Total Logistics Pty Ltd v Acquire4U Solutions Pty Ltd - [2023] SADC 31

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
TOTAL LOGISTICS PTY LTD & ORS v ACQUIRE4U SOLUTIONS PTY LTD & ORS
[2023] SADC 31
Judgment of his Honour Judge Slattery
18 April 2023
TRADE AND COMMERCE - COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION - CONSUMER PROTECTION - MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS
The applicant company, Total Logistics Pty Ltd (Total Logistics) was, after 2005, involved in the transport logistics support industry predominately in South Australia. Mr Andrew Tarca was a director of that company. The applicant, Mr Peter Victory was also separately employed in the logistics industry in various places in Australia.
The respondent Acquire4U Solutions Pty Ltd (Acquire4U Solutions) was incorporated in New South Wales and was involved in the development of a software application designed to connect trucking service suppliers with customers for those services. The software application allegedly enabled a job to be recorded electronically as available, for a trucking supplier to bid for the job and, upon acceptance, to levy a charge for services provided. The respondent, Mr Rodney Wilson was the director of Acquire4U Solutions and owned and controlled the holding company of that company.
In April 2019, Mr Wilson sent to Mr Tarca a YouTube video promoting the software application called MoveIt4U developed by Acquire4U Solutions between 2017 and 2019. On 29 April 2019, Mr Wilson arranged to meet with Mr Tarca in Adelaide to ascertain if he was interested in forming a joint venture with Acquire4U Solutions to commercialise this software application in the logistics industry in South Australia. The discussion proposed that the vehicle to be used to commercialise the software application would enter into a licence arrangement for the use of the software application. Separate licence arrangements could then be made for Queensland, Victoria and Western Australia. In the course of these discussions, Mr Tarca alleges he was told by Mr Wilson that the software application had been operating in the New South Wales market and had generated fees of $500,000 and had attracted three hundred customers. Mr Wilson denies that these statements were made and contends that he told Mr Tarca that the product had reached a ‘proof of concept’ stage which satisfied him that it was ready to be operated in the market. Mr Wilson agrees that in the course of those discussions, he did tell Mr Tarca that the proof of concept operation of the software application had attracted three hundred customers and had generated fees of some $500,000.
Total Logistics contends and Mr Wilson denies that in the period between April 2019 and August 2019, Mr Wilson continued to make representations to Total Logistics, Mr Tarca and later Mr Peter Victory that the MoveIt4U System was operating in New South Wales, it had three hundred customers in the system and $500,000 of turnover.
In reliance upon the representations made by the respondents, the company MoveIt4U South Australia Pty Ltd was incorporated on 22 May 2019. The respondents controlled 51% of the issued capital of that company. On 29 October 2019, Acquire4U Solutions, Total Logistics and Mr Peter Victory entered into a shareholders agreement for the governance of their roles as shareholders within MoveIt4U South Australia Pty Ltd.
By the time of the entry of the parties into the shareholders agreement in October 2019, there had been no formal trading using the software application by MoveIt4U South Australia Pty Ltd but Mr Tarca had received training on its use in Sydney and Total Logistics had paid licence fees for the use of the software application to the corporate respondent. By that time, Mr Tarca had employed Mr Peter Victory as the Australian Sales Manager for the MoveIt4U business. This occurred on 5 August 2019.
At that time, Mr Victory took a transfer of 24.5 % of the issued capital of MoveIt4U South Australia Pty Ltd from the shareholding owned by Mr Tarca.
Mr Victory contends that he gave up certain and settled employment opportunities with two other companies in order to take up employment with MoveIt4U only in reliance upon the representations made by Mr Wilson to Mr Tarca in April 2019, between April 2019 and August 2019 and all ongoing representations up to an including 5 August 2019. But for those representations he would have pursued the other employment opportunities then available to him. He lost his employment in March 2020 and has suffered consequential loss.
The applicants contend that the MoveIt4U System was not operating the market in New South Wales, it did not have three hundred customers, it did not have a turnover of $500,000, it was not a transparent system because of the possibility of market manipulation of charges within the system, it was not trusted at the time in the market because it was not operating and so it had no prosects of trading in the future.
The applicants contend that the representations made by Mr Wilson and Acquire4U to Mr Tarca during 2019 as to existing facts concerning the MoveIt4U System were misleading, that nay representation as to future matter concerning the MoveIt4U System was made without any basis of reason whatsoever and there were no reasonable grounds for making them and Mr Wilson was a person who was knowingly concerned in the making of the representations by Acquire4U Solutions.
Whether the representations as alleged by the applicants were made by Acquire4U Solutions.
Whether Mr Rodney Wilson was knowingly concerned in the making of those representations.
Whether the representations were misleading and whether reliance was placed upon them by either of the applicants.
Whether any loss has been caused to any of the applicants.
Held:
1.      On 29 April 2019, Mr Rodney Wilson represented to Mr Andrew Tarca that the software application MoveIt4U had been commercialised to the extent that it had generated turnover of $500,000 through three hundred customers on its books.
2.      The representations of Mr Wilson were relied upon by Mr Tarca to cause his company Total Logistics to enter the joint venture and to participate as a shareholder in the company MoveIt4U South Australia Pty Ltd which was incorporated on 22 May 2019 and to execute a shareholders agreement on 22 October 2019. He also committed Total Logistics to enter into licence agreements and pay licencing fees to the corporate respondent in respect of exclusive use of the software application in different states of Australia.
3.      Mr Rodney Wilson was knowingly concerned in the representations made by Acquire4U Solutions.
4. The representations were misleading and in breach of the requirements of the s 18 of the Australian Consumer Law.
5.      Mr Victory entered into his employment agreement with MoveIt4U South Australia after he had terminated his negotiations with other prospective employers where he had no prospect of any employment with another prospective employer. None of the conduct of the respondents was connected with the decision made by Mr Victory in August 2019 to commit to his employment with MoveIt4U because that was the decision made outside of potential employment with other companies.
6.      The claim of Mr Victory is dismissed.
7.      The court will hear the parties further in relation to damages and costs.
Observations about the application of the ‘no reflective loss’ rule.
Corporations Act 2001 (Cth); Australian Competition and Consumer Act 2010 (Cth) s 18, referred to.
GoogleInc v ACCC (2013) 249 CLR 435; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 ; Campbell v BackOffice Investments (2009) 238 CLR 304 ; Stone V Chappel (2017) 128 SASR 165 ; Merost Pty Ltd v CPT Custodian Pty Ltd [2014] FCA 97 ; Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661; Lifeplan Australia Friendly Society Ltd v Woff [2016] FCA 248 ; Gore v ASIC (2017) 249 FCR 167, considered.

TOTAL LOGISTICS PTY LTD & ORS v ACQUIRE4U SOLUTIONS PTY LTD & ORS
[2023] SADC 31
Introduction and Result

In this action, Total Logistics Pty Ltd (Total Logistics) alleges that representations were made to it by first respondent, a corporation called Acquire4U Solutions Pty Ltd (Acquire 4U Solution). It alleges that the controller of the owner and a director of Acquire 4U Solutions Pty Ltd the respondent Mr Rodney Wilson was knowingly involved in the making of those representations which concerned the establishment of a new business (called MoveIt4U) in the transport industry relying upon technology using computers and smartphones which had been developed by Acquire4U Solutions. It is alleged that the representations made by or on behalf of the respondents led the corporate applicant to invest in a new business venture. The applicants allege that the representations were misleading, it relied upon them, and as a consequence, it entered into the new business venture with the applicants which failed and loss was suffered. It is also alleged that the second applicant Mr Victory relied on these same representations in making a decision to forgo other work opportunities said to be available to him with a Victorian company CT Logistics Pty Ltd and with Toll Global Logistics Pty Ltd. He allegedly confined himself to working in a role with Total Logistics Pty Ltd as a consequence of making the representations and his reliance upon them. As a result, he says he lost the opportunity to pursue other employment prospects then available to him or which he could otherwise have successfully pursued. Each of the applicants make claims for damages allegedly caused by their reliance upon the misleading conduct of the respondent Acquire4U Solutions Pty Ltd.
These allegations are denied by the respondents. The respondents also deny that any loss has been suffered or caused by anything done by them.
In relation to the claims of Total Logistics Pty Ltd, the conduct of the respondent Acquire 4U Solutions was misleading; a reasonable person receiving the information from Mr Wilson would have understood that the business model which was to become the operating model for a new business MoveIt4U was established, was commercialised, had an identifiable turnover of sales of $500,000 over a 7 month period and had a book of 300 customers. Total Logistics relied upon those representations when it entered into its transaction with the respondents to commercialise the product in South Australia and then the balance of Australia in a corporatized partnership arrangement. I find that Mr Wilson was knowingly concerned in the making of the representations by Acquire4U. It will be necessary to hear the parties further on the issue of causation and damages.
I dismiss the claims of Mr Victory. I am not satisfied on the balance of probabilities that the case put by Mr Victory has been established on the evidence. To the contrary, I am satisfied that all of the decisions made by Mr Victory in relation to CT Logistics Pty Ltd the Victorian company, were made prior to any discussion about him making any commitment to MoveIt4U South Australia Pty Ltd. I am also satisfied that having committed himself to the MoveIt4U South Australia Pty Ltd system, Mr Victory actively sought employment with Toll Global Logistics Pty Ltd (Toll) but was not offered a position with that company despite his efforts. Therefore, no opportunity has been lost which on any basis, can be the cause of any reasonable loss. I dismiss the claims of Mr Victory for these reasons.
The parties pleaded cases
The company Total Logistics was incorporated in South Australia and its director was Mr Andrew Tarca. The business of the company was to provide logistical support in the form of road transport and other affiliated services. Mr Wilson was a director of the company called Acquire4U Solutions Pty Ltd and the only share holder of that company was Acquire4U Holdings Pty Ltd which was also controlled by Mr Wilson. Those companies owned rights in software and other intellectual property rights involved with an internet based application for the management of demand for transport services and the delivery of transport services by contract drivers.
The applicant’s case is that the company MoveIt4U South Australia Pty Ltd was registered on 22 May 2019 and its directors were Mr Wilson and Mr Tarca. Although it is alleged that Mr Wilson was an initial shareholder, the evidence discloses that he was not an initial shareholder in that company. The evidence satisfied me that 51% of the issued share capital of that company was held by Acquire4U Solutions Pty Ltd and 49 % of the issued share capital of that company was held by Total Logistics Pty Ltd; 24.5 % of the shareholding held by Total Logistics Pty Ltd was later transferred to Mr Victory. As a result, there were three directors of that company, Mr Wilson, Mr Tarca and Mr Victory. Even though Mr Tarca and Mr Victory may have controlled the meeting of directors of MoveIt4U South Australia Pty Ltd, the majority shareholding remained in the control of Mr Wilson.
At the end of October 2019, a shareholder’s agreement was executed by Acquire4U Solutions, Total Logistics and Mr Victory. The purpose of this agreement was connected with the commercialisation of a new form of software called MoveIt4U or the MoveIt4U System. This was a software application/internet based portal designed to maintain a database of registered customers who were users of transport services and for the creation of contracts with those customers who were providers of those transport services. The process was that the users of services would record or register an invitation to drivers to deliver goods from an originating place to a destination; there would be a bid by the drivers at a price nominated by the drivers as the providers of that service and the decision would then be made by the customer to enter into a contract for service with the preferred driver. The applicant’s claim is that the system was not established, it was not commercialised, it had no trading history, did not attract sufficient customers and drivers to enable it to become a viable business and the system suffered from continuing software deficiencies. In summary, it is said that it simply did not operate. For their part, the respondents say that the system was an intangible asset, it did not have customers and could not attract customers and that was the task of the user operating the system which needed to attract customers to the business.
On 14 August 2019, Acquire4U Solutions Pty Ltd as licensor, entered into an agreement with MoveIt4U South Australia Pty Ltd as licensee for the use of the software and system. For ease of reference, I will hereafter refer to this as the MoveIt4U software and the MoveIt4U System. The applicants contend that misrepresentations were made by Mr Wilson and so the respondents in the course of the negotiations leading to the involvement of Total Logistics Pty Ltd and Mr Victory in the MoveIt4U South Australia Pty Ltd business.
In early April 2019, contact was made between Mr Wilson and Mr Tarca. Mr Wilson operated out of New South Wales and Mr Tarca operated out of South Australia. They had known each other for about twenty years. They had previous commercial dealings with each other. Mr Wilson sent to Mr Tarca a website example of the use of the MoveIt4U software app/internet based portal; this was a promotional tool. It was a YouTube link.
On 29 April 2019, Mr Wilson needed to come to Adelaide on his way to see a customer at Balaclava. He made contact with Mr Tarca and they met in Adelaide at the Peppers Hotel on the corner of Bentham Street and Waymouth Street Adelaide.
The case of the applicants is that at that meeting, Mr Wilson told Mr Tarca of the business of Acquire4U Solutions and that the equivalent system that he was operating in New South Wales had three hundred clients using the system and had turned over a gross amount of $500,000 worth of trade. The system would reduce costs in the road transport logistics business by improving efficiency by the reduction in the number of empty trucks (usually assessed at 30 % of vehicles involved in the road transport industry) which could pick up other contracts for carriage and thereby become more profitable. For his part, Mr Wilson agreed that he told Mr Tarca at the Peppers Hotel meeting that in New South Wales the MoveIt4U software business had turned over approximately a gross amount of $500,000 worth of trade and that it had approximately three hundred clients registered on its database. He also agreed that he told Mr Tarca that the purpose of the MoveIt4U software was to reduce costs in the road transport logistics business and so therefore to improve efficiency. He maintains that he only told Mr Tarca that the software had been developed to a ‘proof of concept stage’ and therefore he did not make any statement or representation about how many clients were actually using the software or how much revenue was actually being generated from the use of the software.
Mr Tarca also says that on about 9 August 2019 and shortly before a software licence agreement was executed on 14 August 2019[1] Mr Wilson said to Mr Victory that the software system was operating in New South Wales, that three hundred clients were using the system and that because of that, it could be said that the use of the system had proved the concept of the system. Mr Wilson says that the only thing he said to Mr Tarca was that three hundred users had registered on the database of the business preparatory to the use of the MoveIt4U software, and he denied making any such representation as alleged by the applicants.
[1] Exhibit A1, document 163 page 641.
The applicants contend that if anything said by Mr Wilson was a representation as to a future matter, there was no reasonable basis for such a representation to be made. That is because the system was designed in a manner that the operator of the system would receive a fixed administration fee for each job but that the price of the job could be manipulated such that a secret commission would be generated and enjoyed by the provider of the software which would not be agreed to or known about by either of the customer or the service providers. Mr Wilson admitted that MoveIt4U could set a margin for a job but this functionality was at the direction of the operator who was for example the corporate applicant. The applicants knew of this function but it was never used in South Australia and therefore is of no significance.
The case of the first applicant is that each of the representations made by Mr Wilson, actually or impliedly, were misleading and in contravention of schedule 2, s 18 of the Competition and Consumer Act 2010. This was because, it is alleged, there was no live trial ever conducted of the MoveIt4U South Australia Pty Ltd system, that the software application/internet based portal had never been operated with customers and drivers using that software in the ordinary course of business, development of the software system had not been completed, the system had not attracted three hundred registered clients, had not achieved gross turnover of $500,000 and the software required further development.
Although the respondents denied these allegations, the evidence of Mr Wilson which is discussed below is that the software was still within the development phase, it had not ever been operated with customers, there were not three hundred users of the system because it was still within development and the turnover which had been achieved was over a seven month period across two years. That is, when a selection of seven months over a twenty four month period is taken, it is suggested that there has been a turnover of $500,000. This assertion is not supported by the evidence.

It is also alleged by the applicants that in breach of s 137B of the ACL. Mr Wilson was a person involved in the contravention of schedule 2, s 18 of the Competition and Consumer Act 2010 by Acquire4U Solutions Pty Ltd because it is alleged, he aided, abetted, counselled or procured the contravention, or was directly or indirectly knowingly concerned in or party to the contraventions. There is no dispute between the parties that at the time the alleged contravening representations were made, Mr Wilson was the manager of Acquire4U Solutions Pty Ltd and he had the authority to bind that company as its guiding hand and mind.
He was the person who spoke to Mr Tarca in April 2019, and thereafter and it is alleged that he made the representation and he knew or ought to have known that the representations that he made to Mr Tarca were misleading because of his intrinsic knowledge of the product.
The applicants allege that relying on the representations and the implied representations Total Logistics invested in the establishment of the MoveIt4U South Australia Pty Ltd system in South Australia and contributed funds to the establishment of that company. It entered into a joint venture for the establishment of MoveIt4U South Australia Pty Ltd system, became a shareholder of MoveIt4U South Australia Pty Ltd and made a financial commitment to the creation of a fund to assist the company to establish itself and commence operations.
Mr Wilson accepts that Total Logistics Pty Ltd did invest in the system but it did so knowing that it was a start-up system with no registered customers. Total Logistics was responsible for all the costs of the launch and then to launch and expand the product into other states. It did so not as a result of any misleading conduct on the part of the respondents but as a result of its own decision. It did become a shareholder of MoveIt4U South Australia Pty Ltd and any funds paid by Total Logistics for the purposes of the commercialisation of MoveIt4U South Australia Pty Ltd were only for the purpose of that business and not otherwise. If any funds were expended otherwise such as the payment of a salary to Mr Victory then this was a contravention of clause 5 of the shareholders agreement which prohibited the payment of any directors fee, was contrary to clause 13(f) of the shareholders agreement which required the banking of all funds and required the preparation of an operational budget. It is alleged that this was not done properly.
In relation to the applicant Mr Victory, it is alleged that he relied upon the continuing representations allegedly made by Mr Wilson and in reliance, he committed to investing in the establishment of the MoveIt4U South Australia Pty Ltd system in South Australia. He did so by becoming a shareholder in MoveIt4U South Australia Pty Ltd and forgoing an opportunity to work for CT Logistics Pty Ltd located in Victoria or alternatively, Toll Global Logistics in a senior management role in both companies. Each of those companies was involved in the transport logistics industry. It is alleged that he did so in order to be able to dedicate his work efforts to establishing and operating the MoveIt4U South Australia Pty Ltd system. It is alleged that following reliance by both Total Logistics and Mr Victory, damages have been suffered by each. Total Logistics provided funds for the MoveIt4U South Australia Pty Ltd business to enable its establishment and the maintenance of its operations until about March 2020 at which time the company ceased to trade. It paid a salary to Mr Victory to enable him to provide services. Mr Victory says he lost the opportunity to earn a salary from alternative employment.
In that background, I turn to the evidence.
The Evidence of Mr Tarca
Mr Tarca was experienced in the logistics business. In 2019 he owned the company Total Logistics Pty Ltd which he had purchased in 2005. He sold that business in 2021.
That business was described as a third party logistics business which did warehousing and transport work predominately in South Australia. This work consisted of collecting containers from a wharf, returning the containers to the business depot, unpacking the containers, putting containers into a warehouse for customers, collecting product when they needed to be dispatched on customers’ orders, delivery of products to customers and the like. Substantial customers of the business were Metcash and Haigh’s Chocolates and container deliveries direct to the store including from DHL and Kuehne and Nagel. Each of DHL and Kuehne and Nagel were top tier freight forwarders. Total Logistics had a base of about forty customers mixed between transport and warehousing and there was an online system available for customers to check ingress and egress of stock; software was employed to do the company accounting. Thirty of the forty customers held by the company were daily repeat customers. There was a small refrigerated warehouse and retail deliveries were done in transport and delivery trucks. The business owned about thirteen to fourteen trucks and about ten trailers and these included side loaders.
Mr Tarca was very experienced in dealing with containers and shipping. It was necessary to get containers off a ship quickly because if they were left on the wharf for more than three days there was a penalty of at least $100 per day. After day five the daily penalty doubled to $200 per day per container. As a result, subcontractors were often called in to collect those containers. Employees had to work up to twelve hour days to get the containers off the wharf and into storage.
Mr Tarca was well familiar with the accounting system at the business, all of which was electronic. The software used was called Transmate, which is a ‘Xero’ based product. Mr Matthew Peterson was the finance manager of the business.
Mr Tarca first met Mr Rodney Wilson late in 2002 or early 2003. At that time, Mr Tarca was working as the global distribution manager at Southcorp Wines, a position he left in 2005 to set up Total Logistics. In that period, Mr Wilson together with Mr Fleming came to see Mr Tarca and presented software called Buyers Sellers and Movers (BSM) which was created to save money by simplifying exports. The program involved completing bookings with shipping lines and arranging deliveries of documents to Southcorp depots in other countries.
Mr Tarca adopted the system and found it very efficient and a big cost saver. He saw it as revolutionary to the transport industry for exporters but before doing so, he had to sell the benefits of the program to an extraordinary general meeting of shareholders and the board of Southcorp Wines. The board decided to adopt the programme. Thereafter, up to about 2017/18 the contact between Mr Wilson and Mr Tarca was for quotes and transport jobs. Mr Wilson sent an email to Mr Tarca on 4 April 2019 which was indicative of the intermittent nature of work quotes being given.[2]
[2] Exhibit A1, volume 1, tab 36.
Later, in April 2019, Mr Wilson contacted Mr Tarca on a Sunday evening by phone and asked him whether he would work with him in South Australia. He explained a system that he was looking at implementing.[3] Mr Wilson arranged a meeting with Mr Tarca at the Peppers Hotel on the Corner of Bentham Street and Waymouth Street Adelaide.
[3] T36.4-.12.
At that meeting, Mr Wilson explained to Mr Tarca the benefits, cost savings and other features of the MoveIt4U System. He described it as a ‘game changer’. Some of the benefits he identified were that a user could see on a mobile phone where the job was and how much it may cost. Mr Tarca agreed in cross- examination that at this meeting, Mr Wilson did not ever open the MoveIt4U software app/internet based portal or log into it.[4]
[4] T37-38.24; T132.1-.14.
Mr Wilson proposed to Mr Tarca that he take over the South Australian operation of MoveIt4U. He said that he was already turning over $500,000 with over three hundred customers through his business Acquire4U. Those customers were predominately in Sydney and Melbourne but he wanted the business to be everywhere including South Australia. He wanted Mr Tarca to head up the South Australian side of the business. At the time these statements were made, Mr Tarca thought that the business of MoveIt4U had only been operating for seven months. He agreed in cross-examination that when told these things by Mr Wilson, mainly the revenue of $500,000, he thought that this turnover was over a period of seven months.[5] This estimate of seven months was agreed upon by Mr Tarca in cross-examination only after he saw email documentation concerning the operation of MoveIt4U. That was not something that he had earlier remembered.
[5] T134.28-38.
In his evidence in chief; Mr Tarca said that he told Mr Wilson that he was interested in a partnership whereby he would take only 49 % of the MoveIt4U business and Mr Wilson would hold 51 %. He accepted that there would be licence fees.[6] I have some difficulty with this evidence. It is difficult to comprehend why someone who is entering into a joint venture would volunteer that he would only take 49 % of the joint venture business and leave the controlling 51 % in the hands of Mr Wilson. Mr Tarca was cross-examined about this topic and said ‘in the end, that Mr Wilson did not actually say anything at that meeting about doing a 51/49 % joint venture and at that meeting he did not, formally agree to sign up for anything to do with Mr Wilson’.[7]
[6] T39.22-29.
[7] T132.21-.25.
Mr Tarca did not ever satisfactorily explain his decision. It has no influence on my decision and I will leave it to one side.
Mr Tarca said that at the meeting, there was a discussion about a transaction fee to be charged and paid and Mr Wilson told him that a driver would pay a fee of around $6.50/7.00 per transaction and the person who puts up the job also pays a $7.00 fee per transaction.[8] Mr Wilson was only able to show Mr Tarca what the program looked like on his phone. This was how the program would appear to a transport company that may put out a job for bidding by a truckdriver.[9]
[8] T39.1-.7.
[9] T39.10-.17.
Following the meeting at the Peppers Hotel, a number of emails were exchanged between Mr Wilson and Mr Tarca and these generally highlighted the volume of work that was possible with the adoption of the MoveIt4U System.[10] Some of this work included, for example, the South Australian Government’s Uber system for buses.[11]
[10] Exhibit A1, volume 1, tab 43.
[11] T40.32-.38.
On 2 May 2019, Mr Wilson emailed Mr Tarca following a discussion Mr Wilson had with his accountant about the best vehicle to be used going forward. Following that email, a joint venture company was established. Participants in that joint venture company would be Mr Tarca through Total Logistics and Mr Wilson through his own company. At the time, Mr Tarca thought that the software of MoveIt4U was a ‘game changer’ and thought that the statement about a half million dollar turnover showed great potential for the business and so he committed himself to the project.[12] The company established was called MoveIt4U South Australia Pty Ltd.[13] At the time, Mr Tarca was aware from what he had been told by Mr Wilson that some trips had been done to Japan to set up MoveIt4U there and some work had been done in the Philippines and in Singapore but he was unsure of its status.[14]
[12] T42.18-.30.
[13] Exhibit A1, volume 2, tab 78.
[14] Exhibit A1, volume 1, tabs 59 and 61; T41.16-.35.
Mr Tarca said in cross-examination that when he teamed up with Mr Wilson for the joint venture business, he did not expect to be paid a salary for the work and he did not expect to make a return on his investment until the company MoveIt4U South Australia Pty Ltd was generating revenue. He knew that the business was a start-up business in South Australia. He was aware that Mr Wilson thought that he was the person who would be doing all of the work to build up the business in South Australia.[15]
[15] T86.15-T87.2.
Further in cross-examination, Mr Tarca said that Total Logistics became a shareholder in MoveIt4U South Australia Pty Ltd in early to mid-May 2019 but the licence agreement for MoveIt4U South Australia Pty Ltd was not signed until August 2019. Prior to becoming a shareholder in mid May 2019, Mr Tarca had asked Mr Wilson to provide the profit and loss accounts and copies of the accounts or financial statements for the trading of the company in NSW.[16] There was some dispute about the identity of the company about which Mr Tarca asked for financial statements. I think it is clear enough that Mr Tarca was only asking for some financial information about the operating vehicle and its financial performance and upon which he would make his own assessment. I think that these are the plain common sense inferences arising from the evidence. The dispute was the question of whether there would be such documents available in light of Mr Wilson’s version of events. I consider that Mr Tarca made this request consistent with his understanding of an existing trading history connected with the software product disclosed to him by Mr Wilson at the Peppers Hotel meeting. He made that request about a week before he signed the paperwork.[17] He also agreed that when Total Logistics took up the shareholding in MoveIt4U South Australia Pty Ltd in May 2019, he did not make any payment for the shares.[18]
[16] T74.14-T75.8.
[17] T75; T77.12-.15.
[18] T77.16-.19.
Mr Tarca also agreed in cross-examination that he had discussions with Mr Wilson about Total Logistics paying the following fees for MoveIt4U South Australia Pty Ltd namely:-
1.Licencing fees;
2.Set up fees;
3.Hosting fees for the software;
4.Ongoing costs such as bookkeeping; and
5.Travel and any other costs for MoveIt4USA[19]
[19] T77.16-T78.1.
In examination in chief, Mr Tarca identified an invoice dated 27 May 2019 titled ‘certain types of fees’. That invoice was delivered from Acquire4U Solutions and MoveIt4U, both companies controlled by Mr Wilson and it was directed to Total Logistics (controlled by Mr Tarca).[20]
[20] Exhibit A1, volume 2, tab 81.
In cross-examination, Mr Tarca agreed that this was an invoice for the sum of $5,000 for set up and hosting costs. At that time, Total Logistics had not made any commitment to spend any money on the project other than a verbal commitment made by Mr Tarca to Mr Wilson. Mr Tarca agreed in cross-examination that at that time could have walked away from the project. He had that choice at any time.[21]
[21] T78.7-.13; Exhibit A1, volume 2, tab 84.
In June 2019, Mr Tarca had a meeting with Mr Wilson at his offices in Sydney to discuss strategy for taking the product to market, the identity of potential customers and marketing strategies. There was an initial brief meeting between Mr Tarca and Mr Wilson and then shortly afterwards, Mr Wilson’s son Liam demonstrated how to use the programme.[22] There was no paperwork for the programme apart from promotional brochures.[23] All of the other documents were electronic.[24]
[22] T45.17-.22.
[23] Brochure: Exhibit A1, volume 1, tab 7.
[24] T45.21-.28.
Liam Wilson took Mr Tarca through the MoveIt4U System live and he was shown how the customer sets up, how customers are added, how revenue is allocated and how a customer can insert details about services required. Mr Tarca was also shown a demonstration involving maps. Mr Tarca agreed in cross-examination that whilst this demonstration was proceeding, Mr Wilson was seated next door in his own office which was an open space arrangement. He also agreed that Liam Wilson showed him how a customer may enter a job on a website but if the job needed to go through the software app/internet based portal as well, the system would work together to allow this.[25] Mr Tarca confirmed that there were no flaws in the system at the time of this demonstration and he was later asked by Mr Wilson whether the training conducted was satisfactory and he agreed that it was satisfactory.[26]
[25] T79.4-.15.
[26] T79.16-.36.
Mr Tarca also agreed in cross-examination that at this meeting, Mr Wilson showed him a list of people in the live system that were drivers but Mr Tarca could not see how many people were on the list as customers.[27] It appears that Mr Tarca did not ask to see the list of customers about which he said he had been told and he agreed that at this Sydney meeting, there was no discussion about the amount of turnover generated by the NSW company.[28] This was despite the fact that he had earlier asked for the provision of those financial records.
[27] T79.37-T80.15.
[28] T80.16-.18.
On the topic of having three hundred registered clients,[29] Mr Tarca said in cross-examination that at the date of that meeting, he thought that there were three hundred customers/clients who were already registered and signed up with MoveIt4U. He thought that a number of these clients/customers were national companies.
[29] A1, volume 1, tab 111.
However, Mr Tarca agreed that on the day that he had training with Liam Wilson in Sydney, he did not believe that there were three hundred customers transacting business through MoveIt4U in NSW alone. This was because he was told by Mr Wilson that there was revenue coming in from Victoria as well.
Mr Wilson sent to Mr Tarca an email on 12 June 2019.[30] Mr Tarca said that this email related to the meeting in Sydney and concerned the production of business cards and three hundred brochures Mr Wilson was going to provide to Mr Tarca for him to use in knock-on doors process to sell the MoveIt4U System. There was also a further email of 14 June 2019 from Mr Tarca to Mr Wilson which identified a hit list of potential customers. When that was sent to Mr Wilson by Mr Tarca, there was no request by Mr Tarca of Mr Wilson for the provision of a list of clients he already had in NSW. In cross-examination, Mr Tarca agreed that he was looking for more customers rather than leveraging off the current customers as none of the existing clients were trading, to his knowledge.[31] From Mr Tarca’s point of view, it did not matter how many clients the company had because he was controlling South Australia only.[32] He made a call to a company called Royal Wolf in Adelaide. During that call, he was told that the company had a new operating procedure and he had to go through Royal Wolf in Sydney. All drivers had to be certified. He showed Royal Wolf the MoveIt4U promotional material.[33] He also showed the promotional material to SCT Logistics and ANL Containers.[34] He agreed also in cross-examination that he sent an email to himself on 7 July 2019 which was a targeted list of companies he was prepared to approach in relation to MoveIt4U.[35]
[30] A1, volume 1, tab 108.
[31] T80.30-T81.7.
[32] T83.20-.35.
[33] T85.16-T86.2.
[34] T85.35-.38.
[35] A1, volume 2, tab 135.
Mr Tarca has known Mr Peter Victory since about 1990 and he knew of his work experience. They generally only knew each other through work and would occasionally catch up for a drink. He did not have much contact with Mr Victory during his time at Total Logistics because there was no need to transact with services provided by someone like Mr Victory.
Mr Tarca spoke with Mr Victory in 2019. He told Mr Victory of the conversations he was having with Mr Wilson. At the time Mr Victory was unemployed. He had been laid off from Border Express and had not been able to obtain a further role over about a four-month period.
In their discussions, Mr Tarca told Mr Victory that the MoveIt4U software system was going to be a ‘game changer’ in the transport industry and how they could possibly work together somewhere down the track by going out and selling MoveIt4U. Mr Tarca told Mr Victory of the potential benefits, of volumes and that there was already half a million dollars in turnover. They both then did some quick calculations on the number of movements of containers within Australia. Mr Victory suggested that MoveIt4U could also be used for line haul cartage which would be efficient because line haul trucks often travel with no freight and therefore do not generate income. That way, line haul trucks could become more efficient and effective.[36] Mr Tarca told Mr Victory in this discussion that Mr Victory could have a share of the business as it was going to be big for all of them. Mr Tarca wanted Mr Victory to get on board to assist with all of the extra work because Mr Tarca was not able to do it all himself.[37]
[36] T47.3-.16.
[37] T47.9-.33.

Mr Tarca’s view was that the discussions he had with Mr Victory were a progression from the strategic planning he had done with Mr Wilson in Sydney. They both sat down together and looked at the size of the container market by state and what, if any, revenue the line haul market would generate. They played around with the numbers of containers and then used that to determine what amount of containers were needed to cover costs and cover marketing costs.[38] Mr Victory did not test the information given to him nor pose any questions to Mr Tarca.[39] A calculation of revenue was done based on $6.50 for people putting the job up on the program and $6.50 revenue from the transport companies. That was then multiplied by the number of containers that could potentially be obtained and line haul loads that could be obtained at the same price.[40]
[38] T49.29-T50.12.
[39] T50.13-.14.
[40] T50.31-.37.
It was then that Mr Victory was offered a job by Mr Tarca in a role as Business Development Manager for Total Logistics/MoveIt4U South Australia Pty Ltd on the 5^th of August 2019.[41] Initially, this was based upon a salary which then morphed into Mr Victory getting bonuses as well as 25 % of Mr Tarca’s share in MoveIt4U. As earlier discussed, at no time were 25 % of the shares of Mr Tarca be transferred to Mr Victory but rather only 24.5 % of that share.
[41] T88.34-.36.
After speaking to his wife, Mr Tarca sent a Total Logistics Letter of Offer to Mr Victory.[42] In cross-examination, Mr Tarca agreed that Total Logistics was the actual entity which employed and provided the shareholding to Mr Peter Victory. He knew that when Total Logistics engaged Mr Victory on 5 August 2019 that the South Australian MoveIt4U business was not trading and did not have any customers.[43] At the time of engaging Mr Victory, Mr Tarca had not seen any evidence of the turnover of the NSW business, he had not asked for access to the MoveIt4U client relationship management system, nor had he asked to see any business plan or financial projections prepared by Mr Wilson.[44]
[42] Exhibit A2; T51.24-.35.
[43] T109; T91.36-92.16.
[44] T92-93.
Further in cross-examination, Mr Tarca agreed that he did not directly know when he offered Mr Victory a job on 5 August 2019, that Mr Victory had already given up any chance that he had to work for CT Freight.[45] I had considerable doubts about some of the evidence given by Mr Tarca because that evidence does not match up with a number of documents before the court.[46] For example, Mr Victory sent Mr Tarca a letter saying ‘I am back in the market’, at 8.17 pm on Sunday 4 August 2019.[47] In cross-examination Mr Tarca agreed that he had made a verbal offer to Mr Victory on Sunday 4 August 2019. The email of 5 August 2019 setting out the job offer to Mr Victory was a confirmation in writing of what he had already discussed.[48] Mr Tarca agreed in cross-examination that he had verbally made an offer of employment at a salary of $100,000 per annum to Mr Victory and his understanding that this was made before Mr Victory had rejected the opportunity at CT Freight.[49] Mr Tarca agreed that Mr Victory had provided him with a copy of his draft contract with CT Freight on 5 August 2019 at the time that he was being offered a job by Mr Tarca.[50]
[45] T96.12-.17.
[46] T98.28-99.24.
[47] Ibid.
[48] T103.12-.28; Exhibit A2; T97.2-.21; Exhibit A2 page 37.
[49] T97.22-T98.26.
[50] T102; Exhibit A1, volume 1, tab 124.
In cross-examination, Mr Tarca agreed that he expected Mr Victory to work for Total Logistics on tasks unrelated to MoveIt4U South Australia Pty Ltd when he was initially employed but that would not last for long. He denied that he offered a job to Mr Victory without any reference to Mr Wilson or that Mr Wilson did not know who Mr Victory was until he was already employed.[51] For the reasons which follow, I am unable to accept that evidence. On my assessment of the evidence, it was not until after Mr Victory had been retained by Mr Tarca that Mr Wilson became aware of that arrangement and Mr Wilson was concerned about who was going to pay the salary. He was aware of the difficulty in paying a large salary to someone such as Mr Victory who had already been employed.[52] In cross-examination, Mr Tarca said that he had a conversation with Mr Wilson on 6 August 2019 about Mr Tarca taking over other states with MoveIt4U. He said then that he must have spoken with Mr Wilson about employing Mr Victory before 6 August 2019 because he would never have agreed to take over more states without assistance from anyone such as Mr Victory.[53] However, Mr Tarca also believes that he and Mr Wilson had already come to an agreement that Total Logistics would move into other states apart from South Australia before Mr Tarca employed Mr Victory. It is therefore inconsistent to suggest that Mr Tarca and Mr Wilson must have had a conversation about Mr Victory before 6 August 2019. Mr Tarca was taken to an email of 6 August 2019 sent to him by Mr Wilson.[54] In that letter, Mr Wilson expresses, inferentially at least, some surprise about the decision to employ Mr Victory. He queries the payment of the salary of Mr Victory and who would be responsible for that salary.
[51] T87.3-.19.
[52] Ibid.
[53] T88; Exhibit A1, volume 3, tab 160.
[54] Exhibit A1, volume 3, tab 160.
Mr Tarca characterised that letter as Mr Wilson merely confirming the discussions already had between them that Total Logistics move interstate had already been agreed.[55] I am unable to accept that evidence of Mr Tarca. I consider that the text of the letter is clear enough and that it is an accurate contemporaneous record of the views of Mr Wilson that he was surprised by the employment of Mr Victory without having been consulted, that he was concerned about the capacity to pay a salary to Mr Victory and that he was also concerned about which entity was responsible to pay that salary. The document is not confirmatory of discussions already had between the two companies. It is also significant because it contains a clear message that Mr Wilson is concerned about the business not having the capacity to sustain the salary of someone such as Mr Victory. The significance is that Mr Wilson is concerned about generating a sufficient cash flow to pay this salary. The second matter is connected to the first. The role of Mr Victory is to commercialise the product in the market, to generate interest and so sales and thereby to increase the turnover of the business. This is the usual commercial position: an appointee such as Mr Victory will justify his position and so his appointment by his work and the profit it generates. Implicitly, so much was known by Mr Wilson; he remained very concerned about the appointment and the level of salary. Even a casual observer would have then detected that Mr Wilson had adopted a very conservative approach to what may reasonably be expected as the success of the product from its exposure in the new market and so, in turn, its profitability. The applicants appear not to have given thought to any of these matters.
[55] T90-91.
Subsequently, there were exchanges of emails between Mr Wilson and Mr Tarca. The first was on 8 August 2019 concerning business cards for Mr Victory.[56] There was an email from Mr Tarca and Mr Wilson on 9 August 2019. Mr Tarca denied in cross-examination that was the first time that he had mentioned Mr Victory’s name to Mr Wilson.[57]
[56] Exhibit A2; T52.22-.36.
[57] T87.20-T88.9.
There was then an introductory telephone call between Mr Victory and Mr Wilson which occurred on 13 August 2019.[58] Mr Tarca agreed in cross-examination that this phone call was the first time that Mr Wilson had spoken to Mr Victory but by that time, on 5 August 2019, Mr Victory had already been made an offer by Mr Tarca.
[58] T95.
Mr Tarca said there was a discussion about the potential they all saw in the business going forward and where they should target the business. There was also a discussion about revenue sources and how the transport industry could become more efficient.[59] In cross-examination, Mr Tarca said that he was aware that in the statement of claim, Mr Victory states that he had a conversation with Mr Wilson and after that conversation, he gave up that opportunity to work for CT Logistics in Melbourne or Toll Logistics so he could dedicate his work to establishing and operating the MoveIt4U System.[60] In my view, and I find, that evidence of Mr Victory is wrong. I find for reasons which I set out below, that Mr Victory had already refused the offer from CT Logistics before having any conversations about MoveIt4U South Australia Pty Ltd and that albeit he was already employed by MoveIt4U South Australia Pty Ltd, he continued pursuing an opportunity with Toll but was not offered that role.
[59] T53.5-.24.
[60] T94.
Mr Tarca gave evidence that Mr Wilson wanted to work in the international aspect of the business and therefore did not have sufficient time for work on the business in Australia.[61] It was then that Mr Tarca and Mr Victory decided that the South Australian Company would buy a licence for MoveIt4U in NSW, Qld and Victoria despite the fact that Mr Wilson had not provided them with any accounting records for MoveIt4U in any of those states. A software licence agreement for MoveIt4U South Australia Pty Ltd was signed on 19 August 2009.[62] Preparatory to the execution of that licence agreement there were discussions between Mr Tarca and Mr Wilson about Western Australia being added to MoveIt4U. In cross-examination, Mr Tarca agreed that Total Logistics was then taking on a commitment by signing that agreement because it would fund the payment of licence fees referred to in that agreement. He also knew that the licence agreements could be terminated on one months’ notice and that he and Mr Victory formed the majority of the board of the company at that time. As a result, they could have passed a resolution to terminate the licence agreement if they were unhappy with the way that the joint venture was going.[63]
[61] T131.34-.38.
[62] Exhibit A1, volume 3, tab 163; T156.
[63] T104.
In cross-examination, Mr Tarca said that he was aware that the effect of the licence agreement was that MoveIt4U became the exclusive licensee for each of the named states and this meant that the business Acquire4U could not compete in those states; it was the role of MoveIt4U South Australia Pty Ltd to run the businesses in those named states. Mr Tarca said he believed that when signing the licence agreement, the South Australian business was not trading, the New South Wales business had hardly any trade, and that NSW and Victoria had half a million dollars in trade so far.[64] By that time, Mr Tarca had not seen any evidence of a $500,000 turnover even though he said that he asked Mr Wilson for information about the turnover in NSW.[65] Mr Tarca agreed that at the time he signed the licence agreement for NSW, Victoria and the other states he knew that no transactions were being processed through the system but he made the decision to pursue the joint venture despite that fact and he said that the business had potential and so this was only one part of the discussion that was ongoing.[66] He agreed that the email dated 3 November 2019 at 10.28 pm was the first reference that he had ever seen to the $500,000 revenue which was put in writing.[67] There was then an email from Mr Wilson to Mr Victory and Mr Tarca on 22 August 2019 and Mr Tarca denied in cross-examination that email was the first time he saw any written reference to MoveIt4U having three hundred customers.[68]
[64] T105.7-.20.
[65] T105.18-.T106; T153.
[66] T154-155.
[67] T107.6-.25; Exhibit A1, volume 4, tab 231.
[68] Exhibit A1, volume 1, tab 8.
There was then a further email from Mr Victory to Mr Tarca on 29 August 2019 concerning secret margins. Mr Tarca agreed in cross-examination that at the time of receipt of this email, the process for MoveIt4U South Australia Pty Ltd was that it engaged directly with the shipper and the customer and issued invoices to the shipper and made separate payments to the driver.[69] Mr Tarca agreed that he did not speak to Mr Wilson about not wanting to have anything to do with the direct engagement model at the time of receiving this email. Mr Tarca agreed in cross-examination that under this model, MoveIt4U could earn a commission apart from the transaction fees of $6.50 for the driver and $6.50 for the company. He agreed that whether that commission was charged was a matter entirely at the discretion of the operator of the system.[70] Mr Tarca further agreed in cross-examination that an email from Mr Victory of 9 October and the attachment outlined there was an option to apply a secret markup percentage to the invoice for work done by MoveIt4U but he never intended to use that markup option.[71] At that time, he had not had any discussions with Mr Wilson about the MoveIt4U terms and conditions.[72]
[69] T110; Exhibit A1, volume 1, tab 284.
[70] T110.
[71] T112.
[72] T121.35-.38.
Mr Tarca was aware of an email sent by Mr Victory to Mr Wilson and himself on 1 September 2019 on the topic of ‘chain of responsibility’. He understood the term chain of responsibility and the point of the email but he had not had any discussions with Mr Wilson about the chain of responsibility. This topic concerned the exposure of the directors of the company such as MoveIt4U to the consequences of terrible events such as deaths and injuries in the course of a person’s employment. Many references were made in the evidence to what came to be described as ‘industrial manslaughter’. Mr Victory was particularly keen to understand what was the legal position of the directors under these arrangements. As a result, Mr Tarca and Mr Victory sought legal advice from Mr Reinboth, solicitor at Belperio Clark about the terms and conditions of the MoveIt4U System. Mr Tarca could not recall if that advice was that the chain of responsibility legislation was applicable to MoveIt4U.[73] He believed that the terms and conditions for MoveIt4U were finalised and agreed with Mr Wilson after they had met with Mr Reinboth. Eventually, there was an email from Mr Victory to Mr Wilson on 8 October 2019.[74] Mr Tarca was aware that Mr Victory was concerned about MoveIt4U trading whilst there were unresolved issues about the chain of responsibility obligations and terms and conditions.
[73] T122-123.
[74] Exhibit A1, volume 3, tab 196.
Mr Tarca also received an email of 10 October 2019 from Mr Wilson which suggested that the directors of MoveIt4U agree on a budget annually for the business and including costs being incurred. Mr Tarca was aware from this email that Mr Wilson did not want Total Logistics incurring expenses outside of an approved budget or which had not otherwise been separately agreed.[75]
[75] T113-114.
Eventually, a shareholder’s agreement was executed and it was dated 29 October 2019.[76] This was executed by Mr Tarca on behalf of Total Logistics and he agreed in cross-examination that it was a term of this agreement that directors should not be paid unless the company could fund the payments to the directors. He agreed that under clause 13I of that agreement, Total Logistics had no obligation to provide further funding to MoveIt4U but he maintained that the shareholders agreement authorised him to pay, or alternatively, it approved Total Logistics paying Mr Victory a salary on behalf of MoveIt4U.[77] I am unable to accept that evidence. The reference by Mr Tarca to the shareholders agreement does not approve a payment to Mr Victory of any salary. Rather, the payment to Mr Victory under that agreement was a matter for Total Logistics. Eventually, in cross-examination, Mr Tarca said that the approval to pay Mr Victory was at least implicit. There were emails between Mr Wilson and Mr Tarca about Total Logistics employing Mr Victory for MoveIt4U. Upon that happening, MoveIt4U would be charged for all of Mr Victory’s travel and wages.[78] Mr Victory’s wages were also in the budget that had been prepared and these wages were identified as capital expenditure funding in that budget.[79]
[76] Exhibit A1, volume 3, tab 217.
[77] T116.
[78] T117.
[79] T121.14-.18.
There were discussions about any key performance indicators (KPI’s), and potential turnover.[80] Mr Tarca thought that the potential turnover for year one for the business would be easily achieved because of the volume of containers that were available in the market, the position of transport companies in Australia and the opportunities to win customers over.
[80] A1 volume 3, tab 165; T56.22-57.5.
Mr Tarca and Mr Victory then went to see Mr Wilson in Sydney. Mr Michael Lofaro was also present. Mr Lofaro was also a director of Acquire4U.[81]They remained in Sydney for about two to three days and spent most of their time with Mr Wilson.
[81] T57.14-.27.
Following the concerns of Mr Victory about the chain of responsibility, a legal opinion was sought from Mr Ferguson a solicitor at the Australian Industry Group about the structure of the business. Mr Tarca agreed in cross-examination that he and Mr Victory were concerned about whether MoveIt4U was a freight broker for the purposes of any applicable legislation.[82] There was considerable opposition within the transport industry to any form of brokering arrangement. This was because the broker arrangement always drove down the prices for transport companies and therefore for salaries for drivers. Brokers would always take a portion of the fees generated and therefore leave less for everybody else. Mr Tarca agreed that both he and Mr Victory did not receive advice back from Mr Ferguson until January 2020.[83] He agreed also that by January 2020, the issue of whether or not MoveIt4U was a freight broker remained unresolved in the minds of himself and Mr Victory.[84] He was also concerned by January 2020 about whether or not the company could trade while that broker issue remained unresolved because it opened them all up to the transport workers union coming in and putting MoveIt4U in the same boat as Uber drivers which was causing tremendous difficulties at the time.[85]
[82] T124.34-.38.
[83] T61.10-.26; T125.26-29; A1 volume 3, tab 207.
[84] T127.10-.20; Exhibit A1, volume 4, tab 251.
[85] T126.
After the meeting with Mr Wilson in January 2020, Mr Tarca and Mr Victory spoke with Mr Wilson about that conversation with Mr Ferguson and his advice that it was not a good idea to be implementing this strategy and that they would be setting themselves up for legal expenses as well as trouble with the TWU. Mr Wilson’s reaction was that he did not think much of all of it and they were trading well and had nothing to worry about.[86]
[86] T64.9-.22.
By 2 November 2019, a budget had been prepared. There was an email of that date attaching a budget for a commercial manager who was Mr Peter Victory and the amount shown was his salary.[87] There was also an email sent shortly afterwards from Mr Lofaro to Mr Tarca and Mr Wilson dated 13 November 2019.[88] In that email, Mr Lofaro told the recipients that the newly revised system which was being worked on would not go live or be ready to start trading until the new year. This was known by Mr Tarca. In cross-examination, he agreed that the revised system would not go live until the new year and he understood that the revised system was raised with him by Mr Wilson. Mr Wilson told him that it was updating an already functioning system. This was to be called ‘version two’ and that Mr Tarca can recall, that the phone app for version two of the MoveIt4U System was not released until about the middle of October 2019. He cannot recall whether Mr Wilson ever gave him the password for the demo site to use version two.
[87] Exhibit A1, volume 4, tab 231; T158-159.
[88] Exhibit A1, volume 4, tab 233.
Subsequently, visits were made by Mr Victory and Mr Tarca to a number of customers. They were not successful. The software app/internet based portal would not start, and no help could be achieved. The meeting with Elders after the first meeting was then called off.[89]
[89] T66.32-.34.

Then three clients in Melbourne were visited namely, Agility, NA and Silk Logistics. At Agility, there was a meeting with the Operations Manager and they found that the app just did not work. The same occurred at NA and at Silk. In cross-examination Mr Tarca said that he could not be sure whether the programme he and Mr Victory were showing to those potential customers was version one or version two of the software app/internet based portal.[90]
[90] T144-145.
Mr Tarca gave evidence that nothing happened with MoveIt4U during January 2020. Mr Victory and he were unable to visit anyone about the programme because it was not working. He thought that there were about 2000 tests done between Christmas 2019 and mid-January 2020 but nothing was resolved. They did not visit any new potential customers because they were waiting for new software and Mr Victory was still being paid a salary whilst working for MoveIt4U.[91]
[91] T147; Exhibit A1, volume 4, tab 263.
It is apparent from the evidence of Mr Tarca that the relationship began to unwind from at least February 2020. For example, he said that due to unresolved issues, he and Mr Victory wanted to go back to the original subscription model for MoveIt4U which was focused on a monthly subscription fee. He said that he discussed the possibility with Mr Wilson that they should stay with the subscription model as the direct engagement model was a deal breaker for him. Mr Tarca still wanted to move forward with the business at that time.[92]
[92] T128; T129; R3 tab 50; T128-13-.15; A1, volume 4, tab 284.
The relationship finally unwound in about March of 2020 because ongoing funding could not be obtained for the business. Mr Wilson wanted to build up international investors. Mr Wilson wanted to deal with Mr Tarca without Mr Victory and a decision was made that the parties should go their separate ways.[93] In cross-examination, Mr Tarca agreed that Mr Wilson formally terminated the licence agreement after the relationship came to an end. Mr Victory was not made redundant at that point but there was nothing left for him to do once MoveIt4U was finished.[94] Total Logistics then paid Mr Victory the amount which it received from the government in COVID payments from 2 April 2020 for a period of six months. Mr Tarca also agreed that after the relationship between him and Mr Wilson broke down, he considered whether he could get any of the money he had spent on the MoveIt4U business venture back.[95]
[93] T148; T73; T150-151.
[94] T148-149.
[95] T135.
I come to the evidence of Mr Peter Victory. Before assessing that evidence, it is worthwhile to reiterate that the case put on behalf of Mr Victory was as set out in paragraphs 18, 19 and 20 of the statement of claim. Those paragraphs provide as follows:
18.In reliance upon the continuing representations, the August 2019 representations and the implied representation, Mr Victory committed to investing in the establishment of the MoveIt4U South Australia Pty Ltd System in South Australia by:
18.1. becoming a shareholder in MoveIt4U South Australia Pty Ltd; and
18.2. forgoing an opportunity to work for CT Logistics located in Melbourne in the State of Victoria or Toll Global Logistics in a senior management role in the transport logistics industry to be able to dedicate his work efforts in establishing and operating the MoveIt4U South Australia Pty Ltd System.
19.In reliance upon the express representations and the implied representation, Total Logistics has suffered loss and damage and claims damages under s236 of the ACL.
Particulars
19.1. The provision of funds to MoveIt4U South Australia Pty Ltd to enable that company to establish and maintain its operations until about March 2020 at which time the company ceased to trade.
19.2. The cost of salary and wages paid to Mr Victory to enable Mr Victory to provide services for the benefit of MoveIt4U South Australia Pty Ltd.
20.In reliance upon the continuing representations, the August 2019 representations and the implied representation Mr Victory has suffered loss and damage and claims damages under s236 of the ACL.
Particulars
20.1. The lost opportunity to earn a salary from alternative employment at a senior management level in the road transport logistics industry.
20.2. In mid-2019, Mr Victory declined to pursue opportunities to work for CT Logistics located in Melbourne in the State of Victoria or Toll Global Logistics in a senior management role in the transport logistics industry so as to be able to dedicate his work efforts in establishing and operating the MoveIt4U South Australia Pty Ltd System.
Paragraph 18 of the statement of claim contends that Mr Victory made a commitment to investing in the establishment of the MoveIt4U System in South Australia by becoming a shareholder in MoveIt4U South Australia Pty Ltd; he allegedly also forewent an opportunity to work for CT Logistics located in Melbourne, Victoria or for Toll Logistics in a senior management role in order to dedicate his energies to establishing and operating the MoveIt4U Systems. As a result of his reliance on that express representations and implied representations, as well as the continuing representation, it is alleged that Mr Victory has suffered loss and damage by losing the opportunity to earn a salary from alternative employment in a senior management level in the road transport logistics industry and in, mid-2019 (inferentially at least in or about June/July 2019), declining to pursue opportunities to work for CT Logistics in Melbourne or Toll Global Logistics in a senior management role. It is unnecessary that I assess the evidence on that topic in any detail because I have reached very clear views about the credibility of Mr Victory and the pleaded case. For the reasons which follow, I find that Mr Victory has not established the pleaded case and has no claim against the respondents.
The first interaction between Mr Tarca and Mr Victory was when a link was sent by Mr Tarca to him containing information about MoveIt4U. In that email, Mr Tarca said that he had the opportunity to pursue, in effect, commercialisation of the product and that if Mr Victory was interested, they should have a chat.[96] There was a discussion. Mr Victory made suggestions about other possible targets for the market. A thirty percent margin was discussed.[97]
[96] T168.27-.35.
[97] T168.36-169.6.
There was a further discussion about the business model and about the South Australian operation. Mr Victory knew that the potential operation area was restrained because of the licencing agreements. Mr Tarca potentially had rights in Victoria, New South Wales and Queensland and had no one to run those businesses. He told Mr Tarca that in order for him to even consider coming on board to work for MoveIt4U South Australia Pty Ltd, Mr Tarca would have to have the eastern seaboard rights as he would not be residing in South Australia.[98]
[98] T169.7-.27.
Mr Victory said that he had received an offer to work for CT Freight in Victoria and had received contract documents. He received an email on 1 August 2019 from Mr Bryce Thomas of that company asking him to sign and return a copy of the contract dated 12 July 2019 that had been settled between them. Mr Victory was due to commence on 5 August 2019. He had a conversation with Mr Tarca that he would need $100,000 per annum salary plus bonuses; Mr Tarca said that he could accommodate that. He then made a decision to go with Mr Tarca. He had been unemployed for five months. He said was under the impression that he had left Tarca’s office with a firm offer. However, in cross-examination, he agreed that he had received a written letter of offer from Total Logistics on 5 August 2019. He understood that role to be working for MoveIt4U and he would be in charge of the full commercialisation of the business. He thought the company had already been commercialised to an extent that it had already been in the marketplace.[99] It was Mr Tarca who told Mr Victory that the business of MoveIt4U had been trading and that there were three hundred accounts that were registered.[100] This had an impact on his decision making. He knew of businesses that were mentioned such as Trojan and Orbit, he understood that they were using the system and therefore could be successful.
[99] T172.1-.29; T254; T255.1-.4; T256.
[100] T172.
Then in evidence, Mr Victory said that on 2 August 2019, he emailed Bryce Thomas of CT Logistics attaching a signed letter of offer.[101] I am satisfied that the signature on the letter dated 12 July 2019 of the offer is that of Mr Victory. It indicates his acceptance of the offer dated the 12 July 2019. The 2^nd of August 2019 was the date on which he sent the letter of offer back to CT Freight. The executives of CT Freight had been pressing him for a return of the letter. On 2 August 2019, and at that company’s request, Mr Victory forwarded his superannuation and taxation file details preparatory to him starting employment with CT Freight on the 5^th August 2019. Notwithstanding, Mr Victory denied that it was at this point on 2 August 2019 that he had made a final decision to join CT Freight.[102] I am unable to accept that evidence or contention. He said that as he was still having multiple discussions with Andrew Tarca, he thought that as of 2 August 2019, he had no doubt about where he was going.[103] He received a communication on 2 August 2019 at 9.41 from Bryce Thomas concerning his role at CT Freight as a Commercial Manager and it was a long-term role. I confirmed with Mr Victory that it was apparent that he had a job with CT Freight, he had accepted the offer for the job and he was to start on 5 or 7 August and not earlier. Mr Victory agreed with their propositions. He also accepted the proposition I put to him that he would have remained employed with CT Freight unless he was fired.[104]
[101] Exhibit A2, page 36b; T180.
[102] T181-182.
[103] T182.34-.35.
[104] T183-185; Exhibit A2, page 36A.
Then, on Sunday evening the of 4^th August 2019 at 8.22 pm, he sent an email to Mr Bryce Thomas at CT Freight. In evidence in chief, Mr Victory said that he had an understanding from Andrew Tarca that MoveIt4U was progressing with an offer to him and he felt an obligation to tell Bryce Thomas that he needed to decline his offer of employment. He, therefore, told Bryce Thomas that for family reasons he could not accept the offer.[105] I do not accept that at the time that Mr Victory sent the email to Mr Thomas, he had any established contract of employment with MoveIt4U. Further, any suggestion that he would not move to Melbourne for family reasons is inconsistent with other information he gave to Mr Tarca suggesting that he would be living in Melbourne anyway. Mr Victory gave evidence that he was in a relationship with his partner who was living in Melbourne but his children lived in Adelaide. I am satisfied that at the time he sent this email to Mr Thomas, there was no established contract of employment between Mr Victory and Total Logistics. There may well have been an understanding that an offer would be forthcoming but that was established after the time that Mr Victory sent his email to Mr Thomas. That is reinforced by the fact that Mr Victory then sent an email to Mr Tarca.[106] In it he told Mr Tarca he had ‘done what he needed to do’.[107] It was only on the following day that Mr Tarca sent through the letter of offer.[108]
[105] T180.20-.36; T187.2-.21.
[106] A2, page 36.
[107] He needed to rescind the agreement he had made for his employment with C.T Freight.
[108] T187-188; Exhibit A2 pages 40-41.
In cross-examination Mr Victory admitted that he lied to Mr Thomas about the reason for declining the CT Freight offer. He claimed that this lie would preserve their business relationship.[109] Mr Victory also accepted that before he accepted the offer with MoveIt4U, he did not ask Mr Tarca to give him any documents to verify how many clients the business had, the trading terms, the website content, turnover or a demonstration of the software app/internet based. In his evidence-in-chief, Mr Victory said that soon after he commenced working for MoveIt4U he spoke to Mr Wilson. In cross-examination, he accepted that he did not speak with Mr Wilson directly until 13 August 2019; this was the first time he spoke to him.[110] In examination-in-chief, Mr Victory said that when he spoke to Mr Wilson, he asked about the success of MoveIt4U and was told about the $500,000 revenue in a test trial and how MoveIt4U had attracted three hundred accounts. In cross-examination he confirmed that Mr Wilson had used the word ‘accounts’ specifically when speaking about both drivers and shippers paying fees to MoveIt4U.[111] Mr Victory also said in cross-examination that at this stage he understood that there had been a test trial of MoveIt4U System. It had been developed to a proof of concept stage but it has not been commercially implemented.[112] He accepted that his case, as reflected in the statement of claim, is that he relied on what Mr Wilson told him on 13 August 2019 about the MoveIt4U business so much so that he gave up an opportunity to work for CT Freight and also for Toll as a Global Logistics Manager.[113] The evidence does not support this pleading or this contention. After he commenced work with Total Logistics, Mr Victory continued to seek a role with Toll as a global logistics manager. He was interviewed. He was not offered this employment. To fulfil this employment, it would have been necessary for him to move to Victoria to live. This contradicts the assertion made by him to Mr Thomas at CT Freight that he wanted to live in South Australia.
[109] T264.
[110] T257.18-.24.
[111] T258.
[112] T259.
[113] T279-T280.
Mr Victory also agreed in cross-examination that he gave up his opportunity with CT Freight before he spoke to Mr Wilson about MoveIt4U. Throughout the period of this litigation, he knew that he had given up the opportunity to work for CT Freight before he had ever spoken to Mr Wilson.
Mr Victory was continually concerned about whether or not the model of MoveIt4U was a brokerage model. He was very concerned about chain of responsibility legislation.
On the 28^th of August 2019, he went to Sydney by himself to meet with Mr Wilson at the MoveIt4U offices in Sydney and he was there for about half the day.[114] He had a number of discussions with Mr Wilson who told him that there was a second set of terms and conditions about to be developed but had not yet been finalised. He discussed trade with Mr Wilson who expressed some frustration with salespeople and that was reiterated by Mr Lofaro.
[114] T192.
Liam Wilson then demonstrated the software app/internet based to him and he thought there was some glitch. He was told by Liam that the system had attracted a few problems.[115]
[115] T194; T195; T196.
In that discussion, Mr Victory said that the app could be used for much broader logistics work. He was told about an override function on the app where the percentage being paid to the provider would not be revealed. That was never used. The credit risk management system used was called Zoho and he made himself familiar with that system. He thought that that the MoveIt4U System would have information about trade such as ongoing monthly trade and margin information and he was expecting to see accounts that were changing where some dropped off and some others gained traction. He asked Mr Wilson if the credit management system Zoho had all of the information recorded within it. Despite his discussion with Mr Wilson on that day, he could not see any evidence in the reporting system that MoveIt4U had three hundred clients, or that the information that was being provided was complete.[116]
[116] T259.
Mr Victory received the email of 31 August 2019 setting out the new terms and conditions.[117] He read them and thought that the terms were unsuitable because the language used did not meet industry requirements. This document was then given to the solicitors Belperio Clark to redraft because of their industry experience in transport.[118] He said that he did a lot of work on the terms and conditions which he found were not initially suitable for the purpose.[119]
[117] Exhibit A1, volume 3, tab 171.
[118] T204-205; Exhibit A1, volume 3, tab 172.
[119] T205.2-.18.
At all times he was very worried about the question of the chain of responsibility. He continually had concerns about these matters and sent a number of emails about them.[120] He did not think that the terms and conditions were appropriate and made his views well known.[121]
[120] Exhibit A1, volume 1, tab 172.
[121] T205-206.
Mr Victory prepared a draft budget and it was sent to Mr Tarca and Mr Wilson.[122] In his evidence, Mr Victory attempted to explain this document. I found some parts of it almost incomprehensible but overall, it may be understood as a draft budget concerning sales less costs of sales plus cash, less overheads. This approach reflects basic cash statement principles. He agreed that the figures within the document were all hypothetical and gave some idea of potential revenue and transactions. This is the nature of such documents. The budget showed a substantial loss on an ongoing basis. It did not show a profit either on a standalone basis or on an accumulating basis.
[122] Exhibit A1, volume 3, tab 97.
Mr Victory was asked questions about his negotiating with the Toll group. He thought that the 2^nd of August was the date on which he signed the CT Freight offer of 12 July 2019. He thought that he had discussions with Toll before this and that he had been in discussions with Toll for a number of months over 2019.[123] In examination-in-chief, Mr Victory said that he had committed himself to CT Group but within hours withdrew that because he thought he had a genuine offer with MoveIt4U and had made a commitment to Mr Tarca.[124] However, in cross-examination Mr Victory agreed that he had an interview with Toll Group on 19 August before signing the documents on the 20^th August.[125] In the documents which he provided to Toll, he said that he had a current salary of $200,000 with Middleton’s Distribution. That was the company name under which Total Logistics had traded previously. Notwithstanding, the only offer made to him was the offer of $100,000 from Mr Tarca. Mr Victory then said that he had inserted the sum of $200,000 because it was his salary plus bonuses.[126] I am unable to accept that evidence. I am satisfied from the evidence that at the time, Mr Victory was aggressively pursuing a position with Toll, which, at least implicitly, he knew or viewed as being better than the position he would have received at Total Logistics. It is quite obvious that he was attempting to inflate the value of his own services by suggesting that he had an entitlement to a salary at least double the salary he had on offer. Mr Victory then denied that he was not committed to Mr Tarca at that point because he was looking for another role with Toll.[127] I am unable to accept that evidence. This evidence, similar to much of the evidence given by Mr Victory lacked any credibility. I consider that, on balance, Mr Victory would have departed from any role that he then had to take up a role with Toll. He was unsuccessful with Toll and therefore that was the end of his negotiations with that company.
[123] T253.
[124] T246; Exhibits A4 and A5.
[125] T271.
[126] T272.
[127] T275.22-.27.
After meeting with Mr Ferguson, Mr Victory and Mr Tarca had a meeting and then phoned Mr Wilson on their way back to the airport. They informed Mr Wilson about jurisdictional problems and that Ferguson’s view was that the business might operate with at least some reservations in relation to some aspects of the applicable laws in the various states of Australia. It would certainly attract industrial action at the least. That conversation became quite heated and from that time, he and Mr Tarca could not be sure that MoveIt4U could operate in all states in Australia. It was then that Mr Wilson said that MoveIt4U had $500,000 worth of trade and three hundred accounts and disagreed with Ferguson’s interpretation.[128] I am satisfied that Mr Wilson said something to this effect to Mr Tarca and Mr Victory. Evidence to the same effect was given by Mr Tarca. I accept his evidence. This was said by Mr Wilson at the least to give Mr Tarca and Mr Victory some comfort and in so doing he repeated the matters he had previously said in earlier conversations. He continued to present a very positive outlook about and for the business.
[128] T218.10-220.11.

On 3 November 2019, Mr Wilson sent an email identifying that through the proof of concept stage, revenue was $500,000 over seven months.[294] Mr Wilson was shown the budget prepared by Mr Victory for the 2020 trading year.[295] It identifies that after a calculation of net revenue of $477,675, the overhead expenses identified are in the amount of $785,675 leading to a trading loss of $308,000. I will make reference later to this budget and in particular the recognition within it of a need for cash injections from a proprietor and also an add back of directors’ fees.
[294] Exhibit A1, document 226, page 937.
[295] Exhibit A6.
I am satisfied that reference to the $500,000 of revenue can only be understood, on the evidence, as a reference to a fixed transaction fee basis generated using this software app/internet based portal. I am also satisfied that, if there was a proof of concept period it took place prior to the meeting at Peppers on 29 April 2019. As a result of the conversations that occurred at the Peppers meeting and which preceded it, the understanding created in the mind of Mr Tarca through the information provided by Mr Wilson was that the proof of concept period had finished; that the proof of concept had been undertaken and so, the possibility of the commercial implementation of MoveIt4U in South Australia was being proposed to Mr Tarca.
There was a large amount of evidence about what is referred to as the ‘seven month period’. I have found the evidence of Mr Wilson about this topic to be quite unsatisfactory. It was he who mentioned the seven month period. His evidence was that the seven month period took place over a period of a little in excess of two years. This was somewhere between September 2017 and August 2019. I have reviewed the evidence in relation to the turnover for those periods. In none of those periods could it be identified that there was a turnover to that extent in any combination of the seven month period. Leaving that issue aside, it is bordering on nonsense to suggest that a recipient of information about a seven month trading period would not understand that information to mean seven consecutive months. There was no indication made by Mr Wilson to Mr Tarca that the seven month period to which he was making reference would be a combination of seven particular months in a two year period. In my opinion, that version of events put forward by Mr Wilson challenges credulity. It suggests that the proof of concept period lasted at least two years in order for the seven months to be ‘cherry picked’ from that two year period. Further, I am satisfied that Mr Wilson did not understand the budget that had been prepared by Mr Victory. When he saw the figure of $785,675 of overhead expenses after the calculation of sales less cost of sales ($477,675) he thought that a budgeted profit of $785,675 was low for a period of twelve months if a measuring stick of $500,000 was achieved in a seven month period during a proof of concept stage.
First, it is apparent that Mr Wilson did not recognise that the budget was in the form of a typical cash statement (also called a profit and loss account). Second, his immediate reaction was (his misunderstanding) of income of $785,000 in a full year of trading was low then, in his own mind, he had a point of reference of comparison to that level of trading. That could only have occurred during the proof of concept phase. On the documents before the court, there is no ability to compare that proof of concept phase trading and the figure of $785,675 of profit. Therefore, the email of Mr Wilson of 3 November 2019 is corroboration at least of the thinking process of Mr Wilson at the Peppers meeting when he informed Mr Tarca of the $500,000 turnover from three hundred customers during the proof of concept stage.[296] I do not think this evidence given by Mr Wilson can withstand critical scrutiny.
[296] Exhibit A1, document 226, page 937.
In light of the evidence, I am satisfied that when the reference was made at the Peppers meeting to turnover and customers, Mr Tarca understood, as was intended, that it referred to the commercialisation of the software app/internet based portal which would be the basis of the commercial structure of the ‘MoveIt4U’ business. According to the evidence of Mr Wilson, the explanation given to Mr Tarca was in relation to the nature of a fixed fee paid by a customer and by a driver upon successful completion of a particular task. There was no discussion about other kinds of revenue such as margins. Therefore, any discussion about turnover can only be referable to revenues generated from fees from transactions on the system. Other turnover was not taken into account.
The information provided was, in my opinion, directed towards the persuasion of Mr Tarca to become involved in the MoveIt4U business. Any reference to the number of customers using the system was directed in the same way towards the persuasion of Mr Tarca.
I am also satisfied that in the context of the discussion between Mr Wilson and Mr Tarca, the information provided by Mr Wilson was intended to and did create in the mind of Mr Tarca an understanding that a business of the commercialisation of the software app/internet based portal that was to become the basis of the business of MoveIt4U was already operating at least in the New South Wales marketplace and was generating transaction fees on the business model being discussed. I am satisfied that this was not the case. The representation by Mr Wilson, by words and conduct, was misleading. I am satisfied that the trading experience during any possible proof of concept phase could not support any suggestion that in any period between 1 September 2017 and 29 March 2019, there were either three hundred customers in the system or that there was $500,000 in revenue generated. [297] The amount of transport jobs identifiable in that period and the revenue generated from them was, in the overall scheme the representation of $500,000. There was no basis either in fact or, the evidence, to suggest that there was ever revenue of $500,000 from customers; the turnover in the New South Wales business generated about $239,831 in the period between September 2017 and April 2019.[298]Also, there were not three hundred users registered in the system and there was no evidence as to how many users there were; I am satisfied that the number was much less than three hundred. On the evidence, the two principal users of the system between September 2017 and March 2019 were the shippers ‘Seaway and Visa’. Seaway expressed its preference to deal only with a single carrier called Nowrys Haulage and the transport transactions were all arranged accordingly. This arrangement was made by Mr Wilson.[299]
[297] cef A11, tab 1; Exhibit 11, tab 9.
[298] Exhibit A11, tab 5.
[299] Exhibit A1, document 20, page 81.
I am satisfied that the arrangements made with Seaway was that Mr Wilson, as the overall controller and supervisor of the system would receive the emails from Seaway, he would enter the jobs on the system and some income would be generated.[300]
[300] Exhibit A1, document 23, page 95; Exhibit A11, tab 1, pages 14-16.
I have earlier considered exhibit A11 and I am satisfied that, on the evidence, there were only seventy four separate transport jobs in the period 1 September 2017 to 30 June 2018. Of these, twenty five jobs were from Seaway, twenty five jobs were from Visa and the rest were from sporadic carriers that used the system no more than five times. Some only used the system once.
I am also satisfied that in the period from 7 August 2018 to 1 July 2019, there were only fourteen carriers who transacted and of those, almost half were under the special arrangements made with Seaway. The next biggest user was Rhenus and the majority of those transactions were after the Peppers meeting.[301]
[301] Exhibit A7; Exhibit A8.
The statement made at the Peppers meeting on 29 April 2019 of there being three hundred registered users was misleading. I think it was incorrect. There were two principal users of the system and the balance of the users were very minor in nature. The information within the records of the respondent company is that a number of the large companies were multiple users of the system: eg Agility, Seaway Logistics, CT Freight and Visa Global Logistics.
I am satisfied that on the 13^th of August 2019, Mr Wilson repeated the representation about there being three hundred users registered on the system. This was in the context where he was required to defend the system as being still in the development phase and he uttered the expression that he had three hundred satisfied customers using the system. It is irrelevant whether he used any turnover representation at the time. The important thing is that he was discussing three hundred satisfied users of the system.
I am also satisfied that the discussions between Mr Wilson, Mr Tarca and the other representatives of the respondent company in the period between April 2019 and August 2019 carried the clear implication that the system was developed, it functioned and that it was operational. The process of the use of the software was that work would be registered on the system from those entities requiring a carrier service and that carriers could bid on the system for the service. There may be multiple bidders on the system and the provider of the task, could choose between the actual bidders on the system. I am satisfied that the understanding created in the mind of Mr Tarca was that it was an operational system, that it was being used and that no difficulties were being encountered which were not otherwise able to be resolved without difficulty. I am satisfied as well, that there was no basis for that representation to be made, it was made without reasonable basis and it did not accurately represent the position. I am satisfied that it created in the mind of Mr Tarca, an understanding, that in the future, the process could be operated in the way in which it was represented by Mr Wilson and that Mr Wilson had informed Mr Tarca of the whole of the functionality of the system. That understanding created in the mind of Mr Tarca was incorrect. The system had a functionality that would enable an operator to manipulate a price to generate a possible secret margin by quoting a particular price to a shipper or to a carrier that would enable a carve out of profit to MoveIt4U. Based upon the information before the court, particularly the admission by Mr Liam Wilson to Mr Victory that there had not been one successful implementation of the MoveIt4U software app/internet based portal and system, there was no reasonable basis for making the representation about the future use of the MoveIt4U System. I am satisfied that Mr Wilson as a representor, did not possess sufficient facts to induce in the mind of a reasonable person a basis for making the representation.
I am satisfied that at the time that he committed to the MoveIt4U System, Mr Tarca had a clear understanding in his mind about the extent to which the MoveIt4U System was accepted in the New South Wales logistics industry at the least. The intention was to introduce that system into South Australia in its original form but later, it would be introduced across other states and this was a matter of considerable importance to Mr Tarca. I accept the evidence of Mr Tarca that it was important to him to understand that the MoveIt4U System was one which had some form of successful track record at least in New South Wales and this operated upon his mind when he made a decision to commit to the joint venture.
I am satisfied that in light of the whole of the evidence under consideration, the misrepresentations as they are alleged by the applicant company have been made. I am also satisfied that, on the evidence, Mr Wilson knew of the misleading nature of those misrepresentations. I am satisfied that as the guiding hand and mind of the representor, Mr Wilson was a person involved in the making of the representation. He participated in the making of the contravening representations knowing of the essential elements of their misleading nature. He did not have reasonable grounds for making the representations. I am satisfied that he knew of the falsity of those representations. He made them to Mr Tarca in the knowledge of their inaccuracy.
I am satisfied that he was the principal of the Acquire4U Solutions business, he was the senior manager of that business, it was a start up business in very poor financial circumstances, and it had limited profitability and cashflow. He then kept an eye on the financial performance of the commercialisation of this software app/internet based portal through the MoveIt4U platform and the uptake of that system in the logistics industry. He well understood the extent of the business and the number of users involved in the business. He was aware that there had not been three hundred registered users of the system and the turnover of the business using the app was nothing in the nature of what he had represented.
I turn then to the question of damages. I consider that there is a significant aspect of causation of damages which arises in this matter.
Mr Tarca went to Sydney on the 14^th of June 2019 to have training on the system. He admitted that from his point of view, he did not care how many customers the company had because he was taking on South Australia.[302] I do not think that the same consideration applies in relation to when the representations were made to him in April of 2019. Those representations led him to make commitment which had their manifestation in him travelling to Sydney on the 14^th of June 2019. In the meantime, he had employed Mr Victory, having convinced him of the benefits of the software.[303] That is consistent with his evidence that he was persuaded by what had been put to him by Mr Tarca. His employment of Mr Victory was based upon his experience in the logistics industry and his understanding that the business would commence in South Australia and then licences would be granted for other states in Australia. I am unable to accept the submission of the respondents that in employing Mr Victory, he did not make any assumptions about the existing base volume of trading clients. He was making his assessments of the future projections based upon the material that had been provided to him by Mr Wilson.
[302] T83, , lines 20-35.
[303] T50, lines 15-24.
In that context, I consider that the budgets prepared by Mr Victory contained within exhibit A6, particularly at page 8 are very pertinent. The budget used a starting point of zero transactions as at 1 January 2020. This document was produced on the 2 of November 2019.[304] It was prepared by Mr Victory after he had the time to gather the information about the business. That task took up a substantial period of October 2019. The document is drawn as a budget and therefore may be seen on one view as conservative. However, in many commercial undertakings, budgets are set on the basis of a maximum achievable result so that it is a challenge for the business itself. Consistent with that approach, it was agreed in evidence by Mr Tarca that this was a document which provided evidence in relation to the potential of the system.[305]
[304] Exhibit A6, page 8.
[305] T33.3; T153.33.
At the time he took on the licences for New South Wales, Victoria and Queensland operations, Mr Tarca did not believe that there were three hundred customers using the system or that there was $500,000 of ongoing turnover. And by at least November of 2019, the effect of the representations that were made to him, albeit that he had acted upon them, had been extinguished by the information that he already had.[306] I consider this evidence to be significant. Notwithstanding the knowledge of Mr Tarca, he continued to spend money on the venture. He continued to pay Mr Victory a salary, he paid licence fees to Mr Wilson’s entities and he incurred travelling expenses. There is other evidence that points to the folly of the importunity of Mr Tarca pressing on regardless of the opportunity without further reflection. Mr Victory realised by the end of August that there was no way that Total Logistics could trade on the current terms as they had been presented and that the business was not in a position to trade when he took on his shareholding. [307] It appears on the evidence that Mr Tarca relied upon the views formed by Mr Victory concerning the current terms of trading and the position to trade in making his own decisions.[308] At the same time, there were significant problems being experienced both with the original software and the upgraded software. It is a strange result for a business opportunity to be taken up on the basis of an existing operating software when it became immediately apparent that there needed to be upgraded software which itself was problematic.
[306] T153.11-35; T154.29-T155.13.
[307] T205.13-.15.
[308] T73.19-.20.
I am unable to accept the submission of the respondents that Mr Tarca would have proceeded come what may. That fails to take account of the exigencies of ordinary commercial life where parties must have the opportunity to assess their position and obtain a full understanding about it before being required to make an election about the future of their involvement with a particular matter. I am satisfied that by no later than 2 November 2019, there was sufficient information for Mr Tarca to clearly understand that there was no future in the business and that it could not generate the income necessary to sustain the salary being paid to Mr Victory even accepting that there was no return to him until such time as the business was profitable.
There is a further issue which I consider to be of great importance. The budget assumed a cash injection of $120,000 (in this instance this could only have been made by Mr Wilson) as well as an add back of directors’ fees. Even with those add backs, the business still made a loss. Therefore, it would be necessary for the directors to be involved fulltime in the business without remuneration and also to authorise a cash injection to sustain the business on the preliminary budgeting prepared by Mr Victory.
As I have earlier recounted, based upon the budgeting done in November 2019 the only way that this company could survive was for the stakeholders to continue to make very substantial capital contributions regularly. This could be by subscription of further shares. This did not happen and that is understandable. Generally a subscription of shares is associated with a successful business or the expectation of such success. Neither of these were present. In the absence of either of these things, loans are made to the company usually by directors/shareholders. Loans may be called up for repayment. In a failing business that is an empty advantage but commercially it is often seen as more acceptable than subscribed capital in a private company. This budget required the proprietors to be prepared to forgo any return on their own capital or from their exertions. There was no basis to commercially prognosticate when profitability may be achieved. I am satisfied that it was not then achievable under that model. There is a further aspect to that matter. The business required sales and they would not be spontaneous. At the least, the proprietors or someone retained by them would be involved in sales. An employee or agent must be paid and the expectation commercially is that, in time, the benefit of those procured sales would pay those outgoings. The cost of employing sales staff or of making sales must be incurred and it is a fools errand to add back salaries that, objectively, must be paid to ensure sales and an ongoing marketing of the product. On many occasions, the failure to properly report that expense is a method used to disguise insolvency.
The business had no future. This much was apparent by November 2019. Nothing was then done by the parties to staunch the haemorrhaging of cash and capital. I am satisfied that by no later than the middle of November 2019, the business should have been closed; the objectively available evidence pointed in only one direction, namely the failure of the business.

Paragraph 17 of the statement of claim provides:-
‘17    in reliance upon the April 2019 representations and the implied representations, Total Logistics committed to investing in the establishment of the MoveIt4U South Australia Pty Ltd system in South Australia and in reliance on the continuing representations, the August 2019 representations and the implied representations of Total Logistics continued to contribute funds to the establishment of the MoveIt4U South Australia Pty Ltd system in South Australia by:-
17.1   Agreeing with Mr Wilson to enter into a joint venture with Acquire 4U Solutions for the establishment of the MoveIt4U South Australia Pty Ltd system and to provide the funds for the joint venture to do so;
17.2   Becoming a shareholder in MoveIt4U South Australia Pty Ltd; and
17.3 Making a financial commitment to contribute funds to assist MoveIt4U South Australia Pty Ltd to establish itself and to commence operations’
Paragraph 19 of the statement of claim provides:-
‘ In reliance upon the express representations and the implied representations, Total Logistics has suffered loss and damage and claims damages under s 236 of the ACL’
Particulars
19.1 The provision of funds to MoveIt4U South Australia Pty Ltd to enable that company to establish and maintain its operations until about March 2020 at which time the company ceased to trade.
19.2 The costs of salary and wages paid to Mr Victory to enable Mr Victory to provide services for the benefit of MoveIt4U South Australia Pty Ltd.
I am satisfied that after April 2019, and in a number of conversations between them over the telephone, by email and in Sydney NSW, Mr Wilson continued to represent that the MoveIt4U System was operating in New South Wales, that there were three hundred customers using the system and there was a gross turnover of about $500,000 worth of trade. I am also satisfied, that on or about 9 August 2019, during a telephone conference between them, Mr Wilson told Mr Tarca and Mr Victory that the MoveIt4U System was up and running in New South Wales, that it had three hundred clients using the system and that the fact that three hundred clients were using the system proved the concept of the system. I have found that these representations constituted misleading conduct in breach of the requirements of s 18 of the Australian Consumer Law.
I am also satisfied that in reliance upon these representations and implied representations, Total Logistics: committed to investing in the establishment of the MoveIt4U System in South Australia and contributed funds to the establishment of that System in South Australia; entered a joint venture agreement with Mr Wilson and Acquire4U Solutions for the establishment of the MoveIt4U System and to provide the funds for the joint venture; became a shareholder in MoveIt4U South Australia Pty Ltd in May 2019 and made financial commitments to assist that company to commercialise the operations of the MoveIt4U System. On 22 May 2019, MoveIt4U South Australia Pty Ltd was registered as a corporation. Its directors were Mr Wilson and Mr Tarca. Mr Victory later became a director of that company. The shareholders were Acquire4U Solutions and Total Logistics. The issued share capital of MoveIt4U South Australia Pty Ltd was held, as to 51 % by Acquire4U Solutions Pty Ltd and as to 49% by Total Logistics Pty Ltd. In September 2019, Mr Tarca caused half of the shareholding held by Total Logistics to be transferred to Mr Victory. At that time, Mr Victory was appointed as a director. About a month later on 29 October 2019, Acquire4U Solutions, Total Logistics and Mr Victory entered into a shareholders agreement in respect of their interest in MoveIt4U South Australia Pty Ltd.
I have earlier set out the content of paragraph 19 of the statement of claim. This is a claim by Total Logistics Pty Ltd against the first and second respondents in its capacity as a shareholder of MoveIt4U South Australia Pty Ltd.
The claimed losses are comprised of the provision of funds to MoveIt4U South Australia Pty Ltd to enable it to be established and then maintain its operations and the costs of salary and wages paid to Mr Victory. The end costs of salary and wages paid to Mr Victory, are, by their very nature, claims made by the corporation for losses which it has sustained as a result of the reliance upon the misleading conduct.
Claims made in relation to the provision of loan funds or other forms of capital by Total Logistics Pty Ltd to MoveIt4U South Australia Pty Ltd also constitute a claim by a shareholder in relation to the affairs of a company and in particular, the losses sustained by it following reliance upon misleading conduct.
I turn to Chapter 2F of the Corporations Act 2001 (Cth)(CA) concerning members’ rights and remedies. S 231CA provides:
231 Membership of a company
A person is a member of a company if they:
(a) are a member of the company on its registration; or
(b) agree to become a member of the company after its registration and their name is entered on the register of members; or
(c) become a member of the company under section 167 (membership arising from conversion of a company from one limited by guarantee to one limited by shares).
S 232 CA provides:
232 Grounds for Court order
The Court may make an order under section 233 if:
(a) the conduct of a company’s affairs; or
(b) an actual or proposed act or omission by or on behalf of a company; or
(c) a resolution, or a proposed resolution, of members or a class of members of a company;
is either:
(d) contrary to the interests of the members as a whole; or
(e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.
For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.
Note: For affairs, see section 53.
S 233 CA provides:
233 Orders the Court can make
(1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order:
(a)    that the company be wound up;
(b)    that the company’s existing constitution be modified or repealed;
(c)     regulating the conduct of the company’s affairs in the future;
(d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;
(e) for the purchase of shares with an appropriate reduction of the company’s share capital;
(f) for the company to institute, prosecute, defend or discontinue specified proceedings;
(g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company;
(h) appointing a receiver or a receiver and manager of any or all of the company’s property;
(i) restraining a person from engaging in specified conduct or from doing a specified act;
(j)    requiring a person to do a specified act.
Order that the company be wound up
(2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply:
(a) as if the order were made under section 461; and
(b) with such changes as are necessary.
Order altering constitution
(3) If an order made under this section repeals or modifies a company’s constitution, or requires the company to adopt a constitution, the company does not have the power under section 136 to change or repeal the constitution if that change or repeal would be inconsistent with the provisions of the order, unless:
(a) the order states that the company does have the power to make such a change or repeal; or
(b)    the company first obtains the leave of the Court.
The rule called the ‘no reflective loss’ rule means that merely because a company has suffered damage does not mean that a shareholder, who has an interest in that company, may recover damages. In general, a shareholder cannot recover a sum equal to the reduction in the market value of the shares held by that shareholder which are reflected in the losses sustained by the company in its operations. Such a loss is a reflection of the loss suffered by the company. In general, a shareholder does not suffer personal loss but only through the company in the reduction in the value of net assets of the company. This is because the shares of a shareholder provide to that person a right of participation in the company according to the constitution of the company. Even if there has been wrongdoing, the shares and the right of participation within the business of the company are not directly affected by that wrongdoing. Thus, the shareholder continues to hold the shares which reflect the shareholders rights in that company.
The operation of this rule avoids double recovery by a shareholder and the company, and recognises that if a company chooses not to bring an action against the wrongdoer, then any loss suffered by the shareholder is caused by the decision of the company and not by the wrongdoer. The decision by the company not to pursue the wrongdoer ensures the autonomy of the company.
Chapter 2F CA provides in s 232 powers for a court to make orders under s 233 if the conduct of the affairs of a company is contrary to the interest of the members as a whole or is oppressive to, unfairly prejudicial to or unfairly discriminatory against a member or members whether in that capacity or in any other capacity. As has been seen, Mr Wilson has majority control of the issued shares in MoveIt4U South Australia Pty Ltd. There was no evidence before the Court of any application being taken for orders under part 2F CA.[309] For example, if the Court is satisfied that there are grounds for making an order under s 232 CA, it may authorise either for the company to institute, prosecute, defend or discontinue specified proceedings (s 233(1)(f)) or to authorise a member to institute, specified proceedings in the name of and on behalf of the company (s 233(1)(g)).
[309] For the avoidance of doubt, this Court does not have jurisdiction to make these orders under the Corporations Act 2001 (Cth).
In the absence of a Court concluding that the affairs of a company are being conducted oppressively and in the absence of an application under s 233 for orders by the Court, I consider that there is a potential difficulty in Total Logistics sustaining its claim for damages on the basis currently pleaded.
As I have not heard the parties on this topic, it is appropriate that I express no concluded view and I will hear the parties further in relation to these matters.
I find that there is no basis for any orders to be made under s 75AB of the Competition and Consumer Act 2010. There is no factual or legal basis to do so for all of the reasons I have discussed here.
It will be necessary to receive further submissions from the parties in relation to damages in light of my findings about causation. These findings must be taken into account on the question of damages.
In the premises, I am satisfied that:-
1.   In April 2019, representations were made by Mr Wilson to Mr Tarca which induced Mr Tarca to involve himself and his company Total Logistics in a form of corporatised joint venture with Mr Wilson in order to commercialise the software application described as the MoveIt4U System.
2.   In the period between April 2019 and August 2019, Mr Rodney Wilson continued to make representations to Total Logistics, Mr Tarca and Mr Victory that the MoveIt4U System was operating in New South Wales, it had three hundred customers in the system and $500,000 of turnover.
3.   In August 2019, Mr Wilson represented to Mr Tarca and to Mr Victory that the MoveIt4U System is operating in New South Wales, that it had three hundred customers using the system and this proved the concept of the system.
4.   The representations made by Mr Wilson impliedly represented that the MoveIt4U System was transparent and trusted within its market including in relation to its future operations.
5.   In reliance upon and in conformance with the representations made by the respondents:-
5.1MoveIt4U South Australia Pty Ltd was incorporated on 22 May 2019 and the respondents controlled 51% of the issued capital of that company; and
5.2On 29 October 2019, Acquire4U Solutions Pty Ltd, Total Logistics Pty Ltd and Mr Peter Victory entered into a shareholder’s agreement for the governance of their roles as shareholders and directors within MoveIt4U South Australia Pty Ltd.
6.   The MoveIt4U System was not operating in the market in New South Wales, it did not have three hundred customers, it did not have a turnover of $500,000, it was not a transparent system because of the possibility of manipulation of charges within the system, it was not trusted at that time in the market because it was not operating and so it had no identifiable prospects of trading in the future.
7.   The representations made by Mr Wilson to Mr Tarca during 2009 as to existing facts concerning the MoveIt4U were misleading.
8.   The representations made by Mr Wilson to Mr Tarca as to future matters concerning the MoveIt4U System were made without any basis of reasonableness such that the representations were made without any reasonable grounds for making them.
9.   Mr Wilson was a person who was knowingly concerned in the making of the representations by Acquire4U Solutions Pty Ltd.
10.   The claim of Mr Victory is dismissed.
11.   The court will hear the parties further in relation to damages and other consequential orders and on costs.