the stock) on 2 September 1998 as alleged at paragraph 158L of the Sixth Further Amended Statement of Claim (the “Claim”).

(2) Whether the failure referred to in the above paragraph amounted to a breach by Ford Credit of the Bailment Agreements between Ford Credit and TMC and Ford Credit and TC.

(3) Whether Ford Credit, in terminating the Bailment Agreements on 11 September 1998, was in breach thereof by reason if its failure to properly calculate the discounted wholesale value of the used car stock on 2 September 1998 (as alleged at paragraph 158K of the Claim).


(4A) Whether Ford Credit, in the conduct of its audit of TMC and TC on 12 August 1998, failed to take into account the security comprised of used cars the subject of the NFC facility.

(4B) Whether by reason of the matter referred to in paragraph 4A above, TMC/TC owed Ford Credit a shortfall in the amount of $197,550 with respect to used vehicles the subject of the NFC facility at the conclusion of the audit of 12 August 1998.

(5) Whether the facts and circumstances alleged at paragraph 122 of the Claim amount to a contravention by Ford Credit of s 51AC of the Trade Practices Act .

(6) Whether Ford Credit was entitled to terminate the Bailment Agreements on 11 December 1998 between it and TMC and TC.

(7) Whether the termination of the Bailment Agreements was a breach of the agreements as alleged at paragraph 54A of the Claim.

(8) Whether the demand for payment of “about” $650,000.00 constituted a breach of the Bailment Agreements with either or both TMC and TC.

(9) Whether Ford Credit owed a duty of care to TMC/TC/Tomlin with respect to the conduct of the business of TMC/TC.

(10) What was the content of that duty (if any)?

(11) Whether (by reason of the matters alleged in paragraphs 151-154 of the Claim) Ford Credit acted in breach of the duty of care.

(12) Whether there was an implied term in the Bailment Agreements that Ford Credit would act in good faith.

(13) What was the content of the obligation arising out of the implied term (if any)?

(14) Do any of the matters alleged at paragraphs 56 to 77 and 158A to 158B of the Claim amount to a breach of that duty?

(15) Whether the representations by Ford Credit as to TMC’s/TC’s indebtedness on and after 2 September 1998 (as alleged at paragraphs 110(2), 110(5), 158L and 158Y of the Claim) were negligent misstatements.

(16) Not pressed – 11/3/05.

(17) Whether the alleged failure by Ford Credit to disclose to TMC/TC/Tomlin the discounted wholesale value of the vehicles blue noted by it exceeded the amount drawn down under the Facility (including, which is not admitted, the $197,550.00), was a contravention of s 52 of the Trade Practices Act (as alleged at paragraph 121I of the Claim).

(18) Whether the Plaintiffs are entitled to damages including exemplary damages and, if so, which of the Plaintiffs and in what amounts.

(19) Whether the Plaintiffs are entitled to recover damages for both capital loss and loss of profits (ie, is the issue of continuing damage one which gives rise to an entitlement to claim both).

(20) Whether the Plaintiffs are entitled to damages pursuant to s 82 and/or s 87 of the Trade Practices Act.

(21) Whether the Plaintiffs acted reasonably or foreseeably in entering into the arrangements they did with Mr Bradstreet (and entities associated with him) following the events of September 1998.

32 Before I turn to the factual disputes, I shall set out the relevant terms of the contracts between the plaintiffs and Ford Credit. I shall also deal, to the extent that it is necessary, with questions of credibility.

The relevant contractual terms

33 The contracts principally relied upon were two “bailment plan agreements” made on, respectively, 8 May 1996 (the 1996 agreement) and 17 July 1998 (the 1998 agreement) between Ford Credit and Tomlin Motor.

34 Clause 5 of the 1996 agreement dealt with the purchase of motor vehicles and the rights and obligations of Tomlin Motor and Ford Credit in respect of vehicles purchased. Clause 6 set out the obligations of Tomlin Motor as bailee. Relevantly, those clauses provided:

“5.1 All new Goods ordered in accordance with the approval granted by the Bailor shall be purchased from the manufacturer or wholesale distributor or other supplier by the Bailee as agent for the Bailor whom shall quote its Sales Tax Certificate as prescribed and pay for the goods;
…
5.3 All used Goods (not being trade-ins) ordered in accordance with the approval granted by the Bailor shall be purchased by the Bailee from the owner thereof as agent for the Bailor (but without necessarily disclosing the fact of agency) and shall be paid for in the first instance by the Bailee as agent for the Bailor but the Bailor shall reimburse the Bailee in the manner and to the extent provided in subclause 5.6 hereof;
5.4 Every trade-in acquired by the Bailee shall (if covered by the limits of its authority hereunder from the Bailor existing at the time but not otherwise) be deemed to have been purchased by it as agent for the Bailor whether the Bailee discloses to the other party the fact of agency or not and the Bailee shall be deemed to have paid to the other party as agent for the Bailor an amount equal to the trade-in allowance and the Bailor shall reimburse the Bailee in the manner and to the extent provided in subclause 5.6 hereof; and
5.5 All used Goods (not being Goods purchased or acquired by the Bailee pursuant to subclauses 5.3 and 5.4 hereof) acquired by the Bailee from the owner thereof in the name of and by the Bailee as principal and which the Bailee subsequently elects to sell to the Bailor shall, subject to the approval of the Bailor, be purchased by the Bailor from the Bailee upon the Bailor paying to the Bailee or otherwise as directed by the Bailee the price paid or payable by the Bailee as principal for such Goods or the true wholesale value of such Goods whichever is the lesser.
5.6 As to used Goods purchased or acquired by the Bailee:
5.6.1 in respect of any used Goods other than trade-ins the Bailor shall subject to subclause 5.7 hereof reimburse the Bailee in respect of the expenditure incurred by the Bailee as its agent pursuant to subclause 5.3 hereof by paying to the Bailee the price (exclusive of freight and delivery costs) paid for such Goods or the true wholesale value of such Goods whichever is the lesser;
5.6.2 in respect of any used Goods which are trade-ins the Bailor shall subject to subclause 5.7 hereof reimburse the Bailee in respect of the expenditure incurred by the Bailee as its agent pursuant to subclause 5.4 hereof by paying to the Bailee an amount equal to the trade-in allowance allowed for such Goods or the true wholesale value of such Goods whichever is the lesser.
5.7 For the purpose of this clause 5 “the true wholesale value” of any Goods shall mean the sum fixed by the Bailor from time to time as being the true wholesale value (including sales tax, excise duty, goods and services tax and any similar tax if appropriate) of such Goods and the sum so fixed shall be final and conclusive between the parties hereto.
5.8 If the true wholesale value of any Goods shall be less than the price paid for the Goods and the Bailor shall have paid the higher amount the Bailee will upon request pay to the Bailor the difference between the amount paid by the Bailor and the true wholesale value.
…
6.0 THE Bailee agrees in respect of any Goods held by it as Bailee hereunder;
6.1 To keep the Goods in its own possession at the Premises or such other place of display as is specifically approved in writing by the Bailor and keep them unaltered and in at least as good condition as when the Bailee received delivery thereof and to indemnify the Bailor against loss of or damage to the Goods (from whatever cause);
6.2 Not without the specific prior approval in writing of the Bailor to permit the Goods to be used, driven or operated for demonstration or trading purposes;
6.3 To permit the Bailor at any time to enter into or upon any premises where the Goods or any of them are or are believed to be to inspect and/or test the Goods;
… “

35 Clause 10.2 dealt with the right to possession of the bailed Goods. It provided, relevantly, as follows:

“10.2 The Bailee’s right to possession of the Goods shall continue until the first to happen of the following events:
10.2.1 the Bailor electing to terminate the bailment at the expiration of the period from time to time fixed by the Bailor for the purposes of this clause (hereinafter called “the bailment period”);
10.2.2 the Bailor terminating the bailment following a default by the Bailee in making payment of any amount required to be paid to the Bailor under the terms of this or any other Agreement between the Bailor and the Bailee;
… ”.

36 Interest, somewhat obscurely described as “rent for display”, was calculated pursuant to cl 10.3 at the rate from time to time notified by Ford Credit to Tomlin Motor on the amount outstanding under the agreement.

37 Clause 10.6 gave Ford Credit the right at any time to take possession of any bailed vehicle. It provided as follows:

“10.6 The Bailor may at any time take possession of the Goods without notice and without demand and may for that purpose or in search of the Goods enter any premises of or controlled by the Bailee and as the act of the Bailee may enter the premises of any other person.”

38 Clause 13 provided as follows:

“ Implied Conditions and Warranties :
13. THE Bailee acknowledges that all implied conditions and warranties on the part of the Bailor in relation to any Goods to be held by the Bailee hereunder are excluded to the maximum extent permitted by law.”

39 Clause 16 provided as follows:

“ Evidence of Payments
16. A certificate signed by a Director, Secretary or Branch Manger (or any person acting as Branch Manager) of the Bailor that as at the date stated in such certificate any sums have been paid or received, or not paid or received, by either party hereto, or that any sums are payable or recoverable in respect of any Goods taken on display or as to any other act matter or thing arising hereunder (including that a form of record was duly produced from the electronic data system of the Bailor) shall in all Courts and at all times be prima facie evidence thereof.”

40 Clause 19 provided as follows:

“ Termination of Agreement
19. THIS Agreement may be terminated at any time as to future transactions by either party giving notice in writing but this shall not affect the rights and liabilities of the parties hereunder in respect of transactions prior to such notices.”

41 The relevant terms of the 1998 agreement were to the same effect. It is not necessary to set them out.

Credibility

42 I turn now to the credibility of the principal witnesses for the plaintiffs and Ford Credit.

Mr Tomlin

43 In assessing Mr Tomlin’s evidence, it is necessary to bear in mind that he clearly feels very strongly that Ford Credit has wronged him. Indeed, when giving evidence of his decision in September 1998 to sell his business to a competitor, Kloster Ford (which did not then proceed), he broke down in tears. It is clear that he has persuaded himself that Ford Credit is responsible for what he sees as the failure, and subsequent sale, of his business. Whether or not that is the case (and, more importantly, whether it exposes Ford Credit to any legal liability) are matters with which I deal later in these reasons. The significance, for present purposes, is that I have formed the conclusion that Mr Tomlin’s perception, that Ford Credit has wrongfully done him serious injury, has coloured his evidence to a very significant extent.

44 I have concluded that I should not accept Mr Tomlin’s evidence on significant factual issues unless it is corroborated by other acceptable evidence, or is consistent with what I regard as the probabilities objectively ascertained, or is against interest. There are a number of reasons for this:

(1) On a number of occasions, Mr Tomlin prevaricated, or provided non responsive answers: particularly where, it was clear, he perceived the subject matter to be one of some difficulty to him and his case.

(2) On a number of significant issues, his evidence was simply incapable of acceptance.

(3) On other significant issues, his evidence was inconsistent with that of witnesses whom I have concluded were witnesses of truth.

(4) On yet other significant occasions, Mr Tomlin’s evidence was inconsistent with prior statements made by him and given to Ford Credit, apparently in an attempt to secure some settlement. (I should note that it was not suggested that privilege attached to those statements by reason of s 131 of the Evidence Act. )

(5) Making every allowance for the stress of litigation and Mr Tomlin’s strong feelings, his demeanour in the witness box was less than impressive.

45 I do not propose to burden these reasons with excessive citations from the transcript in support of the characteristics that I have just noted. I will however give some brief references. In addition to the matters to which I have referred above, and to the instances of them that I give below, there are numerous other respects in which Mr Tomlin’s evidence was unsatisfactory. I refer to some of those as I discuss the relevant events later in these reasons. I mention that to make it clear that my assessment of Mr Tomlin’s credibility is based on my assessment of his evidence overall, and not just on the instances to which I refer below or to the characterisation of those instances that I have set out above.

46 As to the first category: I refer to Mr Tomlin’s evidence as to:

(1) his reading and understanding of the bailment plan agreements between his companies and Ford Credit (T 128.55-130.40) and his evidence as to what he wanted Ford Credit to do in the period 2 September to 2 October 1998 (T 130.45-131.10);

(2) his handwritten note of the events of 12 August 1998, including the comment that “we valued all the cars” and that there was an undisputed shortfall of (in round figures) $332,000 (T 160.20-162.5);

(3) the investigation of the security value of the used vehicles that were “blue noted” after 3 September 1998 (T 232.25-234.45);

(4) the alleged non receipt of Ford Credit’s letter of 18 September 1998 (T 249.35-250.55), noting that a copy of that letter was produced by the plaintiffs on discovery, and noting also the carefully phrased denial in para 57 of Mr Tomlin’s affidavit sworn 18 October 2004; and

(5) the cancelled electronic funds transfer from his companies to Ford Credit on 7 September 1998 (T 646.20-648.35).

47 As to the second category: I refer to the evidence referred to in para [46(2), (5)] above; and to his evidence as to:

(1) the negotiations with Kloster Ford (T 244.35-247.50): noting, in particular, his assertion that the negotiations with Kloster Ford “weren’t in good faith” (T 244.44, and see also T 244.50 and T 245.1, where he conceded that the want of good faith was bilateral);

(2) his solicitors’ letter of 23 September 1998 to Ford Credit, and in particular to the reference to a reconciliation being “finally provided” (T 252.45-254.10); and

(3) Ford Credit’s status summary (exhibited as MT 38 to his affidavit sworn 1 July 2003) (T 240.35-242.45).

48 As to the third category: I refer to Mr Tomlin’s evidence as to his understanding of the drawdown of $364,123 on 18 August 1998. The value of the vehicles bought at auction totalled, as I have noted, $156,250. Since all were less than 8 years old, the amount available to be drawn was 90% of that value, namely $140,625. Mr Tomlin explained the difference between that amount and the amount in fact paid into his account as reflecting a revaluation of his used car stock that he believed Ford Credit had undertaken (between 12 August 1998, when the audit on that day was completed, and 18 August 1998, when the payment was made). That explanation in itself lacks credibility, given that the request for the drawdown (made by Mr Chalker at Mr Tomlin’s direction) referred only to the purchase of the vehicles at auction. But it is also inconsistent with the evidence of Mr Buckton and Mr Chalker.

49 Mr Buckton said that he concluded that the drawdown involved a mistaken overpayment of, in round figures, $200,000, and that he told Mr Tomlin this at the time. Mr Chalker said that he expected the amount of the drawdown to be the scaled value of the purchases, and that he told Mr Tomlin this. Mr Chalker’s understanding would reflect the direction given to him by Mr Tomlin. As I shall shortly indicate, I regard Messrs Buckton and Chalker as witnesses of truth, on whose evidence I could rely. Mr Chalker’s evidence in this respect was supported by that of Miss Beverley Giggins, another witness whose evidence I have concluded is reliable. Their evidence is inconsistent with Mr Tomlin’s evidence on this point; and I regard the inconsistency as reflecting adversely on his credibility.

50 As to the fourth category: I refer to his evidence from T 160.48 to 162.10 dealing with the words “we valued the cars” (words appearing in his diary that were completely at odds with his present position); to his evidence at T 176.37-177.41 (dealing with discrepancies between what was said in a prior statement and his present case); and to his evidence at T 215.41-216.51 (in which he sought to disclaim the words “and budgeting” in that statement, saying “I wish I never said the word budgeting … “).

51 As to the fifth point: I am conscious that the stress of litigation is great, and that different people react differently to stress. I am conscious, too, that demeanour is at best a fallible guide to veracity. Nonetheless, he did not, in the witness box, inspire me with any feeling that I could rely with confidence upon his evidence; and rereading his evidence has done nothing to change that assessment.

Mr Buckton

52 Mr Buckton was employed as the financial controller of Tomlin Motor (and, I infer, more generally the Tomlin group) from mid July 1998 until February 2001. He gave his evidence clearly and precisely. He appeared to have a good recall of the events of which he gave evidence. He was not shaken in cross-examination. I formed the opinion that he was a witness of truth upon whose evidence I could rely.

Mr Chalker

53 Mr Chalker’s duties included stock control. He had responsibility for ensuring that the dealership kept accurate records of vehicles (new and used) acquired for the purposes of sale and sold. Perhaps not surprisingly, his recollection of detail was a little limited, and, I think, mostly dependent on such contemporaneous documents as existed. Nonetheless, and with that limitation, I formed the view that he was a witness of truth and that I could rely on the substance of his evidence.

Mr Butler

54 Mr Kym Butler was an independent accountant retained by the plaintiffs in mid September 1998. I found his demeanour to be, at times, aggressive; and I found his evidence to be marked by what can only be described as partisan leanings towards the plaintiffs’ cause. In particular, I formed the impression that he had a distinct feeling of hostility towards Ford Credit and its officers involved in the relevant events. I do not regard him as a satisfactory witness; in particular, I do not regard his evidence as providing acceptable corroboration for that of Mr Tomlin.

Mr Moores

55 Mr John Moores and his wife were partners in a business known as Cessnock Car Detailing. That business provided a number of services to, among others, car dealers such as the Tomlin group; Mr Moores said that the Tomlin group was his biggest customer.

56 I did not find Mr Moores to be an impressive witness. He was, on occasions, argumentative and non responsive. Much of his evidence was vague. I concluded that he, like Mr Butler, was a partisan witness. As with Mr Butler, I conclude that he is not a witness whose evidence I could regard as satisfactory; and, in particular, that I could not regard it as providing corroboration for Mr Tomlin.

Mr Bradstreet

57 I have not found the evidence of Mr Bradstreet of great assistance in resolving those factual disputes to which it is relevant. That is not because I think that Mr Bradstreet was seeking to be untruthful. It is simply because, I think, he had no more than a vague recollection of the events of which he spoke, so that his evidence is not reliable.

58 Further, one specific aspect of Mr Bradstreet’s evidence was clearly contaminated. Mr Tomlin said that, on 12 September 1998, he heard a conversation between Mr Bradstreet and Mr Paul Conlon of Ford Credit which included words to the following effect:

“Conlon: “You don’t want to get involved in this business. It is unsalvageable.”
Bradstreet: “You leave that to me to decide.”
Conlon: “Mario’s a dodgy operator.”
Bradstreet: “Don’t talk to me like that about this young fellow. I’ve know him and his family for years.”

See para 144 of Mr Tomlin’s affidavit sworn 1 July 2003.

59 Further, Mr Tomlin said, he heard Mr Conlon say to Mr Bradstreet on the same day words to the effect of:

“Look Mr Bradstreet, this is just a disaster, you don’t want to get involved in this”.

See para 145 of the same affidavit.

60 Mr Bradstreet acknowledged that, before he swore his affidavit, he had spoken to Mr Tomlin about this aspect of the evidence. He agreed that this was “to refresh [his] recollection of what was said” (T 546.5), and to “make sure that [he] got it right” (T 564.9). In fairness, he denied that his purpose was to “make sure [he was] saying the same thing” (T 564.12).

61 In his affidavit sworn 28 July 2003, Mr Bradstreet set out the relevant conversation as follows:

“Conlon: “You don’t want to get involved in that business. It is unsalvageable.”
Bradstreet: “You leave that to me to decide.”
Conlon: “Mario’s [sic] a dodgy operator.”
Bradstreet: “Don’t talk to me like that about this young fellow. I have known him and his family for years.”

62 Further, in para 10, Mr Bradstreet attributed further words to Mr Conlon to the effect:

“Look, Mr Bradstreet, Tomlin’s a disaster. You don’t want to be involved in this.”

63 Mr Bradstreet was unable to explain in cross-examination the remarkable coincidence between his and Mr Tomlin’s accounts of what Mr Conlon had said. It may be no more than an overenthusiastic application of the powers of word processing; or it may reflect a response to leading questions put in conference when the affidavit was drafted; or it may be capable of some other explanation. But it leaves me with a distinct feeling of unease as to the reliability of Mr Bradstreet’s purported recollection.

64 It should also be noted that, having given the evidence of discussions with Mr Tomlin to which I have referred, Mr Bradstreet, when asked whether one of the things he discussed with Mr Tomlin was his recollection of what Mr Conlon had said, said “not really, no” and that he did not “think we discussed that in full” (T 565.5-.10). I do not regard that attempt to retract from what he had earlier said as credible.

65 Further, on this point, Mr Tomlin’s evidence was that he had “heard” the relevant conversation. He was not, either on his account or on Mr Bradstreet’s (if they be separate accounts), a party to the discussion; in substance, his evidence was that he had overheard it. Mr Bradstreet said that Mr Tomlin “wasn’t present at this conversation [he] had with Mr Conlon” (T 565.15). When asked how it was that Mr Tomlin knew what was discussed, he said “We probably had a few discussions about it” (T 565.20).

66 I regard these matters as reflecting adversely not just on the reliability of the particular evidence, but on the reliability of the entirety of Mr Bradstreet’s evidence. I do not think that he had any real recollection of the conversation. That is confirmed by his cross-examination as to its substance, in which he was unable to recall some of the salient points that featured in the account in his affidavit (T 561.20-562.40). These considerations, coupled with my impression that Mr Bradstreet had no real recall of any of the detail of the relevant events, has led to my conclusion that I do not accept his evidence as reliable; and, specifically, that I do not accept it as providing acceptable corroboration for Mr Tomlin.

Other witnesses for the plaintiffs

67 I do not have any substantial criticisms of the other witnesses of fact called by the plaintiffs, although it must be said that (not surprisingly) many of them lacked a clear recollection of the relevant events. That having been said, I conclude in general that their evidence, so far as it went, represented their best and honest recollection of the relevant events.

Mr Esh

68 Mr Esh was, at the relevant time, and remains, a wholesale auditor employed by Ford Credit. My assessment of the reliability of Mr Esh’s evidence has been rendered difficult by the manner in which he gave it: including in this, but not limiting it to, his demeanour. At times, he gave the impression that he was reluctant to deal with questions put to him on their merits. On a number of occasions, he gave answers that appeared to be inconsistent with prior answers (or with his affidavit). From time to time, he gave answers that were on their face difficult to accept. On numerous occasions, he paused for a considerable period of time, frequently 30 seconds and on occasions up to 60 seconds, before giving an answer.

69 I think that a number of the characteristics exhibited by Mr Esh in the witness box, which might be thought to have demonstrated an unsatisfactory demeanour, were due principally to two things. The first is that, I thought, he had difficulty from time to time in understanding questions that were put to him. The second is that, so it seemed to me, Mr Esh is a man of extremely literal mind. On a number of occasions, that characteristic seemed to me to have led him to deny propositions to which, in substance, he might have been expected to assent, because there was a minor slip in the formulation of the questions. (For example, I have referred in para [9] above to the varying age at which the True Wholesale Value of a vehicle reflected 60 rather than 90 percent of its Red Book value. When Mr Esh was asked a question about events involving the scaling process, in which the actual detail of the scaling process was irrelevant, he gave what appeared to be an incorrect answer because the question had postulated 6 rather than 7 years as the age at which the percentage changed, even though on any view this difference was not material to the substance of the question or to the answer to be given. See T 686.20-687.05.)

70 Nonetheless, and making every allowance for the difficulties that Mr Esh appeared to face in the witness box, I did not find his evidence to be persuasive. It is marred by a number of inconsistencies and other problems, some reference to which I shall give. That, when combined with what, after making all allowances, was an unsatisfactory demeanour (particularly, the habit of pausing for very lengthy periods before answering questions – particularly in what might be thought to have been “difficult” areas) has led to my conclusion. Having said this, in general I prefer the evidence of Mr Esh to that of Mr Tomlin where the two are in conflict, and where the conflict cannot otherwise be resolved.

71 Again, I do not propose to burden these reasons with excessive citations from the transcript. I therefore give, by way of example only, the following references to inconsistencies in the evidence of Mr Esh:

(1) The description given by Mr Esh of the process of blue noting that was conducted on 4 and 5 September 1998 was, to put it neutrally, confused. He said in chief at T 652.50-653.10 that he completed the blue notes with the description of the vehicle, the Red Book value and the scaled value (doing this in conjunction with Mr Chalker) and then calculated the total of the scaled values to arrive at the value of the vehicles for security purposes. He then said during cross-examination (in answer to questions from me) that his practice was to fill out the identification details of a particular vehicle “individually as you go along, to complete those forms”; the clear inference from this and his subsequent answers was that the details of each vehicle were completed when he saw it and, by checking the stock list, satisfied himself that it was one to be blue noted (T 662.55-662.25). He said that the value of the vehicles was inserted later, in the office, using the Red Book – after “standing beside the vehicle having noted down its details” (T 662.40-.50). Further, Mr Esh said, he then calculated the True Wholesale Value by applying the appropriate scaling; and after this was done, he gave the blue notes individually to Mr Chalker (or perhaps, on some occasions, Mr Tomlin) to sign (T 662.40-664.15).

Subsequently, however, Mr Esh said that he filled in the details of the vehicles from the stock list in the office, having satisfied himself by inspection that a particular vehicle shown on the stock list was in the yard (T 659.10, 661.15,662.40-664.20).

Further, it became clear subsequently in the cross-examination that Mr Esh did not, in most if not all cases, fill in the “True Wholesale Value” when he first filled out the blue notes. That is apparently because most, if not all, of the blue notes completed on 4 and 5 September 1998 show the same figure (the Red Book value) for “Book Value” and “True Wholesale Value”.


This was the first occasion on which Mr Esh had undertaken the process of blue noting . Although he purported to give evidence by reference to his usual practice rather than individual memory (T 661.15, .50; T 662.15, .40) – something for which he can hardly be criticised, having regard to the lapse of time and the fact that he has carried out many audits since September 1998 – the reality is that, when he blue noted the Tomlin companies’ used car stock on 4 and 5 September 1998, he had no established or usual practice.

(2) Mr Esh said in chief that the first occasion of which he knew when an allegation was made that Mr Tomlin had sold a vehicle out of trust occurred on 11 September 1998. That was in relation to a green Lexus, which was the subject of a blue note and which, therefore, Ford Credit regarded as its property. Mr Esh said that another dealer came to the yard on 11 September 1998, claimed (and showed to the satisfaction of Mr Esh) that the vehicle was his, and took it away. Mr Esh said that this vehicle was used personally by Mr Tomlin (see T 655.10-656.15).

Thus, the evidence-in-chief created the impression (as I am satisfied Mr Esh intended it should) that Mr Tomlin had been guilty of sharp practice by purporting to “sell” it to Ford Credit when he knew that it was the property of another.

However, in cross-examination, Mr Esh agreed that this was not at all a case of a vehicle being sold out of trust (T 659.45). Further, he agreed, the vehicle “had inadvertently been blue noted by” him (T 659.50). Mr Esh then agreed that neither Mr Tomlin nor Mr Chalker was with him when he blue noted the vehicle (T 659.60-660.1); an answer that he immediately after recanted (T 660.5-.25). I am satisfied that his first answer was correct and that his second answer was not. Although the blue note was signed by Mr Tomlin, I am satisfied (as I indicate later in these reasons) that the blue notes were presented in bulk to Mr Tomlin and Mr Chalker to sign, and that they did not check them individually. Although I have formed an adverse view of Mr Tomlin’s credibility as a witness, I do not believe that he would knowingly have permitted Mr Esh to blue note a vehicle that Mr Tomlin knew was the property of another and not available as security.

(3) In his evidence-in-chief, Mr Esh said that after he had completed the blue noting process, he added up the total of the scaled values, told Messrs Tomlin and Chalker the result, and told them that there was a shortfall of $66,023 (T 653.5-.25). For the reasons that I have given, Mr Esh in fact could not have done so, because he did not at first calculate the scaled values; if he did tell them of the scaled values, it must have been after the mistake had been pointed out to him and he had carried out the necessary calculations. Further, in cross-examination, Mr Esh gave evidence precisely to the contrary. He was asked “You did not tell them of the scaled value; did you” and “You did not tell them on the 5th of the short full [sic]”, to both of which questions he answered “No” (T 669.45-.53). Further, in chief, Mr Esh said that when he gave the shortfall figure to Mr Tomlin and Mr Chalker, Mr Tomlin said he could give him a cheque for the shortfall straight away (T 653.30). In cross-examination, when it was put to Mr Esh that “Mr Tomlin said nothing about paying you a cheque on the Saturday”, Mr Esh answered “No”: ie, he agreed with the proposition.

Further, Mr Esh said in chief, he rang Mr Jamie Melville of Ford Credit after calculating the shortfall, telling Messrs Tomlin and Chalker, and receiving Mr Tomlin’s offer to provide a company cheque; and Mr Esh said that he did this in the presence of Messrs Tomlin and Chalker (T 653.45-.55). In cross-examination, Mr Esh recanted this, and agreed that Messrs Tomlin and Chalker were not present when he spoke to Mr Melville (T 670.5-.10; as will be seen, the question at .10, with which Mr Esh agreed, should read “I say they were not present; do you agree with me?”). Later in his cross-examination, Mr Esh volunteered that he had made a mistake when he had agreed that Mr Tomlin was not present during the telephone conversation with Mr Melville (T 677.15-.30). However, Mr Esh did not then seek to recant the other answers given by him in cross-examination, as to the events leading up to that telephone conversation.

In re-examination, Mr Esh affirmed that Messrs Tomlin and Chalker had been present when he rang Mr Melville after the completion of the bluenoting process. He identified the conversation as occurring “once we had calculated – once we’d looked at the Red Book value, then scaled that Red Book value of the blue notes and it came back to a figure of $66,023.” (T 751-.49, -.52). He then said that “Me and David worked out the short – the shortfall which was $66,023 to – which I told Mario and he was very excited and wanted to give me a company cheque for the shortage to discharge us off the premises because that was his paramount – that was his paramount thing; to get Ford Credit off the premises.” (T 752.8, -13).

To complete the picture of confusion, Mr Esh was further cross-examined by leave on this evidence. The relevant question and answer read as follows:

“Q. I put it to you this way: you did not tell Mr Tomlin that the shortfall was $66,000 on 5 September because you did not blue note the final car in that calculation until the 7th September; that’s so, isn’t it?

A. I don’t – I don’t recall.” (T 752.47-.51).

(4) One of the allegations made by Mr Tomlin in his affidavit sworn 1 July 2003 was that Mr Esh (and other employees of Ford Credit) stood near sales staff and customers during negotiations for the sale of a vehicle, and that customers appeared to be intimidated by this (para 115). Mr Esh, in his affidavit, denied that he “ever deliberately stood near a salesman and a customer during a negotiation process” (para 122). In cross-examination, Mr Esh agreed that he regularly stood in the sales area in a position where he could overhear what was happening between customers and sales staff. When asked “Was that so you could overhear what was going on?”, he said “Yes” (T 728.5-.15). If Mr Esh stood near sales staff and customers so that he could overhear what was going on, it must follow that he stood near them deliberately, contrary to his denial.

Mr Turton

72 Mr Nicholas Turton was, in September 1998, a dealer account manager employed by Ford Credit. He is now engaged on his own account in the motor vehicle sales industry. As dealer account manager, Mr Turton’s role was to look after the dealers within his geographical area (which extended from Sydney northwest to Tamworth and Narromine) and to seek to increase both wholesale and retail finance within that area.

73 Mr Turton gave evidence in a clear and straightforward way. He appeared to me to have a good recall of the relevant events, and to have no desire to speculate beyond the limits of his recall. He was not shaken in cross-examination. I formed the opinion that he was a witness of truth on whose evidence I could rely.

Mr Sultana

74 Mr John Sultana is presently a dealer account manager employed by Ford Credit. At the relevant time, he was a wholesale auditor employed by Ford Credit. He conducted the “trial audit” of 23 July 1998; he was not involved in the audit of 12 August 1998; but, in conjunction with Mr Esh, he conducted the audit of 2 September 1998.

75 Mr Sultana did not appear to have any clear recollection of the events of 2 September 1998. It became apparent, in cross-examination, that Mr Sultana was looking at his affidavit to assist him in answering questions (T 818.45). In this regard, the uncertainty of his evidence in cross-examination (T 818.40-.55) stands in marked contrast with the apparent certainty of para 49 of his affidavit sworn 4 May 2004. Further, Mr Sultana had no recollection of Mr Tomlin’s having in substance acknowledged liability for (in round figures) $434,000, or of having proffered a cheque for $434,810.29 accordingly, although Messrs Buckton and Chalker corroborate Mr Tomlin’s evidence that these things occurred; and Mr Melville in Sydney recalled that the cheque had been proffered.

76 Thus, whilst I do not find that Mr Sultana was seeking to do other than give evidence to the best of his ability, I am satisfied that his actual recollection is minimal, and that this adversely affects the reliability of his evidence of the relevant events. Specifically, I do not regard Mr Sultana’s evidence of events in 1998 as providing acceptable corroboration for the evidence of Mr Esh.

Mr Conlon

77 From 1997 until 1999, Mr Conlon was the Branch Manager of Ford Credit’s Sydney office; it appears that his position had the alternative title, State Manager for New South Wales and the Australian Capital Territory. He appears still to be employed within the Ford group, but since 1999 he has been working in different positions within what he calls “Ford Financial” in the United Kingdom.

78 I do not regard Mr Conlon as a witness on whose uncorroborated evidence I could rely. His demeanour was less than satisfactory: for example, from time to time, he subjected cross-examining counsel and the Court to non responsive monologues that were clearly designed to justify his response to a particular question.

79 Thus, it was put to him that he had said to Mr Bradstreet “Tomlin’s a disaster. You don’t want to be involved in this”. He denied that, and then delivered a lengthy but non responsive reason (T 846.45-.55). A little while later, he provided a further non responsive but justificatory explanation, involving this time not his own reasoning process but that of other employees of the Ford organisation (T 847.10-.20).

80 However, my greatest problem with his evidence concerns not his demeanour but what, increasingly, appeared to be a total lack of actual recall of the events about which he was cross-examined. I observed on numerous occasions that, when questioned on a particular topic, he would refer to what he had said (if anything) in his affidavit on that topic before replying. I observed further that, during intervals between questions, he would continue to read through his affidavit. It became apparent that the answers that he gave were prompted by what was in his affidavit.

81 Eventually, when he was cross-examined whilst his affidavit was kept closed, his absence of recollection was exposed. He was cross-examined about the contents of para 77 of his affidavit, which reads as follows:

“On 11 September 1998, I attended a meeting between Mario Tomlin and directors of Kloster Ford being Peter Robinson and Trevor Reading. During that meeting, words were said to the following effect:
Reading/Robinson: “We will pay you $300,000 for the goodwill of the business including buying out Vintage Ford’s parts debt of $100,000 and we will buy your used car inventory based on our own valuation.”
Tomlin: “No I am not prepared to accept that.””

82 When questioned about the meeting of which para 77 speaks, Mr Conlon, without the assistance of reading what he had said, denied repeatedly that any offer was made in his presence by Mr Reading or Mr Robinson to Mr Tomlin; or that Mr Tomlin in his presence said to Mr Reading or Mr Robinson that he was not prepared to accept what they offered (T 880.40-881.20).

83 Mr Conlon was then invited to look at para 77. Eventually, he decided to adhere to what he had said in his affidavit, rather than to what he had said in cross-examination (T 881.25-882.5).

84 Thus, whilst I do not think that Mr Conlon sought consciously to mislead the Court, I do not regard his evidence as reliable. Specifically, I do not regard Mr Conlon’s evidence as capable of providing acceptable corroboration for Mr Esh.

Mr Green

85 Mr Green was at the time the Managing Director of Ford Credit. He now holds a senior position with a Ford affiliate in Japan.

86 Mr Green’s involvement in the relevant events was peripheral. Perhaps for that reason, he appeared to have no real recollection. He, like Mr Conlon, would read his affidavit to see what he had said on a particular topic before answering a question directed to that topic. Thus, when counsel was putting to Mr Green Mr Tomlin’s account of a particular conversation, Mr Green’s response, when asked whether he had said the words in question was “I’ll check” – followed by a perusal of his affidavit (T 905.45). He then asked “Where does that come from”; when pressed, he said “I don’t recall” (T 905.50). Later, when asked whether a denial of particular words was “a definite no now” he responded “yes, because my statement doesn’t say that”; and then agreed with the proposition that he wanted “to change [his] evidence to accord with [his] statement” (T 906.10-.20). The reference to a “statement” was a reference to his affidavit sworn 11 June 2004 read at trial.

260 In those circumstances, the proposition that the plaintiffs have suffered loss of the kind, let alone in the amounts, for which Mr Hughes contends is completely unsupportable. It is for those reasons that I have said that, if it were necessary to do so, I would find that the plaintiffs have not established that they suffered any loss even if (contrary to what I have said) there were some causal connection between the events of which they complain and their financial position that I have summarised.

261 I will add only that although Messrs Hughes and Ross conferred, pursuant to directions given by me, and produced a joint report that eliminated some of the differences between them (and which also produced agreed outcomes depending on the view one took of the remaining areas of dispute), there remained, at the end of the day, a number of questions of dispute. Because of the views to which I have come on the key elements of the plaintiffs’ claim for damages, it is not necessary for me to identify and resolve each of those remaining disputes, and I do not propose to do so. I will however indicate that in general I found the opinions of Mr Ross to be more adequately supported, both by evidence and by reasoning, than those of Mr Hughes; and in general I would accept them in preference to the opinions of Mr Hughes where the two are in conflict.

Conclusions on the issues

262 It will be apparent from what I have said that the plaintiffs’ case must fail. It will also be apparent how many of the issues posed by the parties should be answered. However, by way of summary, I return to those issues and answer them individually:

(1) Whether Ford Credit failed to correctly calculate the amount of shortfall owed to it (having regard to the discounted wholesale value of the stock) on 2 September 1998 as alleged at paragraph 158L of the Sixth Further Amended Statement of Claim (the “Claim”).

Answer: No.

(2) Whether the failure referred to in the above paragraph amounted to a breach by Ford Credit of the Bailment Agreements between Ford Credit and TMC and Ford Credit and TC.

Answer: Does not arise.

(3) Whether Ford Credit, in terminating the Bailment Agreements on 11 September 1998, was in breach thereof by reason if its failure to properly calculate the discounted wholesale value of the used car stock on 2 September 1998 (as alleged at paragraph 158K of the Claim).

Answer: No.


(4A) Whether Ford Credit, in the conduct of its audit of TMC and TC on 12 August 1998, failed to take into account the security comprised of used cars the subject of the NFC facility.

Answer: No.

(4B) Whether by reason of the matter referred to in paragraph 4A above, TMC/TC owed Ford Credit a shortfall in the amount of $197,550 with respect to used vehicles the subject of the NFC facility at the conclusion of the audit of 12 August 1998.

Answer: Yes.

(5) Whether the facts and circumstances alleged at paragraph 122 of the Claim amount to a contravention by Ford Credit of s 51AC of the Trade Practices Act .

Answer: No.

(6) Whether Ford Credit was entitled to terminate the Bailment Agreements on 11 December 1998 between it and TMC and TC.

Answer: Yes.

(7) Whether the termination of the Bailment Agreements was a breach of the agreements as alleged at paragraph 54A of the Claim.

Answer: No.

(8) Whether the demand for payment of “about” $650,000.00 constituted a breach of the Bailment Agreements with either or both TMC and TC.

Answer: No.

(9) Whether Ford Credit owed a duty of care to TMC/TC/Tomlin with respect to the conduct of the business of TMC/TC.

Answer: No.

(10) What was the content of that duty (if any)?

Answer: Not applicable.

(11) Whether (by reason of the matters alleged in paragraphs 151-154 of the Claim) Ford Credit acted in breach of the duty of care.

Answer: No.

(12) Whether there was an implied term in the Bailment Agreements that Ford Credit would act in good faith.

Answer: No.

(13) What was the content of the obligation arising out of the implied term (if any)?

Answer: Not applicable (but see para [116] above).

(14) Do any of the matters alleged at paragraphs 56 to 77 and 158A to 158B of the Claim amount to a breach of that duty?

Answer: No.

(15) Whether the representations by Ford Credit as to TMC’s/TC’s indebtedness on and after 2 September 1998 (as alleged at paragraphs 110(2), 110(5), 158L and 158Y of the Claim) were negligent misstatements.

Answer: No.

(16) Not pressed – 11/3/05.

(17) Whether the alleged failure by Ford Credit to disclose to TMC/TC/Tomlin the discounted wholesale value of the vehicles blue noted by it exceeded the amount drawn down under the Facility (including, which is not admitted, the $197,550.00), was a contravention of s 52 of the Trade Practices Act (as alleged at paragraph 121I of the Claim).

Answer: No.

(18) Whether the Plaintiffs are entitled to damages including exemplary damages and, if so, which of the Plaintiffs and in what amounts.

Answer: No.

(19) Whether the Plaintiffs are entitled to recover damages for both capital loss and loss of profits (ie, is the issue of continuing damage one which gives rise to an entitlement to claim both).

Answer: No.

(20) Whether the Plaintiffs are entitled to damages pursuant to s 82 and/or s 87 of the Trade Practices Act.

Answer: No.

(21) Whether the Plaintiffs acted reasonably or foreseeably in entering into the arrangements they did with Mr Bradstreet (and entities associated with him) following the events of September 1998.

Answer: No.

Orders

263 I make the following orders:

(1) Direct entry of judgment for the defendant on the plaintiffs’ claim.

(2) Order the plaintiffs to pay the defendant’s costs of the proceedings.

(3) Reserve liberty to either party to discharge or vary order (2), by making application on notice to the other and my associate within 14 days of today’s date.

(4) Exhibits to be retained for 28 days and thereafter held or disposed of in accordance with the Rules.

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