WCW Pty Ltd v Charthill Ltd

[1992] FCA 318

JUDGMENT No. ..5.!%../.,92

TN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION	No. QG 5 of 1991
B E T W E E N :

WCW PTY. LTD.

Applicant

And :  CHARTHILL LIMITED

First Respondent

And :  CHARTHILL BUSINESS BROKERS
(QLD) PTY. LTD.

Second Respondent

And :  HENRI VAN RYN

Third Respondent

And :  ELZA VERONICA BRAIN

Fourth Respondent

And :  BOLSTER & CO. (a firm)

Fifth Respondent

Coram:	Olney J
Place:	Melbourne (heard in Brisbane)
Date:	25 May 1992
3. ,The assessment of damages in respect of the judgment against the second respondent remain reserved;

MINUTE OF ORDERS

THE COURT ORDERS that:

1.   The applicant's claim against the third and fourth respondents be dismissed;

2.   The applicant's claim agalnst the fifth respondent be dismissed;

4.    The question of costs be reserved;

AND DIRECTS that:

5.   Within 14 days the parties be at liberty to file and serve written submissions concerning any proposed order in relation to the costs of the proceedings;

6.    Within 14 days the applicant cause to be served at the registered office of the second respondent copies of this order and the reasons for judgment published herein;

1. Within 14 days after service of the documents referred to in paragraph 6, the second respondent be at liberty to enter an appearance and make any application deemed appropriate;

2. Any application made by the second respondent pursuant to the leave granted in paragraph 7 be returnable on a date to be fixed after consultation with the District

Registrar;

1. In the event that the second respondent does not make any application pursuant to the leave reserved in paragraph

   7, the applicant may request that the Court proceed to

   assess damages against the second respondent.

NOTE :	Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA	)
QUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1  No. QG 5 of 1991
B E T W E E N :

WCW PTY. LTD.

Applicant

And :  CHARTHILL LIMITED

First Respondent

And :  CHARTHILL BUSINESS BROKERS
(QLD) PTY. LTD.

Second Respondent

And:  HENRI VAN RYN

Third Respondent

And :  ELZA VERONICA BRAIN

Fourth Respondent

And :  BOLSTER & CO. (a firm)

Fifth Respondent

Coram:	Olney J
Place:	Melbourne (heard in Brisbane)
Date:	25 May 1992

REASONS FOR JUDGMENT

1. INTRODUCTION

Early in 1988 the applicant purchased from the third and fourth respondents Frenchman's Food Products, a business then conducted at Southport in Queensland, together with the premises from which the business was conducted. Within about

2 years the business had failed and ceased to operate. The

applicant now seeks to recover damages from the business broker which negotiated the sale (the second respondent), the vendors of the business and premises (the third and fourth respondents) and a firm of solicitors engaged by the applicant to act in relation to the transaction (the fifth respondent). Various causes of action are pleaded and these will appear later when the pleadings are analysed. It will be convenient to first introduce the various participants in the events under consideration and to explain something of their background.

WCW Pty Ltd (WCW) is the applicant in the proceedings. It is a company incorporated in Queensland on 25 September 1987 and was the purchaser under two contracts each dated 17 February 1988 whereby it purchased unit 5/37 Bailey Crescent, Southport (the premises) and the business known as Frenchman's Food Products (the business).

Lothrop Hooper Wakefield Jnr (Wakefield) is an experienced

businessman and was at all material times the major	shareholder in WCW and chairman of its Board of Directors.
For all practical purposes he represented WCW in all its dealings in relation to the company's activities. Prior to his dealings with the third and fourth respondents he had been seeking to purchase a business in the general vicinity of Southport and in pursuit of that goal had had some dealings with Charthill Business Brokers and its employee Gordon Cunnington as well as with the fifth respondent.
Neil Joseph Wilson (Wilson) was at relevant times a minor shareholder in and a director of WCW. For part of the period during which WCW operated Frenchman's Food Products, he was actively engaged on a daily basis in the conduct of the business.
Karine Elizabeth Wilson (Mrs Wilson) is married to Wilson. She took a very minor part in the operation of the business.
Henri Van Ryn (Van Ryn) and Elza Veronica Brain (Mrs Brain)
are the third and fourth respondents. They were the vendors
under both contracts. Prior to selling to WCW they had
carried on Frenchman's Food Products in partnership for over 3
years. Van Ryn had produced and marketed a product which he
called pate under the name Frenchman's Food Products since the
late 1970s and he had done this at various restaurants and
premises. (Throughout these reasons in referring to the
product made by Van Ryn and la$er by Frenchman's Food Products
the common Anglicised spelling is adopted rather than the

French word p%+.) Van Ryn first registered Frenchman's Food

Products as a business name in January 1980. In January 1985 he took Mrs Brain into partnership and commenced to conduct the business at rented premises at 8/11 Bailey Crescent, Southport. The product produced by the business was pate. In July 1986 the business was relocated to the premises at 5/37 Bailey Crescent which Van Ryn and Mrs Brain purchased for that purpose.

Charthill Limited is a company incorporated under the law of Western Australia on 10 September 1985. It is named as the first respondent in the proceedings and although it entered an appearance and pleaded a defence it took no part in the trial, the applicant having at the commencement of the hearing sought, and been granted by consent, leave to discontinue the application so far as it related to the first respondent. In the statement of claim the applicant pleads that Charthill Limited and the second respondent carried on business as business brokers under the name of Charthill Business Brokers but this is denied in the first respondent's defence. The true relationship between the first and second respondents and their respective involvement in the business carried on as Charthill Business Brokers was not a matter which was pursued at the trial.

Charthill Business Brokers (Qld) Pty Ltd was incorporated as a company under the law of Queensland on 12 January 1988 and is named as the second respondent. It was duly served but did

was entered against it for damages to be assessed.	not enter an appearance. On 5 April 1991 judgment by default
Gordon Cunninston (Cunnington) was at the relevant time a business consultant employed by the first and second respondents. In the course of his occupation he became acquainted with Wakefield and was aware of his desire to purchase a business. Not long before Frenchman's Food Products was listed for sale, he had been involved with Wakefield in negotiating the purchase of another business, but that had fallen through. When Cunnington received instructions from Mrs Brain to sell Frenchman's Food Products he sought out Wakefield and later introduced him as a potential purchaser.
Bolster & Co. is the fifth respondent. It is a firm of solicitors practising from premises in Tweed Heads, NSW. It was engaged by WCW to act on the company's behalf in relation to the purchase of the business and premises.
Paul Anthony Bolster (Bolster) is a solicitor of the Supreme Courts of Queensland and New South Wales and was the partner in Bolster & Co. with whom WCW, through Wakefield, dealt in relation to the purchase of the business and premises.
Merelyn Shirley Turner (Mrs Turner) was employed as a legal secretary in the office of Bolster & Co. during part of the period that the purchase of the business and premises was
receiving attention.
Philip Anthony Flay (Flay) is the Environmental Health Officer of the South Coast Regional Health Authority, a new authority which took over responsibility from the Queensland Health Department on 1 July 1991. Prior to that date he had been District Health Inspector responsible for the Gold Coast area and at times relevant to these proceedings was the superior officer of Environmental Health Officer Shillig.

Duncan Robert Haiq (Haig) is an inspector employed by the Veterinary Public Health Branch of the Queensland Department of Primary Industries (the DPI).

Gregory Shilliq (Shillig) is an Environmental Health Officer employed by the Queensland Department of Health. He is currently stationed at Townsville, but formerly (during the period 1987 - 1989) he was employed as a health inspector in the Gold Coast District Office of the Division of Environmental and Occupational Health.

Bryan James Barker (Barker) is an Environmental Health Officer employed by the Gold Coast City Council (the GCCC).

John Patrick Nisbet (Nisbet) is a senior inspector employed by the DPI in the Veterinary Public Health Branch which is responsible for the administration of the Meat Industry Act and the Meat Industry Requlations in so far as they relate to the production and manufacture of prescribed meats. In

particular the branch is responsible for the licensing of	butcher's shops and the enforcement of regulatory
requirements.
Peter Cranston is director of the Food Industry Development Centre in the University of New South Wales. He carried out a theoretical calculation to establish the meat content of the product made in accordance with Van Ryn's recipe and was called to give evidence to establish that the meat content

exceeded 51%, but his evidence failed to live up to the applicant's expectation and indeed supported Van Ryn's assertions. There will be no need to refer further to it.

At the trial, evidence was given by a number of witnesses in addition to those named above. It is not necessary here to identify them individually but sufficient to say that they fall into two categories, namely, expert witnesses who gave opinion evidence concerning the value of the business and the premises and experienced solicitors who gave opinion evidence concerning the functions of a solicitor engaged in this type of transaction.

The application, which was filed on 16 January 1991, claims:

1.    Against the First and Second Respondents:

(a) damages pursuant to Section 82 of the Trade

Practices Act 1974;

(b) interest;

(c) costs.

2 .    Against the Third and Fourth Respondents:

(a) damages pursuant to Section 82 of the Trade

Practices Act 1974 or alternatively for deceit

or negligence;

(b) interest;
(C) costs.

1. Against the Fifth Respondent:

   (a) damages for breach of contract or negligence;
   (b) interest;
   (C) costs.

2. PLEADINGS

(a)

The claim aqainst the first and second respondents

The case pleaded against the first and second respondents is that by two contracts in writing, each dated 17 February 1988, the applicant agreed to purchase the business and the premises from the third and fourth respondents for $75,000 and $100,000 respectively. The first and/or second respondent acted as agent for the third and fourth respondents in advertising the business and the premises for sale and introducing prospective purchasers. Before the applicant executed the contracts the first and/or second respondent by their or its servant or agent Cunnington, by delivering to the applicant a document headed "Dated 11.2.88 Location Unit 5/37 Bailey Crescent Business for Sale" (the listing card) represented that the product manufactured by the business (the product) was pate and that the manufacture

and sale of the product from the premises as pate was "Health Department approved" (the Cunnington representations). The applicant relied upon the Cunnington representations in entering into the contracts.

Each of the Cunnington representations was false in that:

(a)	the product contained greater than 51 per cent but less than 66 per cent meat content;
(b)	pursuant to the Food Standard Requlations 1987 and the Food Standards Code adopted thereunder the product could not lawfully be sold or described as pate as it contained less than 66 per cent meat;
(c)	pursuant to the Meat Industry Act and regulations, the product could only lawfully be manufactured in a licensed class 2 butcher's shop;
(d)	the premises were not a licensed class 2 butcher's shop;
(e)	the premises were too small to be licensed as a class 2 butcher's shop.

(These assertions are later referred to as the matters
pleaded in paragraph 6.)

It is said that the Cunnington representations constituted conduct in contravention of section 52 of

the Trade Practices Act 1974.

It is unnecessary to refer to the details of the defence filed by the first respondent.

The second respondent did not enter an appearance. According to the Court record the first directions hearing was held on 28 February 1991 when each party other than the second respondent appeared. The second

respondent not having appeared, the applicant, apparently by oral application without notice, sought judgment by default but that application was adjourned to the next mention date namely 5 April 1991. On that occasion the second respondent again dld not appear. The Court record indicates that the Court having noted that the second respondent had been served at its registered office, "and in default of appearance or attending last directions or today" ordered that judgment be entered against the second respondent with damages to be assessed.

With respect, I have grave doubts as to whether it was open to the judge on 5 April 1991 in the absence of any motion on notice to have entered judgment against the second respondent. The relevant provision of the Federal Court Rules is Order 10 Rule 7 which contemplates that there first be an order that a party take a step in the proceeding and that the Court be moved on notice. No such order was made in respect of the second respondent

Whatever may be the true position with respect to the nor was notice given of the motion for judgment.

judgment entered against the second respondent, it does not amount to a finding in these proceedings of any of the facts alleged in support of the claim that the second respondent contravened section 52 of the Trade Practices Act in respect of which the applicant says the third and fourth respondents were knowingly concerned.

(b) The claims aqainst the third and fourth respondents

The first cause of action pleaded against the third and fourth respondents is that they were knowingly concerned in the contravention of section 52 of the Trade practices

Act by the first and second respondents. It is said that

they instructed the first and second respondents to make the Cunnington representations or alternatively, supplied the information forming the substance of the representations to the first and second respondents knowing they would make such representations and that they knew the representations were false.

It is further pleaded that before the applicant executed the contracts, the third and fourth respondents, at the premises, made certain oral representations (the oral representations) to Wakefield and thereby to the applicant, namely that the product of the business was pate, that all necessary business, health and government

been granted by all relevant authorities, that approvals for the manufacture of pate by the business had

manufacture of pate by the business was lawful and that the business had all necessary consents. It is claimed that the third and fourth respondents made the oral representations to induce the applicant to enter into the contracts and that the applicant relied upon the oral representations, in entering into them. The third and fourth respondents sought further and better particulars

of the oral representations. The final form of the applicant's response to this request is found in its second amended further and better particulars. The particulars are:

(a)	The representation that the produce was pate was made by the third and fourth respondents to Wakefield at the premises on 12 February 1988 and 23 February 1988;
(b)	The representation concerning business and other approvals was made on 10 February 1988 by Cunnington at his office by presenting the listing card to Wakefield and Wilson, and on 12 February 1988 by Van Ryn at the premises when in answer to Wakefield's question, "Do you have authorities to run the business?" Van Ryn replied, "Yes, we do". It is also said that on 23 February 1988 at the premises in reply to Wakefield's question, "What authorities do you have to operate?" Van Ryn produced a letter from the GCCC dated 15 May 1985 and said, "This is
the authority".

In respect of the representations that manufacture of pate by the business was lawful and that the business had all necessary consents the applicant replied to the request for particulars by simply repeating the foregoing particulars.

As the applicant pleads that the oral representations were made before it executed the contracts, it follows from the particulars that it is the applicant's case that they were not executed until at least 23 February 1988.

The applicant says that the oral representations were false (and repeats the matters pleaded in paragraph 6), that the third and fourth respondents knew them to be so or were recklessly indifferent as to whether they were true or false.

In the alternative, the applicant pleads that the third and fourth respondents made the oral representations negligently.

The third and fourth respondents admit that by two contracts in writing, each dated the 17th day of February

1988, the applicant agreed to purchase the business and

the premises from them for the sums previously mentioned but they do not admit that the first and second

made the representations alleged. They deny that the	respondents acted as their agents nor that Cunnington
applicant relied on the Cunnington representations and say that it entered into the contracts after making its own investigations relating to the business and the premises and further they plead that clause 12 of the contract for the sale of the business provided:

The Purchaser acknowledges that no representations in

connectaon wath this sale have been made by the Vendor and that he, the Purchaser, has completed the said purchase after satisfactory personal anspection and investigataon of the said premases and busaness and the said faxtures, fattings, plant, trade utensils, implements, stock and licences and has perused such records of fanancial transactaons relating to the said busaness as he has desared to anspect.

They admit that the premises were not licensed as a class

2 butcher's shop but say that the product sold by the

business prior to its sale contained less than 51% meat and that it could lawfully be manufactured in premises not so licensed. Their general denial in relation to the matters pleaded against the first and second respondents extends to denying that the Cunnington representations constituted conduct in contravention of section 52 of the

T r a d e P r a c t i c e s A c t .

The third and fourth respondents also deny that they were knowingly concerned in the alleged contravention of section 52 of the T r a d e P r a c t i c e s A c t by the first and second respondent and deny the facts pleaded in support

of that allegation.

In response to other matters pleaded against them the third and fourth respondents say that before the applicant executed the contracts, they advised the applicant that the premises were approved for use as a commercial food factory and could be used as such provided that the product produced had a meat content of less than 51% and that the wording of the labels on the product would need to be altered once existing labels were exhausted, as to which the applicant should contact the Health Department to ascertain its requirements.

On the eighth day of the trial the applicant sought leave to amend its statement of claim to plead several additional causes of action. The proposed amendment first seeks to add additional paragraphs to plead (in paragraph 13A) that the third and/or fourth respondent informed the first and/or second respondent or Cunnington that:

(a) the business was Health Department approved; and/or

(b)	the manufacture of "pate" by the business was Health Department approved; and/or
(c)	the business had all necessary business, health and government approvals for the manufacture of "pate"; and/or

(d) the premises were Health Department approved; and/or

(e)	the manufacture of "pate" at the premises was Health Department approved; and/or
(f)	manufacture of "pate" by the business was lawful; and/or

(g) the business had all necessary consents;

but refrained from and otherwise failed to inform them, it or him of the matters pleaded in paragraph 6 (paragraph 13A) and further that the first and/or second respondent or Cunnington refrained from and otherwise failed to inform the applicant thereof (paragraph 13C).

It is said that having regard to the fact that the first and second respondents acted as agent for the third and fourth respondents in the sale of the business and the premises and/or having regard to the Cunnington representations, the third and fourth respondents were under a duty to inform the first and/or second respondent or Cunnington of those matters and in the premises the first and second respondents' failure to inform the applicant of those matters was conduct which contravened section 52 of the Trade Practices Act, and the third and fourth respondents were knowingly concerned in such contravention.

The proposed amendment also seeks to plead that the third and fourth respondents were under a duty to inform the applicant of the matters pleaded in paragraph 6 and that

in breach of that duty they refrained from or otherwise	failed to inform the applicant of those matters.
Further and alternatively the applicant seeks to amend the statement of claim to plead that the contracts contained a warranty or alternatively that it was warranted that the business had all necessary business, health and government approvals for the manufacture of pate from the said premises; and/or manufacture of pate by the business from the said premises was lawful; and/or
the business had all necessary consents.
The proposed amendment concludes by asserting that in consequence of the claimed breaches of duty and/or negligence of the third and fourth respondents the applicant entered into and completed the contracts and thereby suffered loss and damage.
The application to amend was opposed by counsel for the third and fourth respondents principally on the ground that "the evidence makes the proposed amendments futile", but it was conceded by counsel that should the amendments be allowed, he would not seek to call any other evidence on behalf of his clients. I reserved my decision on the application to amend to be dealt with in my judgment.
Whllst counsel's assessment of the state of the evidence at the time the amendment was sought may well have been
was it the case that to allow the amendments would be justified, no findings had at that stage been made nor
unfair or otherwise cause a disadvantage to the respondents which could not be compensated for.
In these circumstances, it is appropriate that the applicant be permitted to amend its statement of claim to remedy what may be perceived to be a defect in the pleadings and to allow the determination of all issues
which arise in the proceedings. Accordingly, leave is granted to amend the statement of claim in the terms of the minute tendered on 19 March 1992. The third and fourth respondents have not had the opportunity to plead to the amendment, but as no new issue of fact is raised by the amendment, it is appropriate that I take note of the respondents' responses to the same or similar allegations made elsewhere in their defence.

(c) The claim aqainst the fifth respondent

The applicant claims that prior to executing the contracts Wakefield as a director of WCW retained the fifth respondent to act as its solicitor to advise regarding proper terms to be included in the contracts and as to any matters necessary to protect the applicant's interests in entering into them and to act as its solicitor in respect of the purchase pursuant to the contracts if and when they were executed. It is said

Wakefield and Bolster at the fifth respondent's office. that the retainer was made by oral agreement between

It is claimed that it was an implied term of the retainer that the fifth respondent would act with the reasonable care, skill and diligence of a competent solicitor or alternatively that the fifth respondent owed the applicant a duty to act with reasonable care, skill and diligence.

The applicant complains that in breach of the retainer and negligently the fifth respondent:

(a)

failed to ascertain which licenses were required for the lawful manufacture of the product on the premises ;

(b)

failed to ascertain what requirements had to be met for the lawful sale of the product as pate;

(c)

failed to advise the applicant to ascertain the matters referred to in (a) and (b) above;

(d)

failed to advise that there should be included in the terms of the contracts:

(i)	a warranty that pate could be lawfully manufactured on the premises; and
(ii)	a warranty that the product manufactured by the business could be lawfully sold as pate;

(iii)a term that the applicant would be able to rescind the contract for breach of either of the said warranties;

and that as a consequence thereof, the applicant entered

and damage.	into and completed the contracts whereby it suffered loss
In answer to the fifth respondent's request for further and better particulars the applicant says that the fifth respondent was retained on 17 February 1988.
The fifth respondent admits that at all material times it was a firm of solicitors and that it was retained by the applicant to act as its solicitors but says that it was
retained after the contracts were signed and otherwise denies the details of the retainer pleaded by the applicant.

The fifth respondent admits the implied term and duty of care pleaded by the applicant but denies the alleged breach and negligence, and denies that, as a consequence of the alleged breach and negligence, the applicant entered into and completed the contracts and that it thereby suffered loss and damage.

(d) The claim for damaqes

The applicant pleads that in an attempt to mitigate its loss it traded until 31 January 1990 and then ceased to trade because it was unable to sell the product as pate and was unable to lawfully manufacture the product on the premises without carrying out substantial works.

Particulars of the alleged loss and damage include claims

for: 

(a) the difference between the purchase price and the claimed value of the business at the date of purchase;

(b) trading losses;
(c) acquisition costs;

(d) interest foregone on the applicant's contribution towards the purchase price;

(e) interest on mortgage finance; 

(f) interest for loss of the use of money expended in the business;

(g) the anticipated costs upon sale.

The third and fourth respondents deny that the applicant suffered loss and damage by entering into the contracts, and as to the other matters pleaded:

(a)	admit that the applicant ceased to trade on or about 31 January 1990;
(b)	say that the applicant ceased to trade because it:

(i) failed to conduct the business in a competent or proper manner;

(ii) failed to employ competent cooks and other employees;

(iii)failed to manufacture the product in accordance with the recipe delivered to it at settlement or otherwise failed to manufacture the product

content was less than 51%; in a manner to ensure that the product's meat

(iv)alternatively to (iii), neglected to seek or obtain dispensation from relevant authorities so as to be entitled to produce products with a meat content of 51% or more from the premises, and failed to carry our minor modifications to the premises in order to be licensed as a class 2 butcher shop, and in the further alternative,

failed to manufacture the product from other
premises ;

(v)   took no steps to omit the word "pate" from labels on the product;

(vi)  failed to maintain the goodwill and customers associated with the name "Frenchman's";

(vii)  lost customers and incurred unnecessary expense in altering the packaging of the product;

(viii)  significantly altered the manner in which the product was prepared, resulting in a marked deterioration in the taste of the product;

failed to maintain any proper system of control
over the quality of the product;
failed to maintain existing systems of
distribution and marketing;

(xi)  failed to properly promote the product;

(xii)  failed to meet the standards and packaging of competitors and to expand its range of products.

And in response to the applicant's particulars of damage

the third and fourth respondents:

(a)	deny that the applicant suffered loss and damage of the extent alleged in the particulars;
(b)	alternatively, deny that the loss and damage alleged was caused by the conduct alleged in the statement of claim;

(c) further, and in the alternative, say that the

applicant failed to mitigate any such loss and damage by reason of the matters particularised above.

The fifth respondent denies each allegation of fact pleaded in the claim for damages.

3. THE REGULATORY REGIME

(a) The requlations

The statutory and regulatory regime affecting the use of premises for the manufacture of food in Queensland and the restrictions and obligations associated therewith are complex. To assist a better understanding of the issues in the proceedings I will identify the relevant regulatory provisions in so far as they relate to the business of Frenchman's Food Products and the premises upon which it was conducted. But first it will be

dispute. helpful to refer to several facts which are not in

During the whole period he was engaged in the business of Frenchman's Food Products, Van Ryn, and later Van Ryn and Mrs Brain, manufactured a product which was described as pate. This is a product containing a number of ingredients and it is produced by a process involving cooking. Chicken livers was the main ingredient of the

product in terms of the weight of the various ingredients. Several different flavours of pate were produced. The containers in which the product was sold were labelled and on the label the word "pate" in combination with the words "de Foie" appeared with an appropriate description e.g. "Pate de Foie au Poivre Craque (with cracked peppers)", "Pate de Foie aux Apricots et Brandy (with apricots and brandy)", "Pate de Foie aux Herbes (with herbs)".

The labels used by Van Ryn and Mrs Brain contained a statement of the ingredients of the product and in each case the first named ingredient was chicken livers.

In the period from January 1985, when Van Ryn and Mrs Brain entered into partnership, until the business was sold to WCW in March 1988 it was conducted successively from 2 different premises which can best be described as factory units both situated in Bailey Crescent,

was registered as a butcher's shop. Although some minor	Southport. Neither of the 2 premises used in this period
sales were made directly from the premises, they were in effect used only for the manufacture and preparation for sale of pate.
The Meat Industry Act 1965 (Qld) is an act to consolidate and amend the law relating to the meat industry and is under the administrative control of the Minister for
Primary Industries. The Act itself is relevant only in so far as it contains a number of definitions and authorises the making of regulations. In exercise of that power the Meat Industry Requlations 1973 at all relevant times provided:

119. (1) A person shall not use premises as a butcher's shop unless such premises are registered rn accordance wlth the provisions of these Regulations.

(2) The provisions of subregulatron (1) of thrs Regulatron shall not apply to premises used for the sale of prescribed meats or poultry meat but not kept or used for the storage for sale, the preparation for sale or the sale of meats other than prescrrbed meats or poultry meat or for the storage other than for sale or for the manufacture or preparation for sale of prescrrbed meats or poultry meat.

120.  Butchers' shops shall be classifred according to the fol1owlng:-

(a)	Class 1 - premlses other than those specrfied as Class 2, Class 3, Class 4 or Class 5;
(b)	Class 2 - smallgoods factories;
(c)	Class 3 - pre-wrapped meat shops;
(d)	Class 4 - cold stores; and
(e)	Class 5 - a unlt located within a retall meat market.

not in a way which has any bearing upon these	(Subregulation 119(2) was amended on 31 August 1989 but
proceedings.)
In order to understand regulations 119 and 120 it is necessary to refer to the following definitions.

"Butcher's Shop" - Any place kept or used for the storage of meat for sale, or for the preparation for sale or sale of meat,

o r f o r any purpose of o r connected wlth t h e s to rage of m e a t f o r

s a l e , o r t h e prepara t lon f o r s a l e o r s a l e of meat, and any

v e h i c l e kept o r used f o r o r m connection wlth t h e s to rage of

meat f o r s a l e , o r ca r r i age o r de l ivery of m e a t , and any appliance prescr ibed by t h e Governor i n Council by Order i n Councll t o be a butcher ' s shop:

The term lncludes any p lace kept o r used f o r t h e manufacture o r prepara t lon f o r s a l e of prescribed meats but does not inc lude a

small goods shop;	(Regulatron 3 )
"Meat"	- The whole o r any portaon of t h a t p a r t of t h e ca rcass
of	any s tock t h a t i s ordinarily used o r consumed f o r t h e food
of	man, whether i n its na tu ra l s t a t e o r prepared by f reez ing ,

chilling, preserving, s a l t i n g o r o ther process, and includes-

( a )	a food of man t h a t contalns not less than 51 pe r c e n t of
meat; o r
( b )	a food of man, whlch is l abe l l ed wlth i ts lngredren t s i n accordance wlth t h e Food Standard Regulations 1982 made under t h e Food Act 1981, of which t h e f i r s t ingredient is expressed t o be meat;

Except where otherwise prescribed t h e t e r m inc ludes pou l t ry

meat. (Sect lon 6 )

"Prescribed meats" - Bacon, brawn, cooked meats, dripping, l a r d , ham, p l g s ' cheeks, p lgs ' kidneys, p i g s ' t a l l s , p ickled

pork hocks, pork bones, pork f i l l e t s , sausages, t l n n e d meats

and t r o t t e r s :

The t e r m a l s o includes any meats prescrrbed by t h e Governor i n Councll by Order i n Councll i n addrt ion t o o r i n substitution

f o r any such meats; (Sect ion 6 )

"Small goods Shop" - Any place kept o r used f o r t h e s a l e of any prescr lbed m e a t but not kept o r used f o r t h e s to rage f o r s a l e ,

t h e prepara t ion f o r sa le , o r t h e s a l e of meats o t h e r t h a n

prescr ibed meats o r f o r t h e s torage o the r than f o r s a l e o r t h e

manufacture o r prepara t lon f o r s a l e of prescr ibed meats:

The t e r m lnc ludes any p lace which is prescrlbed by t h e Governor i n Council by Order l n Council t o be a small goods shop;

(Sect lon 6)

"Poultry m e a t " - The whole o r any portron of t h a t p a r t of t h e

ca rcass of any poul t ry t h a t rs o rd rna r l ly used o r consumed f o r

t h e food of man, whether i n l ts na tu ra l s t a t e o r prepared by

f reez ing, c h i l l i n g , preserving, s a l t l n g o r o t h e r process;

(Sect lon	6 )
"Poultry" - Fowls, ducks, geese, turkeys, gurnea fowls, and

plgeons, and t h e young the reof , and any o t h e r b i r d s whlch t h e Governor l n Councal by Order i n Council from t i m e t o tune dec la res t o be pou l t ry under and f o r t h e purposes of t h i s A c t ; (Sect ion 6 )

"Smallgoods fac tory" means a place r e g i s t e r e d a s a bu tcher ' s shop a t whrch prescr ibed meats are prepared, processed o r manufactured f o r s a l e o the r than a t such premises; (Regulat ion 3)

T h e r e can be no q u e s t i o n t h a t chicken l ivers are "pou l t ry

meat" and t h u s "meat". Fu r the r , a food of man (e.g.

p a t e ) t h a t con ta ins no t less than 51% of chicken l ivers

and/or other meat, is also "meat", and being "meat" which has been cooked, would be a "prescribed meat". It follows that premises used for the manufacture of pate which contains not less than 51% of chicken livers, would be a "butcher's shop" and may not be used as such unless registered as a class 2 butcher's shop whereupon it would become a "smallgoods factory".

Paragraph (b) of the definition of "meat" presents something of a problem. The Food Standards Requlations 1982 made under the Food Act 1981 were replaced on 27 August 1987 by the Food Standards (Adoption of Food Standards Code and General) Requlations 1987 which adopted as the law of Queensland The National Health and Medical Research Council Food Standards Code published in the Commonwealth Gazette dated 27 August 1987 (the Food Code). The administration of the Food Act is vested in the Minister for Health.

The Food Standards Requlations 1982 contained extensive	provisions relating to the labelling of food but it does
not appear that any obligation was created by the regulations to label food. However, as it is common cause that at all times the product produced by the third and fourth respondents was labelled, there was an obligation to comply with the regulations in so far as they controlled the form and content of the label. The following portions of regulation A 1 have relevance:

A 1 ...

(5 ) ( a ) The l a b e l on o r at tached t o a package

conta in ing food s h a l l conta in a statement of

t h e ingred ien t s and components of t h e food

contained i n t h e package m t h e manner

prescr ibed by t h i s regulatron.

(b ) A l l t h e ingredients of a packed food and, as

required by t h i s regulat ion, t h e components of a packed food s h a l l be declared i n a statement i n t h e l a b e l by use of t h e

prescribed name o r appropriate designation

arranged i n descending order of t h e proportron by weight of t h e rngredient o r component contamed i n t h e packed food save t h a t -

(i)   .. .

( i v )	t h e following foods a r e exempt from t h e
ingredient l abe l l rng requirements of
t h i s regula t ion subjec t always t o any
s p e c i f i c regulation i n respect of t h o s e

foods -

( A ) ...

( E ) food i n a package t h a t has a

t o t a l ,surface	area	of	l e s s t h a n
100 cm .

Although no evidence was given at the trial as to the total surface area of the package which the third and fourth respondents used, counsel agreed that it was in excess of 100 cm2, a conclusion which is consistent with

my own calculations. It follows that the labelling used by the third and fourth respondents was required to	contain a statement of the ingredients of the product and
that the ingredient "chicken livers" was required to be stated first. This obligation was in fact complied with in respect of each of the various pate flavours produced by the third and fourth respondents. Notwithstanding the percentage of the meat content of the product, the effect of so labelling the containers was that the product was

within the definition of "meat" and it follows that the premises were at all times a butcher's shop, and to use them as such was prohibited without them being duly registered.

Following the adoption of the Food Code in place of the Food Standards Requlations 1982, there was no relevant change in the regulatory provisions relating to the labelling of packaged food. Section 8(l) (b) of the Acts

Interpretation Act 1954 (Qld) requires that the reference

in the Meat Industry Act to the Food Standards

Requlations 1982 be read as a reference to the Food Code.

I now turn to the regulations relating to food standards.

Regulation C1 of the Food Standards Requlations 1982 provided :

Cl. M e a t . (1) (a) Meat a s an edable p a r t of any c a t t l e

o r of a buffalo, sheep, p ~ g , r a b b l t , goat o r

bard o the r than game, t h a t is ordanar i ly

consumed a s food by man, whether i n a f r e s h ,

c h i l l e d o r frozen s t a t e .

(i) Manufactured meat not otherwise

standardized by t h e s e r egu la t ions is a preparataon of meat t h a t may be whole, minced, chopped, c u t o r commmuted. I t may b e cooked o r

uncooked. It may b e subjec ted t o

t h e ac t ion of smoke derived from

wood o r may contaan smoke

f lavour .

( a i ) Where a product i n which food o r

a maxture of foods o t h e r than

meat is present i n proport ion not

less than 510 g/kg and t h a t food

o r mrxture is f r r s t named i n t h e l a b e l on o r at tached t o a package contarnrng t h e product, then t h e

product s h a l l be deemed not t o be

manufactured meat wi th in t h e

meanrng of t h i s subregulation.

( b ) Manufactured meat -

(i)	s h a l l conta in	not	l e s s than	660
g/kg of meat;

(e) (i) ...

( i i ) The l a b e l on o r at tached t o a

package containrng manufactured meat drsplayed f o r s a l e s h a l l contarn, rn standard type of 3 mm t h e words -

"MANUFACTURED MEAT" . . .

The Food Code adopted a slightly different definition of meat:

(1) ( a ) (1) Meat is t h e whole o r a p a r t of t h e ca rcass

rncludrng	t h e	e d i b l e	o f f a l	the reof ,
o r d i n a r i l y consumed	a s food by	man,	of	any

c a t t l e , buffa lo , sheep, prg, goat , deer ,

r abbr t , hare o r poultry: The term does not

rnclude t h e ca rcass o r p a r t of	t h e carcass of
t h e unborn.

(11) For t h e purposes of t h i s Standard, t h e term

'pou l t ry ' means fowls, ducks, geese, turkeys, pigeons, pheasants, qua i l s , emus, guinea

fowls and o t h e r avian species o r d i n a r r l y

consumed a s food by man.

The Food Code provisions relating to manufactured meat are somewhat more extensive than those of the former regulations. Standard Cl-10 provides:

( 1 0 ) ( a )	(i)	Manufactured meat not otherwise standardised
by t h i s Code i s t h e product prepared from
meat that may be minced, chopped, cut, diced, flaked or comminuted. It may be cooked or uncooked.

(ir) Where a product in whrch food or a mixture of foods other than meat is present in proportion not less than 510 g/kg and that food or mixture is first-named in the label on or attached to a package containing the product, then the product shall be deemed not to be manufactured meat wlthin the meanlng of this clause.

(b) Manufactured meat includes products descrrbed as frankfurts, saveloys, devon, strasburg, salaml, brawn, meat loaf, meat paste or spread rncluding pZt6 (or the product described as 'pate'), meat pattres or by any other word or words havlng the same or a sunrlar effect.

(e) Manufactured meat -

(l) shall conta~n not less than 660 g/kg of meat;

(h) (I) There shall be wrrtten in the label on or attached to a package contalnlng manufactured meat, in standard type of 3 mm -

(A) the words 'MANUFACTURED MEAT' ..

By virtue of subparagraphs 10(a) (i) and lO(a) (ii) of the Food Standards Requlations 1982 a preparation of meat was deemed not to be manufactured meat only if the preparation contained not less than 51% of some other

label of the product. The same construction applies	food or mixture of foods which was first named on the
under the Food Code. This exclusion clearly did not, either before or after the adoption of the Food Code, apply to the product manufactured by the third and fourth respondents. I am satisfied that under the former regulations the product was "manufactured meat" and was required to contain 66% meat, and to be described as

"manufactured meat" on the label.

Even if there be some doubt as to the validity of the construction I have adopted in respect of the former regulations, there can be no doubt at all that after the Food Code came into force the mere description of the product as "pate" was sufficient to require that it contain 66% meat and to be identified on the label as "manufactured meat".

(b) Precontract dealinqs with the requlatory authorities

When Van Ryn and Mrs Brain set up the business in their first factory premises at 8/11 Bailey Crescent in 1985, they did so under the supervision of the appropriate officers of the GCCC. The exact nature of the authority exercised by the GCCC in respect to the premises has not been made to appear from the evidence nor has it been thought necessary to refer me to any statutory or other

provisions that may be relevant. Be that as it may, there is evidence that in April 1985 both the DPI and the

GCCC were taking an interest in the premises. The relevant GCCC file contains a file note dated 23 April 1985:

The D . P . I . are claiming that because pate has a greater meat content than 51% that these premises should come under therr control .

Have rung Bob Sharpe 224 8471 Brrsbane and rndicated t h e reason that w e had approved of these premrses - mainly

because of a food manufacturing business.

Frnd rt hard to accept that expansron of the premises is 3ustrfied in view of the operation. The installation of a cool room 1s desirable and acceptable - at present a domestic refrigerator is used and although a reasonable size it rs not really practrcable.

Although the author of the file note is not apparent from the document itself there is other evidence to indicate that it was written by one Hanlan, a former employee of GCCC whose present whereabouts is not known.

In a letter written to Van Ryn on 26 April 1985 Mr R.W. Sharpe, District Inspector, Veterinary Public Health Branch, Department of Primary Industries (presumably the Bob Sharpe referred to in the GCCC file note), (Sharpe) said:

Dear Srr,

I wrsh to confrrm my discussrons wrth you and Ms. Elza Brain on the 12th and 24th of Aprrl 1985 concerning the manufacture and sale of pate and certarn regulatory requrrements relevant to the regrstration of Class 1 and

2 butcher's shops.

You will recall that District Inspector Robotham and I

had a srmilar discussion with you on the 28th March 1984 and followrng thrs Inspector M. Rickard and I had a further discussron with you at the Eagle Herghts Restaurant, Tamborrne on the 23rd May 1984 regarding the manufacture and sale of pate and other relevant regulatory requirements.

I would advise that your present premises situated at 8/11 Bailey Crescent, Southport do not conform to the prescribed standards.

For your reference and future guidance, the following are copres of the meanrng of the terms meat, prescribed meat and butcher's shops as defined in the Meat Industry Act 1965-1984 and Regulation 119(1)(2) Meat Industry Regulations 1973.

(The letter then quotes in full the definitions of meat and prescribed meats

from the Heat Industry Act 1965 and regulation 119 from the Meat Industry Regulations 1973.)

What, if anything, was resolved between the DPI and the GCCC in the context of the differences they appear to have had in April 1985 is not something about which there is any evidence but on 15 May 1985 the Town Clerk of the GCCC wrote to the Manager "The Frenchman" Food Products:

Dear Sir,

PATE MANUFACTURING

I refer to Council's prevrous approval for premises

located at 8/11 Bailey Crescent, Southport and you are advised that Councrl offers no objectron to the premises being used for the manufacturing and preparation of pate and other products.

It seems that Sharpe again visited the premises on 27 August 1985 as is evidenced by a letter he wrote to Van Ryn dated 3 September 1985:

Dear Sir,

I wish to confirm a discussron I had wrth you and Mrs B r a m at your premlses situated at 11 Balley Crescent, Southport on the 27th August concerning the meat content rn certarn pate product manufactured by you at the above premrses.

To confrrm, I have been advised by an offioer of the State Health Department of the analytical results of a sample of pate manufactured by you, the total meat content was 56.2%.

Product such as this is regarded as being as defined

under the provisions of the Meat Industry Act 1965-1984.

I would advise that the preparation of such meat product is to be undertaken in a registered Class 2 butcher's

S hop.

You wlll recall that I have had discussions with you
regarding these matters on a number of previous

occasions. If you desire to cont~nue manufacturing pate

containing meat in premlses not registered under the provisions of the Meat Industry Regulatlons 1973, the

pate will need to contain less than 51% meat. If product is labelled in accordance with the Food Standard Regulations 1982 made under the Food Act 1981, of which the first ingredient is expressed to be meat such pate will be regarded as being meat.

For your reference and future guidance the following are coples of the def~nltion of the term "Meat", Meat Industry Act 1965-1984; a deflnltion of the term "Butcher's Shop" and "Smallgoods Factory", Meat Industry Regulations 1973, a copy of Regulation 119 Meat Industry Regulatlons 1973. Also please flnd attached a copy of the General Powers of an Inspector, Part XII, Meat Industry Act 1965-1984.

(The definitions and regulation referred
to are set out in full.)

You are requested to take prompt remedaal actron to ensure that pate and/or other product manufactured by you conforms to a standard not requ~red to be manufactured in a registered butcher's shop (smallgoods factory) 1.e.

contarns less than 51% meat and lf labelled, such label conforms to the requ~rements of the Food Standard Regulatlons 1982.

Van Ryn and Mrs Brain purchased empty factory premises at 5/37 Bailey Crescent, Southport in July 1986 and proceeded to fit them out for use in the conduct of their business. They say, and there is evidence which by inference supports their assertion, that the fit-out was

done under the supervision of the GCCC.

The October 1987 issue of "Choice", the journal of the Australian Consumers' Association, published an article entitled "P8t4 - fit to eat?" which carried the subheading "Made from partially-cooked, high protein ingredients, p8t4 is a perfect environment for bacteria. Our tests found unacceptable levels in almost every brand." Although the article referred only to brands of

pate manufactured in New South Wales, the publication had an immediate adverse effect on the business of Frenchman's Food Products. Mrs Brain took steps to assure customers as to the quality of their product and the Queensland health authorities also took appropriate remedial steps. On 9 November 1987 Shillig attended at the premises and obtained samples of the product for microbiological analysis.

In the course of a conversation between Van Ryn and Shillig, Van Ryn said words to the effect that the product contained less than 51% meat content and that the premises were not licensed by the DPI because no licence was required as the product contained less than 51% meat content. In the course of the same conversation Shillig said to Van Ryn words to the effect that the standard for pate in the Food Standards Code required a meat content of not less than 66% and that he would have to comply with the standard for manufactured meat or cease

describing his product as pate. During the course of the

visit Shillig also took samples of the various product labels. He said to Van Ryn words to the effect that the labelling may not comply with the regulatory requirements and undertook to supply him with a copy of the food additive information pamphlet giving details of the statutory labelling requirements for food additives. Sometime shortly after 9 November 1987 Shillig forwarded to Van Ryn by post a copy of the food additive

information pamphlet.

The fears created by the "Choice" article were put to rest when Sharpe wrote to Van Ryn on 17 November 1987:

Dear Mr Van Ryn,

As you are aware Veterinary Public Health Branch, Department of Prmary Industries recently carried out a survey of pate

manufactured for commercial purposes e.g. for resale.

The results of the sample collected from your premises and submitted for mlcrob~ological testing was found to be

bacter~olog~cally satisfactory.

It is proposed to carry out simllar tests on pate in approxmately four weeks tlme.

I have attached a copy of a Ministerial press release concerning the recent survey for your information.

Thank you for your co-operation and participation durrng the survey.

Shillig again visited the premises on 7 January 1988 but he was not able to recall the purpose of the visit, nor anything that may have transpired at the time. He did however subsequently, on 19 January 1988, advise Van Ryn by telephone of the results of the 9 November 1987

sampling.

The only other evidence concerning Frenchman's Food Products in the immediate precontract period is an office memo sent by Mr H.S. Juffs, Director, Food Research Branch, Department of Primary Industries to Director, Veterinary Public Health Branch on 23 January 1988:

SUBJECT Analysrs of Pat6 Sample

Followrng are the results of analyses carried out on a

pat6 sample (Pat6 de Foie a'Lirl - Frenchmans) submitted
to the Food Research Branch on 3.12.86 by Ur R.W. Sharpe,

District Inspector.

Total Solids	28.58%
Total Fat	11.95%
Meat Fat	11.04%
Non-fat Solids	16.63%
Total Proteln	11.18%
Ash	2.11%
Carbohydrate + Crude Cellulose	3.34%
Cereal Flller	6.68%
Cereal Nitrogen	0.07%
Meat Nitrogen	1.72%
Meat Protein	10.75%
Meat Content	48.6 %

There is no evidence as to whether, and if so when, the result of this analysis was conveyed to Van Ryn and Mrs Brain but it seems likely, in view of the normal course of conduct adopted by the authorities, that it was at some stage.

(c) The evidence of the requlators

Shillig's evidence concerning his visits to the premises

What appears above reflects his evidence-in-chief as in the precontract period has already been referred to. contained in his statement (exhibit WCW 6). The

following summarises his evidence in crass-examination in so far as it relates to his dealings with the third and fourth respondents.

The visit to the premises on 9 November 1987 was part of a broader survey the department was then undertaking of

pate manufacturers in south-east Queensland. He had no personal knowledge of any recent chemical analysis of the product produced by Frenchman's Food Products and did not know what preservatives or additives the product may have contained. The Food Code had then recently come into force and had introduced new labelling requirements in respect of preservatives and additives. He took samples of the labels then in use, and noted that they had no reference on them to chemical preservatives or additives. He explained the requirements for the labelling of food additives to Van Ryn and on returning to his off ice sent Van Ryn an information pamphlet about food additives. He also took samples of the product for analysis. Subsequently, the analysis was carried out by the Health Department and the product was found to comply with the Food Code, part C1 10. On the occasion of his visit to the premises on 9 November 1988 Van Ryn told him that he had recently spent thousands of dollars on purchasing new labels and in response to that he told Van

Ryn that he should look into the matter and prior to the	next reprinting he should amend the labels with respect
to food additive labelling. There was some discussion between Shillig and Van Ryn concerning the meat content of the product to which reference is made earlier. Shillig decided to follow up the question of meat content but did not subsequently correspond with Van Ryn about that matter. On 19 January 1988 he informed Van Ryn of the results of the 9 November 1987 sampling which

involved microbiological analysis only and did not refer to meat content. Shillig visited the premises on 7 January 1988 and again on 24 October 1988 by which latter time WCW had taken over. In answer to counsel for the fifth respondent Shillig agreed that had there been an inquiry about the business at between 19 January 1988 and

24 October 1988 the response would have been that the

department was not aware of any non-compliance with
regulations.

Flay's evidence was somewhat shorter than Shillig's. In his statement (exhibit WCW 42) he said (paragraph 2 ) :

I am ab le t o say t h a t had an enqurry been made of my

o f f r c e i n r e spec t of t h e business known a s "Frenchman's

Food Products" s r t u a t e a t Balley Crescent, Southport r n

o r about February o r March of 1988 with r e spec t t o t h e

s a l e o r purchase of t h e s a l d business tha t :

(1)	I would have supplied t h e enqurry with d e t a i l s of
t h e provlsron of t h e Food Standard Code a s it
r e l a t e d t o t h e manufacture of pate; and
(ii)	Suggested t h a t e n q u ~ r i e s be made with t h e
Department of Primary Indus t r i e s and i n
p a r t i c u l a r would have given them t h e name and
telephone number of t h e appropriate DPI o f f i c e r
r n t h i s i n s t a n t , Mr Duncan Haig.

Flay's cross-examination revealed nothing that had not already been said by Shillig except that it was claimed by Flay that his department was liaising with the DPI in 1987 and 1988 concerning whether the product met the standards for pate. However there was no correspondence on the file relating to this matter. Flay referred to Haig as the person in DPI with whom Shillig was dealing.

Haig's evidence-in-chief (exhibit WCW 31) was that he first attended at the premises on 10 April 1989 when he went there in the company of Shillig. Although he gave no evidence of any prior knowledge of the business of Frenchman's Food Products, he was asked, by way of further evidence-in-chief:

Mr Haig, had an inquiry been made of you by someone lnvolved in the purchase or sale of Frenchmans Food Products, a business we are referring to, in or about February or March of the year 1988? What ~nfomatron, if any, would you have passed to the person making the ~nquiry?

To which he replied:

Well, ~t depended on the pate - the content of meat; whether it came under the jurlsdict~on of the DPI or the State Health Department. If it was below the 51 per cent, I would have referred them to State Health for labelling and descr~pt~on requirements, and for the purposes of perhaps gaming a search for structural repalrs and so forth to be carr~ed out, I would have referred them to the local council health department.

In response to a question from the bench he said that at the time (that is February - March 1988) he knew that the	product of Frenchmans Food Products had been tested and	found to be below 51% meat content. In answers given in
cross-examination he said that he had not viewed the files but he was aware that Sharpe and other inspectors had visited the premises and had advised the owners that the product must be below 51%, and that he believed tests were carried out at the time and they were found to be below 51%.

Barker gave evidence in response to a subpoena to the GCCC to produce relevant files. There was no written statement of his evidence. It appears that until March 1989 when the Food Hyqiene Regulations 1989 were gazetted it was not necessary for any licence to be obtained from, or for premises to be registered with, the local authority, in respect of their use for food preparation. In respect of 5/37 Bailey Crescent, an application for the fitting out of the premises was approved by the Council on 4 July 1986. The witness was unable to give any evidence concerning the inspection of the premises during fit-out but the file records that there was an inspection on 28 October 1986.

Nisbet's evidence was contained in 2 written statements (exhibits WCW 9 and 9.1) and in addition he gave oral evidence. The thrust of his evidence-in-chief was that departmental records reveal that Frenchman's Food Products came to the attention of the Veterinary Public

department wrote to the then proprietors in respect of	Health Branch early in 1985. On 26 April 1985 the
their non-compliance with the regulatory requirements and again on 3 September 1985 (exhibit WCW 8). Nisbet did not personally visit the premises of Frenchman's Food Products until 11 May 1989 when he went in the company of Haig. Had an inquiry been made of the branch in respect of the sale of Frenchman's Food Products in February or March 1988 the branch would have supplied details of the

provisions of the meat industry legislation as it related to the manufacture of pate and suggested inquiries be made of the Department of Health at Southport. In cross- examination he said that if the premises were not registered his branch would not inspect them. (In this context it is relevant to note that regulation 122 of the Meat Industry Requlations 1973 which deals with the transfer of registration applies only to registered butchers' shops and it is therefore not surprising that no inspection, or indeed any other action, would occur upon DPI being notified of the proposed sale of premises that were not registered.) The remainder of Nisbet's evidence related to events after the sale which are not presently under consideration.

(d) Findinqs

A number of findings of fact can be made from the

foregoing.

content of the product manufactured by Frenchman's Food First, there is no doubt that in early 1985 the meat

Products exceeded 51% but that by early 1988, and probably considerably before that, the meat content had been reduced below 51%. This is entirely consistent with Van Ryn's evidence, which I accept, that following correspondence from DPI in 1985 he deliberately set about changing his recipe in order to maintain a meat content

below 51%.

Second, it is equally clear that Van Ryn believed that so long as he maintained a meat content below 51% he would avoid the regulatory consequences which would result if the product were to come within the definition of "meat" in the Meat Industry Act.

Third, Van Ryn's belief as to the effect of maintaining meat content below 51% was initially contributed to by Sharpe's letters of 26 April 1985 and 3 September 1985, and the GCCC letter of 15 May 1985. Although a close analysis of Sharpe's correspondence may have led to a view different from that arrived at by Van Ryn, the mere reference to the labelling provisions without further explanation coupled with the absence of any action on the part of Sharpe or the DPI, tended to suggest that the authorities accepted Van Ryn's understanding to be valid.

Fourth, although Shillig in conversation with Van Ryn on	9 November 1987 specifically raised the provisions of C1
lO(e) (i) of the Food Code, his action in sending Van Ryn particulars of the labelling requirements in relation to food additives only, without sending a copy of the relevant Food Code provisions would tend to support Van Ryn's belief that all was well provided he kept his meat content below 51%.
Fifth, the contact which occurred between Van Ryn and the authorities subsequent to Shillig's visit on 9 November 1987 tended to confirm Van Ryn's belief that his product was in conformity with the law, and that there was no requirement that the premises be registered as a butcher's shop.
Sixth, whether it be due to the sheer complexity of the regulatory regime involving as it did 3 different regulatory authorities or whether it was because of simple bureaucratic inertia, it is the case that none of the several authorities evidenced any real concern about the manner in which Frenchman's Food Products conducted its business and none actually did anything to suggest that Van Ryn ought not to be comfortable in his belief that so long as the meat content of his product was less than 51% he could continue to conduct his business without interference from the regulators.

(e) Contact subsequent to settlement

The new owner's first contact with the regulatory authorities after settlement occurred on 24 October 1988 when Shillig attended at the premises and obtained micro samples of the product. He again attended the premises on 10 April 1989, in the company of Haig but it would appear that someone, not necessarily Shillig, had been to the premises on 24 January 1989 to obtain further

samples. On 10 April Haig and Shillig explained to Wakefield the requirements of the Food Act and of Standard C1 10 of the Food Code. Haig took measurements of the premises. In the course of the conversation between those present Wakefield was told that:

(i)	in order to describe product as "pate" it had to comply with the requirements in respect of "manufactured meat"; and
(ii)	the premises used for the manufacture of "manufactured meat" were required to be licensed as a class 2 butcher shop; and

(iii) the premises used for the manufacture of food product containing not less than 51% meat content were required to be licensed as a class 2 butcher shop; and

(iv) the samples taken of product produced by Frenchman's Food Products revealed that the product contained a

% meat content in excess of 51% but less than 66%;

and

(v)  there were minimum requirements for licensing as a class 2 butcher shop;

(vi) the size and dimensions of his premises were such that they did not comply with the minimum requirements for registration as a class 2 butcher shop; and

(v) that his premises did not comply with the regulatory requirements for registration as a class 2 butcher shop.

On the following day Shillig wrote to Wakefield and enclosed a copy of Standard C1 (10) of the Food Code and a Food Act notice. In the letter Shillig gave details of

3 samples said to have been removed on 24 January 1989

which contained a total meat content of 52 .g%, 52.5% and 55.5% respectively, and pointed out that the samples did not comply with the prescribed standard for manufactured meat in that they were deficient in total meat content. After referring to other samples which had been analysed microbiologically and found to comply with the Food Standards Requlations, Shillig concluded by saying:

Please note that a detalled check wlll be made of current food labels when time permrts.

The Food A c t notice forwarded with the letter required the applicant within 7 days to:

Ensure that all prepacked pate, prepared and packed for aale at the Southport premises, comply with the prescribed standard for manufactured meat.

Nisbet told Wakefield that the Health Department had told	On 11 May 1989 Nisbet and Haig attended at the premises.
him that the product was over 51% meat which meant that it was a "prescribed meat" under the Act. He also went through all the other matters Shillig had mentioned on 10 April 1989 which are detailed above. Discussion took place between Nisbet and Wakefield concerning the suggestion that an application be made for a provisional
licence for the premises. On 15 June 1989 WCW wrote to the Health Department seeking permission to continue pate production from the premises and subsequently approval was given for a provisional class 2 butcher's shop licence, subject to certain modifications being carried out and to other conditions which, inter alia, would restrict the transferability of the licence. WCW was advised of this decision by letter on 19 July 1989 and on 31 July 1989 Haig wrote to WCW advising details of the modifications required to obtain a provisional licence. On 2 January 1990 Haig wrote again pointing out that despite numerous undertakings, the work required to obtain a provisional licence had not been done and advising that the production of prescribed meats at the premises was now prohibited. Wakef ield responded by letter dated 25 January 1990 indicating that production would cease on 1 February 1990. In the meantime Shillig had taken further samples on 27 June 1989 and on 26 September 1989 advised Wakefield by letter the results of
meat content of 62% and 63% respectively and a third, the analysis which showed 2 of the samples had a total
67%. Further samples were taken on 25 September 1989 and Wakefield was advised by letter dated 8 January 1990 that their total meat content was found on analysis to be 63%, 63% and 64% respectively.

1. THE SALE OF THE BUSINESS AND THE PREMISES:

(a) The decision to sell

By early 1988 Frenchman's Food Products was a successful small business. The combination of Van Ryn's experience and knowledge as a cook and Mrs Brain's energy and personality in expanding the customer base meant that by the end of the 1987 financial year they had developed a business turning over nearly $140,000 per annum, and providing a net income of the order of $50,000, and this for 24 days' work per week.

The decision to sell was spontaneous and had nothing to do with the success or otherwise of the business. Rather it arose out of a personal disagreement between the partners. And just as the decision to sell was made quickly, so the sale was made in a remarkably short time

frame .

Mrs Brain telephoned Cunnington, on 10 February 1988 and gave him instructions to list the business and premises

for sale. Obviously she must have given him some information about the business but exactly what this was is not a matter about which there is any evidence. However, it is fair to say that until then Cunnington knew nothing of the vendors nor of their business. The next day, 11 February 1988, Cunnington attended at the premises where he met Mrs Brain and completed a listing card. A photocopy of the listing card was tendered (exhibit WCW 16). It would have been preferable if it could be reproduced in these reasons, but the quality of the exhibit is not sufficiently high for this to be done. The following description will have to suffice. The listing card was a printed form headed "Business for Sale" upon which various headings relevant to the sale of a business were set out with space for particulars to be written in. As it happened Cunnington appears to have paid little regard to the printed headings. The following is a comprehensive statement of the information on the card:

-

Date:	11.2.88
Location:	Unit 5/37 Balley Cres.
Price:	$175,000 firm, + stock, includes freehold O.N.O.
Type of busmess:	"Frenchman's Food Products" Reg.
District:	Southport

2$ days per week.

Trade:	$139,000
Net profit:	(mcl. add back) $71,000.

stock guaranteed at $2/3,000.

Plant value:  $35,000 + (Dep. value $25,000).

Vlew by appointment. Prefer not Tues/Wed.

Reason for selling:	Partnershrp break-up.
Perrod of occupancy:	2 years.
Relocated June 86.
owner :	Henri Van Ryn and Elza V. Brain Elza A/H 91 3271 Phone 32 328
Product:	Frenchman's Pate (Reg.) on the market - 10 years.

Frenchman's Pate incl. 10 m2 cold room

Run by 2

Deal wrth:	Frankllns Woolworths coles 1 Distr. in Brlsbane 1 DLstr. Ln Gold Coast
Shelf l~fe:	7/10 weeks
Incl. recrpe

Freehold value $75,000 - Health Dept approved.

Dellver refrigerated transport direct to warehouse.

After completing the listing card Cunnington returned to his office.

(b) Cunnington's dealinqs with Wakefield

Knowing as he did Wakefield's interest in acquiring a business and judging that this may well meet his requirements, Cunnington telephoned Wakefield soon after Mrs Brain's first telephone contact with him. Obviously,

available and after returning from the premises on 11 further action had to wait until more information was

February 1988, Cunnington again telephoned Wakefield and arranged to meet him at his (Cunnington's) office the next day. On 12 February 1988 Wakefield and Wilson attended at Cunnington's office where Cunnington gave Wakefield a photocopy of the listing card to which was attached a photocopy of the profit and loss statement and

depreciation schedule of Frenchman's Food Products for the year ending 30 June 1987. The three of them (possibly with Mrs Wilson as well) then went to the premises where they met Mrs Brain. There is a dispute as to whether Van Ryn was also there at the time. Wakefield and Wilson say he was whereas Van Ryn and Mrs Brain say he was not. Cunnington is unsure. I prefer the evidence of Van Ryn and Mrs Brain to that of Wakefield and Wilson. Indeed, throughout these proceedings, on every major issue, I have formed an adverse view of Wakefield's credibility so much so that it would be unsafe for me to accept any of his evidence unless it is uncontradicted or is otherwise supported by some objective evidence. To the extent that it appeared to corroborate Wakefield and Wilson's evidence was unconvincing and I reject it. Just what was said at the meeting at the premises on 12 February 1988 is central to this case and I will deal with the evidence about it in detail later. For present purposes it is sufficient to say that after attending at

Cunnington's office.	the premises Wakefield, Wilson and Cunnington returned to
Later that day, Wakefield telephoned Cunnington and asked him to see if the vendors would accept $175,000 inclusive of stock. When this proposition was put to them the vendors agreed. Cunnington again telephoned Wakefield to advise him of the vendors' acceptance of his offer. Charthill Business Brokers advertised the business and premises for sale for $175,000 plus stock in the 13 February 1988 issue of the Gold Coast Bulletin. When the paper went to press however the words "Under Contract" in bold type were superimposed diagonally across the text of the advertisement. I draw the inference from these facts that at some stage after receiving his instructions from Mrs Brain, Cunnington placed the advertisement with the Gold Coast Bulletin but that prior to the publication of the paper on 13 February 1988 Wakefield's offer to purchase the business and premises had been accepted by the vendors.
At the time Cunnington advised Wakefield of the vendors' acceptance Wakefield said that he would like to see the books of the business and was told by Cunnington that the vendors required that he first pay a deposit. Exactly what, if any, contact there was between Cunnington and Wakefield in the few days following 12 February 1988 is not a matter about which any evidence was given. It is
fact however that during the morning of 17 February 1988
Wakefield attended at Cunnington's office and collected two contract documents, one for the business and one for the premises. He took them to Bolster's office and later that day he returned with the documents which he executed in Cunnington's presence. Before execution, both documents had been amended by the addition of several special conditions, a matter which will be addressed in detail later. At the time of executing the contracts Wakefield gave Cunnington cheques for $10,000 and $7,500 drawn on the account of WCW and payable to Murphy & Associates Trust Account being respectively 10% deposit for the purchase of the premises and the business. Van Ryn and Mrs Brain also executed the documents in Cunnington's presence later that day.

(c) Wakefield's precontract dealinqs with the vendors

Wakefield went to extraordinary lengths in his evidence to establish that the contracts were not in fact signed until after a second visit to the premises on 23 February 1988, but the more he was tested, the less credible was his evidence until ultimately he appeared to accept that his task was hopeless, as indeed it was. Being satisfied as I am that the contracts were signed on 17 February 1988, what took place on 12 February 1988 becomes central to the applicant's case against the third and fourth respondents. I propose therefore to refer to the

evidence in detail.

In his statement (exhibit WCW 17) and indeed under intense cross-examination, Wakefield maintained that Van Ryn was present on 12 February. I find this not to be so, but nevertheless, I set out below Wakefield's version of the interview which to a large extent paraphrases paragraphs 22 to 24 of his statement:

When we arrived at Balley Crescent Cunnington introduced Wilson and I to Van Ryn and Mrs Brain. Cunnlngton, Van Ryn and Mrs Brain then proceeded to show Wilson and I around. Durlng the course of thrs meetrng Van Ryn and Mrs Brarn, in the presence of Cunnrngton, made the oral representations referred to in paragraph 9 of the statement of clam. Wrlson and I were informed of other matters m additron to the oral representations. Whilst I cannot recall the exact words spoken I can recall that, in the presence of Cunnrngton and Mrs Brain, I asked Van Ryn in words to the effect:

"Who do you sell products to and how does it get

rnto your client's warehouses?"

and he said -

"We deliver it to Brisbane central warehouses and a Gold Coast food distributor purchases the product at the door."

I asked -

"What about raw materials supply?"

"We have agreements wrth Inghams for chicken lrvers, both fresh and frozen and packagrng supplred from around the corner."

I can also recall asklng Van Ryn and Mrs Brain in the presence of Cunnrngton, rn words to the effect:

"Is you busrness legally const~tuted?"

Van Ryn sard -

"Yes, it rs, we are in partnership."

"Is Frenchman's Food Products' name regLstered?"

Van Ryn sard -

"Yes, it 1s in Queensland."

I can also recall asklng Van Ryn and Mrs Brarn in the presence of Cunnington, In words to the effect:

"What about the recipes; wrll you teach us to

manufacture in accordance with the recipes?"

He sard -

"Yes - on settlement date, we wrll give you the recipes, but it took us a long t m e to develop them and rt is part of what we are selling."

I then sard, m words to the effect:

"What are the billings to the major clients?"

Van Ryn said -

"I do not have the books here, they are at home."

He went on to say -

"Our accountant is Douglas Lipp."

I then saw Mrs Brain write this name on the back of a

Frenchman's card and handed it to me.

I then said, In words to the effect:

"What are the Frenchman's terms of trade?"

Van Ryn said -

"Supermarkets are on 30 days and the Gold Coast -
the Distributor pays at the door."

Wilson's statement (exhibit WCW 23) relates his recollection of the events which occurred after the meeting in Cunnington's office when the listing card was handed over. The following is a paraphrase of paragraphs

d u t r e s owed	by	a	s o l i c i t o r t o h i s c l i e n t a r e hrgh,	i n t h e sense
t h a t he holds	himself	out as p rac t r s rng a	hrghly	s k i l l e d and
exactang profess ion ,	but	I	t h i n k t h a t t h e cour t must	beware of

imposing upon s o l r c r t o r s - o r upon professronal men i n o t h e r spheres - dutaes which go beyond t h e scope of what t h e y a r e requested and undertake t o do.

The authority quoted from then proceeds:

I t may be t h a t a p a r t i c u l a r l y metaculous and conscient ious

p r a c t i t r o n e r would, i n h i s c l i e n t ' s general mterests, take it

upon hrmself t o pursue a lane of inqurry beyond t h e strrct
limrts	comprehended by h r s rns t ruc t rons . But t h a t i s no t t h e
test.	The test LS what t h e reasonably competent p rac ta taoner
would do havina reaard t o t h e standards normallv a d o ~ t e d	r n h i s
professaon, an2 c&es such a s Duchess of kgyil	v . - ~ e u s e l i n c k

119721 2 Lloyd's Rep. 172: G r i f f l t b s v. Evans 119531 1 W.L.R.

i424 and ~ a l i v. ~ e y r l c k 119571 2 Q.B. 455 demoristrati t h a t t h e

duty is d i r e c t l y r e l a t e d t o t h e confines of t h e r e t a i n e r .

Although Mason CJ and Wilson J were in the minority in Hawkins v. Clayton there is nothing in the judgments of the majority judges to raise any doubt as to the validity of these general

principles.

I propose to deal first with Wakefield's evidence-in-chief encompassed in paragraphs 29 to 50 of his statement (WCW 17) which is to the following effect.

Sometime between 12 February and 17 February, 1988 he telephoned Bolster and said that he wanted him (Bolster) to act for WCW in respect of a business sale that he was negotiating. On 17 February 1988 he visited Cunnington's office and spoke with Cunnington who gave him two draft contracts, one for the sale of the business and one for the sale of the real property. He then made an appointment to see Bolster and attended at his Tweed Heads office later on 17 February 1988 when he said words to the effect:

We are gorng ahead and here are the contracts prepared by the vendors agents. I have read them together wrth the special conditions. I thrnk it needs more.

He said that Bolster then read the contracts and they had a discussion about the special conditions. Special conditions

discussion. He told Bolster that before he signed the 38 and 39 (of the business contract) resulted from this	contract he wanted to look at the financial records of the
business whereupon Bolster replied, in words to the effect:

Look for the sales tax provisions or payment of sales tax.

He said he recalled informing Bolster that he intended to hand over a deposit for the business and Bolster offered no objection to the proposed payment to the stakeholder. He left the draft contracts with Bolster who told him that he would look after the contracts and ring him when they were ready. Wakefield then returned to Cunnington's office later on the afternoon of 17 February 1988 and wrote out two cheques totalling $17,500 made payable to Murphy & Associates Trust Account. He said that as he handed the cheques to Cunnington, he said to him in words to the effect:

These cheques are wrrtten t o show our good f a i t h prior t o our
returning the contracts with the ir amendment.

On or about 5 March 1988 he received in the course of the mail a letter from Bolster dated 4 March 1988, together with a form of instructions to act, for signature.

He said that it was his distinct recollection that he did not execute the contracts on 17 February 1988 but rather sometime thereafter but prior to 5 March 1988. He had left the draft

discussion with Bolster when he called to collect the	contracts with Bolster on 17 February 1988 for inclusion of further special conditions. He recalled that he had a further
contracts prior to signing them and on this occasion special condition 40 was drafted and inserted. Whilst he was not entirely certain he thought that he signed the contracts sometime shortly after 29 February 1988.
He said he saw Bolster at his office on 10 March 1988 when he handed him a yellow piece of paper with his own handwriting on it which, among other things dealt with how part of the purchase was to be financed by his wife, Katherine Wakefield. He also gave Bolster the signed authority to act at this meeting. On 17 March he again went to see Bolster at his office when he provided Bolster with a handwritten note relating to various concerns he had in respect of the contract. He could not recall the exact words that were spoken however he recalled discussing the matters referred to on his handwritten note and in particular recalled telling Bolster that he was concerned about the possible requirements of the DPI. The remark was made in the context of requirements for exporting the product. He recalled that he told Bolster that the vendors had told him that no DPI approval was necessary.
Bolster took the note and Wakefield gave him instructions to withhold $10,000 from settlement in respect of outstanding
GCCC requisitions but Bolster subsequently informed him that
the GCCC Health Department officers prior to the time he had arranged for a further inspection of the property by
appointed for settlement and later he (Wakefield) came to an arrangement with the vendors which allowed the matter to settle without the retention of any monies.
When cross-examined Wakefield was forced to concede that he had taken the contract documents back to Cunnington on 17 February 1988 and that he could have signed them on that day and it follows from that, that much of his evidence-in-chief, and indeed a good deal of the evidence given in cross- examination was shown for what it was, pure fabrication designed with no purpose other than to mislead the Court into believing that the contract was signed at a later date.
Whilst I found Bolster to be a much more creditworthy witness than Wakefield, his lack of recollection of a number of details and the absence of much in the way of contemporary records has meant that many vital questions have been left unanswered. Doing the best I can, I find that in all probability Wakefield did see Bolster at his Tweed Heads office on 17 February 1988 and produced copies of the contract documents that Cunnington had given him earlier that day. Clearly Bolster suggested at least one amendment. The new clause 38 is written in pencil in his handwriting on a copy of the contract which is on his file. Bolster had no recollection of the interview, but conceded that it did take place. It is equally certain that Wakefield did not leave the
documents with Bolster, but took them wlth him when he returned to Cunnington's office. There is no doubt that at
some stage additional special conditions were added and there is no reason to think other than that this occurred before the contracts were executed by WCW. The most likely explanation is that the additional conditions were typed in Cunnington's office. I reach this conclusion by a superficial comparison of the typeface and the obvious use of blue carbon paper, something used by Cunnington's office at the time but not Bolster's. The contracts were executed first on behalf of WCW by Wakefield and later the same day by Van Ryn and Mrs Brain. On the following day, 18 February 1988, Cunnington sent the vendors and Bolster & Co. copies of the contracts by post. There is no record on Bolster's file of when he received the copy contracts but there is no doubt that they were received. It may be fair to assume that they were received a day or two after 18 February 1988, but whether they were or not, the first action taken by Bolster was on 4 March 1988. By this time settlement was only 14 days away.
Copies of letters on Bolster's files show that on 4 March 1988 he wrote 3 letters to Van Ryn and Mrs Brain. Two of these (one on each file) enclosed requisitions on title relating respectively to the business and the premises whereas the third had to do with matters relating to the body corporate of the building units. Whether or not these letters were sent under the same or separate cover is not a matter upon which there is any evidence.
On the same day Bolster wrote to the Town Clerk of the GCCC as
follows :

Dear Sir,

RE: W.C.W. PTY. LTD. PURCHASE FROM VAN RYN AND BRAIN.

BUSINESS SITUATE 5/37 BAILEY CRESCENT SOUTHPORT.

We act for the purchaser of a business known as Frenchmans Food
Products at Southport.

Could you please advise whether your Council has approved the
establ~shment of the business at the premises situated at Unlt
5 37 Bailey Crescent Southport and ~f there are any outstanding

requ~sitions from your Councll in relatlon to the operation of
busmess at those premises.

Bolster also wrote to WCW on 4 March 1988 forwarding for signature an authority to act and requesting a cheque to cover stamp duty on the property contract. On 5 March 1988 he wrote again to WCW to request a cheque to cover stamp duty on the business contract.

Of the two sets of requisitions sent to Van Ryn and Mrs Brain only one (relating to the property) was returned, and that occurred (in Bolster's words) "either just before or at settlement".

Requisition 22 of the property requisitlons asks:

22.   Is the subject land or any structure on the subject land or any part thereof licensed or requlred to be licensed

by any authority or body for the use of any purpose?

Particulars of all licenses necessary or in exlstence are

required. Are there in existence any unsatisf~ed

requisit~ons Ln respect of such matters?

to which the response was:

Yes Health Dept.

Even if they had been answered, it is unlikely that the business requisitions would have provided any enlightenment. The only requisition of any relevance is that numbered 21 which asks:

21.    Are the premrses registered under:-

(a)	The Health ~cts;
(b)	The Factorres & Shops Act?
(C)	The Liquor Act?

Assuming that it had been answered accurately, it would seem that all the purchaser would have learned is that the premises were not registered under any of the nominated statutes. The answer would have told the purchaser nothing about registration pursuant to the Meat Industry Requlations.

In cross-examination when Bolster was asked whether we had telephoned his client to get instructions to settle on the basis of the requisitions, he replied:

I had his ~nstructrons to settle, in the morning, based on

exactly what we knew to be the position;

and when it was put to him that he had not at that stage

received the requisitions he agreed and said:

But if the requ~s~t~ons reflected anyth~ng other than his

instructions, I would have rung him.

i

The witness was not questioned as to whether he had looked at	r
the answers given by the vendors nor as to what he made of the	Z l . .
!
answer given to requisition 22.	1 ,
Bolster knew from a very early stage of his involvement in the transaction that the product produced by the business was pate and he knew that pate involved the manufacturing of meat. On three previous occasions he had acted for purchasers of butchers' shops and on each occasion when he had asked if they required him to do anything in relation to matters involving the DPI the purchasers had said they would make their own arrangements and if there was a problem, get back to him.
In ideal circumstances a prudent purchaser, and a solicitor advising such a person, would have made some inquiry as to the legal conditions and restraints applicable to the conduct of the business being purchased before the contracts were signed, but in the circumstances of this case there was no opportunity for any such inquiry to be made.
The matters discussed between Wakefield and Bolster on 17 February 1988 clearly had to do with the financial aspects of the proposed transaction as is evidenced by the nature of the
Wakefield was an experienced businessman, he had read the	special conditions that were added to Cunnington's drafts.
contract documents and understood them sufficiently to know that he required some further special conditions to be added. The purchaser was under no time constraints to sign. The business had been on the market for less than a week, Wakefield had only made one inspection of the premises, and indeed he had not even met the partner who was responsible for actually preparing the product. The vendors certainly had
shown no anxiety about making an early sale and there was no suggestion that there was any competing offer. In fact, Cunnington had taken the business off the market before it was advertised. Furthermore, Wakefield had within hours of inspecting the premises made an offer which was virtually the vendors' asking price. Everything points to the fact that he was determined to sign the contracts on 17 February 1988 and his consultation with Bolster on that day must be viewed in that context. And when that is done I do not think that Bolster can be said to have breached the terms of his retainer or failed to exercise the appropriate degree of care which the occasion demanded. Clearly, Wakefield's conduct was not that of a prudent purchaser and on 17 February 1988 Bolster's response was appropriate to the occasion. There is therefore no substance in the applicant's complaint that Bolster failed, at that stage, to have done the things pleaded in paragraph 20 of the statement of claim.
The contracts having been executed on 17 February 1988
associated with the settlement. In the less pressured	Bolster's engagement extended to attending to matters
circumstances that prevailed after the contracts were executed, prudence would have dictated that some inquiry be made concerning the legal conditions and restraints applicable to the business. Whether or not his discussion with Van Ryn on 23 February 1988 gave rise to any concern on Wakefield's part as to the need for further inquiry, he certainly did not alert Bolster to any such need. It would seem that by the time Wakefield first heard from Bolster after signing the contract he had already had his meeting with Van Ryn. Bolster said that he had a conversation with Wakefield on 10 March 1988 when he (Bolster) told him that he (Wakefield) would need to make inquiries of the DPI and that he (Wakefield) would need to check to see what registration was required and what would need to be done in respect of its transfer. Wakefield's response was that he had carried out inquiries, and had inspected records of the vendors in respect of the DPI requirements and had satisfied himself that although there may have been some problem in the past in respect of the product, that problem was now overcome. When this matter was pursued further counsel asked Bolster whether he had asked Wakefield what letter or documents he had seen that evidenced that there was any requirement of the DPI in respect of the premises to which the witness replied:

Yes, he s a ~ d that he had seen a couple of letters from the DPI

directed to the vendors.

As counsel for the fifth respondent has pointed out in his	final submissions, this answer is of considerable
significance. Bolster had not been present during the early part of the trial and had not heard the evidence given in relation to the two letters from the DPI dated 26 April 1985 and 3 September 1985 (exhibit WCW 8) and knew nothing of them, yet he was able to say that Wakefield had mentioned two letters from the DPI in this context. The compelling conclusion is that by the time he visited Bolster on 10 March 1988 Wakefield had read these letters and knew of the role of the DPI in relation to the business. He did not expand on what the past problem was and clearly did not expect that Bolster would have any involvement in relation to it. Furthermore, in his evidence Wakefield attempted to confuse the issue by suggesting, untruthfully as I find, that his reference to DPI in his discussions with Bolster before settlement had to do with a proposal to export the product.
Apart from Bolster's word on this issue, which I accept in preference to that of Wakefield, there is every reason to believe that what he says occurred did in fact happen. In his statement (exhibit WCW 17) and in his evidence generally, Wakefield held himself out as a businessman of considerable experience who had a degree from Middlebury College in USA and who had undertaken various courses in management, data processing, negotiation and business related topics with various bodies including the Universities of Virginia and
business Development Corporation. In paragraph 10 of his Sydney, the Australian Institute of Management and the Small
statement he said:

Over the years, I have purchased several business undertakings in different parts of the world and it is my policy not to sign contracts before maklng thorough investigations as to the financial viability of the proposed businesses and I always employ solicitors to make enquiries on my behalf.

Whatever may have been his past practice there is no question that in this case he signed the contracts before any inquiries at all were made or could have been made either by Bolster or anyone else. And typical of the man, he had personally, on 29 February 1988, attended the office of the vendors' accountants and conducted what he called an "audlt" of the vendors' books to satisfy himself as to the accuracy of the financial statement he had received with the listing card. Bolster had previously dealt with Wakefield, once in relation to the purchase of a house from one of Bolster's clients and later, not long before 17 February 1988 when Wakefield was negotiating for the purchase of a business known as "Outback Bllly's Camping Warehouse". Bolster's impression gained from these previous contacts was that Wakefield had personally undertaken his own inquiries and investigations into the property and the business he was proposing to acquire, and he conveyed the impression that he was assiduous in making inquiries and was very experienced in matters of business.

Upon consideration of all of the evidence I am left in no	doubt that whatever may have been said between Bolster and	Wakefield concerning the DPI, when Wakefield was alerted to
the possibility that some enquiry in that quarter would be appropriate he conveyed to Bolster the impression that he had satisfied himself and that it was unnecessary for Bolster to pursue the matter.
I am of the opinion that whatever obligations may have been implicit in Bolster's acceptance of instructions to act for
WCW in relation to the purchase of the business and the
premises, as at 10 March 1988 Bolster was relieved of any obligation to undertake inquiries concerning the status of the premises and any requirement that they be registered with the
D P I .
The applicant has not established any breach of the terms of the fifth respondent's retainer nor any failure to exercise reasonable care, skill and diligence. The claim against the fifth respondent fails.
8. CONCLUSION

m ,

For the reasons expressed above I would dismiss the

>..

applicant's claims against the third and fourth respondents

!

and the fifth respondent.	i
t ,~
The occasion to assess damages against the third, fourth and fifth respondents does not arise but the issue of damages in
respect of the default judgment against the second respondent	remains unresolved. Because of the reservations I have
concerning the validity of that judgment I propose to defer making any assessment until an opportunity is given to the second respondent to raise any matter which may properly be
raised.	In due course I will give appropriate directions.

I certify that this and the

preceding 93 pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Olney

7

Associate: db-

Dated: 25 May 1992

Heard :	10-13, 16-19 March 1992 and 22 April 1992
Place:	Brisbane

Judqment : 25 May 1992 (in Melbourne)

Counsel for the applicant:	Mr P. Baston
Solicitors for the applicant:	Thynne & Macartney, Brisbane, agents for Primrose Couper Cronin Rudkin, Southport.
Solicitors for the first
respondent:	Sly & Weigall Cannan & Peterson
Counsel for the third and fourth
respondents:	Mr P. Applegarth
Solicitors for the third and
fourth respondents:	Callaghan & Reidy, Brisbane, aaents for Price & Roobottom.

Counsel for the fifth respondent: Mr G.A. Thompson

Solicitors for the fifth
respondent:	Mallesons Stephen Jaques