Weir v Screen - [2013] ACTSC 188

WEIR & ANOR v SCREEN & ANOR
[2013] ACTSC 188 (6 September 2013)

Trade Practices Act 1974 (Cth), s 52, s 82

Complete Constructions Pty Ltd v Nelson (1990) 196 CLR 594
Houghton v Arms (2006) 225 CLR 553
Meadow Gem v ANZ Executors & Trustee Co Ltd & Ors (1994) ATPR (Digest) 53,626 (46‑130)

No. SC 50 of 2007

Judge: Foster J
Supreme Court of the ACT
Date: 6 September 2013

IN THE SUPREME COURT OF THE     )
  )          No. SC 50 of 2007
AUSTRALIAN CAPITAL TERRITORY           )

BETWEEN:MALCOLM WEIR & GEORGE WEIR
Plaintiffs

AND: MEL SCREEN
First Defendant
SCREEN INVESTMENTS PTY LIMITED (ACN 102 655 336)
Second Defendant

ORDER

Judge:  Foster J
Date:  6 September 2013
Place:  Canberra

THE COURT ORDERS THAT:

The legal representatives of the parties confer as soon as practicable and agree the final form of the judgment and orders to be made in order to give effect to Reasons for Judgment published by Foster J this day (6 September 2013).
The legal representatives of the parties lodge with the Associate to Foster J by 27 September 2013 Short Minutes of Order setting out the said final judgment and orders as agreed pursuant to Order 1 above.

The plaintiffs, George Fergus Weir and Donald Weir, are brothers. They are both carpenters. They are relatively unsophisticated when it comes to making business investments.

In early 2004, the plaintiffs were introduced to the idea of investing in a rabbit breeding venture by a friend of George Weir, Clinton Robinson. Mr Robinson was about to invest in the venture. He mentioned the scheme to George Weir and agreed to organise a meeting between George Weir and the first defendant, Melanie Anne Screen.

A meeting took place in March 2004 among George Weir, Malcolm Weir, Mr Robinson and Ms Screen. It is at this meeting that the Weir brothers allege they were told a number of things concerning the rabbit breeding venture which induced them to invest in that venture.

The investment went sour and the Weir brothers lost their money.

They have sued Ms Screen and a company controlled by her, Screen Investments Pty Ltd (Screen Investments), for damages for breach of contract, damages for misleading and deceptive conduct and remedies based upon an alleged express trust.

THE PLEADED CASE

In the final iteration of their Statement of Claim (the Further Amended Statement of Claim filed in Court on 16 October 2012) (the ASC), the plaintiffs put their case in a number of different ways.

First, they sue Ms Screen for damages for breach of contract. The contract is said to be entirely oral and to have been made in about March 2004 at a meeting which took place at the residence of the mother of Mr Clint Robinson at her house in Charnwood ACT. The essence of the contract said to have arisen from what was discussed at this meeting was that the plaintiffs could purchase rabbits to be managed by a farm manager (who was later identified as Reedy Creek Rabbit Farms Australia Pty Ltd (Reedy)) in accordance with the terms of a Management Contract entered into between Screen Investments and Reedy. The purchase was to be effected by the plaintiffs providing funds to Ms Screen who was then to invest them in her name in the rabbit breeding venture on behalf of the plaintiffs. Those funds were to be used for the purchase of rabbits for breeding in accordance with the Management Contract. All funds paid to Ms Screen by the plaintiffs were to be refundable upon the plaintiffs giving to Ms Screen one month’s notice in writing.

The plaintiffs also allege that Ms Screen represented to them that they would not lose money on their investment.

Pursuant to the alleged contract, the plaintiffs claim to have paid a total of $64,102 to Ms Screen in three separate instalments in the period from April to June 2004.

The plaintiffs allege that the breeding and agistment of rabbits never commenced. They contend that, for that reason and having regard to the terms of the contract which they say they made with Ms Screen, the full amount of their investment became refundable. In early 2006, they demanded a refund of the moneys which they paid to Ms Screen. They claim that, apart from a payment of $5,476.20 made by her on 13 April 2007, Ms Screen has failed to repay any of the moneys paid to her on account of the alleged investment.

In the alternative, the plaintiffs allege that the three payments that they made to Ms Screen were to be held by her on trust for the purpose of enabling her to purchase rabbits on behalf of the plaintiffs to be managed in accordance with the Management Contract. They claim that, because the rabbits were never purchased, upon demand, Ms Screen was obliged to return the amounts received from the plaintiffs.

A further alternative way of putting the case was that the plaintiffs were entitled to relief pursuant to s 52 and s 82 of the Trade Practices Act 1974 (Cth) (the TPA). They claim that the representations made to them at the meeting in March 2004 were false and misleading because Ms Screen did not have reasonable grounds for making the representations which she made at the time when she made them. The plaintiffs allege that, if the representations had not been made, they would not have entered into the contract which they made with Ms Screen and then made the payments to her which they subsequently made.

Finally, the same claims are repeated as against Screen Investments, in the alternative.

The representations pleaded in the ASC which underpin all of the causes of action relied upon are those which are set out in par 7 and par 11 of that pleading. In those paragraphs, the plaintiffs alleged that Ms Screen told them that:

(a) The investment would be used by her to purchase rabbits;

(b) The investment would not be used to fund the construction of infrastructure on the land where the rabbits were to be bred, such infrastructure including, but not being limited to, sheds, heating lamps and cages;

(c) Ms Screen would return to the plaintiffs the full amount of the money invested by them immediately upon the plaintiffs giving to her one month’s notice in writing;

(d) She would organise the preparation of a formal written contract; and

(e) The plaintiffs would not lose money on this investment.

In their Further Amended Originating Claim filed in Court on 16 October 2012, the plaintiffs claim damages for breach of contract and pursuant to s 52 and s 82 of the TPA. They also claim an account as against Ms Screen for breach of trust. They also claim interest on the moneys due.

In her Defence, Ms Screen admits receiving the moneys which the plaintiffs allege they paid to her. She also admits the existence of a management contract between Screen Investments and Reedy entered into on or about 4 April 2004. Ms Screen also concedes that, on or about 21 January 2006, the plaintiffs requested her to repay the amounts which they had paid to her. She denies that the circumstances of the case give rise to any trust and denies that she acted as the agent of Screen Investments. In addition, Ms Screen pleads that the plaintiffs’ moneys were paid to Reedy by her pursuant to the Management Contract between Screen Investments and Reedy. She contends that Screen Investments was obliged to exercise rights against Reedy in the interests of the plaintiffs in order to recover their investment. She says that Screen Investments endeavoured to do so but was unsuccessful. She also argued that the investment was lost because Reedy’s business failed. The substance of Ms Screen’s Defence was repeated in the Defence filed on behalf of Screen Investments.

THE PLAINTIFFS’ VERSION OF EVENTS

The Evidence of George Weir

George Weir testified that he became aware of the rabbit breeding venture when his friend, Clinton Robinson told his brother, Malcolm Weir, and him, that he (Robinson) was going to invest in the rabbit venture and that the returns seemed to be quite good on paper. Mr Robinson told the Weir brothers that he had been introduced to the venture by Ms Screen. George Weir and his brother then arranged to meet with Mr Robinson and Ms Screen at Mr Robinson’s mother’s house in Charnwood, ACT. This first meeting took place in March 2004. Present at this meeting were George Weir, Malcolm Weir, Mr Robinson and Ms Screen.

According to George Weir, the following discussion took place at this first meeting:

(a) Mr Robinson said that he was leaning towards putting in $30,000 and $1,000 per month thereafter;

(b) As far as Mr Robinson’s proposed investment was concerned, a few scenarios were discussed but the proposal summarised at subpar (a) above was the one which he favoured;

(c) Both George and Malcolm Weir told Ms Screen that each of them would possibly do the same. That is, that each of them would possibly put in $30,000 at the beginning and $1,000 per month thereafter;

(d) Ms Screen said that the Weir brothers could not lose their money and that the investment was pretty secure. She said that they would be dealing with her, not the farmer. (I pause to note that the farmer was not identified by Ms Screen at this meeting.) Ms Screen went on to say that all the Weir brothers had to do was put their money in and then not worry about it; and

(e) Ms Screen also said that, if the Weir brothers wanted to pull out at any time, they could do so by giving to her a notice in writing requiring payment of their investment within one month of the giving of that notice.

George Weir was not sure whether Ms Screen showed to his brother and him a draft contract and printouts of figures at the first meeting which he had with Ms Screen or whether those documents were shown to him, his brother and Mr Robinson at a second meeting which took place amongst the same persons a couple of weeks later at the same venue. He was inclined to think that the printouts were produced and shown to his brother and him at the second meeting rather than at the first meeting.

George Weir said that, at either the first or the second meeting, Ms Screen gave to him four folios in hard copy comprising printouts from a computer disk. Neither he nor his brother looked at anything on the computer disk by using a computer. He said that they were both “computer illiterate”. He said that they only looked at the paper or hard copy version of the printouts. He said that they did not spend much time looking at these documents. He also said that they were not allowed to keep these printouts or to take them away after the meeting. He went on to say that neither he nor his brother understood the printouts.

In his evidence-in-chief, George Weir said that his brother and he were told by Ms Screen at either the first or the second meeting that the draft contract shown to them was a draft of the contract which she proposed to enter into with the farmer. The contract document which they were shown was incomplete in a number of respects and had not, at that stage, been signed by anyone. Ms Screen told the Weir brothers that their transaction would be with her and that, although their contract with her would be similar to the draft contract which she produced to them, their contract with her would be different from that contract in a number of respects. She did not explain what these differences would be. She did say that the contract would be with her, and with her alone. She said that the contract would reflect the fact that the Weir brothers were dealing with her and not with the farmer. She said that she would arrange for her solicitor to draw up a contract between the Weir brothers and her and provide that contract to them once it was available.

Neither the draft contract nor the printouts which George Weir said were shown to him and to his brother at either the first or second meeting with Ms Screen were tendered in evidence before me.

It appears that the printouts were available to the parties had they wished to tender them. However, no tender was made. Some oral evidence was given by George Weir, Mr Robinson and Ms Screen as to the contents of parts of these documents. That evidence was very general and of little or no assistance to the Court. If reliance was intended to be placed by any party on the contents of these documents, the documents themselves should have been tendered in evidence. In the absence of such a tender, I propose to disregard the oral evidence given as to the contents of these documents.

George Weir went on to testify that, at either or both of the first two meetings, Ms Screen told his brother and him that the $30,000 payment under discussion was for rabbits and cages. The investment was to be purely in the stock on the farm, not in the farm itself or in the sheds and other buildings and infrastructure to be constructed on the farm.

George Weir said that, at either the first or the second meeting, he and his brother told Ms Screen that they were keen to “go in” on the same sorts of conditions as Mr Robinson intended to invest.

Ms Screen explained to the Weir brothers and to Mr Robinson at either the first or the second meeting that the farmer was going to run the farm and that the farmer would be paid a fee out of the investors’ money. She did not specify at any of the discussions which she had with the Weir brothers when or how that fee would be paid.

According to George Weir, at either the first or second meeting, Ms Screen told those present that she would “… hold on to [any money that the Weir brothers and Mr Robinson paid to her on account of this investment] until it was time to buy rabbits and cages”. The farmer had to get the farm ready for the enterprise. Once that was done, the moneys which they paid to Ms Screen would then be used to buy rabbits and cages. In effect, she made clear that the moneys which they paid to her would not be used for anything else and would not be paid across to the farmer until the time had come to purchase rabbits and cages. It was the Weir brothers (and, indeed, the other investors) who would own the rabbits and cages which were to be purchased with their funds.

Ms Screen said that she was in the early group of investors. She said that her family had already invested. She said that this early group would get preferential treatment on the terms and conditions of the investment. If the Weir brothers chose to invest through her, they would get the benefit of her preferential terms and conditions. If they chose not to deal through her, they would have to deal with the farmer directly and inevitably this would lead to a requirement that they pay a larger upfront sum by way of investment in the venture.

Ms Screen went on to say that, if the Weir brothers wanted to invest and to be in her early investor group, they had to make up their minds “… pretty quickly”. She stressed that, if they chose not to deal through her, they would have to deal with the farmer directly.

George Weir testified that he and his brother had fairly much made up their minds to invest in the manner suggested by Ms Screen by the end of the second meeting.

On 1 April 2004, George Weir went to Ms Screen’s parents’ house and handed to her a cheque made out in her favour in the amount of $60,102.

Over the next couple of months, an additional $4,000 was paid to Ms Screen by the Weir brothers.

The total amount paid to her in connection with the rabbit breeding venture was $64,102.

The Weir brothers’ cheque for $60,102 was deposited on 2 April 2004 into a bank account operated by Ms Screen and her father. The additional $4,000 paid by the Weir brothers was also deposited into that account.

George Weir said that, in about June or July 2004, he and his brother had become concerned about the lack of progress with the scheme. Between 1 April 2004 and June or July 2004, George Weir had had a number of conversations with Ms Screen seeking to ascertain what progress had been made. He did not receive satisfactory responses. Eventually, George Weir told Ms Screen that, unless they could be satisfied that real progress was being made, they would call for their money back. He told her that they wanted to see physical evidence of progress. He told her that they wanted to see a farm with a shed and a setup that was ready to go.

According to George Weir, Ms Screen was reluctant, at first, to facilitate any contact between the Weir brothers and the farmer. The Weir brothers then threatened to demand the return of their money in accordance with their arrangements with Ms Screen. In the face of that threat, Ms Screen organised a meeting between the Weir brothers and Bill O’Mara, who was the principal of Reedy, at a farm which was located near Bookham, NSW. Bookham is approximately 35 km west of Yass. George Weir said that a meeting with Mr O’Mara at the farm took place in the second half of 2004.

The only persons present at this meeting were the Weir brothers and Mr O’Mara. At the time when they met with Mr O’Mara, no physical progress was evident at the farm. Mr O’Mara spoke with them in a small caravan which he had parked there. He waxed lyrical about how the whole thing was going to work. He appears to have convinced the Weir brothers that he had a good plan, that it was definitely going to go ahead and that it was just taking a bit longer than it should have.

After the meeting at the farm, the Weir brothers attempted to secure a written contract with Ms Screen. They were unable to do so. They did not, however, make any further payments to her.

Subsequently, George Weir made a number of phone calls to Ms Screen requesting the return of the moneys which the Weir brothers had paid to her in respect of the rabbit breeding venture. She fobbed him off. After a time, Ms Screen ceased answering the phone. The Weir brothers then had a couple of conversations with Ms Screen’s mother and father. In the end, however, the money was not returned.

In late January 2006, George Weir and his brother delivered a letter dated 21 January 2006 to Ms Screen at her parents’ home. There is some inconsequential dispute in the evidence as to the mode of delivery. However, there is no dispute that that letter came to Ms Screen’s attention soon after its delivery. The letter from the Weir brothers to Ms Screen is in the following terms:

21 January 2006
RE: REIMBURSEMENT OF INVESTED FUNDS
Dear Ms Screen
We refer to previous telephone conversation, dating back as far as July 2005, regarding our decision to withdraw our invested funds in your Rabbit Farm Investment Project.
As previously mentioned, we would like to withdraw our $64 000.00 in this project due to the lack of progress made. When this money was forwarded to you to invest in this project, we were assured that at anytime we could leave the investment with one months notice and all funds would be refunded. This was also stated in the draft contract which you provided to us.
This notice was given to you in July 2005. However, as at today’s date we have yet to receive any money from you let alone any indication when we may receive our $64 000.00.
When we invested in this project we were informed that all money would be held in a trust account until the sheds and cages were in place and stock (rabbits) was purchased. Therefore as none of this has actually occurred, there should be no reason as to why we have been unable to receive a refund of our funds.
As we have hot had any contact with you since October 2005, we are quite exasperated with this whole situation. Therefore we have no alternative other than to request we receive our $64 000.00 within 28 days of this letter, otherwise we will be forced to take this matter legally further.
We can be contacted on the numbers below to discuss the transfer of funds.
Yours sincerely
George Weir Malcolm Weir
PH: 0407 238 927 PH: 0407 884 340

By letter dated 15 February 2006, Ms Screen attempted to explain herself to the Weir brothers and to put forward a proposal to resolve what, by then, had become an acrimonious dispute. Ms Screen’s letter became Exhibit D at the hearing. It was headed “Without Prejudice” but I was informed by Counsel for the parties that the parties had agreed that, whatever privilege existed in the letter, that privilege should be waived and that the letter could be tendered by consent.

The letter is in the following terms:

PO Box 6706
Charnwood ACT 2615
15 February 2006
M & G Weir
7 Grimshaw St
Richardson ACT 2905
Dear Malcolm and George
Without Prejudice
When I spoke with Clint in December 2005 to obtain your mailing address, I told him what had happened with regard to the money invested in Reedy Creek Rural Pty Ltd. I don’t believe that he has not passed that information on to you. Notwithstanding that, you were informed by my mother that the money had all been gambled when you telephoned my parents house shortly after you delivered your letter of demand. As you were rather rude whilst talking to her, I do not know whether or not you bothered listening to a word she said. Please do not continue to harass my family.
I suggest that you study carefully the contract that you were provided. To briefly summarise, it states that written notice of 90 days is required to receive a refund of any monies. It also states that this money can only be refunded AFTER the first year of the contract, the start date being either the date of the contract (i.e. 4 April 2004) or the delivery of the first litter of kittens, whichever is the LATER.
Again, I am aware that you have been told at least once and more than likely twice, that there is no money available to be refunded by Reedy Creek Rural Pty Ltd. I am in discussions with my solicitor regarding action we can take against Bill O'Mara as director of Reedy Creek Rural Pty Ltd.
I am aware that I verbally informed you that you wouldn’t lose any money. I am prepared to honour the majority of that commitment at present. However, I do not have any funds available to provide to you at this point in time. I propose to offer to pay to you $500 per month, beginning on the 1st of April if you accept my terms. I have a unit in the Metropolitan development in Canberra City. It is listed for sale. If it sells on the development's completion scheduled for November, I will have the majority if not all of the funds to provide to you then. Please be aware and acknowledge that it is now my own money that I will be providing to you. If you were to rely on the contract with Reedy Creek Rural Pty Ltd you would receive approx 5 cents in the dollar, based on preliminary discussions with my solicitor regarding the assets available to us. If you wish to take legal action yourselves, then I wish you good luck.
Please advise acceptance in writing by the 15^th March, complete with bank details of where I am to deposit the funds. If I do not hear from you, I will assume that you are taking legal action and will pass on all documents to my solicitor.
Yours sincerely
Mel Screen

No further discussions about the return of the Weir brothers’ investment took place between either of the Weir brothers and Ms Screen after the exchange of correspondence to which I have referred at [40]–[42] above.

By letter dated 30 November 2006, the plaintiffs’ solicitors made a formal demand upon Ms Screen for the payment of $64,000. Legal action was threatened in that letter.

The only monies repatriated to the Weir brothers by Ms Screen was an amount of $5,476.20 which was forwarded to Myer Vandenberg by Ms Screen’s lawyers, National Business Lawyers, under cover of a letter from those lawyers to Myer Vandenberg dated 13 April 2007. Omitting formal parts, that letter is in the following terms:

We refer to the above matter.
As stated in our client’s Defence, the investors in the rabbit farm recovered some money from Bill O’Mara and Phil O’Mara. In order to avoid further disputation, we are instructed by Screen Investments Pty Limited to pay your clients their share of the monies recovered plus interest calculated at 9% commencing from 10 June 2006 until 12 April 2007.
Accordingly, we enclose a cheque for the sum of $5,476.20 being the plaintiffs’ share of the recovered monies inclusive of interest.
Please acknowledge receipt of the cheque by signing and dating the duplicate copy of this letter.

In cross-examination, George Weir adhered to the substance of his version of events. In particular, he adhered to his evidence that Ms Screen was going to organise a formal contract to govern the relationship between the Weir brothers and her concerning the investment. He also was emphatic that Ms Screen was not to disburse the funds which he and his brother intended to pay to her on any acquisition other than the purchase of rabbits and cages.

In addition, George Weir was cross-examined by reference to a version of events which he had written, probably in 2006. Although Counsel for Ms Screen and Screen Investments managed to demonstrate that there were some differences in the account given in the notes, those differences were not so significant as to cause me to doubt the truthfulness given before me by George Weir. He readily accepted such differences as existed without argumentatively seeking to disown his own work.

The Evidence of Malcolm Weir

Malcolm Weir gave evidence broadly to the same effect as that given by George Weir. There were some minor differences. For example, he accepted that he and his brother had been given a computer disk at one of the meetings although he said that they did not look at the material on that disk on a computer.

Malcolm Weir generally appeared to have a more detailed recollection of events than his brother George although, as I have said, the substance of that which he remembered was essentially the same.

As was the case with George Weir, Malcolm Weir was cross-examined at some length. However, in the end, I am satisfied that no concessions were made in the course of that cross-examination which damaged or altered the evidence given in chief by Malcolm Weir nor, with great respect to Counsel, did Counsel otherwise establish that that evidence was inaccurate in any material respect or unreliable..

The Evidence of Clinton Hilliard Robinson

The plaintiffs called Mr Robinson in their case.

Mr Robinson testified that he had been introduced to the rabbit breeding venture by Ms Screen’s brother. Ms Screen’s brother had suggested to him that Ms Screen had a good rabbit scheme going in which he might be interested in investing.

At transcript 72, Mr Robinson gave a lengthy answer between ll 17 and 39 in which he recounted the conversation which took place at the first meeting held at his mother’s house involving the Weir brothers, himself and Ms Screen. The lengthy answer came to this: Ms Screen was advocating investing in the rabbit breeding venture which she had in mind because there was great potential for making money out of the sale of rabbit meat. She told those present that she had looked into it and the potential for the investment was very good. She told those present that any investment funds paid to her would be used for rabbits and cages and only rabbits and cages. She told those present that she would not hand over their money to the farmer until the necessary infrastructure was constructed on the farm. Ms Screen told those present that things were progressing and that they would not have to wait long before their funds were used to buy rabbits and cages, should they choose to invest. Mr Robinson confirmed that the Weir brothers had asked for a formal contract and that Ms Screen had said that she would have one drawn up.

Mr Robinson testified that he had managed to get his money back from Ms Screen about a year and a half after the initial meeting.

As was the case with the Weir brothers, I do not think that the cross-examination of Mr Robinson dented his credibility or altered the effect of the evidence which he gave in chief.

MS SCREEN’S EVIDENCE

In her evidence-in-chief, Ms Screen explained how she had looked at CSIRO research on rabbit breeding. She said she had also read newspaper articles which provided information on the demand for rabbit meat in Australia and overseas, particularly in China. She said that she had also telephoned local butchers and made enquiries as to what their interest in purchasing rabbit meat might be. Ms Screen said that she thought that investing in rabbit breeding was an investment which had great potential. She was very positive about such an investment.

Ms Screen went on to give evidence as to discussions she had with Mr Bill O’Mara, who was the principal of Reedy. She had been given information by him to the effect that he had secured an appropriate parcel of land upon which to farm the rabbits and was in the process of constructing the necessary infrastructure. She said that she herself had invested in the project after signing a letter of intent on 29 January 2004.

A formal contract between Screen Investments and Reedy was ultimately signed on or about 4 April 2004. Ms Screen testified that she thought that the $80,000 which she had paid to Reedy or Mr O’Mara was to be used to purchase rabbits.

When Ms Screen came to give evidence of the meeting with the Weir brothers and Mr Robinson, there were material differences between her version and the version given by and on behalf of the plaintiffs. In particular, she said:

(a) The investment was for the purchase of rabbits and the investment moneys would be handed to Mr O’Mara as soon as practicable after being paid to her;

(b) She expected the venture would be up and running within a couple of months after March 2004;

(c) She gave to the Weir brothers and Mr Robinson the product of her research, including material revealing the CSIRO research;

(d) She was excited about the prospects of the venture;

(e) She did inform the Weir brothers and Mr Robinson that, if they decided to invest separately with the farmer, they would pay more.

Ms Screen said that the Weir brothers and Mr Robinson should make out their investment cheque to her personally because the corporate trustee of her family trust did not have a cheque book.

Ms Screen seemed to understand that, if the group of investors which she was procuring for the venture was limited to less than 20, there would be no need for a prospectus. Whilst she denied that was the reason for procuring the investments from the Weir brothers and Mr Robinson in the manner that she did, it seems very likely that that was the true reason.

Ms Screen emphasised on a number of occasions during her evidence-in-chief that she had informed the Weir brothers and Mr Robinson that each rabbit would cost $477.

Ms Screen denied saying that the moneys would not be used to build infrastructure and would be kept by her in a separate account. Ms Screen also denied ever undertaking to have a contract drawn up. Her version was that she told the Weir brothers that they should have a contract drawn up, if they wished to formalise the arrangements between them and her.

Ms Screen claimed to have sent a letter to the Weir brothers in February 2006. She said that she had half written her letter when she received a letter from the Weir brothers. She did so when being asked why she had not taken issue with the Weir brothers about the contents of their letter to her dated 21 January 2006.

Ms Screen vehemently denied assuring the Weir brothers and Mr Robinson that any investments placed with her would be kept by her in a separate account and not paid across to the farmer for any purpose other than for the acquisition of rabbits and cages.

Ms Screen also asserted repeatedly that she explained to the Weir brothers that she had a family trust, that Screen Investments was the corporate trustee of that trust and that she was investing in the rabbit breeding venture through her family trust. She also repeatedly emphasised the fact that she and her father and another acquaintance of hers had all lost money in the rabbit breeding venture at the hands of Mr O’Mara.

FINDINGS OF FACT

I had the benefit of seeing each of the witnesses called by the parties in the matter in the witness box. Although unsophisticated, each of George and Malcolm Weir were forthright and straightforward in the evidence which they gave. Of particular importance in assessing what really happened in the present case was the evidence of Mr Robinson. He is independent of each of the parties involved in the present action although he is known to each of them. He is friendly with Ms Screen’s brother. On the evidence before me, he appeared to have no reason to support either the plaintiffs or the defendant. He appeared to be in neither camp. To my perception, he appeared to be endeavouring to do his best to tell the truth about what happened. As I have indicated above, his evidence corroborated the substance of the version of events given by George and Malcolm Weir.

Ms Screen, on the other hand, seemed to be conscious of the need to resist the suggestion that the moneys paid to her by the Weir brothers were to be used only to purchase rabbits and cages and not for any other purpose and were to be kept in a bank account in her name until such time as they were disbursed for that purpose. She seemed to be very keen to ensure that, at no stage during her evidence, would she make a concession that the substance of the arrangement was as the Weir brothers contended. At times, she presented as evasive and unwilling to give a frank answer to appropriate questions asked of her.

Both versions of the arrangement suggest that the arrangement made was very unusual, to say the least. But, from time to time, people make unusual arrangements. Not everyone conducts himself or herself upon the basis that serious investments will be documented so as to ensure that the true arrangement is clear to all.

In the present case, Ms Screen was lauding the benefits and prospects of the rabbit breeding venture. I think that she was enthusiastically promoting it to the Weir brothers and to Mr Robinson. She presented it as a prospect which could not fail. In her letter to the Weir brothers dated 15 February 2006, she admitted that she had told them that they would not lose any money. In the same letter, she endeavoured to rely upon terms in the contract between Screen Investments and Reedy as a justification for postponing the refund to which she otherwise she appeared to concede the plaintiffs were entitled. In addition, in the same letter, Ms Screen said that she was prepared to honour the majority of the commitment that she had made that they would not lose any money. She offered to repay over time all of the moneys which the Weir brothers had advanced. In her letter, she did not challenge the assertions made by the Weir brothers in their letter of 21 January 2006. The Weir brothers’ letter makes allegations which are substantially to the same effect as the evidence which they gave before me.

The provisions entered into between Screen Investments (or Ms Screen herself) and Reedy have no contractual significance or other legal significance as between the plaintiffs and the defendant.

I find that, at the first meeting held at Mr Robinson’s house in March 2004, the following discussion took place, as alleged by the plaintiffs:

(a) After introductions, Mr Robinson informed those present that he was leaning towards putting in $30,000 with Ms Screen for investment in the rabbit breeding venture and $1,000 per month thereafter;

(b) As far as Mr Robinson’s proposed investment was concerned, other scenarios were discussed but the proposal summarised at subpar (a) above was the one which he favoured;

(c) Both George and Malcolm Weir told Ms Screen that each of them would possibly do the same. That is, that each of them would possibly put in $30,000 at the beginning and $1,000 per month thereafter;

(d) Ms Screen said that the Weir brothers could not lose their money and that the investment was pretty secure. She said that they would be dealing with her, not the farmer. Ms Screen went on to say that all the Weir brothers had to do was to put their money in and not worry about it thereafter;

(e) Ms Screen also said that the moneys invested with her would only be used for the purchase of rabbits and cages and not for any other purpose such as purchasing sheds and other infrastructure for the farm;

(f) Ms Screen also said that the project start date was imminent; and

(g) Ms Screen said, in addition to everything else, that, if the Weir brothers wanted to withdraw the funds which they invested with her, they could do so by giving a notice in writing to her requiring repayment of their investment within one month of giving that notice.

CONSIDERATION

The payments made pursuant to the arrangements reached between the plaintiffs and Ms Screen were made as follows:

(a) $60,102 on 2 April 2004 to a St George Bank Freedom Cheque Account in the name of Ms Screen and her father, James Raymond Screen;

(b) $2,000 on 10 May 2004 to the same account.

(c) $2,000 in June 2004 to the same account.

There is no dispute, therefore, that the total amount of $64,102 was paid into the joint bank account held by Ms Screen with her father at St George Bank Limited. The bulk of those moneys (the initial payment of $60,102) remained in that account for almost two weeks. On 14 April 2004, the said amount of $60,102 was paid out of the account as part of a cheque for $98,000.

There is no specific evidence establishing the identity of to the recipient of that cheque for $98,000 although it is a reasonable inference, in all the circumstances, that it was Reedy.

I do not think that the arrangements made between the plaintiffs and Ms Screen constituted a contract containing the terms pleaded in the ASC.

It may be that the correct analysis is that the moneys paid to Ms Screen by the Weir brothers in April, May and June 2004 were impressed with a trust with the consequence that those moneys were to be used only for the purpose agreed as between the parties. On the evidence before me, on this analysis, the requisite purpose was for on-payment to the entity which was to farm the rabbits or as that entity might direct for the sole purpose of acquiring rabbits and cages. It was submitted on behalf of the plaintiffs that Ms Screen paid across their investment, not for that purpose, but for other purposes. It was submitted that, because she did not regard herself as confined in the way suggested by the plaintiffs, she had disbursed the moneys as part of a number of other investments which she passed on to Reedy.

The facts of the present case may be susceptible to the trust analysis. But there are difficulties with that analysis, not the least of which is that the alleged trust moneys have disappeared. In the circumstances, I prefer to rest my decision upon the other case advanced by the plaintiffs, that is, the case based upon s 52 and s 82 of the TPA.

The representations pleaded in subpar (a) to (d) of par 7 of the ASC are all promissory in nature. In order to establish that they were misleading or deceptive within the meaning of s 52 of the TPA, the plaintiffs would need to establish that Ms Screen did not intend to fulfil those promises or, at the very least, had no reasonable basis for making them. I am not satisfied that Ms Screen’s intentions and reasoning process were of that character.

The representation to the effect that the plaintiffs would not lose their money if they made the investment suggested by Ms Screen is, however, of a different character.

It is very difficult to see how Ms Screen could have made such a statement. The whole venture was imprecise in conception and murky in execution. It seems that Mr O’Mara, through Reedy, and other companies, had persuaded Ms Screen and others to part with significant amounts of cash on a venture which did not exist and had no real prospect of existing. Ms Screen never really investigated the venture nor did she satisfactorily tie down the arrangements pursuant to which she made payments to Mr O’Mara and his corporate entities.

In my judgment, Ms Screen had no reasonable basis for making the statement which I have found that she made to the effect that the plaintiffs would not lose any money if they made the requisite investment.

In my judgment, that representation was a significant inducement to the plaintiffs to part with their cash. Ms Screen promoted herself as a savvy investor who had done a good deal of work to satisfy herself of the wisdom of the investment both for her own purposes and for the purposes of recommending the investment to others. The truth was that she had not investigated Mr O’Mara at all and had only superficially investigated the wisdom of such a venture, in any event.

I have come to the conclusion that the plaintiffs would not have paid the total sum of $64,102 to Ms Screen had this representation not been made.

In light of her letter of 15 February 2006, Ms Screen did not and could not have contested that she made a representation to the effect that the plaintiffs would not lose their money if they invested in the rabbit breeding venture. There was no serious challenge to the plaintiffs’ evidence that they relied upon that representation in making the payments which they made. The only defence of substance raised by Ms Screen was that the relevant representation was not made “in trade or commerce”.

During closing submissions, Mr Whybrow submitted that Ms Screen was acting as a “conduit” in making the representations to the plaintiffs which led them to invest in Mr O’Mara’s Reedy Creek rabbit breeding scheme and that for this reason, she may not have been acting “in trade and commerce” as required by s 52. Implicit in this submission is a suggestion that in order to be acting “in trade and commerce” when making the representations, it was necessary for Ms Screen to be involved in the business to which those representations related.

In Complete Constructions Pty Ltd v Nelson (1990) 196 CLR 594 at 603 the majority (Mason CJ, Deane, Dawson and Gaudron JJ) in a joint judgment held that the reference to conduct “in trade or commerce” in s 52 should be construed as “ ... referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character.”

That finding was referred to in the unanimous judgment of the High Court in Houghton v Arms (2006) 225 CLR 553 at [33]. The Court went on to say:

34 Moreover, in his judgment in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, s 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation [Complete Constructions Pty Ltd v Nelson (1990) 196 CLR 594 at 613]. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity [See Fasold v Roberts (1997) 70 FCR 489 at 531].

In Meadow Gem v ANZ Executors & Trustee Co Ltd & Ors (1994) ATPR (Digest) 53,626 (46-130), which is discussed in Fasold v Roberts, claims were pleaded against ministers of the Victorian Government and the Registrar of Building Societies. The claims were based on public statements made by them representing that investments in a building society, which later failed, were secure and were without risk to the investors. In that case, Hedigan J found that “the representations made were directly addressed to and supportive of the affairs of a trading and financial corporation and therefore are more easily identifiable as representations made in the trade or commerce of a building society” (53,631).

Ms Screen’s conduct was clearly addressed to the affairs of Mr O’Mara’s rabbit breeding venture and was clearly designed to encourage the plaintiffs to invest in that scheme. It was therefore conduct “in trade or commerce”.

CONCLUSION

For all of the above reasons, the plaintiffs are entitled to damages in the amount of $64,102 plus interest on the components of that amount from the date each of those components was paid at the Court-prescribed rate less the amount repaid by Ms Screen in 2007 ($5,476.20).

I propose to direct the parties to confer and agree on the final amount for which judgment should be entered.

Costs should follow the event.

I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Foster.
Associate:
Date: 6 September 2013

Counsel for the plaintiffs:  Mr WL Sharwood
Solicitor for the plaintiffs:  Meyer Vandenberg
Counsel for the defendants:  Mr SM Whybrow
Solicitor for the defendants:  Colquhoun Murphy
Date of hearing:  15–16 October 2012
Date of judgment:  6 September 2013

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Citations

Weir v Screen [2013] ACTSC 188

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Statutory Material Cited

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Houghton v Arms [2006] HCA 59