Wendy Byrne v Cope Street Pty Limited

[2009] NSWSC 947

CITATION:	Wendy Byrne v Cope Street Pty Limited & Anor [2009] NSWSC 947
HEARING DATE(S):	10/08/09, 11/08/09, 12/08/09, 13/08/09, 20/08/09
JUDGMENT DATE :	14 September 2009
JUDGMENT OF:	Forster J at 1
DECISION:	See paragraphs 163 to 165 of judgment.
CATCHWORDS:	Trade Practices Act - Representations with respect to future matters - no evidence adduced to establish reasonable grounds - reliance and liability established. Contracts Review Act - liability established - section 6(2) found not to apply Unconscionability - vulnerability resulting from lack of financial or business sophistication - "wall of persuasion" constituted by defendant providing plaintiff with advice on all aspects of transaction.
LEGISLATION CITED:	Contracts Review Act 1980 (NSW) Conveyancing Act 1919 (NSW) Fair Trading Act 1987 (NSW) Trade Practice Act 1974 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 Beneficial Finance Corporation Limited v Karavas (1991) 23 NSWLR 256 Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited (2009) 257 ALR 658 Jones v Dunkel (1959) 101 CLR 298 I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 Lopwell Pty Ltd v Clarke & Ors [2009] NSWCA 165 Louth v Diprose (1992) 175 CLR 621 March v Stramare (E. & M. H.) Pty Ltd (1991) 171 CLR 506 Medlin v State Government Insurance Commission (1995) 182 CLR 1 Nassif v Caminer [2009] NSWCA 45 Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367 Spina v Permanent Custodians Limited [2009] NSWCA 206 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Wardley Australia Limited v Western Australia (1992) 175 CLR 514 West v AGC (Advances) Limited (1986) 5 NSWLR 610 Zhang v VP302 SPV Pty Ltd & Ors (2009) 223 FLR 213
PARTIES:	Plaintiff- Wendy Byrne Defendant- Cope Street Pty Limited
FILE NUMBER(S):	SC 2071/06
COUNSEL:	Plaintiff- G. P. McNally SC; J. Tobin Defendant- R. Freeman
SOLICITORS:	Plaintiff- Thurlow Fisher Solicitors Defendant- N/A.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

FORSTER J

MONDAY, 14 SEPTEMBER 2009

2071/06 WENDY BYRNE v COPE STREET PTY LTD & ANOR

JUDGMENT

: By her Further Amended Statement of Claim filed on 13 March 2009 the plaintiff seeks various declarations and orders relating to:

(a) a Put and Call Option dated 7 August 2003 (“the Option Agreement”) entered into between the plaintiff and the defendant in relation to a property contained in Lot 2 of an unregistered plan, being part of Folio Identifiers A/440923 and B/440923, to be known as Unit 2, 180-182 Cope Street Waterloo (“Lot 2”); and

(b) a contract for the sale of land dated 15 August 2003 (“the Contract”) between the same parties relating to the sale by the defendant to the plaintiff of Lot 4 in the said unregistered plan, to be known as Unit 4, 180-182 Cope Street Waterloo (“Lot 4”).

2 Under the terms of the Contract, the plaintiff paid a deposit in the sum of $33,000. Under the terms of the Option Agreement, she paid to the defendant an option fee in the sum of $46,000.

3 By its cross-claim filed on 6 July 2006 the defendant likewise seeks declarations and orders in relation to the Option Agreement and the Contract. It seeks to retain the said sums of $46,000 and $33,000 but no longer seeks to recover from the plaintiff the difference between the amounts it would have received from her had the Option Agreement and the Contract been completed in accordance with their respective terms and the amounts that it in fact received upon the resale of Lots 2 and 4.

The basic facts

4 The following facts were in the main not disputed.

5 The plaintiff was born in October 1949 and was at the relevant time 53 years of age. She was a single mother and was employed as a casual cleaner at a local caravan park. She was earning a wage of $42,000 per annum and her only asset of substance was her home at 43 Strickland Street Bass Hill. The home had a value of about $430,000 and was mortgaged to the Commonwealth Bank to secure the repayment of a home loan of which a sum of approximately $56,000 was still owing. She did not have any spare money for investment purposes and had little property investment experience.

6 All of the foregoing matters came to be known by the defendant prior to the plaintiff entering into the Option Agreement and the Contract.

7 The defendant was the owner of the land situated at 180-182 Cope Street Waterloo in which both Lots 2 and 4 were to be situated. It proposed to develop the site by erecting a multi-storey building and dividing it into home units under the provisions of the Strata Titles Act. It was a “single purpose” company, that is to say its sole activity was, and would always be, the development and sale of the land in question.

8 The defendant formed part of a group of associated companies with common, or at least overlapping, shareholders and directors. In 2003 its directors were Mr Rusty Moran, Mr Matt Daniel and Mr Callum Sked. Each of those persons also owned one third of its issued capital through entities respectively controlled by them.

9 Another company in the group was Nursery Street Pty Limited (“Nursery Street”) which was similarly engaged in another development project situated at Nursery Street, Hornsby. The directors and shareholders of that company were the same as those of the defendant. A third company, namely Tailored Property Pty Limited (“Tailored Property”), which was engaged in sale activities on behalf of the defendant, Nursery Street and other companies, likewise had the same directors and the same shareholders.

10 The other companies which relevantly formed part of the group associated with the defendant consisted of Coset Pty Limited, which traded as Raine & Horne Residential Investments (NSW) (“R & H”), and which carried on business inter alia as a real estate agent. Its sole director was also Mr Rusty Moran. Its sole shareholder was another company, Tailored Equity Pty Limited (“Tailored Equity”). The sole director of Tailored Equity was again Mr Rusty Moran, and its sole shareholder was a company called Moran Corporation Pty Limited. The sole director of that company was also Mr Moran, and its only shareholders were Mr Moran and his wife. That company, that is to say Tailored Equity, purported to provide advice in a wide range of areas, including the areas of property, investments, finance, law, insurance and accounting.

11 At some time in early 2003, the plaintiff received an unsolicited call from a telemarketer, who enquired whether she might be interested in investing in property. Telemarketing was one of the methods used by the defendant and Tailored Property to effect sales in projects being developed by the defendant and other associated companies.

12 The plaintiff indicated to the telemarketer that she was interested in investing in property and, as a consequence, on 19 March 2003, Mrs Debbie Eyres, who was then an employee or consultant of R & H, attended at the plaintiff’s home. There is substantial dispute as to what was said at that meeting, how long it went for and who was present. It is common ground, however, that it commenced at about 4pm in the afternoon.

13 Following the meeting with Mrs Eyres, a further meeting took place on 16 April 2003 at 6.30pm at the offices which were shared by the various companies to which I have referred. In attendance was Mr Danny Haymes, who was employed by R & H as a property sales manager, and who was allocated the task of dealing with the plaintiff in relation to her proposed investment. That meeting was described by Mrs Eyres as the “financial workshop”.

14 There then followed a further meeting with Mr Haymes on 23 April 2003 for the stated purpose of informing the plaintiff of the properties that were available for investment purposes. That meeting was referred by Mrs Eyres as the “property run”. On the same day, namely 23 April 2003, the plaintiff also met with Mr Callum Sked.

15 There was a further meeting between the plaintiff and Mrs Eyres on 20 May 2003. It is common ground that on the afternoon of that day, Mrs Eyres attended at the plaintiff’s home and delivered some papers to her. There is, however, again a dispute as to what was said on the occasion of that visit.

16 On 20 June 2003 R & H sent to the defendant and to its solicitors, Simpson Freed, a Sales Advice relating to Lot 4. It also sent a copy of that Sales Advice to the plaintiff and to Wicken & Goodsell, the solicitors who had been recommended to the plaintiff,either by Mrs Eyres, or by someone else on behalf of the defendant, as solicitors who would be appropriate to act for her in relation to the proposed transactions. As it ultimately transpired, the Sales Advice of 20 June 2003 turned out to be erroneous in that it called for a Put and Call Option in relation to Lot 4, whereas that Lot was to be the subject of the Contract.

17 Likewise, on 27 June 2003 R & H sent a Sales Advice relating to Lot 2 to the same recipients.

18 Following the receipt of the said Sales Advices, Simpson Freed submitted to Wicken & Goodsell a draft Put and Call Option deed relating to Lot 4 on 23 June 2003 and a draft Put and Call Option deed relating to Lot 2 on 1 July 2003. At the time Simpson Freed were under the impression that both Lot 4 and Lot 2 were to be the subject of Put and Call Option deeds.

19 Following the receipt by Wicken & Goodsell of the said draft deeds, Mr Michael Rogers, who had recently become employed by that firm, entered into correspondence with Simpson Freed, in the course of which he sought various amendments to the documents in question. At that time, Mr Rogers had not met with the plaintiff and the evidence does not suggest that they had even spoken by telephone.

20 On 14 July 2003 Mr Rogers attended at the plaintiff’s home and gave her certain advice. The precise content of that advice is in dispute, as is whether the plaintiff signed any documents on that day in the presence of Mr Rogers.

21 On the following day, namely 15 July 2003, Mr Rogers wrote to the plaintiff purporting to confirm the advice he had provided the previous day. There is a dispute as to whether that letter accurately reflected the advice he had provided.

22 At some time after 15 July 2003 (the precise date being unclear) the plaintiff attended at the offices of R & H. Either then, or on 15 July 2003, in the presence of Mr Rogers (it being an issue in dispute), the plaintiff signed the Option Agreement and the Contract, which were subsequently notionally exchanged and dated respectively 7 August 2003 and 15 August 2003.

23 In the meantime, the plaintiff had arranged to re-finance her home with St George Bank, and on 6 August 2003 she drew down by way of a loan the sum of $212,000. From the proceeds of that loan, she paid the option fee under the Option Agreement in the sum of $46,000 and the deposit under the Contract in the sum of $33,000, a total of $79,000. From the balance, she repaid the amount that was then owing to the Commonwealth Bank under her previous mortgage and advanced the sum of $65,000 to Nursery Street at an interest rate of 20 percent per annum.

24 The loan to Nursery Street is referred to in these proceedings as the “mezzanine loan”. Nursery Street paid interest on the said sum at the agreed rate until February 2005, at which time it repaid the loan to the plaintiff, there being no dispute that it was entitled to do so.

25 So far as is relevant, the Option Agreement between the defendants as the “grantor” and the plaintiff as the “grantee” provided as follows:

“Put and Call Option
…
Operative Part
…
Grant of option

2.1 In consideration of the amount in item 2 (the ‘option fee’) which the grantee has paid to the grantor (and which the grantor acknowledges having received) the grantor grants to the grantee or his nominee an option to purchase the land for the amount in item 3 (the ‘purchase price’) upon the terms and conditions set out in the agreement for sale annexed (the ‘contract’).

2.2 This option is binding on the grantor and its assigns.

2.3 The grantee may appoint as his/her nominee one or more persons and corporations and may include himself/herself as one of the nominees.

Exercise of option

3 This option may only be exercised by the grantee (or its nominee) giving written notice of exercise to the grantor after the expiration of 42 days from the date of this deed and on or before 5.00pm on the day stipulated in item 4 (time being of the essence).

Option fee

4.1 If this option is not exercised, the option fee will be forfeited to the grantor. If this option is exercised the option fee will be credited in reduction of the purchase price, which reduction is to be applied to the deposit payable under the contract.

4.2 The option fee must be paid into the trust account of the grantor’s agent and held until:

(a) the contract is completed;
(b) the grantee assigns his rights under this option; or
(c) the option fee is forfeited to the Grantor pursuant to clause 4.1 above,


Whichever occurs earlier.

Offer

5. In addition to the option granted by clause 2 of this deed and in consideration of the grant of the put option fee of $10.00, the grantee grants an option to the grantor (“the put option”) to require the grantee to purchase the land for the purchase price upon the terms set out in the contract.

Acceptance of offer

6. The grantor may accept the offer by giving written notice to the grantee on or before 5.00pm on the day stipulated in item 5 (time being of the essence).”

26 On 5 August 2004, and again 12 August 2004, the solicitors by then acting for the plaintiff, namely Williams Boxsell Georgas, wrote to Simpson Freed requesting that the defendant release the plaintiff from her obligations under the Option Agreement and to refund the $46,000 paid thereunder. By letter dated 19 August 2004 Simpson Freed informed Williams Boxsell Georgas that the defendant declined to do so. By Notice of Rescission dated 14 February 2005 the plaintiff by her solicitors purported to rescind the Option Agreement principally on the basis that the Option Agreement did not have attached to it documents required by law to be attached.

27 By letter dated 16 February 2005, the defendant’s solicitors informed the solicitors for the plaintiff that the defendant treated the plaintiff’s Notice of Rescission as a repudiation of her obligations under the Option Agreement, that the defendant accepted such repudiation and that it thereupon terminated the Option Agreement. The Notice further provided that as the plaintiff could no longer exercise the option granted under the Option Agreement, the option fee was forfeited to the defendant.

28 I should add that in a judgment delivered on 7 November 2008, this Court summarily struck out the plaintiff’s claim that she was entitled to rescind the Option Agreement by reason of the alleged failure on the part of the defendant to attach the various documents required by law, or as a result of the alleged failure on the part of the defendant to pay the $10 option fee. Accordingly, that issue is no longer before me.

29 So far as the Contract is concerned, it is in the standard Contract for Sale of Land form (the 2000 Edition). It states the purchase price as $330,000 and the deposit as $33,000. It provides that the completion date is to be “21 days from the date on which the vendor notifies the purchaser that the strata plan is registered”. The vendor is the defendant and the purchaser is the plaintiff.

30 The standard form is supplemented by a number of special conditions, with special condition 32 providing as follows:

“32 Sale Subject to Registration of Strata Plan

The property is sold subject to and conditionally upon the granting of consent to the Strata Plan by the proper authority or authorities and registration for the Strata Plan. The vendor has an obligation to the purchaser to use its reasonable endeavours to register the Strata Plan as aforesaid at the earliest possible time PROVIDED that in the event of such registration not being effected by 1 October 2005 (“Registration Date”) or within such further period as provided for herein, either party may by notice in writing to the other, but prior to such registration being effected, rescind this contract whereupon the provisions of clause 19 hereof shall apply.”

31 So far as is relevant, special condition 31 provided as follows:

“31 Works

31.1 Before completion the vendor will use its reasonable endeavours to cause the “Works” to be done in a proper and workmanlike manner. The “Works” comprise the construction of a strata title residential home unit and retail building substantially in accordance with the Architectural Plans attached to this contract (Annexure ’C’) and the draft Strata Plan (Annexure D), the requirements of all competent authorities and the Schedule of Finishes (Annexure ‘G’).

…

31.6 If completion of the Works is delayed beyond the control of the vendor, the vendor or its architect may give one or more certificates specifying the nature and extent of the delay. On presentation of a copy of this certificate or certificates to the purchaser, the date for registration of the Plan and the Registration Date will be automatically extended by the period specified in the certificate/s. Unless the purchaser disputes the certificate/s by written notice within 14 days of service of the certificate/s, the certificate/s will be conclusive evidence of the nature and extent of the delay and will be binding on the parties.

31.7 If there is a dispute as to the performance of this clause, either party must refer the matter to an architect appointed by the president for the time being or other senior officer of the Royal Institute of Architects NSW Chapter who will act as an expert and not as an arbitrator and whose decision will be binding on the parties. The cost of the reference will be borne as the expert decides and in default of a decision in equal shares.”

32 By letter dated 7 April 2005, addressed to Wicken & Goodsell, Simpson Freed on behalf of the defendant gave notice purporting to extend the registration date specified in special condition 32 to 3 November 2006 pursuant to special condition 31.6. Attached to that letter was a document purporting to be a certificate by Cracknell Lonergan Architects Pty Limited, specifying the nature and extent of the delay.

33 After being informed by Wicken & Goodsell that they no longer acted for the plaintiff, Simpson Freed sent another copy of the said documents to Williams Boxsell Georgas, the solicitors then acting for the plaintiff.

34 By letter dated 11 April 2005, and followed up by a further letter of 15 April 2005, Williams Boxsell Georgas wrote to Simpson Freed protesting against the extension claimed by the defendant and disputing the defendant’s entitlement to extend the time pursuant to the Contract. By letter of 21 April 2005 Simpson Freed replied, refuting the arguments put forward on behalf of the plaintiff. The penultimate paragraph of that letter stated as follows:

“If your client continues to dispute the Certificate of Cracknell and Lonergan we shall seek our client’s instructions to pursue the provisions of special condition 31.7 of the contract.

35 By letter of 21 April 2005, Williams Boxsell Georgas took issue with the contents of Simpson Freed’s letter and sought certain further information from Simpson Freed. The letter did not, however, directly address this latter point.

36 Then nothing further appears to have happened in respect of this matter and no further steps appear to have been taken by either party to engage the provisions of special condition 31.7.

37 According to the evidence adduced on behalf of the defendant, by letter dated 28 September 2005 Simpson Freed provided to Williams Boxsell Georgas a further certificate from the firm of Cracknell Lonergan Architects Pty Limited, dated 27 September 2005, which also purported to specify the nature and extent of the delay. The letter purported to bring the registration date back to 2 September 2006.

38 Williams Boxsell Georgas disputed receiving the letter of 28 September 2005 or its enclosure. When this was pointed out by Williams Boxsell Georgas, on 24 November 2005 Simpson Freed provided Williams Boxsell Georgas with a copy of their letter dated 28 September 2005 and of the document which had accompanied it.

39 By letter dated 23 February 2006 Thurlow Fisher, the solicitors by then acting for the plaintiff (and who are currently acting for her), served upon the defendant, by its solicitors Simpson Freed, a Notice of Rescission of the Contract.

40 Although there is no evidence before me of any formal notice of termination having been served by the defendant, it is clear that it has treated the plaintiff’s solicitors’ letter of 23 February 2006 as a repudiation, and it is common ground that both the Option Agreement and the Contract are now at an end.

41 The evidence discloses that the defendant subsequently sold Lot 2 (the subject of the Option Agreement) for $439,000 and Lot 4 (the subject of the Contract) for $325,000. As I have already noted, although the defendant seeks to retain the amounts of $46,000 and $33,000 paid by the plaintiff in respect of the said two lots, it makes no further claim for damages.

The witnesses

42 Before making further findings of fact, including facts in respect of which there are disputes between the parties, it is necessary to say something about the credibility of the various witnesses who gave evidence and were cross-examined before me.

43 The plaintiff and her daughter Shayne Byrne swore affidavits for the plaintiff and Mrs Eyres, Mr Sked and Mr Rogers swore affidavits for the defendant. The deponents of all of those affidavits were cross-examined. I should add that an affidavit had also been sworn by Mr Haymes who, like the other witnesses, had been required to attend for the purpose of cross-examination. I was informed from the bar table that notwithstanding that he had earlier informed the solicitors for the defendant that he would attend for cross-examination at this hearing, in the day or two immediately preceding its commencement, he indicated his inability (or unwillingness) to attend. Despite attempts made by Mr Freeman and others on behalf of the defendant to contact Mr Haymes, no success was achieved and as his precise whereabouts were unknown (other than that he was in the Melbourne area) it was not feasible to enforce his attendance.

44 By agreement between the parties, only a limited portion of his affidavit was read and it was further agreed that no submission would be made on behalf of the plaintiff in reliance on the principles in Jones v Dunkel (1959) 101 CLR 298.

The plaintiff

45 The plaintiff was cross-examined at some length. Despite, and perhaps as a result of, the detail of her cross-examination, I formed the view that she was a credible witness who had a good recollection of the events in question, notwithstanding they occurred some six years ago. I also formed the view that she was doing her best to give her evidence truthfully and accurately.

46 I was particularly impressed with aspects of her evidence which, at first glance, seemed unrealistic and counterintuitive, and yet were subsequently proved correct. One example was the evidence she gave in cross-examination in relation to her meeting with Mr Rogers on 14 July 2003. She said that she did not sign any documents that day because there was a mix-up with the sales advices. While this explanation seemed puzzling as there was nothing on that point anywhere in the evidence, it transpired that the sales advices were initially drawn on the erroneous assumption that both Lots 2 and 4 would be acquired by the plaintiff on the basis of a Put and Call Option whereas, in fact, only one of the Lots, namely Lot 2, was to be acquired in that manner.

47 One of the principal grounds of attack on the plaintiff’s credibility was that although these proceedings were commenced in March 2006, it was not until June 2008 that she sought to rely on the provisions of the Trade Practice Act 1974 (Cth) (“the TPAct”), the Fair Trading Act 1987 (NSW) (“the FTAct”), the Contracts Review Act 1980 (NSW) (“the CRAct”) or on the principles of unconscionability. It was submitted that the lateness of those allegations suggested that the plaintiff was fabricating her evidence.

48 Although I acknowledge the validity of that criticism, I do not place upon the lateness of those allegations the emphasis that Counsel for the defendant asked me to place. As a matter of reality, the manner in which a party’s claim is formulated is as much a result of the approach taken by that party’s legal advisers, as it is the result of the instructions provided by the party. It would be unrealistic to deny that in many cases the instructions which are provided by a party depend to a large extent on the direction or approach taken by the legal adviser. Answers tend to reflect the questions asked.

49 In the present case, it is clear from the correspondence that the focus of the plaintiff’s case was initially on whether the “sunset date” of 1 October 2005 under the Contract had been validly extended, and whether the Option Agreement had been properly documented. The fact that that focus shifted to the issues which are presently before me is probably best explained not by the plaintiff fabricating her evidence, but as a result of her legal advisers re-focusing their attention once their initial thoughts appeared to be less promising.

Shayne Byrne

50 I also formed the view that Shayne Byrne, the plaintiff’s daughter, was a credible witness. I do not consider that her credibility is undermined by the fact that she said nothing in her otherwise very brief affidavit about being present at a further meeting which her mother attended. This omission is at least partly explained by the fact that she gave no evidence of any substance in relation to what was said at that second meeting.

51 However, the uncontested evidence before me is that prior to the hearing, she had told the plaintiff’s Counsel that she was present at the meeting in question. That fact, of course, is by no means conclusive and does not exclude the possibility of fabrication. However, her evidence was corroborated by the plaintiff, whom I have already found to be a credible witness, and even Mrs Eyres finally admitted that she could not remember whether or not Shayne Byrne was present at the earlier meeting in respect of which she did give some evidence of substance.

Debbie Eyres

52 Mrs Eyres was engaged by R & H to liaise with potential purchasers of properties, including the plaintiff, and to introduce them to Tailored Equity in its capacity as a finance broker, and to Tailored Property in its capacity as a property sales agent. She was the person who visited the plaintiff at the plaintiff’s home after the plaintiff had informed the telemarketers of her interest in investing in property, and she remained the principal contact between the plaintiff and the various companies with whom she had put the plaintiff in touch.

53 Mrs Eyres was also cross-examined at some length and I formed the view that she was a pleasant and sociable person, well suited to a job in sales and good at enthusing and encouraging persons who had shown some initial interest in becoming involved in investment property. I have no doubt that she and the plaintiff got along very well at the first interview and that Mrs Eyres was herself enthusiastic about the investments into which the plaintiff subsequently entered.

54 However, by the time she first met the plaintiff, Mrs Eyres had been in her job for almost a year and had had numerous meetings with people who, like the plaintiff, had a nascent interest in investing. To her credit, she conceded, and I accept, that she has no specific recollection of precisely what was discussed at her initial meeting with the plaintiff. She was forced to rely on what she claimed was her usual procedure and was unable categorically to deny any of the words attributed to her by the plaintiff.

55 However, some of her evidence was quite unrealistic. She insisted that she had a very limited role and that all she did at that initial meeting was to follow the following script:

“The purpose of this meeting is to:

*Introduce you to Raine and Horne Residential Investments NSW and the services we provide to average Australians investing in property.

*Explain some concepts relating to the creation of wealth and discuss some strategies, which are designed to produce a retirement income for our clients.

*Explain negative gearing and how it can assist you to make your first or several investments in property. We will point out why the Sydney Property Market and specific areas in Sydney are the compelling choice.

*Explain the tax benefits available to average Australians, in plain English.

*If all this information makes sense and you would like to discover more, we then make an appointment to meet again, at the offices of Raine and Horne Residential Investments, to discover if you are in the position to invest in property.”

56 I find it very difficult to accept that in the course of that first meeting, which Mrs Eyres herself described as being between 1 and 1.5 hours in length, but which (if Shayne Byrne’s evidence is accepted) may have taken even longer, Mrs Eyres limited the conversation to the matters so outlined. I find to be incredible her denial that during the whole of that meeting no specific property was discussed, nothing was said about finance and all that was discussed were generalities about the benefits of investment in properties within a 10 kilometre radius from the Sydney Central Business District. Those matters would have been explained in a much shorter period of time, particularly as they would have constituted little more than preaching to the converted. It was clear that the plaintiff was already interested and enthusiastic about those matters.

57 On the contrary, I consider that it would have been almost impossible for Mrs Eyres not to descend into particulars of the properties which were available notwithstanding the plaintiff’s limited resources and into the particulars of the various financial mechanisms that could be availed of. I formed the view that despite her earlier denials, Mrs Eyres had at least a degree of working knowledge of the various financing avenues that might have been available and of the properties which were going to be offered to the plaintiff and it would have been difficult to resist the temptation (and probably the probing questions of the plaintiff) to deal with these matters.

58 I rather obtained the impression that Mrs Eyres was giving evidence of what she was supposed to talk about at the initial meeting rather than what she did in fact talk about.

59 There was one particular aspect of Mrs Eyres’ evidence that gave me some cause for concern. In the context of denying that Shayne Byrne took part in any of the conversations between herself and the plaintiff, Mrs Eyres referred to Shayne Byrne as “Mr Shayne Byrne”, and did so on five different occasions in one paragraph of 7.5 lines. A perusal of the balance of that affidavit, as well as her earlier affidavit, reveals that in all other cases she referred to people by reference only to their names, without according them titles such as “Mr”, “Mrs” or “Ms”. When asked, she said that she referred to Shayne Byrne as “Mr Shayne Byrne” because she thought that Shayne Byrne was a male.

60 She said that she missed the reference in Shayne Byrne’s affidavit where she described herself as a daughter of the plaintiff. That much I can accept. What does concern me, however, is her rather unsubtle attempt to her the impression that she had never met Shayne Byrne by attributing to him the title of “Mr”, and gilding the lily by doing so five times in the one paragraph.

61 Nor do I accept that this was merely the result of an over-enthusiastic legal draftsperson without Mrs Eyres having had any involvement in the drafting of the affidavit. The repetition was so obvious that Mrs Eyres must have noticed the quintuple reference to the title “Mr” and must have been prepared to go along with the drafting. If she really had never met Shayne Byrne, or had no recollection of meeting a person by that name, the approach I would have expected her to take would have been to refer to that person without a reference to a title, in exactly the same way as she referred to everyone else throughout her affidavit.

62 For those reasons, I am of the view that where the evidence of Mrs Eyres conflicts with the evidence of the plaintiff or her daughter, I should accept the evidence of the plaintiff or her daughter in preference to the evidence of Mrs Eyres.

Callum Sked

63 As I have already noted, Mr Sked was a director of the defendant, as well as being a director of Nursery Street and Tailored Property throughout the relevant time. His role, particularly as a director of Tailored Property, was to make sales by procuring interested parties to purchase lots off the plan.

64 Like Mrs Eyres, Mr Sked conceded that he had no specific recollection of what was said at his meeting with the plaintiff, but it was obvious he considered that the financial resources of any particular purchaser was of little concern to him. While he gave potential investors a general review of how properties could be financed, he had no particular interest in educating potential investors either in the available means of finance or in the suitability of those means of particular investors. Without meaning to be unkind to him, Mr Sked came through as a young man in a hurry.

65 I would not be prepared to place a great deal of reliance on Mr Sked’s recollection of events, and once again, I prefer the evidence of the plaintiff to the evidence of Mr Sked.

Michael Rogers

66 Mr Rogers was the solicitor who was recommended to the plaintiff by someone on behalf of the defendant (most probably Mrs Eyres) as someone who would be appropriate to represent the plaintiff’s interests in relation to the transactions that were being proposed. Mr Rogers’ role in the transaction was limited. He corresponded on behalf of the plaintiff with Simpson Freed, albeit at a time when he had had no contact with the plaintiff. He attended at the plaintiff’s home on 14 July 2003 and on the following day he wrote a letter of advice purporting to confirm the advice that he had given.

67 Like Mrs Eyres and Mr Sked, Mr Rogers had no independent recollection of what he had said on the occasion of his visit. That is not surprising given that the visit took place over six years ago and given that at the time he was acting for about five other purchasers of units from the defendant following similar recommendations made on behalf of the defendant to those other potential purchasers.

68 I did not consider that Mr Rogers was intentionally telling untruths in the witness in box. On the contrary, I thought he was doing his best to be truthful and accurate, but his recollection was slight and I cannot place a great deal of reliance upon it. In particular, I am not at all satisfied that Mr Rogers said all of the things that he purported to confirm in his letter of 15 July 2003. Perhaps that is not of any major significance given that there is no doubt that he provided the advice in the letter itself, whether or not he had previously given that advice orally.

Further findings of fact

69 Having regard to such objective evidence as is before me and in view of the opinions that I have formed in relation to the credibility of the various witnesses, I will now proceed to fill in the gaps in my factual findings and make some further findings of fact.

70 One area of significant factual dispute concerns the first meeting between Mrs Eyres and the plaintiff on 19 March 2003 at the plaintiff’s home. It is common ground that it commenced at about 4 pm and went for at least one hour, almost certainly more. When it first commenced, the only persons in attendance were the plaintiff and Mrs Eyres, but I am satisfied that when Shayne Byrne returned home from work, the meeting was still continuing and Shayne Byrne did take part in at least the latter part of the meeting.

71 I also accept the plaintiff’s evidence as to what occurred at that meeting. In particular, I accept that she told Mrs Eyres how much she was earning at the time (namely $42,000 per annum), what she considered to be the value of her home (namely about $430,000) and the amount which was still owing under the mortgage to the Commonwealth Bank (namely $56,000). She also told Mrs Eyres that she did not know much about investment properties and that she only owned the house that she was living in, and had no other assets of substance. I also accept that the plaintiff was told by Mrs Eyres that the companies she was representing had advised a number of people in the past about investment properties, that those people had made money, and that the companies she was representing could arrange the plaintiff’s finance, organise “the legal side of things” and advise on all aspects of property investment. In that way, the plaintiff would not have to worry about a thing. She also said that it would be best for the plaintiff to purchase two units at the development at Cope Street and that all she would need to do was to pay a 10 percent deposit of the purchase price for each property up front. She also said that this could be achieved by using the equity in the plaintiff’s home to re-finance her existing mortgage and to take out an additional loan to cover the 10 percent deposits, and that the payment of interest on that additional loan could be financed by what she referred to as a “mezzanine loan”. She explained that that would be a loan by the plaintiff of whatever additional funds she could borrow from the bank to Tailored Equity at a high interest rate, which interest could be used to finance the repayment on the extended loan.

72 Mrs Eyres also recommended that the plaintiff purchase one of the properties by way of a put and call option. In that way, she explained, she would still not be required to pay for the property in full until it was complete but she added:

“However if you do not want the property we can onsell it for you before completion. This will mean you will not have to pay stamp duty and the profit that you would get from this property would go towards the other property you have. Alternatively if you did not want to rent the other property, we can also sell that property for you and the profit that you will made (sic) on that unit can go towards your current home loan.”

73 I also find that at the meeting on 16 April 2003 with Danny Haymes and Mrs Eyres, referred to as the “financial workshop”, there was a discussion in which the concept of a mezzanine loan was described to the plaintiff, in the course of which discussion, Mr Haymes said words to the following effect:

“What this means is simply this. You provide a loan to [Tailored Equity] for X amount of dollars for a period of say 12 months. During this time, [Tailored Equity] will pay you interest at a rate of 10% per annum paid monthly. That way the repayments received from [Tailored Equity] will go towards the monthly repayment to your loan and you will not be out of pocket. At the end of the 12 months [Tailored Equity] will pay you the full amount they borrowed. That way in 9 months time you will be in a better financial position than you are now. With the two properties you will be a millionaire on paper.”

74 On 20 May 2003 Mrs Eyres again attended at the plaintiff’s home to drop off some documents. So much is common ground. I find that the documents which Mrs Eyres left with the plaintiff included a document on the letterhead of Tailored Equity, addressed to the plaintiff, and headed “Welcome to the Tailored Wealth Program”, which document forms Annexure WB4 to the plaintiff’s affidavit of 29 June 2007. I also find that she was shown the document entitled “Proposed Finance Structure for Wendy Byrnes”, which purports to outline aspects of the various proposed loans.

75 Finally, I also accept the evidence of the plaintiff, given in the course of her cross-examination, that in the course of one or more of her meetings with Mrs Eyres, Mrs Eyres did say to her that she would not be out of pocket and also that she would make a profit: Transcript pages 100, 101 and 104.

76 It is not clear at which meeting or meetings this was said to the plaintiff, but it occurred before the time the Option Agreement and the Contract were exchanged.

77 As I have already noted, Mr Rogers, the solicitor, attended upon the plaintiff at her home on 14 July 2003. Undoubtedly he provided the plaintiff with some advice, and in any event he followed up his visit by a letter the following day, in which letter he purported to record and confirm the matters discussed with her. I am somewhat reluctant to accept Mr Rogers’ evidence that he had discussed with the plaintiff all of the matters contained in the letter of 15 July 2003, but quite clearly the letter itself was received by the plaintiff who had an opportunity to consider it at her leisure.

78 A copy of the letter of 15 July 2003 is in evidence before me. It deals principally with the provisions of the contractual documents, and expressly states that Mr Rogers’ firm is not able to advise the plaintiff concerning financial matters. It specifically states:

“…if you require financial advice concerning the transaction you should contact an accountant or other qualified financial advisor”.

79 The only other reference in that letter to financial advice appears in the context of the plaintiff wishing to assign or sell her rights under the Option Agreement, in which case the letter notes that she would have to consider her position with regard to Capital Gains Tax and GST. Mr Rogers’ letter says:

“We recommend that you obtain appropriate financial advice prior to entering into any arrangement to assign your rights under and your interest in the Option”.

80 No other encouragement is given to obtain financial advice.

81 However, there is one particular aspect of the advice given by Mr Rogers that does have to be noted. In his affidavit, he has deposed that he said to the plaintiff at her home words to the following effect:

“You can not rely upon anything that has been said to you with respect to your purchase of the properties unless it is set out in these agreements. Do you understand that?”

82 He has deposed in his affidavit that the plaintiff replied “Yes”.

83 I am not prepared to disbelieve Mr Rogers. On the balance of probabilities, I find that he probably did say words to that effect, and in any event, paragraph 14 of his letter of 15 July 2003 is in the following terms:

“14. As you are aware you are not entitled to rely on anything that has been said to you that is not repeated in the contract and you cannot rely on any documents not forming part of the contract.”

84 However, it should be noted that those words were said in the context of Mr Rogers reviewing the legal aspects of the contractual documentation rather than in the context of the overall transaction and its projected profitability. There is nothing either in Mr Rogers’ affidavit or in the letter itself that deals with the profitability or affordability of the proposed transaction, the providence or financial viability of the proposed purchase or with the financial risks inherent in it. Indeed, Mr Rogers’ letter makes it clear that the letter is not to be taken as financial (as distinct from legal) advice.

85 I make the following further findings of fact.

86 First, the plaintiff presented as a person who was unsophisticated in matters of property investment and finance and there is no evidence before me to suggest that she had had any experience in investing before the transactions in question. She was aware that property prices were rising in the first half of 2003 and it would have been obvious to any observer that she was keen to participate in, and profit from, the rising prices. In that sense, she was overtly vulnerable and was a natural prey for any persuasive real estate salesperson who came across her.

87 Secondly, there is no evidence to suggest that at any time prior to her entering into the transactions in question, it was suggested to her that the transactions could possibly result in a loss. All conversations in which she was involved, and all of the advices she received proceeded on the indubitable assumption that the escalation in property values would continue and that it was inevitable that she would make a profit. The only questions left unanswered were the amount of the profit and the precise manner that would be adopted by her to obtain it.

88 Thirdly, there is no suggestion that the prices at which the various lots were offered were in any way subject to negotiation, or were in any way supported by valuations or by any other means. All discussions proceeded on the basis that the prices for the properties were as put forward by those representing the defendant. Having regard to the fact that the properties in question were to be purchased off the plan and were not expected to be available for some considerable time, there was no means available to the plaintiff to assess whether the prices at which the lots were being offered were realistic.

89 Fourthly, there is no evidence that the true nature of the Option Agreement was ever explained to the plaintiff. All that appears to have been said to her was that its use facilitated on-selling the lot to which it applied by reason of the fact that there would not be two applications of ad valorem stamp duty payable on the transaction. This was hailed as an advantage of the mechanism of the Option Agreement. What was not explained to the plaintiff was that in a practical sense, her ability to on-sell was ultimately dependent upon how prices moved. If the value of the lots were to fall, no amount of stamp duty saving would make the re-sale profitable. The other matter which was clearly not explained to the plaintiff, but which becomes obvious on a careful perusal of the terms of the Option Agreement, is that in reality, the Option Agreement had the same effect as an ordinary contract for the sale of land in the sense that either party could require the other to perform by selling or buying (as the case may be) the subject lot at the price stated in the Option Agreement. In addition, the form of the transaction had the added benefit to the defendant that the option fee, being 10 percent of the purchase price (which played the role of a deposit in the ordinary form of contract for sale of land) was not held by the selling agent until completion, but was immediately released to the defendant.

90 Fifthly, it is now obvious, although it would not have been obvious to the plaintiff at the time, that she was surrounded by what I might call a “wall of persuasion”. As Mrs Eyres made it clear to her, the group of companies that she represented would look after everything for her, giving her financial advice, property advice as well as procuring for her a source of legal advice. The plaintiff would not need to go outside the protective walls that were being built around her; every type of advice that she could conceivably need was to be provided to her. When Mr Rogers in his letter of 15 July 2003 advised her that if she required financial advice, she should contact an accountant or other qualified financial advisor, she could have felt no need to obtain any advice other than that which was being offered to her by Tailored Equity. Mr Rogers certainly did not advise her to obtain financial advice from someone totally independent of the defendant and R & H.

91 Sixthly, as good as the description of the mezzanine loan sounded, what was not explained to the plaintiff was that the term of the mezzanine loan was not to be related to or otherwise dependent on, the time by which the subject lots would be ready for completion. True it is that the interest rate on the mezzanine loan was 20 percent per annum (not 10 percent per annum as initially mentioned) but nothing was said to her as to what would happen when the term of the mezzanine loan came to an end and was repaid, and when she could no longer count on receiving interest at that very favourable rate. That was precisely what happened when, in accordance with the provisions of the mezzanine loan, the principal was repaid, whereafter the plaintiff found that she was no longer able to maintain the interest payments on the loan she had obtained on re-mortgaging her home.

92 Seventhly, in the same way, nothing was said to the plaintiff about the effect that the transaction would have on her overall financial position if anything went wrong with the proposed transaction. While the upsides were openly discussed, the risks were not.

93 Eighthly, it was never pursued with the plaintiff whether she could actually afford to retain even one of the lots for rental purposes. It had been suggested to her that she may wish to sell one of the lots before settlement, namely the lot the subject of the Option Agreement, and put the profit that she made towards the other lot, which she might decide to retain and rent out as an investment property. However, no attempt was made to give any consideration to the likely relationship between the rental which she might expect to receive and the interest that would still have to be paid on the increased loan outstanding on her own home and on any further loan she would need to take out to complete the purchase. Further, given her level of income, any general information given to her about the benefits of negative gearing could only have been misleading, unless it was made clear to her that in her case, given the level of her income, the negative gearing would have little or no benefit at all.

the conduct of the defendant, by itself and by its various agents including Tailored Equity, Tailored Property and R & H, demonstrated it to be a finely honed and sophisticated selling organisation, into whose clutches the plaintiff walked, eager, keen to profit but unsophisticated. In her evidence she said the following:

“Q… What I am putting to you is this, that you were certainly affected by what was happening in the property market at the time, that even your own house was showing a marked increase in value, that you were affected by what was happening on the TV, what was in the papers, that the property market was booming, that you were advised that your maximum borrowing capacity was $365,000 by Tailored Equity, that you yourself being affected by the boom in property market took the risk of acquiring not one but two properties in the hope that you would profit by on-selling in particular unit 2 prior to completion. What do you say to that?

A. I don't agree with that. There was no way I ever intended to be an investor until Raine and Horne or Tailored Equity approached me. I was influenced by what they showed me, the strategies they said that I could use to, especially with the put and call option and how I could on sell the second unit and make a profit and that could go on towards my home, that I would not be out of pocket, I was influenced by, I thought they were genuine honest people - I trusted them. The information they gave me and just to hear all this what they say in these affidavits, I am absolutely gob smacked”.

How the plaintiff puts her case

95 Although not necessarily in that order the plaintiff puts her case under the following headings:

(a) She claims relief under the provisions of the TPAct and the FTAct on the grounds that the defendant made certain representations which constituted engaging in trade or commerce in conduct that was misleading or deceptive or likely to mislead or deceive;

(b) She claims that the Option Agreement and the Contract were each contracts which were, within the meaning of the CRAct unjust in the circumstances relating to them at the time they were made;

(c) She also claims that in contravention of section 51AA of the TPAct, the defendant engaged in trade or commerce in conduct that was unconscionable within the meaning of the unwritten law of the States and Territories; and

(d) She seeks relief pursuant to section 55(2A) of the Conveyancing Act 1919 (NSW) (“the ConvAct”).

96 Under each head of claim, the plaintiff seeks to recover the amounts of $46,000 and $33,000 paid under the Option Agreement and the Contract, respectively. In addition, under heads (a), (b) and (c) she also seeks reimbursement for her out of pocket expenses, consisting principally of the additional interest that she has incurred. She also seeks reimbursement for other disbursements, such as fees paid to Tailored Equity, Mr Rogers and the banks with which she had to deal.

97 It is clear that the various grounds upon which the plaintiff puts her case overlap to a large extent. It is therefore somewhat difficult to know where to start. However, as between the grounds based on the CRAct and the grounds based on the principles of unconscionability, the appropriate course is to deal first with the principles under the CRAct. As Young JA (with whom the other members of the Court of Appeal agreed) said in Spina v Permanent Custodians Limited [2009] NSWCA 206 at [74] and [75]:

“[74] On the remaining issues, the judge first dealt with unconscionability and then with the Contracts Review Act. I do not intend to follow that order of proceeding because it seems to me that with the possible exceptions listed below, it is always preferable to deal with the Contracts Review Act point first. Not only is the jurisdiction probably wider under that Act than when dealing with equitable principles of unconscionability, but where, as has happened time and time again through history, statute has been enacted to cover the same ground as an equitable principle, the equitable principle is usually put into abeyance. After all, equity only operates where the common law is inadequate.

[75] There can, of course, be some situations where unconscionability will apply where the Contracts Review Act does not. Without meaning to be exhaustive, this will occur when the transaction impugned is not a contract within the meaning of the Contracts Review Act or where there is an exemption from the application of the Act such as some situations where the plaintiff has been carrying on a business or where there are problems involving the Real Property Act 1900 where the statute cannot quite cover the field. Otherwise, it is best to look at the statutory ground first.”

98 As between the grounds underlying the claims under the CRAct and the grounds underlying the claims under the TPAct and the FTAct, it seems to me that the logical order would be to deal first with the latter, as amongst the matters that a court is required to have regard under the CRAct when considering all the circumstances of the case is whether any unfair pressure or unfair tactics were exerted on or used against the plaintiff.

99 That leaves the claim based on the section 55 (2A) of the ConvAct to be dealt with last.

100 There is one further ground upon which the plaintiff seeks relief, although only in relation to the Contract. She claims that she has validly rescinded the Contract pursuant to special condition 32 on the grounds that the strata plan had not been registered by 1 October 2005. That claim raises issues entirely different from, and unrelated to, the other grounds upon which the plaintiff relies, and I propose to deal with it separately from, and before I deal with, the various other grounds.

Special condition 32

101 I have already set out in paragraphs 30 and 31 above the relevant provisions of special conditions 31 and 32 of the Contract and have referred in paragraphs 32 to 40 to the correspondence exchanged between the parties.

102 The submission made on behalf of the plaintiff is that the date of 1 October 2005 referred to in special condition 32 had not been validly extended, and that, as a consequence, she was entitled pursuant to that special condition to rescind that Contract by her solicitors’ letter of 23 February 2006.

103 I do not accept that submission for at two reasons. First, I am of the view that the letter dated 7 April 2005 from Simpson Freed did have the effect of extending the date by reason of special condition 31.6 of the Contract. I do not consider that the correspondence which followed constituted a dispute of the kind that negatived the effect of the certificate that accompanied the said letter. There is no doubt that correspondence was entered into within the 14 day period, whereby the certificate in question was “disputed”. However, it is clear that notwithstanding the exchange of correspondence, no steps were taken by either party to refer the matter to an architect pursuant to special condition 31.7.

104 In my opinion, the requirement under special condition 31.6 that the purchaser dispute the certificate by written notice within 14 days is a necessary requirement to rebut the conclusive nature of the certificate, but is not of itself sufficient. In order for the conclusive nature of the certificate to be rebutted, the notice of dispute must be followed by a reference pursuant to special condition 31.7. Were it otherwise, a “stalemate” precisely of the kind that has occurred in the case before me could occur, leaving both parties unsure as to the effect of the certificate and of the exchange of correspondence that follows it. It seems to me that the purpose for inserting special condition 31.7 was to provide a mechanism to test the validity of the certificate. Where the mechanism provided by special condition 31.7 is not availed of, in my opinion the conclusive provision of special condition 31.6 will continue to apply.

105 Secondly, even if I am wrong in relation to the first matter, I am satisfied that on 28 September 2005, a further letter bearing that date was sent by facsimile to the plaintiff’s solicitors, attaching a further certificate from the same architects, dated 27 September 2005. The evidence before me includes a statement in an affidavit sworn by Paul Edward Freed (on which Mr Freed, a principal of Simpson Freed, was not cross-examined) deposing to the service of the certificate. A copy of the records of Simpson Freed’s facsimile journal is in evidence before me, which shows documents having been faxed at 16:35 on that day to facsimile number 9899 4697, which I find was the facsimile number of Williams Boxsell Georgas, the solicitors then acting for the plaintiff. In the absence of any evidence to the contrary, I am prepared to infer that the documents the subject of the facsimile journal included a copy of the certificate in question.

106 There is no direct evidence before me to the effect that the facsimile in question was not received. Significantly, the person best placed to give that evidence, namely Mr Boxsell, the solicitor with the conduct of the matter on behalf of the plaintiff, was not called to give evidence, nor was any reason advanced for his absence. In this case I am prepared to draw the inference referred to in Jones v Dunkel (1959) 101 CLR 298.

107 There is no basis for me to reject the evidence of Mr Freed nor the authenticity of the documents before me. Accordingly I find that the letter of 28 September 2005 was in fact communicated on that day to the solicitors acting for the plaintiff. Once again, the certificate, which was unchallenged under special condition 31.7, had the conclusive effect accorded to it under special condition 31.6, and was sufficient to extend the date for completion in accordance with its terms.

108 Accordingly, I reject the submission that the plaintiff was entitled to rescind the Contract as she purported to do by the Notice of Rescission served by her solicitors on 23 February 2006.

Claim under the TPAct and the FTAct

109 In paragraph 19 of her Further Amended Statement of Claim, the plaintiff alleged that certain representations were made to her on behalf of the defendant, the particulars of which were as follows:

“(a) The Plaintiff would be able to sell both the properties at a substantial profit prior to the completion of the subject building.

(b) The Plaintiff would not be required to complete purchases pursuant to either the Option Agreement or the Contract, as she would be able to onsell the properties at a profit.

(c) The Plaintiff would not be out of pocket on the transactions.

(d) The Plaintiff could afford to, and had the financial capability to enter into the Contract and Option Agreement.

(e) The Plaintiff could afford to, and had the financial capability to finance and complete the Contract.

(f) The Plaintiff could afford to, and had the financial capability to finance and complete the Option Agreement.

(g) The Representations were express or implied. To the extent the Representations were express they were made in conversations between the Plaintiff and Debbie Eyers and/or Danny Haynes on behalf of the Defendant.

(h) To the extent the Representations are implied they are implied from the express words of the conversations between the Plaintiff and Debbie Eyers and/or Danny Haynes on behalf of the Defendant.”

110 She further alleged, inter alia that each of the representations (a) to (f) were representations as to future matters and that she was relying on section 51A of the TPAct and section 41 of the FTAct to establish that such representations were misleading. She alleged reliance upon those representations and that she suffered loss and damage as a consequence.

111 The first issue to determine is whether the representations were made as alleged. I have already recorded my finding in paragraph 75 above that at some time prior to the transactions being entered into, Mrs Eyres did say to the plaintiff that the plaintiff would not be out of pocket on the transactions. Accordingly I find particular (c) as having been established.

112 I am also of the opinion that particular (b) has been established albeit not in precisely the terms alleged. In paragraph 72 above I have recorded my finding as to what Mrs Eyres said on that subject matter. In my opinion, the effect of that statement was to represent to the plaintiff that she would not be required to complete the purchases pursuant to either the Option Agreement or the Contract, as she would be able to on-sell the properties at a profit. Mrs Eyres’ statement envisages making a profit on both of the properties (or alternatively an overall profit on the sale of both properties) and implies that “we” (by which I understand her to have meant the defendant and its various associates) can sell both properties for the plaintiff.

113 Those two representations go to the heart of the matter. The plaintiff was clearly conscious of her inability to complete possibly even one, but certainly both, of the transactions into which she was about to enter. She was also conscious of her own relatively vulnerable financial circumstances and of the fact that she could not afford, at her stage of life, to suffer a loss of any magnitude. The representations particularised in (b) and (c) went a long way towards relieving her fears that she might be out of pocket on the transactions and that she would be required to complete the purchases under the Option Agreement or the Contract, or both.

114 The next issue to determine is whether the making of those representations constituted conduct in trade or commerce that was misleading or deceptive or likely to mislead or deceive.

115 So far as the same is relevant, section 51A of the TPAct provides as follows:

“51A Interpretation

(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.”

116 Section 41(1) of the FTAct is in similar terms to section 51A(1) of the TPAct, while section 41(2) of the FTAct provides as follows:

“(2) The onus of establishing that a person had reasonable grounds for making a representation referred to in sub-section (1) is on the person.”

117 It seems to me that for present purposes, there is no relevant difference between the two pieces of legislation.

118 Section 52(1) of the TPAct provides as follows:

“A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

119 Section 42(1) of the FTAct is to the same effect.

120 It seems to me that both of the representations in question constitute representations as to a “future matter”. That term is not defined in either Act but quite clearly both of the representations relate to something that could occur only in the future. Neither of those representations could be capable of verification or falsification until some time in the future, once it became clear whether she would be required to complete the purchases in question, whether the plaintiff would be able to on-sell the properties at a profit and whether, at the end of the day, she would be out of pocket.

121 Although there is some doubt as to whether, in order to enliven the provisions of section 51A, it is necessary expressly to refer either specifically or generally to section 51A, in the present case paragraph 23 of the Further Amended Statement of Claim specifically refers to section 51A of the TPAct and section 41 of the FTAct.

122 Whatever may be the precise ambit of section 51A (and section 41), and in particular whether it merely reverses the evidential burden of proof or constitutes an absolute reversal of the onus of proof, in the present case no difficulty arises on that point as no evidence was adduced by the defendant to the effect that it had reasonable grounds for making the representations in question. It is clear from the evidence that the state of affairs predicted by the representations did not transpire. The plaintiff was not able to on-sell the properties at a profit and she was out of pocket on the transactions in question. However that is not directly to the point. What is directly to the point is that in the absence of any evidence to the contrary, the defendant is deemed not to have had reasonable grounds for making the representation and in those circumstances the representations are to be taken to be misleading. As such, the making of those representations of themselves constitute contraventions of sections 52 of the TPAct as well of section 42 of the FTAct.

123 So far as reliance is concerned, I am comfortably satisfied that the plaintiff relied, in addition to the various other matters to which I have referred, upon the said representations made to her by Mrs Eyres. In paragraph 5 of her affidavit of 2 May 2008 she said, referring to the Contract and the Option Agreement, that she signed those documents:

“…based upon the conversations that I had with [Mrs Eyres], as set out at paragraphs 5,7,11 and 16 of my earlier affidavit and the documents she handed to me during our meetings as exhibited to my earlier affidavit, as well the conversations I had with [Mr Haymes], as set out at paragraph 8 of my earlier affidavit, and the documents he handed to me during our meetings as exhibited to my earlier affidavit and as a result of these conversations and meetings I felt assured that I would be able to afford these investment properties, that I would not be out of pocket as a result of the transactions and that I could sell the properties for a profit before the completion on the purchase if I needed to. If I had not felt assured like this I would not have signed the Contract or the Put and Call Option.”

124 I might add that the passage I have extracted in paragraph 72 above appears in paragraph 7 of the plaintiff’s earlier affidavit of 28 June 2007.

125 She continued in paragraph 6 of her said affidavit of 2 May 2008 in the following terms:

“Also if I had not felt assured like this I would not have paid the deposit under the Contract or the Option Fee under the Put and Call Option. Further, as the only way I could afford to pay the deposit under the Contract or the Option Fee under the Put and Call Option was to obtain a loan to get these funds, I would not have entered into the loan to borrow the money for the deposit under the Contract or the Option Fee under the Put and Call Option if I had not felt assured that I would be able to afford these investment properties, that I would not be out of pocket as a result of the transactions and that I could sell the properties for a profit before completion on the purchase if I needed to.”

126 I have also extracted in paragraph 94 a passage, which I accept as a true explanation of why the plaintiff entered into the transactions in question.

127 In the circumstances I am satisfied that Mrs Byrne suffered loss or damage by conduct of the defendant that was done in contravention of the relevant provisions of the TPAct and the FTAct. As Mason CJ and Dawson, Gaudron and McHugh JJ said in Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 525:

“The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or commonsense concept of causation recently discussed by this Court in March v Stramare (E. & M. H.) Pty Ltd, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so.”

128 In March v Stramare (E. & M. H.) Pty Ltd (1991) 171 CLR 506 at 515, Mason CJ referred to the common law tradition that what was the cause of a particular occurrence is a question of fact ”which must be determined by applying common sense to the facts of each particular case”. In the same case, Deane J (as his Honour then was) said, at page 522:

“For the purposes for the law of negligence, the question of causation arises in the context of the attribution of fault or responsibility whether an identified negligent act or omission of the defendant was so connected with the plaintiff’s loss or injury that, as a matter of ordinary common sense and experience, it should be regarded as a cause of it.”

129 In Medlin v State Government Insurance Commission (1995) 182 CLR 1 at page 6, Deane, Dawson, Toohey and Gaudron JJ said, in the context of the intervention of a subsequent and more immediate cause of the loss or damage:

“For the purposes of the law of negligence, the question whether the requisite causal connection exists between a particular breach of duty and particular loss or damage is essentially one of fact to be resolved, on the probabilities, as a matter of common sense and experience. And that remains so in a case such as the present where the question of the existence of the requisite causal connection is complicated by the intervention of some act or decision of the plaintiff or a third party which constitutes a more immediate cause of the loss or damage. In such a case, the "but for" test, while retaining an important role as a negative criterion which will commonly (but not always) exclude causation if not satisfied, is inadequate as a comprehensive positive test. If, in such a case, it can be seen that the necessary causal connection would exist if the intervening act or decision be disregarded, the question of causation may often be conveniently expressed in terms of whether the intrusion of that act or decision has had the effect of breaking the chain of causation which would otherwise have existed between the breach of duty and the particular loss or damage.”

130 Their Honours continued in the following terms:

“The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent decision, the defendant's wrongful act or omission is, as between the plaintiff and the defendant and as a matter of common sense and experience, properly to be seen as having caused the relevant loss or damage.”

131 In the present case, I am satisfied that as a matter of common sense and experience, the representations in question were causative of the loss or damage sustained by the plaintiff.

132 I do not find that the said representations were the only cause of the plaintiff’s loss or damage. However they did play a part in causing such loss or damage, and indeed a substantial part. That is sufficient to satisfy the requirements of section 82 of the TPAct and the corresponding provision of the FTAct. Indeed it would have been sufficient even if the representations had played only a minor part: I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; at [33] per Gleeson CJ; [57] per Gaudron, Gummow and Hayne JJ and [216] per Callinan J, and the authorities there cited.

133 In the present case, the plaintiff’s case is relatively simple. The loss she has suffered by reason of the defendant’s conduct is the loss of her deposit under the Contract of $33,000 and the loss of the option fee of $46,000. In addition, her loss included any other amounts she paid out in the context of the transactions, as well as the additional interest that she paid on the loan she took out from St George Bank over and above the interest that she would have continued to pay to the Commonwealth Bank had she not entered into the transactions in question. There would need to be offset against that additional interest any interest she received on the mezzanine loan. Additional bank fees, application fees and the like would also come within the amounts which she is entitled to recover.

The CRAct

134 Having regard to my conclusion based upon the provisions of the TPAct and the FTAct, it is strictly unnecessary for me to consider any other issue raised in the proceedings. However, in the event that this matter goes further, I propose also to consider the other issues raised, albeit perhaps in a shorter compass. In any event, the findings of fact that I have made earlier should assist in the determination of the issues by any court that may be called upon to review my decision.

135 Section 7(1) of the CRAct provides as follows:

“ (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following:
(a) it may decide to refuse to enforce any or all of the provisions of the contract,
(b) it may make an order declaring the contract void, in whole or in part,
(c) it may make an order varying, in whole or in part, any provision of the contract,
(d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that:
(i) varies, or has the effect of varying, the provisions of the land instrument, or
(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.”

136 The sub-section envisionages a two stage process. First, the Court is required to find whether a contract or a provision of a contract was unjust in the circumstances relating to the contract at the time it was made. That is an objective enquiry, not calling for any exercise of discretion. The second stage involves the exercise of the court’s discretion. It authorises the court to grant relief in accordance with the section if it considers it just to do so, and then (only) for the purpose of avoiding as far as practical an unjust consequence or result.

137 The term “unjust” is defined in section 4(1) of the CRAct to include “unconscionable, harsh or oppressive”.

138 Section 9 of the CRAct sets out the matters to which the Court is to have regard in determining whether a contract or a provision of the contract is unjust in the circumstances relating to the contract at the time it was made.

139 The provisions of the CRAct have been considered by this Court on numerous occasions, a recent example being the decision of the Court of Appeal in Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited (2009) 257 ALR 658. It is trite but true that ultimately whether a contract or a provision thereof is unjust depends on the facts of each individual case.

140 In considering the provisions of section 9 of the CRAct it is useful to keep in mind what was said by McHugh JA (as his Honour then was) with whom Hope JA agreed in West v AGC (Advances) Limited (1986) 5 NSWLR 610 at page 620 in the following time honoured passage:

“If a defendant has not been engaged in conduct depriving the claimant of a real or informed choice to enter into a contract and the terms of the contract are reasonable as between the parties, I do not see how that contract can be considered unjust simply because it was not in the interest of the claimant to make the contract or because she had no independent advice. The late Professor Peden who was largely responsible for the drafting of the Act has said that in accordance with his recommendation:

“…the Act does not include the term ‘unfair’ since this might have been interpreted to include situations in which, although the contract favours one party, there has been no abuse of power or unfair conduct on his part”: Macquarie University Continuing Education Program, “Contracts Review Act, 1980 — in practice” at 17.

This passage brings out the important point that, under this Act, a contract will not be unjust as against a party unless the contract or one of its provisions is the product of unfair conduct on his part either in the terms which he has imposed or in the means which he has employed to make the contract. In this respect it stands in marked contrast with the provisions of the Industrial Arbitration Act 1940, s 88 F , which provides, inter alia, that the Industrial Commission may declare certain types of contract or arrangements void on the ground that they are “unfair”.

141 In concluding, as I do, that both the Option Agreement and the Contract were unjust in the circumstances relating to them at the time they were made, I refer to the various findings that I have made above and make the following further observations:

(i) I consider it not to be in the public interest for persons in the financial position of the plaintiff to be taken advantage of by an unsolicited approach, followed by an all-encompassing, “one-stop shop” facility that does not provide her with, or encourage her to obtain, truly independent legal or financial advice;

(ii) Non-compliance with, or contravention of, any or all of the provisions of the Option Agreement and the Contract into which she entered resulted in the loss of all of the funds advanced by her which, in her case, constituted a substantial part of her equity in her home, which was her only substantial asset. Had the market fallen further, such non-compliance could have exposed her to an even greater financial loss;

(iii) There was a material inequality in the respective bargaining powers of the plaintiff and the defendant. She had no input into the price of the properties the subject of the transactions, and very little input as to the terms of the relevant contractual documents through a solicitor who was, to some extent, and whether consciously or subconsciously, beholden to the defendant and those associated with it. Likewise she had no input into the interest rate payable under the mezzanine loan (although she received a higher rate of interest than had first been suggested to her, but not as a result of any negotiation on her part), nor did she have any input into the term of the mezzanine loan or any other aspect of it. All of the conditions contained in the Option Agreement, the Contract and the mezzanine loan documentation were, as a practical matter, imposed upon her by the defendant and its various agents;

(iv) Except for the negotiations made purportedly on her behalf by Mr Rogers in relation to aspects of the documentation, which were, in the circumstances, of little significance, there was no realistic opportunity for the plaintiff to negotiate any aspect of the provisions of the the Option Agreement or the Contract;

(v) It was similarly not reasonably practical for her to negotiate for the alteration of, or to reject any of the provisions of either of those two contractual documents;

(vi) For the reasons that I have earlier set out, the plaintiff was not reasonably able to protect her interests, not so much as a result of her age or the state of her physical capacity, but as a result of her mental capacity in the sense of her lack of experience and sophistication in matters of business, investment or finance. Similarly, her economic circumstances and educational background were such that she was placed in a position of significant relative disadvantage when dealing with the sophisticated and well organised group of persuasive individuals, whether they be ostensibly friendly and engendering trust and confidence (as was the case of Mrs Eyres) or off-handed and dismissive, but appearing confident and knowledgeable (as was the case of Mr Sked);

(vii) The plaintiff received only limited legal advice from a solicitor who, as I have already noted, was at least to some extent beholden to the defendant and its associates. More significant, however, was the absence of any independent expert financial advice which might have properly informed the plaintiff that the representations to which I have earlier referred should not be relied upon and that there were risks inherent in the transaction. There was no-one to advise the plaintiff that the documentation was such that there could be no certainty that she would not be out of pocket or that she would make a profit. On the contrary, it should have been emphasised to her that notwithstanding the assurances being made to her, there was a very real risk of substantial loss, including a substantial loss even greater than the one she actually suffered;

(viii) There was a complete failure to explain to the plaintiff the true legal effect of the Option Agreement, namely that in a practical sense, it was simply a normal contract for sale of land with the deposit released. Insofar as the financial aspects of the proposed contractual documents were explained to her, such explanations were incapable of understanding. The documents that were provided to her, which form Annexures WB1, WB3 and WB4 to the plaintiff’s affidavit of 28 June 2007 defy comprehension not only by someone of the plaintiff’s lack of experience, but also, I dare say, would have defied comprehension by persons who possessed far greater commercial and financial skills; and

(ix) Finally, I am of the view that the representations that I have found were made to the plaintiff constituted unfair pressure or unfair tactics by the defendant, and resulted in the plaintiff having been taken advantage of by a person in whom she came to repose trust and confidence, namely Mrs Eyres.

142 For those reasons, I find that the overall setting, purpose and effect of both the Option Agreement and the Contract were such as to render both Contracts unjust within the meaning of the CRAct.

143 As a consequence of the said two contractual documents being unjust, an unjust consequence resulted, namely the plaintiff has suffered the losses to which I have already referred. It then becomes necessary to consider whether I consider it just to grant relief to the plaintiff in the exercise of the court’s discretion, and the form of the relief which should be granted for the purpose of avoiding an unjust consequence or result.

144 I have no doubt that in the circumstances the court should exercise its discretion in favour of granting relief to the plaintiff. Pursuant to section 8 of the CRAct, the court has the power to grant relief in the various ways set out in Schedule 1 of that Act, including making an order for the payment of money. Should it become necessary to determine the issue, in the exercise of my discretion, I would make an order requiring the defendant to pay to the plaintiff an amount of money calculated in accordance with the formula to which I have referred in the context of the TPAct and the FTAct. Alternatively, I would make an order in accordance with paragraphs (a), (b) or (c) of sub-section 7(1) of the CRAct to achieve the same result.

145 The defendant has sought to rely on sub-section 6(2) of the CRAct which is in the following terms:

“(2) A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales.”

146 Counsel for the defendant has submitted that the contracts in question, that is to say the Option Agreement and the Contract, were entered into by the plaintiff in the course of or for the purpose of a trade, business or profession carried on by her or proposed to be carried on by her, namely the trade, business or profession of investing in real estate. He placed particular emphasis on the fact that neither of the properties in question were intended by the plaintiff to become her residence but were always intended by her either to be re-sold at a profit or to be retained as an investment property for rental purposes.

147 I do not consider that the defence under sub-section 6(2) of the Contracts Review Act provides any assistance to the defendant. The contractual documents were clearly not entered into in the course of or for the purpose of an existing trade, business or profession carried on by the plaintiff. The question is whether they were entered into in the course of or for the purpose of a trade, business or profession proposed to be carried on by her.

I am of the view that they were not. The evidence makes it clear that the plaintiff had not previously been involved in investments. Nor was there any evidence that the plaintiff intended to engage in any further acts of investment. Indeed, every indication was that it was always intended that she would divest herself of at least one of the properties in question (or possibly of both of the properties) and to utilise the profit she expected to make to reduce her overall indebtedness. It was a “one off”. It might have been otherwise if the evidence showed that the plaintiff intended the subject transactions to be the first step in engaging in other acts of investment or in trading in real estate. However, that appears to have been furthest from her mind.

148 In reaching that conclusion, I am comforted by the fact that in somewhat similar circumstances, where the plaintiff purchased a property “off the plan” for investment purposes, White J did not hesitate to grant relief under the Contracts Review Act notwithstanding the provisions of section 6(2): see Zhang v VP 302 SPV Pty Ltd & Ors (2009) 223 FLR 213.

149 One element affecting the exercise of the discretion is whether or not the party against whom the order is sought under the CRAct was aware of the facts that made the contract in question unjust. Despite a degree of reluctance on the part of courts to exercise the jurisdiction in circumstances where that party is unaware of those facts, it is clear that the jurisdiction exists: see for example Beneficial Finance Corporation Limited v Karavas (1991) 23 NSWLR 256.

150 The workings of the CRAct have also been reviewed recently by the Court of Appeal in Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 and in Spinav Permanent Custodians Limited [2009] NSWCA 206.

151 As Young JA (with whom Tobias and Campbell JJA agreed) pointed out in Spina at [124]:

“Broadly speaking, the same sort of factors are relevant in a case based on unconscionability as those based to get relief under the statute. However, as the learned primary judge pointed out, to succeed in showing there is unconscionable conduct, a plaintiff must show that the defendant’s conduct fell short of the standards accepted by courts of equity and the focus is on the defendant. Under the Contracts Review Act, the focus is on the weaker party as to whether the contract operates unjustly towards the weaker party. Furthermore, under the Contracts Review Act relief may be given even if the relevant circumstances are not known to the other party when the contract was entered into, but this is not the case where the allegation is unconscientious conduct.”

152 In the present case, this difficulty does not arise. The defendant by itself or by its various agents was well aware of all of the matters to which I have referred. Indeed it was the architect of most of them.

Unconscionability

153 I propose to say little on this subject matter, having regard to the conclusions I have already reached. I propose only to say that in the circumstances, the conduct of the defendant can also be described as unconscionable (or unconscientious). In my view, in the present case the defendant’s conduct fell short of the standards accepted by courts of equity.

154 The general principles relating to unconscionable conduct were most recently examined by the Court of Appeal in Lopwell Pty Ltd v Clarke & Ors [2009] NSWCA 165. Macfarlan JA, with whom Ipp and Campbell JJA agreed, set out the general principles in [36] - [41] of his judgment. It is perhaps appropriate to set out the passage from the judgment of Deane J (as his Honour then was) in Louth v Diprose (1992) 175 CLR 621 at 637, which Macfarlan JA cited in his judgment at [37] and which is in the following terms:

“It has long been established that the jurisdiction of courts of equity to relieve against unconscionable dealing extends generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party to the transaction with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that special disability was sufficiently evident to the other party to make it prima facie unfair or ‘unconscionable’ that that other party procure, accept or retain the benefit of, the disadvantaged party’s assent to the impugned transaction in the circumstances in which he or she accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable.”

155 Macfarlan JA also referred to the decision of Spigelman CJ in Attorney General of New South Wales v World Best Holdings Ltd (2005) 63 NSWLR 557 where the Chief Justice said at [120]:

“Unconscionability is a well-established but narrow principle in equitable doctrine. It has been applied over the centuries with considerable restraint and in manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not a principle of what “fairness” or “justice” or “good conscience” requires in the particular circumstances of the case.”

156 The Chief Justice also emphasised at [121] that unconscionability is not to be equated with the concept of “fair” or “just” and that the concept of unconscionability “requires a high level of moral obloquy”.

157 Applying those principles to the case before me, I consider that the plaintiff was indeed under a special disability constituted by all of the circumstances which I have set out above. In particular, by reason of her lack of financial or business sophistication she was vulnerable to the wall of persuasion created by the defendant and its associates. She was also under a special disability by reason of her gullibility and her desire to make a profit in an area of which she had no knowledge and in which she had no experience.

158 That disability must have been perfectly evident to the defendant who chose to take advantage of it by procuring the plaintiff’s assent to the transaction in question. Doing so was, in my opinion, unconscientious, and in those circumstances there is an onus cast upon the defendant to show that the transaction, was fair, just and reasonable.

159 That onus was not discharged by the defendant. For example, there is no evidence before me to establish how the prices at which the properties were being offered to the plaintiff had been calculated, and whether the properties represented good value for those prices. The evidence establishes that in fact the properties were sold some years later at prices below those at which they were being offered to the plaintiff. The reality is that the defendant simply wished to make sales at the prices nominated by it and it gave no thought to ensuring that a person in the plaintiff’s position be given a proper opportunity to look after her own interests.

160 Once again I would be prepared to make an order so as to enable the plaintiff to recover the amounts to which I have earlier referred.

Section 55 (2A) of the ConvAct

161 Having regard to the conclusions that I have reached above, I propose to say even less about this head of the plaintiff’s claim. I propose merely to note that the section was recently considered by the Court of Appeal in Nassif v Caminer [2009] NSWCA 45 in which Basten JA and Sackville AJA reached a different conclusion from that reached by Macfarlan JA on the application of section 55(2A) of the ConvAct on the facts before them.

162 In the present case the issues raised on behalf of the plaintiff present some interesting but difficult questions. One such question is whether the section applies, or can be made to apply, to the Option Agreement. Another question is whether and to what extent the court should take into account the various matters with which I have been dealing when determining whether or not the court’s discretion should be exercised, having regard to the recent decisions of the High Court in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 and in Romanos v Pentagold Investments Pty Ltd (2003) 217 CLR 367.

Conclusion

163 In the circumstances, I propose to make an order that the defendant pay to Mrs Byrne an amount calculated in the manner to which I have referred in paragraph 133 above. I also propose to make an order dismissing the defendant’s cross-claim and to order the defendant to pay the plaintiff’s costs of the proceedings.

164 I direct the parties to attempt to agree on the amount involved. Insofar as they are unable to do so, I direct the parties to provide to my Associate within 21 days any further evidence on which they propose to rely for the purpose of quantifying the amount in which such order should be made, together with a draft of the orders which they propose.

165 If the parties are unable to agree, they should also provide within the same period written submissions in support of the orders they propose. I will then have the matter re-listed at a time that is convenient, most likely at 9.30am one morning, with a view to determining all outstanding issues.

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