Successful Misleading Conduct Claim Under Trade Practices Act

OUTCOME: Allowed

JUDGMENT No. AQ BS ene

CATCHWORDS

Trade Practices Act, s.52 ~ Sale of farm - Whether "in trade or

commerce" — Whether such a_ sale falls within the principle of [NAME_1] v. [NAME_2] 7 F.C.R. 325 —- Representations made by

telephone.

Trade Practices Act 1974, ss.6(3), 52, 87

[NAME_3] & ANOR -V-— [NAME_4] G.345 of 1985

Burchett J. Sydney 28 July 1988

IN THE FEDERAL COURT OF AUSTRALIA

) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.345 of 1985 ) )

GENERAL DIVISION

BETWEEN: [NAME_3]

First Applicant

[NAME_5]

Second Applicant

[NAME_6]

Respondent

REASONS FOR JUDGMENT

BURCHETT J.

On 22 November 1985 [NAME_3] (to whom I shall refer as [NAME_3]) applied to this Court for interlocutory and permanent orders restraining [NAME_7] (who was' called from time to time by witnesses "[NAME_4]" and to whom I shall refer as [NAME_4]) from offering or selling certain land near [NAME_8] by way of mortgagee's sale. She obtained some anterlocutory relief, which was subsequently withdrawn, and then, after the commencement of the final hearing in the latter half of the next year, in part restored. On 17 February 1986 a statement of claim was filed alleging, in substance, breaches by [NAME_4]

of ss.52 and 53A(1)(b) of the Trade Practices Act 1974, and also

fraud at common law. I shall not set out the terms of this

statement of claim, which bears the marks of careless preparation

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and was the subject of a number of subsequent amendments. However, it is fair to say that the amendments do not depart from the basic case made by the original statement of claim, except in so far as they join an additional applicant, correct errors of date, and vary a particular allegation, to be referred to later, in respect of a representation alleged to have been made

concerning a subdivision of part of the land in question.

[NAME_3] had been legally represented, she was not represented by any lawyer when the final hearing commenced. In part by reason of her language problem (she is of Russian extraction and communicates in English with some difficulty), I permitted her to be represented by a friend who was said to be a business consultant. Both he and [NAME_3] appeared quite unable to comprehend the issues involved, and much time was wasted. After the case had been adjourned part heard for a number of months, the hearing was resumed, [NAME_3] and her son [NAME_5], who was then joined as an additional applicant, being represented by [NAME_9] of counsel. I should like to say that in a very difficult hearing, which proved much lengthier than anyone had estimated, and therefore had to be broken off and resumed several times, so that it was spread over almost a year, both the applicants and the respondent were very well served by their legal representatives, [NAME_9] and [NAME_10], and the Court also 1s indebted to them.

The statement of claim, in its final form, relied on breaches of the same sections of the Trade Practices Act, and

again relied also on common law fraud. It alleged that in

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December 1983 the applicants went to [NAME_8], and met' the respondent; that the respondent owned land at [NAME_8]; and that after the visit to [NAME_8] the respondent, during February 1984, made a number of representations concerning his farming property by telephone to [NAME_5]. These representations, as set forth in the statement of claim, were the

following:

"(a) The property had a carrying capacity of 200 head of breed (sic) cattle.

(b) The rainforest on the property, if cleared, would yield land suitable and sufficient for grazing a further 50 head of cattle as well as establishment of a commercial scale plant nursery.

(c) The property had upon it growing timber having a sale value of between $50,000 and $60,000.

(d) Portion 5 of the property was suited to the agistment of horses.

(e) Conduct on the property of cattle grazing and breeding, timber felling and nursery activities would produce income sufficient to comfortably support the applicants and the second applicant's family without need for external income.

(f£) He would personally tutor and assist the second applicant in the proper conduct of the business of cattle breeding and grazing on the property if the applicants purchased it.

(g) There was considerable work available in the area of the property for contract workers with their own farm machinery and he would provide machinery to the second respondent (sic) to enable him to obtain such work if they purchased the property.

(h) If the applicants purchased the property, he would remain on the property until the applicants took possession of it to ensure maintenance of the quality of the property during changeover.

(i) He would include with the property on sale certain farm equipment being a tractor slasher jib and carry-all all 1n good condition,

(9) If the applicant (sic) purchased the property, he would complete an access road into the rain forest (already part built) to permit cattle grazing and nursery activities there.

(k) He would include with the property on sale 100 head of cattle in good condition.

(1) Portion 5 of the property was or would be subdivided at the respondent's

expense into three lots each capable of sale for between $50,000 and $60,000."

As I have already indicated, the alleged representation lettered (1) differs from what had been alleged in that respect in the earliest statement of claim, the corresponding allegation in which was a_ representation "that one portion of the property was divided into three lots which could be sold for $60,000 each." That statement of the representation had been subsequently amended, during the period when [NAME_3] was not legally represented, to read:

"That one portion of the property was divided

or would be subdivided at his expense into three lots which could be sold for $50,000 or

$60,000 each, and were not traversed by any road."

The statement of claim proceeded to allege that, after a further visit to [NAME_8] by the applicants, the respondent in early April 1984 made, by telephone to the first applicant, representations to the same effect as those previously made to

her son, and again by telephone repeated the representations to

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him. Thereafter, in late April 1984, it was alleged that the applicants orally agreed with the respondent to purchase the property, that they made certain payments, and that [NAME_3], in trust for herself and [NAME_5], executed certain documents including a mortgage. (In fact, she contracted to purchase' the property, and gave a mortgage back on completion in respect of a balance of purchase moneys.} The statement of claim proceeds' to allege that, by making the representations, the respondent engaged, in trade and commerce in Australia, in conduct which was at all material times misleading and deceptive, or likely to

mislead and deceive, in contravention of s.52 of the Trade

Practices Act, and further that he was in breach of s.53A. The same representations were also pleaded as having been made

fraudulently.

[NAME_4]'s statement of defence admits the visit of the applicants in December 1983, adding (and this is not disputed) "that although he showed the applicants the property he did not then offer it for sale to them." The statement of defence admits that [NAME_4] had a telephone conversation with [NAME_5] in or about February 1984, but denies the representations alleged to have been made in that conversation, and also in the other telephone conversations alleged in the statement of claim. In particular, and with reference to the telephone conversation with [NAME_5], the statement of defence deals with the lettered alleged representations already set out by stating that [NAME_4]:

"(a) denies that he ever represented to the applicants or either of them that the property had a carrying capacity of two

(b)

(c)

(d)

(e)

(£)

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hundred head of breeding cattle or any particular carrying capacity at all;

(1) admits that he informed the applicants (but not on the telephone) that the rainforest on the property, if cleared, would yield land suitable and sufficient for grazing fifty head of cattle;

(2) denies that he ever represented to the applicants or either of them that the rainforest if cleared would support the establishment of a commercial scale plant nursery; and

(3) admits that he unformed the applicants (but not on the telephone) that it was possible to remove plants from the rainforest for sale.

denies that he ever represented to the applicants or either of them that' the property had upon it growing timber having a sale value of between $50,000 and $60,000 but admits that he informed the applicants (but not on the telephone) that there was a $200 royalty for lamp posts and that there was plenty of suitable timber on the property;

admits that he informed the applicant (but not on the telephone) that he had horses agisted on the property but denies that in respect of such aunformation there was any limitation to portion 5;

denies that he ever represented to the applicants or either of them that conduct on _ the property of cattle grazing and breeding, timber felling and nursery activities would produce income sufficient comfortably to support the applicants and the second applicant's family without need for external income, but admits that he informed the applicants (but not on the telephone) to the effect that if the applicants and their family worked hard they might get a living out of the property;

denies that he ever represented to the applicants or either of them that he would personally tutor and assist the second applicant in the proper conduct

(g)

(h)

(i)

(3)

(k)

(1)

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of the business of cattle breeding and grazing on the property if the applicants purchased it;

denies that he ever represented to the applicants or either of them that there was considerable work available in the area of the property for contract workers with their own farm machinery and that he would provide machinery to the second applicant to enable him to obtain such work if the applicants purchased the property.

admits that he informed the second applicant (but not on the _ telephone) that if the applicants purchased the property he would remain on the property and maintain the property in good condition until they took possession;

admits that he informed the applicant (but not on the telephone) that he would include with the property on sale certain farm equipment being a tractor, slasher, jib and carry-all;

admits that he informed the applicants {but not on the telephone) that he would complete an access road into the rainforest (already part built);

admits that he informed the applicants (but not on the telephone) that he would include with the property on sale one hundred head of cattle in good condition;

denies that he represented to the applicants or either of them that portion 5 of the property was or would be sub-divided at the respondent's expense into three lots each capable of sale for between $50,000 and $60,000 but admits that he informed the applicants (but not on the telephone) that a proposal for sub-division of portion 5 had been approved but that if it were to proceed the applicants would have to pay for the costs of survey and sub-division and further admits that he informed the applicants (but not on the telephone) that nearby one hundred acre lots without 1umprovements were selling for $50,000."

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The statement of defence admits that on or about 30 April 1984 the applicants paid to the respondent's solicitor as a deposit the sum of $31,500; that on or about 30 June 1984 they paid a further sum of $100,000; and that on or about 17 December 1984 they paid a further sum of $60,000. It admits [NAME_3] executed a contract and mortgage, but denies that the applicants or either of them relied upon the truth of the alleged representations. It asserts, inter alia, that the property did have a carrying capacity 1n excess of 200 head of cattle, and that the rainforest on the property, if cleared, would yield land suitable and sufficient for grazing in excess of 50 head of cattle; that there was considerable work available in the area of the property for a competent farm hand; that he remained on the property until the applicants took possession and that the property was then in good condition; that the equipment included in the sale was in good condition and working order; that he completed the access road into the rainforest; that included with the property on the sale were 115 head of cattle in good condition; and that he did not at any relevant time intend that

portion five be subdivided at his expense into three lots.

The statement of defence denies that the respondent was relevantly engaged in trade and commerce in Australia, and in final submissions on the respondent's behalf [NAME_10] urged that the sale of a property of this kind was not in the circumstances something done in trade or commerce, Bevanere Pty

Ltd v. Lubidineuse (1985) 7 F.C.R. 325 being in his submission

distinguishable. I shall return to this interesting question of

law.

It was a somewhat tangled, and much disputed, tale which led to these proceedings. It began in 1983, when [NAME_5] and his wife [NAME_5] were living in Geelong in the home where [NAME_5] had grown up. [NAME_3] was then living in the Gold Coast area of Queensland. [NAME_5] and [NAME_3] had a desire, which I think was more than a little escapist in nature, to find a haven somewhere deep in the country. [NAME_5] had just been involved in a disastrous business venture. It was suggested, in cross-examination on behalf of the respondent, supported by evidence of attempts at a later date to avoid knowledge getting about of his address, that [NAME_5] wished to escape creditors, but he denied this, and the facts are: that there is no evidence any creditor was pressing him, that his only liability of which there is evidence was upon a joint guarantee of a relatively small amount, and that after the events which I shall describe he did in fact return to Geelong to live and work, there being no suggestion that he was faced with any difficulty in doing so. The probability is that [NAME_3] and [NAME_5] were simply, or at least mainly, afflicted with that romantic yearning for the country life which

sometimes afflicts those who have never experienced it.

Just before Christmas 1983, [NAME_5] saw an advertisement for a property in the [NAME_8] area owned by a [NAME_11]. He telephoned [NAME_11], who was in Adelaide, from his own office 1n Melbourne, and obtained directions with a view to inspecting the property. He then went to [NAME_19], picked up [NAME_3], and drove to the address of Mr.

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[NAME_11]' property. There he met a [NAME_12], who had taken a letting of [NAME_11]' house in his absence, and who had previously agreed to buy part of [NAME_4]'s property, variously referred to in the evidence as the rainforest and as Purgatory. (Ultimately, [NAME_12] proved unwilling to proceed in respect of that proposed purchase, with the result that a few months later it was cancelled.) [NAME_5] and [NAME_3] spoke to [NAME_12], who said the property would not carry the number of cattle [NAME_11] had claimed it could carry, and nowhere near the number originally advertised, and that the land was unsuitable for cattle. A discussion ensued about the requirements of the applicants, after which they walked back to their car which was parked near the front gate. As they were about to get in, [NAME_4] drove up ina landrover and greeted them, asking whether they were looking for land. When they said they were, but this place was not suitable because it would not yield a sufficient income, he requested them to wait while he spoke to [NAME_12], and then told them he knew a couple of properties for sale in the valley (the area formed a valley known as Thumb Creek). He invited them to come back with him to his place, which was only a couple of minutes drive up the road, and upon their accepting, he turned his vehicle round and they

followed in theirs.

They arrived at a house some hundred yards off the road, where [NAME_4] introduced them to a [NAME_13], known as [NAME_13], with whom he was living, and their little girl, [NAME_13]. There was a discussion in which the applicants told [NAME_4] they were

looking for a property that would provide a sufficient income to

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support [NAME_5]'s family and his mother, and that they had in mind spending somewhere between $150,000 and $200,000. [NAME_4] said there were a couple of properties in the valley they might look at. Over coffee and biscuits with prawns, [NAME_4] told them about himself and the role his horses had played in the film "Man from Snowy River". I think that in this conversation and ensuing conversations [NAME_4], as an older man of much experience, a rough rider in rodeos and films in the United States and Australia, a former commando, and a cattleman and bushman, impressed his personality upon the much younger [NAME_5], who was still in his twenties, and upon [NAME_3], and somewhat captivated them. [NAME_5] had himself for some time attended [COMPANY_14], and may have been susceptible to tales of conflict with man and beast. That afternoon coffee was the beginning of a relationship which, at least for some

months, involved admiration and trust.

The applicants obtazned from [NAME_4] the addresses of a couple of properties in the valley, and he told them that if, after they had seen those places, they came back and called on him the next day, he might have further information about any available land. They stayed the night at [NAME_8], visited the properties [NAME_4] had told them about, which were not suitable, and called back at [NAME_4]'s property in the early afternoon. [NAME_5] told [NAME_4] that he needed to buy where someone would be able to teach him how to run a farm. After further discussion, [NAME_4] told them that he had sold a lot of land in the area, but had kept the best for himself. He asked

them if they would like to look around his property, and took

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them for a drive along the road, showing them where the boundaries, paddocks, ridges, valleys and river flats were. The house was between the road and a small river or creek which made a horseshoe bend around a spur jutting out of the hillside that rose above the road. The house was built on the spur. Along the river there were river flats, and on the other side of the raver the land rose fairly steeply to the top of a ridge on the hidden far side of which [NAME_4] told them he owned a big piece of rainforest. At some stage, the applicants learned that [NAME_4] referred to this rainforest as Purgatory because there was a creek running through it known as Purgatory Creek, an apt appellation deriving from the jungle of lantana and stinging nettles which would have to be traversed by an unwary visitor venturing there. Beyond Purgatory, extended the Mistake National

Forest.

On their return from the drive to [NAME_4]'s house, [NAME_4] and [NAME_5] again discussed the land in the valley, [NAME_5] saying that he liked [NAME_4]'s property, and [NAME_4] referring to the rising cost of land in the area. [NAME_5] spoke of his limited resources, and the conversation ended as it was getting late. There was a long way ahead of [NAME_5], after driving his mother back to the Gold Coast, to return to his own home in [ADDRESS], Geelong. [NAME_4] asked for the applicants' telephone numbers so that he could contact them 1f he came across any property for sale, which they gave him, and he also gave [NAME_5] a note of his own telephone number. The

applicants left.

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It is common ground that [NAME_4] did not offer, on either of those two days, to sell his property to the applicants, nor did he suggest that 1t was for sale. The applicants' case is that he did offer his property to them shortly afterwards, in circumstances which will be recounted, and making the representations that are the basis of the action. [NAME_4], on the other hand, claims that it was the applicants who subsequently came to him, eagerly desirous of buying his property. Indeed, in an affidavit to which I shall refer, after mentioning the day of their first meeting, he swore: "Over the period of the next few weeks, they kept coming back to me saying

'We want to buy your property.'"

Concerning this conflict, there are some circumstances which provide support to the applicants' version. [NAME_4] asserted it was by pure coincidence that he met the applicants at [NAME_11]' place while driving back to his own property from town. But there is reason to think that, on the contrary, he came there deliberately in order to make contact with persons interested in purchasing land in the area. In cross—-examination, he himself gave some rather equivocal evidence suggesting that he may have thought his estranged wife might be willing to resume their relationship if he moved out of the area, that he had some desire for a reconciliation with her, and that his' relationship with [NAME_13] was at the time breaking up. It did in fact break up when she left him in August of the following year, and apparently established a relationship with another man. [NAME_13] is very many years younger than [NAME_4]. She was' called

in the applicants' case, and gave evidence that she lived with

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[NAME_4] from the end of 1978, the child [NAME_13] being born in [DATE]. Before the applicants ever came to the property, [NAME_4] (she said) had told her that he wanted to sell the house and the property, and they had discussed building a new home in the area for themselves. [NAME_4], though he denied saying these things, at one stage in cross-examination admitted

he "very likely may" have told her he "would build her a house".

[NAME_13] was an extremely nervous witness, with little understanding of business or affairs, who was probably not a close observer of much of what occurred in her presence. But I think she was an honest witness, and I did not detect any indication that she was motivated by revenge in giving evidence, some of which was unfavourable to [NAME_4]. Not all of her

evidence was unfavourable to him.

[NAME_13] was the sort of [NAME_15] woman for whom the preparation of an appetising afternoon snack might be more important than a business discussion. She remembered what she had provided for the applicants, and the circumstances which led to her doing so. It was the first occasion on which she met them, and she said that before they arrived there was a telephone eall which [NAME_4] answered. After speaking on the telephone, he told her "that there were some people coming up to have a look at the land down further (i.e. further down the road) and he would go down and meet them." [NAME_4], she said, "gave me instructions after that telephone call to prepare afternoon tea." It was some time after that that the applicants came to the

property and she prepared afternoon tea. [NAME_4] denies

is.

the evidence of the telephone call, he admits that he stopped his vehicle when he saw the applicants right outside [NAME_11]' place, his explanation being he thought they might have lost their way. As they had not, it 1s unlikely they gave any clear

indication that they had.

[NAME_10] urged in argument that I should not accept [NAME_13]'s evidence. He relied on the fact that [NAME_5] said he had arranged to visit the property by a telephone call from Melbourne to Adelaide, and had driven directly to it after picking up his mother, without calling on an agent in [NAME_8]. However, this certainly tends to negate any suggestion that [NAME_5] had procured [NAME_13] to give false evidence on the matter, since he is a man of some intelligence (albeit no knowledge at all of the country). The evidence does not make it clear who was the caller in the telephone call to [NAME_4], but if I accept her evidence, someone who was in a position to know (as she thought, a real estate agent) did inform him that persons interested in buying land at Thumb Creek were calling at a property which was only a couple of minutes drive from his own place; whereupon he did evince an immediate interest, taking action to ensure that he made contact with them and was in a position to invite them to refreshments during which he could establish some relationship with them. Although the precise link which led to the telephone conversation has not been established by the evidence, it is easy to infer that there may have been some prior communication of the applicants' impending visit, or alternatively that someone telephoned immediately upon their

arrival at [NAME_11]' place. After all, it was very near [NAME_4]'s, and [NAME_12] was in business contact with [NAME_4] in connection with the proposed sale of Purgatory, on which he had paid a deposit, during the very period in question. One matter which tends to confirm that [NAME_13]'s evidence was not fabricated is that in respect of a number of other issues, on which she might have been expected to give evidence favourable to the applicants if she had been prepared to conspire to assist them, she had a very limited recall, or did not profess to have been present during relevant discussions. I do accept [NAME_13] as a witness of truth. It follows that [NAME_4] was 1n fact keenly interested ina possible purchaser in the Thumb Creek area, although at the time he did not offer his own property for sale. It also follows that his evidence suggesting the meeting

with the applicants arose out of a pure coincidence was untrue.

Another significant pointer to the untruthfulness of [NAME_4]'s account of the initial meeting of the parties is that, although at the hearing he gave evidence about inviting [NAME_3] and [NAME_5] to refreshments at his place, and of saying he knew "other places for sale", on 21 February 1985 he had sworn in an affidavit an account which omitted all reference to his invitation, and suggested their coming to his place was an independent event, of their volition, later in the day. On that version, there was involved a second coincidence, that it was his property they happened to visit afterwards during the same day in

which the original chance meeting had occurred.

According to [NAME_5], [NAME_4] telephoned him

several times early in the new year 1984. The first couple of

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calls were in January, and in each of them [NAME_4] said something about the possibility of properties becoming available in the near future, but without being specific. There was also conversation about racehorses, both men being interested in

betting on horses.

Then, [NAME_5] said, in early February 1984 [NAME_4] telephoned him and asked whether he was "still interested in coming up and living in the valley". [NAME_5] said: "Yes, we are very interested." [NAME_4] then referred to [NAME_13]'s desire to have a new house with a swimming pool, and said that he "had land nearby on which he proposed to build a new house for her with a swimming pool, and would we be interested in his place?" [NAME_5] claimed that he replied indicating interest, but asking to know the terms upon which a purchase could be effected. He said he had a notepad at his desk in his Geelong home, and that he started to take notes which, however, were subsequently discarded. The fact that he had made, and read over at the time, notes of what was represented in the conversation enabled him, he asserted, to have a clear picture of what [NAME_4] put to him. [NAME_4] told him he was dealing with businessmen from Sydney, but would rather sell to [NAME_5] because he liked [NAME_5] and felt [NAME_5] would do well on the land. "(H)e said he makes his income from selling and breeding cattle and horses and timbering. Then I... asked him how many head of cattle does his property run. He said 'It runs at least 200 and quite often I have more than that there.' He said that there was lots of timber up in the place, and I asked him how much timber was

there. He said there was at least $50,000 or $60,000 worth of

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timber there." [NAME_4] indicated that he had not worked out a price, but he knew they had only $150,000 to $200,000 and had "worked out a deal that might interest you". He referred to the fact that he had made an application to subdivide one block (the block on the opposite side of the road to the house, that is, extending up the hillside), the suggestion being that some of

this land could be sold off to meet part of the purchase moneys.

At this point [NAME_5] said he raised the question:

"If we spend all our money buying (the) place, how would we make a living out of it?"

[NAME_4] referred to the cattle and equipment he was prepared to include in the contract, among which was 100 head of cattle, and

said "you can breed out of the 100 head". He also said:

"There is at least $60,000 worth of timber up there and you can use my bulldozer. I will teach you how to use it, and you can get the timber out while you are building the cattle herd up to sufficient proportions ... to derive an income from."

He added:

"If you ever get short of work there is plenty of work up in the valley."

When [NAME_5] referred to his own lack of experience, [NAME_4]

retorted:

"Look, I told you already I am building a house nearby. I will give you all the assistance you need. wee {I)n a couple of years you would be quite capable of running the place by yourself."

[NAME_5] said that [NAME_4] added:

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"The only problem would be he promised his wife [NAME_13] that he was going to take her for an overseas trip, and that he would be away for a couple of months, and that when he returned there would be no problems about him teaching me the pros and cons of what to do and what not to do on properties."

[NAME_5] made a reference to the effect on the farm of losing subdivided land sold off, to which [NAME_4] replied:

"well, that block across the road is not much

good to you anyway. All it's good for is

agisting horses. You make your main money

out of cattle and timber. Listen, mate, what

you want to do is you want to get the timber

off the subdivided blocks first, and then

sell the blocks after you have got the timber

off. There is quite a number of pole trees on that slope."

[NAME_4] said there was a high royalty on pole trees which were

in short demand.

There was also, according to [NAME_5], a reference in the conversation to the possibility of [NAME_12] defaulting in respect of his purchase of the rainforest area, and an indication that this would be added at a reduced price if it became available. [NAME_4], he said, referred to the desirability of keeping the farm together, his confidence that [NAME_5] would work hard on it, and the good company his three years old daughter [NAME_13] would be for [NAME_5]'s expected child. He also said he was constructing access over the ridge into the cainforest area, which had been neglected lately, "but if it was slashed we could raise another 50 head of cattle there when the

stock had been built up. And he said that... it is an aideal

20.

place for building a nursery because it is always hot there and moist and plenty of sunshine. He said 'plants grow like wildfire there,' and he said quite often he takes truckloads of plants

down to Sydney, and had made a lot of money out of them."

[NAME_5] said he told [NAME_4] he was interested, and would relay the information to his mother. The call had lasted

at least half an hour.

[NAME_5] said he did telephone his mother that night. They had a discussion, in which they decided to go and have another look at the property. [NAME_5] flew to [NAME_19], and then drove with his mother to Thumb Creek. He thought this was in the second half of February, but having regard to the fact that [NAME_4] instructed a solicitor in the matter on 16 February, I think it must have been somewhat earlier. More serious errors of date than this occurred in the evidence; [NAME_4], in his affidavit, brought the first meeting

of the parties in December 1983 forward to April 1984.

There is now no dispute that [NAME_3] and [NAME_5] did visit the property in February, but [NAME_4] gives an entirely opposed version of how they came to do so. [NAME_5] says he telephoned back to [NAME_4] after the long conversation, the terms of which I have indicated, to say he and his mother would be coming again to discuss the matter, [NAME_4] says the first he knew about that visit was "as far as I can recall they just came there." He had "definitely not" discussed

his property with [NAME_5] on the telephone, or asked him

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whether he was interested in buying the property, or made any reference to it, though he acknowledged that in a _ telephone conversation "I did tell him that my sale of Purgatory fell through, or I thought it had fallen through then." He did concede that "[NAME_5] and I had a couple of phone calls", which he first thought were in March, but then said were before the February visit. Asked who initiated the calls, he said:

"I think I rang [NAME_5] once and I think he rang

me twice. I. cannot remember, but I think that is what it was."

He could not say who made the first call. Apart from the reference to Purgatory, the subject on which he was definite was that there had been discussion of racing tips. So, on [NAME_4]'s evidence, it was quite out of the blue when [NAME_3] visited him in February with [NAME_5], and said (as he claims):

"We would like to buy your place, can we buy your place?"

[NAME_4]'s version is that he responded by saying "Yes, I would if I got the right price for 1t, and I was having a bit of trouble, I would sell it, but I would have to sell it less Purgatory because Purgatory was still going through at that

time."

It 1s, of course, a consideration which favours [NAME_5] in this conflict that I have already concluded [NAME_4] deliberately set out to meet [NAME_3] and [NAME_5] upon

learning they were interested 1n land in the valley, and that he

22.

had told [NAME_13] he wanted to sell his land. There is other evidence in the case which shows [NAME_4] had played some part in the arrangement of a number of other sales in the area, and I infer that he had had some experience in negotiation. If, as I think, he did in fact want to sell his property, I cannot believe that he was shy about making the appropriate approach. I thank it is lakely that he did proffer his own property to the applicants, knowing that they were interested in land in the area. He did not do so in December because of uncertainty concerning the sale to [NAME_12], and also because of the need to take time to sort out a proposal which would make it possible for him to get the price he wanted from prospective purchasers who had indicated their resources were strictly limited. There may have been other factors, but I am satisfied that the possibility of achieving a sale to the applicants was in [NAME_4]'s mind from the beginning. I shall consider the various alleged representations later in these reasons. It is enough at this stage to find that the respondent did urge upon [NAME_5] the desirability of his property by telephone prior to _ the

February visit, and that the visit resulted from his doing so.

On the February visit, [NAME_4] took the applicants in his landrover to the top of a high hill, from which they could overlook a large part of the property, but not Purgatory. [NAME_4] pointed out particularly that portion of the property across the road, describing it as "full of pole trees". During this visit, according to [NAME_5], [NAME_4] confirmed a number of his statements made on the telephone. He said he was going to build a new house nearby and would be able to teach [NAME_5]

everything he needed to know, adding:

23.

"You are as big and strong as one of my bulis in the paddock down there, and you will have no problem at all. You can help me, and I will help you."

[NAME_5] referred to the promise to leave a hundred head of

cattle and asked:

"What do you term a head of cattle?"

[NAME_4] replied: "A head of cattle is a breeding cow that you can breed off, and you can sell the [NAME_15]

calves. That is how you. make money out of them."

[NAME_5] expressed concern about income in the early stages, to which [NAME_4] replied: "There is heaps of timber all over the property," and added that they could make a lot of money out of the timber. [NAME_5] asked:

"Have you done any timbering on the _ place

before?" [NAME_4] said:

"I have not done much. I have taken a bit

here and there, but most of the timber is still up on the property."

Specifically with reference to pole trees, he said:

"They are all on portion 5, up at the top of the hill ... . ... They are mainly in the gullies up in portion 5."

This was a reference to the area above the road. [NAME_5] said

they were unable, on that occasion, to inspect the timber,

24.

because it had been raining, and [NAME_4] said that his vehicle

would slip on the hillside.

There was further discussion about the financing of any purchase, and the possibility of selling subdivided blocks from portion 5 for that purpose. Reference was made to [NAME_13]'s father being interested in moving up to live close by. There was also a discussion of two blocks, which could be sold, and one which should be retained in order to preserve the privacy of the house, a matter which seems to me to have the ring of probability about it. Then mention was made of the directness of access to the Purgatory area to be achieved by completion of the part-constructed road into that area, which would be much better than the roundabout access [NAME_4] then had through the property of a neighbour, a [NAME_16]. I shall refer later to

the difficulties involved in that access.

According to [NAME_5], he asked [NAME_4] how much he made out of cattle, receiving an interestingly indirect reply.

[NAME_4] said:

"Well, I run over 200 head. You work it out for yourself. If each one drops a calf each year, and allowing for some that do not make it through, if that is 200 you can sell each one for at least 200 and you can make at least $40,000 or $50,000 out of cattle once you build your herd up."

In evidence, [NAME_4] insisted that he made no representation as to the carrying capacity of the property, or as to its ability to

provide an adequate income from the breeding of cattle. He

25.

conceded that he had not himself for some years achieved any

significant net profit from the property.

[NAME_4]'s account, as given in chief, made no specific reference to taking the applicants to see a panoramic view of the property, but he did refer to showing them parts of the property; he said he explained the subdivision had been "passed in principle only"; he said he had a wildlife licence to sell staghorns and other plants (this related to the rainforest) which he would endeavour to transfer to [NAME_5]; he said "we definitely went along the road and looked at the boundaries and I showed him the tops of the hills and... where both boundaries ended"; and he said, either on that occasion or subsequently, "[NAME_5] and I walked up some gullies on block 5 and I showed him timber." [NAME_4] denied there was any discussion about' the value of the timber, but said he did show [NAME_5] some poles, that something was said about a royalty on timber, and that "in one discussion when they were there I showed him the prices of what you got for the poles." He denied he said anything to the effect that he would stay on the property, or near the property, and help. He denied that he said anything about a nursery,

except "I might have told them I sold plants to a nursery."

It is clear that a measure of verbal agreement was reached during the February visit. [NAME_4] says two prices were negotiated, one on the basis that the sale of Purgatory to [NAME_12] would be going through, and the other on the basis that the whole property would be involved. The fact 1s that

immediately afterwards [NAME_4] instructed his solicitor, [NAME_16], of [NAME_8], to forward two contracts, one on each of these two bases, to [NAME_17], a_ solicitor of the Sydney suburb of [NAME_17] for his consideration. That makes it clear there must have been at least tentative agreement on the figures, but it also demonstrates the vagueness of the arrangement at that stage. Neither the property nor the name of the purchaser had been identified, nor had there at that stage been any mention of a mortgage back. One consequence of this vagueness, and of the suggestion that the sale of subdivided blocks would assist in paying off the balance of the purchase price of the property, was that [NAME_3] was under the impression there was no limit to the number of blocks she could sell for that purpose, or indeed to get in money for other purposes. The proposal was, however, sufficiently concrete for [NAME_5] to proceed to take preliminary steps to endeavour to sell his home in Geelong (it was then in the joint names of himself and his wife though, at his wife's request, it was later transferred to her), a_ sale which was necessary if the money was to be raised to pay for the purchase of the property at Thumb Creek. In cross-examination,

[NAME_5] was asked:

"After your February visit to the property you certainly had not made up your mind to buy the property then had you?"

He answered: "I believe that we tentatively were going to

make arrangements and see if it was possible for us to buy the property."

In answer to further questions, he said that there was a proposal that the price would be $315,000 for the whole property, and a

proposal to buy all of the property except the rainforest at a

27.

price which he could not recall, but which could have been

$275,000.

It is clear that there was adelay for some time following submission of the alternative contracts, and it is most probable that both the uncertainty regarding Purgatory and indecision on the part of [NAME_3] and [NAME_5] contributed. [NAME_16], [NAME_4]'s solicitor, said he had a large number of conversations with [NAME_4] over the March, April, May period, but that, as late as 11 April 1984, he still did not know who would be the purchaser. Finally, he received the deposit of $31,500 from [NAME_5] on 30 April, which he paid into his trust account on 1 May 1984. The terms of the proposed contract had nevertheless still not been settled at that stage, and a further form of contract was submitted on 15 May 1984 to [NAME_17]. A conditional tender of exchange was made by [NAME_17] on 12 June, unconditional exchange being finally effected under cover of a letter sent by [NAME_16] to [NAME_17] dated 26 June 1984,

[NAME_5] ain evidence put some flesh on these bare legal bones of the transaction. He said that in March he telephoned [NAME_4] to say his mother was concerned about the financing of the purchase, and they would probably not be able to proceed. [NAME_4] said he still did not know whether' the rainforest was 1n fact available. He assured [NAME_5] he would call back in a few days. Then, early in April, [NAME_4] telephoned to say the rainforest was now available, that a

nursery could be established in it, and that it could be' slashed

28.

in order to run an extra 50 head of cattle there. [NAME_4] also

said:

"I will finish the road down into the rainforest, and you can have easy access from your house instead of having to go right around the roads to get in from [NAME_16]'s side."

There was also further discussion about the subdivision proposal, and [NAME_5] promised to discuss the matter again with his

mother.

[NAME_5] did telephone his mother, he said, to find that she had herself received a call from [NAME_4], in which he had put the same matters to her. [NAME_3] gave evidence of a conversation, spiced with some attempt at gallantry on the part of [NAME_4], in which the same representations were put to her, together with some further representations and an assurance that "a country man's word is not like the city, it is like a law". In the version which she gave, [NAME_4] insisted he would be there for two years and would teach her son, who could easily produce sufficient for two families from the property, from

cattle, a plant nursery, and timber felling.

Thereafter, in early April, the applicants again travelled to the property, this time accompanied by a [NAME_18], whose opinion [NAME_3] apparently valued. It is convenient to note here that [NAME_18] was not called, although the earliest version of the statement of claim included

an allegation that a number of relevant representations were made

29.

to him, as well as to [NAME_3] and [NAME_5]. At one stage during the protracted hearing [NAME_18] was overseas, but at another stage he was outside the court. [NAME_10] relied on the failure of the applicants to call [NAME_18], but [NAME_4] himself said he had insisted on the exclusion of [NAME_18] from all conversations relating to the transaction, and on the occasion of two particularly hotly disputed conversations [NAME_18] was left outside sitting in the car. It is one of the many strange features of this case that at a later conference, at which [NAME_16] was prepared to make representations to the applicants in the absence of their solicitor [NAME_17] (a situation which did not seem to concern either solicitor), no one seems to have seen anything inappropriate in [NAME_4] insisting upon [NAME_18] remaining outside in the car. The result was that [NAME_4] had the benefit of a professional representative while [NAME_3] and [NAME_5], who certainly stood in need of assistance in relation to a substantial business transaction, were denied whatever assistance [NAME_18] might have been able to offer. I do not know whether [NAME_18]'s presence would in fact have averted any of what followed, but the fact is that [NAME_3] had brought him all the way from [NAME_19] in order to get the benefit of his advice, the usefulness of which must have been greatly diminished by his exclusion from all discussions. I do not think, in the circumstances of this case, I should attribute much weight to his absence also from the

witness box.

On the occasion of the April visit, a [NAME_20] was

also present with [NAME_4] and [NAME_13]. On this occasion, it

30.

was possible for the first time for the applicants to see the rainforest known as Purgatory. They travelled by landrover, driven by either [NAME_4] or [NAME_20], with [NAME_18]. In order to get to the rainforest they drove back onto the public road, down it for some distance, and then turned off along a track which crossed the river, passed through [NAME_16]'s property, and followed Purgatory Creek to the boundary of that part of [NAME_4]'s property called Purgatory. In taking this route, there were two gates through which it was necessary to pass. Both gates, [NAME_5] said, were locked. According to him the first gate, which gave access to the track from the main road, was opened by [NAME_4] by levering the lock off with a tyre lever. He spoke to [NAME_4] about this, and was told there was trouble with a neighbour about access, "and they're always putting logs across the road to stop me getting through my own gates." The second gate, [NAME_5] said, was opened by [NAME_20], who obtained a key from a hiding place in the scrub nearby. This was the gate which actually led onto [NAME_4]'s property, of which he alone might be expected to control the key. According to [NAME_4] and [NAME_20], the lock which was broken was the lock on the second gate, the explanation being given that [NAME_4]'s key had been taken or lost. [NAME_4] nor [NAME_20] could say who broke the lock, although each conceded that 1t was one of them. On this subject, Ido not find acceptable the evidence of [NAME_4] (who at one stage did say that he himself broke the lock, and then changed his evidence to the version that it may have been [NAME_20]) or the evidence of [NAME_20]. I find 1t curious that the man who broke the lock

cannot recall doing so, and if it was the gate the key of which

31.

was secreted in the bush, it is curious, too, that no evidence was given either by [NAME_4] or by [NAME_20] of a fruitless search for it. There is also, in my view, significance 1n the fact that [NAME_5]'s description of how the key was obtained to open the final gate in [NAME_4]'s boundary fence of Purgatory closely matches admissions obtained from [NAME_20] in cross-examination as to how this gate was normally opened. If, on the only occasion [NAME_4] and [NAME_20] took [NAME_5] to Purgatory, that gate (and not the previous gate) was opened by breaking the lock, it is curious that [NAME_5] knew how it

should have been opened. He described it as if he had seen it:

"[NAME_20] got out of the car, and [NAME_20] jumped over the fence and went about five yards into the scrub and got a key from a hiding place and opened the lock."

Of course, the true significance of the incident of the gate was not so much that it was a particular gate, but that there were difficulties with the roundabout route to Purgatory, which tends to confirm [NAME_5]'s version of [NAME_4]'s statement that he was completing another means of access. However, if I had accepted the story of a missing key, it would have appeared that there may have been no difficulty, but just an

unfortunate accident.

According to [NAME_5], as they drove into Purgatory, [NAME_4] pointed out a spot which he said was where "you should put your nursery to get the most of the sunlight." He also pointed out small rainforest plants and staghorns and said: "You

just put them in pots and they grow like crazy up there,"

32.

indicating a particular area. [NAME_4] then suggested that he and [NAME_5] walk back to the house, so that he could' show [NAME_5] where he had started the access road. [NAME_20] drove off with [NAME_3] and [NAME_18], and [NAME_4] and [NAME_5] walked up quite a steep hill to a point where there was a big stump, above which was a 40 or 50 yards stretch of newly made roadway joining up with a forestry road at the top of the ridge in [NAME_4]'s property. According to [NAME_5], [NAME_4] made it clear that his intention was to continue the new roadway, past the spot where the stump was, down into the Purgatory valley, to provide access to it, which would involve dynamiting the stump and then doing further work with a bulldozer. [NAME_5] said [NAME_4] claimed expertise as a bulldozer driver. The two of them then walked up over the top of the ridge, and down from the forestry road to the back of the house, using a quite long

section of older road construction, and crossing the river.

Upon their return to the house, [NAME_5] said, there was a further discussion in which [NAME_4] asserted that in one weekend he and [NAME_13] could get $500 worth of shrubs out of the rainforest, and that by slashing the slopes and flats another 50 head of cattle could be grazed there. He continued:

"Once I finish the road, you can run them

straight up the road, over the hill and down into the yards."

He also said he would teach [NAME_5] to ride a horse, adding: "I am just building a house nearby." He referred to two big logs

they had seen, and said: "I am sending them down to the _ local

33.

saw mill to get cut up to use in the framework of the house I am building for [NAME_13]." ([NAME_4] denied these statements, but in his own evidence he said that, following a discussion with [NAME_13] about a new house, he had three big logs carted to a mill and "cut up into enough timber to build what we were going to build." He said that was in about 1983.) After further discussion, in which [NAME_4] said there was "a hell of a lot of timber" on the property including red cedar in one part of Purgatory, the

visitors left for [NAME_19].

A couple of days later, [NAME_5]'s evidence was, he telephoned [NAME_4] to tell him they would like to buy the property, but would have to sell assets, which would take some time. He said to [NAME_4]: "You have got a deal." At some stage, [NAME_4] asked for a 10% holding deposit "to know that you are genuine." [NAME_5], to whom [NAME_4] had previously proclaimed that "a country man's word is better than any contract", retorted: "Well, you have my word; it is as good as yours", and they laughed. [NAME_5] did pay appropriate moneys to his solicitor, [NAME_17], and personally delivered [NAME_17]'s trust account cheque for the deposit of $31,500 to [NAME_16], [NAME_4]'s solicitor, on 30 April 1984.

Some time in May, [NAME_3] received from [NAME_17] a draft contract, and was unhappy with it. As a result, [NAME_3], [NAME_5] and [NAME_18] travelled to [NAME_8] in late May. By then, it had been agreed between [NAME_3] and her son that the purchase would be made in her name, though on

behalf of both of them, on the basis that she would leave her

34.

interest to him in her will. They went to [NAME_16]'s place, this being the occasion when [NAME_18] was excluded, upon [NAME_4]'s objection. [NAME_16] thought the conference took place on Saturday 29 April 1984, and not at the end of May as [NAME_5] said. There are several reasons to accept [NAME_5]'s version, not the least being that 29 April 1984 was not in fact a Saturday, but a Sunday. [NAME_16] relied on a note in his file headed "[NAME_4] 29/4/84", saying it would be consistent with his recollection that that was the date of the conference "if it was a Saturday". [NAME_5], on the other hand, relied on his memory that he went to [NAME_8] and saw [NAME_16] after the birth of his child, who was born on 24 May. I accept [NAME_5]'s evidence on this, and it follows that [NAME_16]'s notes are notes, as the heading actually implies, of what [NAME_4] told him, and not of what was agreed at a conference involving [NAME_5] and [NAME_3]. So [NAME_16], who did not profess to have a clear memory of what was said on various relevant occasions, was attempting to refresh his recollection in respect of the conference from a document relating to [NAME_4]'s statements on a different occasion. However, two of the notes are interesting. One refers to the need to adjust the draft contract "to allow sale of part of property i.e. 60 acres." This at least goes some way to confirm the applicants' evidence about the importance of selling pursuant to the subdivision, 1n order to raise necessary moneys. The other note, made at a time when it could not have been known that the contract would not in fact be completed until the end of the year (as late as 23 July 1984, [NAME_16] wrote "our client has advised that the purchaser is

to take possession at the end of the month"), reads:

35.

"R.B. to - for plant and stock to end of year. After 30/8/84, parties to bear costs of repair to plant as to 50% each."

In the blank in this note appears the word "care" with a line through it. The note at least suggests a contemplation of some

ongoing role for [NAME_4] after completion, since on all the

evidence I am satisfied [NAME_4] was looking for a much earlier completion than the end of the year. In fact, as will be recounted, [NAME_16] treated the contract as completed at the

end of June.

One thing that certainly was discussed in the conference was the desire of [NAME_3] to be able to sell two blocks subdivided from the land, 1n order to meet the repayments under the mortgage, which she claimed was in accordance with the oral discussions with [NAME_4], whereas the draft contract permitted only one. According to [NAME_5], [NAME_16] simply responded: "I am acting under [NAME_4]'s instructions." According to [NAME_16], "[NAME_4] ... only would allow them to sell one block." But [NAME_4]'s version was different. He said that he did not say anything about that: "I let [NAME_16] do most of the work. ... I know he would not let them

have two."

On 12 June 1984 [NAME_17] forwarded to [NAME_16] a counterpart of the agreement for sale, signed by [NAME_3],

under cover of a letter which, omitting formal parts, reads as

follows:

36.

"We enclose herewith our client's executed

copy of the Agreement for Sale of Land. We are instructed to exchange subject to a favourable report from the Forestry Commission granting our client the right to log timber on the property. Our client has been informed and rely on (sic) purchasing this property on a warranty given by [NAME_4] that there would be no objection by any authority to the cutting and sale of timber on the property.

We would be pleased to exchange immediately with that proviso."

This letter is consistent with the proposition that the applicants were satisfied, without any doubt, of the truth of what [NAME_4] had told them about the value of the timber, and for that very reason were concerned about the possibility that the Forestry Commission might not permit them to realize that value. This is indeed the substance of what [NAME_17] said, when he gave evidence. He recalled that, early in the transaction, either [NAME_5] or [NAME_3] had said to him "that the property had trees on it that could be logged and that would provide a lot of money for the purchasers," as a result of which he made a note "to check with the Forestry that you could,

in fact, remove it."

In this connection it may be mentioned that, much later, when [NAME_5] abandoned the property after attempting for three months to work it, according to [NAME_17]'s evidence, [NAME_5] made a number of complaints of alleged breaches by [NAME_4], of two of which [NAME_17] then made a specific note, which bears the date 30 March 1985. Interpreting abbreviations in the light of [NAME_17]'s evidence, the effect of this note

may be stated as follows:

37.

It was represented that there was $50,000 to $60,000 worth of timber, but the timber was not up to the standard represented and its real value was $6,000 to $10,000.

[NAME_17] did obtain, by a letter dated 19 June 1984 from the Forestry Commission of New South Wales, an assurance that the Commission had no interest in any timber on the property, except timber growing on reserved roads. [NAME_17] appears to have confirmed that the exchange could now be made unconditional, and [NAME_16] completed the exchange by forwarding the original contract for sale, executed by the

vendor, under cover of a letter dated 26 June 1984.

On 30 June 1984, a Saturday, [NAME_5] went to [NAME_8], and personally paid the sum of $100,000 to [NAME_16]. Of this sum, $75,000 was paid by [NAME_17]'s trust account cheque, the source of which was the sale of a unit at [NAME_19] by [NAME_3], and $25,000 was in cash which had earlier been withdrawn from [NAME_5]'s savings account. There was dispute about the receipt which [NAME_16] gave [NAME_5] for this sum. As it was a Saturday, [NAME_16] simply wrote it out on a sheet of paper. It is possible easily to read, in the document tendered, the words "the sum of $100,000.00 being completion money," but the last three words have been crossed out, and there 1s a somewhat equivocal mark in the margin which might or might not represent an initial. At one stage, it was suggested handwriting evidence might be called on behalf of the respondent, but this was not done. According to [NAME_5], he

drew [NAME_16]'s attention to the fact that he was not' then

38.

completing, whereupon [NAME_16] crossed out the words which are crossed out. He did not suggest that [NAME_16] initialled the alteration. [NAME_16] in cross-examination conceded that the crossing out may have been his work, but he could not remember doing 1t, and he said the mark in the margin did not appear to have been made by him. He also said that he had specific instructions from [NAME_5] that the money was' to be held for [NAME_3], and at one stage in his evidence he said that the moneys "were held in my trust in the name of [NAME_3]." In fact, the trust account ledger showed the money as paid in in [NAME_4]'s name, and [NAME_16] accounted for it to [NAME_4] within a few days. At the same time, he accounted for the deposit of $31,500, although the contract specifically provided for the obtaining of an authority from [NAME_17] to account, which he had not obtained, and although clearly the matter was not completed. The time for making requisitions had not expired, andno requisitions had even been received, let alone answered. In fact, no requisitions were ever received. Particulars of title had been given only a couple of days before. [NAME_17] was not advised that the deposit and the further payment of $100,000 had been disbursed to [NAME_16]'s client. In evidence, [NAME_16] said he treated the contract as settled as at 1 July because the contract provided for settlement on that date, notwithstanding that exchange had been delayed until 26 June. The impossibility of maintaining this point of view is emphasized by the fact that the mortgage back was not even submitted until 5 July, and the discharge of a mortgage, which the vendor had previously given to a bank, and the deeds

held by the bank were only received on 9 July.

39.

These proceedings have had an unusual and _ tortuous history, and a number of persons may have handled the receipt in question. I have no doubt that the money was not in fact paid as completion money, but on the basis that the solicitors for the parties, whose responsibility it was to carry through the contract to completion only after the appropriate steps had been taken, would attend to those steps, and the money would be held in [NAME_16]'s trust account pending completion. [NAME_16]'s handling of the matter left a great deal to be desired, as indeed did [NAME_17]'s, and between them they probably contributed greatly to this litigation by failing to follow ordinary conveyancing procedures; but I do not feel able to make an affirmative finding that [NAME_5] drew [NAME_16]'s attention to the terms of the receipt as originally written out, though he may have done so. He had not yet finalized sale of his home in Geelong, which I think he regarded as a precondition to completion, nor was it finalized until

almost the end of the year.

In July 1984, [NAME_5] brought his wife and child to Thumb Creek, by arrangement with [NAME_4], to visit the property, and they stayed six days. Unfortunately, it was bitterly cold, wet weather. They were unable to see much of the property except from the road. But [NAME_4] did point out some trees to [NAME_5], and [NAME_5] gave evidence that [NAME_4] pointed out to her "the type of trees that could be logged, the type of trees that were used for telephone poles, and informed me

that this was the timber that was abundant on the property. aoe

40.

He said there was red cedar to be found on the property and that these were a very expensive tree and it was in our interests to find these trees and log them." The part of the property he pointed to, where there were trees that could be used for poles,

was across the road from the house, up on the hill.

[NAME_5] also said that [NAME_4] "did at one point say that he was pleased that I would be good company for [NAME_13] because he would be building a house up the road that would be their home where they were living, and that we would not be far

away from each other."

[NAME_5] also gave evidence of some subsequent telephone conversations with [NAME_4], when he had telephoned to speak to her husband who was not home, and had referred to the "comfortable living" which the property could provide and to his own remaining available to give assistance, and his building of a

house "up the road".

In cross-examination, [NAME_5] was asked about the payment of the deposit and what she thought the $100,000 was if the first payment had been a deposit. She replied:

"[NAME_5] had told me that [NAME_4] had requested

we take money up to show him the colour of our money."

She understood from what her husband had told her that 1t was to

be held on trust.

41.

[NAME_5]''s credit was attacked, particularly on the basis of an entirely peripheral issue about a visit to Port Macquarie, concerning which her evidence was vague until after she had had an opportunity to refresh her memory. I am quite unable to regard vagueness about an event of no great significance in itself, which happens to have occurred at a_ time of considerable stress for her when other events must have tended to preoccupy her mind, as having any bearing on her credit. It was suggested she was endeavouring to cover up for the fact that her mother-in-law, [NAME_3], had not in reality been present at the property during a period when she claimed to have been there. But since, on all the evidence, I am satisfied that [NAME_3] was in fact there, this ground of attack is without sting. Whatever else may have accounted for hesitation on the part of [NAME_5] on some questions, it was not the improper motivation alleged. There was, as I observed her, nothing in her demeanour

to suggest she was other than a witness of truth.

The sale of the house in Geelong took some time, and by early October it became clear that the applicants would be unable to comply with the arrangement for payment of the next instalment, which was $100,000 payable at the end of October. They offered a variation of the contract, involving the payment of some interest. Ultimately it was agreed, 1n November, that the matter would be settled on the basis of a payment of $60,000 after completion of the sale of the house at Geelong, which was expected on 10 December 1984, and that the mortgage back would be varied to accord with the new arrangements. The existing

contract was cancelled, a fresh contract being entered into 1n a

42.

form submitted by [NAME_16] with a note dated 3 November 1984. It is interesting to observe that the note makes it clear that, even as late as that date, there was uncertainty about precisely what was intended to be the purchaser's right in respect of the sale of subdivided blocks. It may be the varied contracts were never formally exchanged, but the original signed by [NAME_4] was backdated to 4 October 1984 and stamped. It provided for a price of $315,000, as originally agreed. That price was to be paid by a deposit of $131,500 (the total of the two amounts already paid), and the balance of $183,500 was to be secured by first mortgage to provide for a further payment of $60,000 on 14 November 1984, a payment of $83,500 on 15 August 1985, and the balance on 31 January 1986. No interest was to be charged "provided the principal sum is repaid within the time (sic) stipulated". The purchaser was to be entitled to sell one block "which shall be deemed to have been consented to by the vendor". The last provision had originally been typed "two blocks" and was altered in ink, apparently at the time [NAME_4] executed it. The counterpart signed by [NAME_3], but apparently never formally exchanged, was unaltered, and thus in

it the relevant clause read "two blocks".

An express special condition was included in the

contract as follows:

"5. The Purchaser acknowledges that he (sic) does not rely in this contract upon any warranty or representations made by the Vendor or any other person on behalf of the Vendor except such as are expressly provided herein but the Purchaser has relied entirely upon his (sic) own inspection of the property hereby sold and accepts the property and improvements included in this sale in their

43.

present state of repair and subject to any defects whether latent or patent." [NAME_10] relied on this clause, I do not

think such a provision can effectively answer either a claim in

deceit or a claim under the Trade Practices Act: Bateman v.

Slatyer (1987) 71 A.L.R. 553 at 561-2.

On 17 December 1984 [NAME_5] paid the further payment of $60,000 directly to [NAME_16] at [NAME_8], almost all of it in cash, and was given the key to enable him to go into occupation. No adjustment of rates figures were ever worked out, and in fact Pastures Protection Board rates back to 1983 were outstanding. The settlement (of a kind) which was thus effected is further indication of the slipshod way in which the whole conveyancing transaction was carried out. Alterations made by [NAME_16] to the executed mortgage had at that stage not yet been approved by the purchaser's solicitor. However, it seems clear that a settlement was intended, and that the alterations to the mortgage were ultimately approved. The settlement was somewhat later than had been proposed, because [NAME_5] had difficulties with his motor vehicle in the course of the journey up from Geelong, arriving perhaps a week or two late. He had telephoned before leaving to arrange for [NAME_4] to vacate, so that the property would be available for him and his family to go into occupation. The evidence of [NAME_4] and [NAME_16] suggests some criticism of the alleged shortness of the notice to vacate, but since settlement was overdue by about a month, even under the varied conditions of the new contract, I do not' think

this criticism is justified.

[NAME_5], with their little more than six months old child, arrived at the house very late in the evening,

to find a situation which, as they described it, was harrowing.

44.

The full extent of it could not be seen until daylight, but the area around the house was overgrown, there was rubbish, there was spilt sugar in the house and rats had got into the place and left droppings on the floor and the bed, there was a terrible' smell which turned out to be from the contents of a freezer simply thrown over the fence and left to decompose, and the house water tank had been allowed to run dry. The cows had been left penned in paddocks which were eaten bare, while other paddocks were

empty of stock and covered with long grass.

They remained at the farm for three or four days, during which [NAME_5] got the water pump going and refilled the tanks, started slashing the grass around the house, and tried to count the cattle. He telephoned [NAME_16] to ask where [NAME_4]

was. [NAME_16] said he did not know.

Just before Christmas, they went to [NAME_19], returning with [NAME_3] on the ist or 2nd of January. Apart from the brief visit to Port Macquarie, they stayed until about the end of March, by when they had come to the conclusion that it would be impossible for them to live and maintain themselves on this farm. Instead of the 100 head of breeding cattle which they understood were to be left, many of the somewhat more than 100 cattle on the property were steers and calves. [NAME_5] attempted fruitlessly to sell the timber which he understood was available on the property and, so far as the subdivided blocks were concerned, an estate agent advised him that costs would have to be incurred in completing the subdivision which would render

the project uneconomic. He endeavoured to obtain work in the

45.

area, but was unable to do so. They ran out of money trying to

live without income on very meagre resources.

Upon leaving the property, [NAME_5] arranged for a tenant to be put in the house, and he saw [NAME_17], as I have indicated, on 30 March 1985, when he instructed [NAME_17] that the property had been misrepresented to him. A somewhat garbled letter of complaint was written alleging false and misleading representations, which referred to reliance on a_ representation that timber on the land was suitable for sale. But otherwise nothing was done for several months, until the threat of a mortgagee's sale led to these proceedings. [NAME_17] said he was waiting for a more detailed statement of [NAME_4]'s representations. Doubtless, [NAME_5] was preoccupied with the problem of finding work, and re-establishing his family in

Geelong.

It is now necessary to examine the principal matters

alleged to have been misrepresented, and I shall do so seriatim.

Carrying capacity of 200 head of breeding cattle, and potential of rainforest, if cleared, to graze additional cattle

This representation is alleged to have been made both on the telephone and in personal conversations. On some occasions [NAME_4] is alleged to have referred to "head of cattle", and on other occasions to "breeding cattle". I have already noted that, according to [NAME_5], [NAME_4] told him that "a head of cattle is a breeding cow that you can breed off, and you sell the [NAME_15] calves." As regards the 100 head to be left on the

property, [NAME_5] said he made it clear that these were needed

46.

to start building up the herd, that is to say, they were also to be cows. [NAME_17] was asked 1n cross-examination whether the word "breeders" was used in the conversations of which he gave evidence, to which he replied in the affirmative, and said:

"That is what I understood all the way through. That was the base, breeders."

In fact no more than 40 breeding cows were included in the 113 head of cattle that were left on the property, the others being

47 steers, 2 Brahman bulls and the balance [NAME_15] calves.

This is one of the allegations in respect of which the applicants receive some support from [NAME_13]. She said [NAME_4] talked to the applicants about "different ways of making a living off the farm which he had done". She was asked:

"As near aS you can remember, what did he

actually say about it?"

Her answer included a reference to breeding cattle and she continued:

"If you kept a certain amount of head of

breeding cattle you could have a calf each year which was extra income."

A [NAME_21], who bought some land four kilometres from [NAME_4]'s farm in 1982 after seeing [NAME_4] on the recommendation of [NAME_16], said that [NAME_4] showed him the land telling him he could run "between 50 and 60 head of breeding cattle on it." This evidence was admitted on the issue of whether [NAME_4]'s selling activities involved trade and

commerce, and I refused to admit evidence tendered to show, on a

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similar fact basis, that the representation of carrying capacity made to [NAME_21] was false. I did not think the doctrine of similar facts could be stretched so far. However, the expression "breeding cattle" was, according to [NAME_21], employed by [NAME_4], and I think this does admissibly refute [NAME_4]'s denial that he used the expression "breeders" or "breeding cattle". He said: "I do not use it." In answer to his own counsel, as_ to whether there was any particular reason why he did not use it, he said he had always been taught that a cow is a head of cattle, a steer is a head of cattle and a place would run a particular number of head of cattle. But [NAME_21] asserted that [NAME_4] had used the expression "breeding cattle", which he said it was the practice to use in breeding areas, though not in dairying areas, and that the area in question was breeding country. [NAME_21] impressed me as an honest witness, and I accept that [NAME_4] did use the expression he attributed to him. As a matter of fact [NAME_4] himself at one point in his evidence, after saying "you always call it a head of cows - that 1s what nearly everybody who has been in the cattle business calls it - a head of stock, no matter what it is it is a head of stock," used the expression "breeders" when answering a question as to how many cows capable of having calves were included among his" stock. Another witness, [NAME_22], who described himself as a bushworker and grazier who had lived all his life 1n the Thumb Creek/[NAME_8] area and had for some time lived on one of the properties adjacent to [NAME_4]'s property, also used the word "breeders" when answering a question about cattle carrying capacity of a property. The same expression was used by [NAME_23], a local stock and station agent and real estate agent

with thirty years' experience.

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[NAME_23] expressed the opinion that the property could carry 50 breeders, which he explained meant plus their progeny, up to a maximum of somewhere over 100 at times - but he added "not for the whole year round though". He described the property as land that "does not carry cattle year in and year out, very well," and said that it had at one time in the past been a dairy farm, and well kept, with improved pastures, but even then was limited to about 80 cows plus their replacements, or somewhere in the vicinity of 130 or 140 head of cattle all told. He inspected the property, either late in 1984 or early in 1985, at [NAME_5]'s request, when he noticed "the country was very bare as far as feed was concerned", and "rubbish had grown up in some of the areas." He did not believe it would be viable as a_ cattle breeding property, as he thought in the vicinity of 150 to 200

head of breeders would be required for viability.

[NAME_22]'s estimate was that 40 or 50 breeders was the number that could be run on that property. If as much of the area called Purgatory as the so1l conservation authorities would permit were cleared, it might be possible to run an additional 6 to 10. He noticed that there had been regrowth all over the property, which was not consistent with being just that summer's growth. He also said there was very little improved pasture to be found in the district, the expense being more than you could get out of your cattle. [NAME_15], an agricultural worker whose aunt had a property next door to [NAME_4] and who had himself run breeding cattle on a property, said that he would not like to

run any more than 70 breeders on [NAME_4]'s property. He

49.

pointed out that the numbers you can carry in the summer have to be supported in the winter, and that kikuyu, a grass which grows substantially on [NAME_4]'s property, is a summer grass which 1s severely affected by frosts, the area being one which gets severe

frosts.

[NAME_24], an experienced farmer in the area who was called on behalf of [NAME_4], gave evidence that, leaving aside the Purgatory area, approximately 80 cows and their calves and a

few extras could be run on the property.

[NAME_4] himself said at one stage that the largest number of cattle he had ever run on the property was between 120 and 130. He said he had also had between 10 and 20 horses at that time. But other evidence showed that [NAME_4] also utilized other land to carry some of his cattle from time to time. In particular, he had an arrangement with a [NAME_25], and some of his cattle might have grazed every year on [NAME_25]'s land. When he had his maximum number of cattle, not all of them grazed on his own land. That was in the late 1970s. At the time he left the property, he conceded "it would not run 200 head of cattle." But if the weeds were kept down, and the lantana and ferns, and necessary spraying and farming operations carried out, "it would run closer to 200 head then." At another point in his evidence, he said "if it was a real good season you would run a

lot more than you would any other time." Asked:

"What could you run at any other time?"

he replied:

50.

"A hundred head, a hundred and twenty head, more if you were there all the time and moved them from paddock to paddock and took them over to Purgatory and brought them back."

Asked:

"And what could you run in what you describe as a good season?"

he replied: "In a good season you would run another 20 or 30 head more. It all depends how much money

you had to spend on the property and how much time you had."

[NAME_4]'s defence in respect of this matter was' that he had never said the property had a carrying capacity of 200 head of breeding cattle, and that he had not said anything to the applicants about the carrying capacity of the property in relation to any particular figure. Although the statement of defence admits that he did say that the rainforest, if cleared, would yield land suitable and sufficient for grazing 50 head of cattle, in evidence he also at one stage explicitly denied saying that. Pressed, he gave evidence that he would have said if the whole of Purgatory was cleared you would be able to run extra cattle, but added "I would not have said you would be able to run them all the year round." Asked did he recall whether he said how many extra cattle you would be able to run, he said "maybe 40 or so." Later, he did say that he told [NAME_3] or [NAME_5] that that was his op2nion. He endeavoured to support that opinion by saying he was' referring to the entire area, not just the flats along Purgatory Creek. But the evidence showed the soil conservation authorities would not permit much of the area

to be cleared. Moreover, the carrying capacity of this land was

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almost completely dependent on the flats, which were of very

small extent.

[NAME_4] supported his denial that he had stated a carrying capacity for the property by giving evidence of a particular conversation towards the end of May 1984, when he said a [NAME_26] was present. He said that in that conversation [NAME_3] "did ask what could you carry on the place as far as cattle went." He added it may have been [NAME_5] who asked. He said he had given an answer that it was "up to the individual who runs the property," referring to the work put in to the place, the superphosphate used, the slashing done and other matters. He said they then asked [NAME_26] who "more or less agreed with me." [NAME_5] was cross-examined about

this, and denied the alleged conversation.

[NAME_26] was called in the respondent's case. I formed the impression that he was doing his best to assist the respondent. He was a friend who at one stage was going to go into business with [NAME_4], whom he had known for a long time. But there were a number of curious features about his evidence, He said there was another man there on the occasion in question who stayed in the car - a statement which fitted the evidence that [NAME_18] was outside in the car on that occasion in May. But later in his evidence, he said that he did not speak to [NAME_5] or [NAME_3] on any occasion in April or May, and was not present at any discussions that they had at that time. The only times he saw [NAME_3] and [NAME_5] were in early

September, and a further occasion after that. He could fix the

52.

specific month of September because of his own personal circumstances, involving marital problems. He had gone to [NAME_4]'s place to visit and, finding that [NAME_13] had left [NAME_4], he had stayed from September to November of 1984. There were odd inconsistencies, on the subject of a carpet, and the use of the slow-combustion stove, between his evidence and _ the evidence of other witnesses. If he was at the property over' the extended period he described, though certainly he said he was away from time to time for short periods during those months, it is strange that [NAME_4] had to get [NAME_13]'s assistance in October, though she had left him in August, when he was in hospital for a couple of days and said he could not get out of hospital to go back to the farm "without I had somebody there." As a result, he invited [NAME_13] to come for a few days and offered her $5,000 to work to clean up the property in preparation for the settlement. Why would he agree to pay $5,000, which in fact he did not pay, for work a woman could do in a few days, if he had staying with him an able-bodied close friend of many years standing? [NAME_4] and [NAME_26] went to Queensland to look at businesses they contemplated buying together, and it is difficult to believe [NAME_26], having accepted [NAME_4]'s hospitality over a lengthy period, would not have been happy to assist at the time when [NAME_4] had just

come out of hospital.

Whether or not [NAME_26] was staying with [NAME_4] over the period he says, I do not accept that he was involved in the conversation he alleges with [NAME_3] and [NAME_5]. No

other witness, including [NAME_4], alleges that any relevant

53.

conversation took place between [NAME_4] and [NAME_3] or [NAME_5] during the period when [NAME_26] says he was staying with

[NAME_4].

[NAME_17] made the usual Pastures Protection Board inguiry in connection with the transaction, and received a_ reply dated 1 June 1984 which includes the statement:

"Assessed carrying capacity 100 Head of Stock."

This certainly raises the question whether, if [NAME_3] and [NAME_5] had been told something different by [NAME_4], they would not have queried the matter. However, they may have had the same sort of attitude to such an official assessment as many people have to Valuer-General's valuations. [NAME_17]'s evidence is that, on his instructions, he regarded the Pastures Protection Board information as confirming the under-utilization of the property and the scope for expansion. He thought he did tell his clients about it, but could not recall showing it to them. As at 1 June 1984, I do not think the applicants, even if made fully aware of the Pastures Protection Board reply, would have regarded it as cause to lose faith in what [NAME_4] had

told them.

I think [NAME_4] made the alleged representation about the carrying capacity of the property. I think 1t is very unlikely that he would have given them a precise figure, as admitted on the pleadings, in respect of the relatively small

potential capacity of the area known as Purgatory, and not have

54.

given them any indication, as he claims, despite a request for information, as to the carrying capacity of the existing property. If he made the representation, it is clear on his own evidence that it was incorrect. So too was the statement about running 50 head of cattle in Purgatory. It is also clear that he

knew both statements were incorrect.

Timber

It is important to note that, while the statement of defence denies a representation that there was on the property timber of a sale value of $50,000 to $60,000, it admits that [NAME_4] informed the applicants, though not on the telephone, "that there was a $200 royalty for lamp posts and that there was plenty of suitable timber on the property." The evidence suggests that even this representation would have been seriously misleading in

view of the paucity of the number of suitable trees.

[NAME_5]'s evidence as to this representation is supported by his wife, [NAME_5], who said that [NAME_4] told her that pole trees were "abundant on the property" and

there was also expensive cedar.

[NAME_4] denied representing there was timber that could be sold for $50,000 to $60,000, but he said he told the applicants he had bought a_ bulldozer in order to cut poles, and that he showed them paperwork concerning the royalties obtainable from timber of particular types. He said he told [NAME_5] "there was timber there and we went for a walk one afternoon. I explained it to him in the gully." Asked what he explained, he

said:

ry

55.

"I told him the different types of timber, showed him the different types of timber."

He denied that he said anything about timber on the telephone.

He did on one of the visits tell them something about the royalty

for timber.

But [NAME_4]'s witness, [NAME_20], said he recalled hearing a discussion between [NAME_4] and [NAME_5], relating

to timber, prior to [NAME_5] moving to Thumb Creek. He could

not recall the date. He said:

"I can recall that in the conversation [NAME_4] said that there was thousands of dollars worth of timber on the property."

[NAME_26], for what his evidence is worth, recalled [NAME_4] saying to [NAME_3] and [NAME_5] "that there was a lot of timber on the property," though he related it to the ability to "cut your own fence posts and rails for yards," notwithstanding that the evidence 1s [NAME_4] had renewed all the fencing and

its condition as well as that of the yards was very good.

The subject of timber was certainly very much in [NAME_4]'s mind in 1984, for [NAME_16] recalled [NAME_4] saying

to him "that he and some other person were thinking of starting a

sawmill."

Timber was also in [NAME_5]'s mind when he moved onto

the property, for during the relatively short period he was there

y

56.

he made attempts to sell timber from it. He contacted the local sawmiller, a [NAME_27], and also [NAME_22] and [NAME_15], all of whom came to the property and none of whom was prepared to buy timber from him. [NAME_27] "said it was not worth his while coming up because there was nothing there," but he did in

fact come onto the property.

[NAME_22], who sells timber from his own property which adjoins [NAME_4]'s on one corner, and employs [NAME_15] in connection with timber getting, gave evidence that at [NAME_5]'s request he attended to "have a look and see what the timber was on the place." He looked specifically over the block on the hillside across the road from the house which, according to [NAME_5]'s evidence, [NAME_4] had particularly nominated. The area he saw had been logged, so that what had been left behind was "mainly the small stuff and the short stuff." He thought there were five or six truckloads of timber there. As to the rest of the property, he said that he had been over it "looking for cattle", and "I could see that it had been logged and there was not areal lot of timber left on it," that also being mostly pallet timber, that is to say, the small and short timber. He thought on the rest of the property there would be something like three times as much as on the block across' the road. On [NAME_22]'s figures, there might have been about $4,000 worth of royalties if someone had been prepared to take this timber and pay royalties on it, or alternatively 1f [NAME_5] had got the timber out himself he might have got a_ gross return of about $10,000, from which he would have had to pay for

the cost of labour and equipment to do it. So far as poles were

57.

concerned, [NAME_22] said "I might have seen two or three." He added:

"It is not real pole country; like at the time

I was cutting poles - a pole has got to be

straight and it has got not to have any

defects. --- (P)oles are pretty hard to get, poles.

He confirmed that if there were poles they would be very valuable, ranging from $35-00 to $550-00 each when cut and taken

to an appropriate dump.

I accept [NAME_22]'s evidence. It follows that there was nowhere near $50,000 to $60,000 worth of timber on the property. It also follows that the admitted representation suggesting that there was plenty of suitable pole timber on the

property was quite misleading.

On the whole of the evidence, and bearing in mind the importance which was clearly attached by the applicants to ensuring the Forestry Commission would have no objection to timber getting operations, I am satisfied that the alleged representation was made. I think it was made as alleged by [NAME_5] on the telephone, as well as at the property, and having regard to the fact that [NAME_4] had himself sold timber in the past, and in view of his knowlege of the property, I am also satisfied that [NAME_4] knew this representation was untrue or

was at least reckless as to its truth.

58.

Comfortable Income and Tutoring and Assisting

I shall treat together the alleged representations that conduct of the proposed activities on the farm would produce an income sufficient to support the applicants comfortably and that the respondent would personally tutor and assist the second applicant in the proper conduct of the business of cattle breeding and grazing. The statement of defence denies the latter representation and also the former, but admits that, though not on the telephone, the respondent said that if the applicants and their family worked hard they might get a living out of the

property.

In evidence, [NAME_4] emphasized his denial of any representation that the applicants could obtain a comfortable living from the property. He said:

"No, I told them it was terrible hard work up

there, to do it, to live, to keep the farm

going, all that, you were at it day and night."

On this basis, Purgatory was well named. [NAME_5] would have done better to have stayed in his home in [ADDRESS]. At the same time, [NAME_4] said he would have told them that it was a good quiet life; he claimed they did not ask for any details of

how much could be made out of the farm.

[NAME_5] said that, right at the beginning of their acquaintanceship in December 1983, he told [NAME_4] he _ was looking for something that would provide a good income sufficient

to support his family and mother. On his evidence, the whole

59.

tone of the discussions suggested the farm was a viable operation, and substantial income figures were suggested to him as to be expected from 200 head of breeders each dropping a calf which could be sold for over $200. On his evidence, [NAME_4] added:

"you have to allow a little bit in case a few of them do not make it through,"

a comment calculated to suggest that a fair and reasonable

estimate was being put forward taking proper account of losses.

In so far as [NAME_5]'s evidence depends on the proposition that [NAME_4] was to remain in the area and provide him with tuition, it gains some support from the evidence of [NAME_13]. She recalled, on one of the visits by the applicants, [NAME_4] making statements to the effect: "We were going to build a house not too far away and [NAME_4] would be there to give him a hand and show [NAME_5] how to run the farm for a while. There were different ways of making a living off the farm which he had done and basically talked about the different ways of making the extra income." She said plans for the future were discussed, [NAME_4] saying "we would have a new house built, still in the valley." [NAME_3] and [NAME_5] both gave evidence of statements by [NAME_4] that he was going to build anew house nearby, and would be able to teach [NAME_5] everything he needed to know. [NAME_5] said [NAME_4] told him that "[NAME_13]'s father is very interested in moving up and living close by," a statement which would tend to reinforce the idea that [NAME_4] and [NAME_13]

would continue to live in the area. In the telephone

60.

conversation in March, [NAME_5] said [NAME_4] made the

statement: "I will teach you everything you need to know. You

can make a good income from it."

[NAME_5]'s evidence confirmed both the representation that the property would provide a comfortable living and that [NAME_4] would remain, building a house up the

road, and give assistance.

Interestingly, although [NAME_4]'s evidence makes it clear that it was always his intention to leave [NAME_13], if she had not left him first, the applicants' evidence is that he said at one stage:

"I promised I would take [NAME_13] on a trip

overseas, and that would take some time, and

by the time I get my own house organized you can move in and my house can be built."

It was urged on behalf of [NAME_4] that this detracted from the reality of the representation that he would be staying in the area, being consequently available to assist [NAME_5]. On the contrary, it seems to me that a temporary break, such as this evidence suggests, would not seriously disrupt the alleged arrangements, and it is difficult to understand why [NAME_5] should have introduced the question of a trip overseas by [NAME_4] and [NAME_13], unless [NAME_4] had in fact said it. According to [NAME_5], the overseas trip was also mentioned in the telephone conversation 1n February, when the representations about income and remaining to provide tuition were also made, and

on that occasion [NAME_4] said they would be away for a couple

61.

of months. This is not a very long period in the operation of a

farm.

There is some confirmation in the evidence of [NAME_16], who said he thought "there was an arrangement whereby [NAME_4] was going to stay there for some' short period." He supposed it was "to show him the farm," but he did not know. [NAME_17], too, said that it was his understanding, from early in the piece, that [NAME_4] was to remain in the area and personally tutor [NAME_5] in relation to the farm. He explained the way in which he had permitted himself to be bypassed in the conveyancing procedures by saying that the parties had become friends, with his clients trusting [NAME_4] implicitly. Because of the special relationship, he permitted

them to work out their own arrangements.

My conclusion is that [NAME_4] did make each of these alleged representations. I find it impossible to reconcile my impression of [NAME_4] with the proposition that he presented, while attempting to sell his property, the Spartan and uninviting picture he claims to have painted of carrying it on as a farm. I find he did represent it would provide an income sufficient to support the applicants comfortably. I also accept [NAME_5]'s evidence that [NAME_4] represented himself as intending to remain in the area for some time, where he would be available to teach and assist [NAME_5], and that he represented himself as

intending to do so.

62.

In fact, it is plain from admissions made by [NAME_4] himself in cross—examination that he had not made a living out of the farm, which he said was why he had gone out to work and done other things such as horse training and stunt work. Asked: "Was your farm covering your living expenses?" he answered "Hardly." His evidence made it clear that in the past two years before he sold the farm the cost of running it was more than the receipts from it. The property was not capable of yielding a comfortable

living for [NAME_5], his family, and his mother.

So far as concerns tutoring and assisting [NAME_5] in this unproductive enterprise, it is quite apparent that [NAME_4] did not intend to remain in the area. In his own phrase, he intended to "do a bolt". As far back as shortly before he met [NAME_3] and [NAME_5], he admitted in cross-examination, he was considering leaving the area to break up his' relationship with [NAME_13] and re-establish his previous family. On his own evidence, I conclude that from an early stage in the negotiation of the sale of the farm he intended to leave [NAME_13]. He had no intention of building a new home there. During a period of about three months up until about two months before he left, he was looking at properties in Queensland, a preoccupation which provides some support for the applicants' evidence of the neglected state of the farm when they took it over. This was amatter which only really came out in the

cross—examination of [NAME_26] and [NAME_16].

Immediately upon the conclusion of the sale, [NAME_4]

left the district without telling [NAME_3] and [NAME_5], for

63.

whom he had professed such liking, where he could be found. It is true that he had promised to pay [NAME_13] $5,000 to assist in the support of their child and as a reward for the work she did when he came out of hospital, and that he was avoiding her. However, [NAME_16] gave evidence in cross-examination that, about April or May 1985, he received explicit instructions not to tell [NAME_3] where she could get hold of [NAME_4]. As I have remarked earlier in this judgment, [NAME_16]'s recollection of dates is not always accurate. The fact is that [NAME_5] was seeking to get in touch with [NAME_4] from the beginning of his occupation of the farm, but neither [NAME_16] nor anyone else was able, or at any rate willing, to tell him where [NAME_4] was. I think [NAME_4] intended to avoid [NAME_5] and [NAME_3] because he was quite conscious that his conduct was in breach of representations he had made to them. On all the evidence, I have also come to the conclusion that he did not intend to do what he said at the time he made the representations about tutoring and assisting [NAME_5]. He certainly knew the farm would not provide the applicants with a

comfortable living.

[ADDRESS] to Purgatory

Both on the pleadings and in evidence, [NAME_4] admitted that he informed the applicants he would complete an access road into the rainforest area, though on his version he did not say it on the telephone. The defence is that he kept his word. A great deal of time was taken up at the hearing in a detailed examination of the problems of access to Purgatory by

the roundabout route already described, or by other similar

64,

routes. There were difficulties caused by the divergence of a made track from the line of a reserved road, and there were arguments with neighbours. As a result, [NAME_4] took steps to obtain rights of way, and had surveys made and a certain amount of work done to provide for the passage of vehicles. It is this work which he claims to have completed in performance of his

undertaking to [NAME_5].

Whether, by December 1984, any access route had been completed, over the whole of which rights of passage existed, was a matter much in dispute at the hearing. In the view that I take, it is unnecessary to resolve this dispute. I accept, on the basis of [NAME_5]'s evidence, that the statement about completion of an access road referred to the newly constructed section of roadway or track, finishing at a big stump on the edge of a declivity, on the far side of the ridge which separated the farmhouse from Purgatory. As I have said, the true relevance of the difficulties of access to Purgatory by the road or roads in or near [NAME_16]'s place is that these difficulties underline the need for direct access wholly within the bounds of the property. [NAME_4] conceded that he and [NAME_5] had walked back from Purgatory along the route [NAME_5] described (in evidence to which I have earlier referred). He also conceded that in 1983 he had cleared a track, along which they walked, in the vicinity of what he described as "a stump and a half". However, he denied that the stump blocked the track, and denied entirely the conversation about the access road which [NAME_5] alleged took place while they were walking up from Purgatory past the stump. There was no contradiction of [NAME_5]'s evidence

that nothing was done to complete this method of access.

65.

I have concluded that this also is a representation which [NAME_4] did make. It was a representation as to his intention to do something, and I have concluded, on all the evidence and as a matter of inference, that he did not intend to do it. However, despite the disproportionate amount of time taken at the hearing dealing with this aspect of the case, I have difficulty in regarding the particular representation as a significant one. There was no evidence that completion of the proposed route in the vicinity of the stump would have been impracticable for [NAME_5], or as to what it would have cost, or as to anything he would in fact have done in the Purgatory area (had [NAME_4] been as good as his word) which in the event he could not do, or as to any diminution in the value of the property resulting from this particular route to Purgatory not

having been completed.

Subdivision

There were two proposed subdivisions of [NAME_4]'s property, the former to enable Purgatory to be excised, and the second to enable two or three blocks to be sold out of that part of the property which was across the road from the house. The former was of course relevant to the sale to [NAME_12] which did not go to completion. It was the second in relation to which the applicants claimed [NAME_4] had made a representation that it would be effected at the respondent's expense so as to produce

three lots capable of sale for between $50,000 and $60,000.

66.

The statement of defence denies the making of the representation pleaded, but admits that the respondent informed the applicants, though not on the telephone, that a proposal for subdivision had been approved and that nearby 100 acre lots without improvements were selling for $50,000. The respondent says he made it clear that if the proposed subdivision were to

proceed the applicants would have to pay the cost of it.

The history of the transaction reveals that over a lengthy period [NAME_3] was concerned about the question of subdivision. Undoubtedly, the prospect of selling one or two blocks for a price in the vicinity of $50,000 each was very important in the applicants' calculations as to whether they would be able to find the money to pay off the mortgage. In [NAME_17]'s letter of 8 May 1984 to [NAME_16], specific reference is made to this matter. [NAME_17] writes:

"Our purchaser has been advised by your client

that the property is the subject of some subdivision with the local council. Would you be kind enough to advise if the property has in fact been submitted to council and if

in fact the property has had a development application for the subdivision."

There is also a note in [NAME_17]'s file which reads:

"Pind out from council 1f possible to subdivide into 100 acre".

But nothing seems to have been done to clarify the precise position concerning the subdivision. [NAME_16] replied to

[NAME_17]'s letter of 8 May in terms which contained no warning

67.

of the fact that the approval was already quite an old one, on which no action had been taken, and that very substantial contributions as well as road construction costs were required to be met if the subdivision was to proceed. What he advised [NAME_17] on 15 May 1984 was:

"We confirm that the property has been the

subject of a proposed plan of sub-division

which proposed plan was in fact approved hy

the Nambucca Shire Council but unfortunately

we do not have copies of the plan, but they

can be obtained by the surveyor [NAME_28], [ADDRESS], [NAME_8]."

There is no suggestion [NAME_28] was in fact asked to obtain

copies of the plan at any time before contracts were exchanged.

On the basis of the fact that [NAME_28], the surveyor, had reactivated his file and written a letter, dated 31st October 1984, to the Northern Rivers County Council for advice as to its requirements for supply of electricity to lots in the proposed subdivision, which [NAME_28] referred to as "proposed subdivision of portions four/five parish of Herborn for [NAME_4]", it was suggested that [NAME_5] or [NAME_3] must have been in touch with [NAME_28] in October. [NAME_28] had no other record pertaining to any such contact and his recollection as to whether or not it occurred was extremely vague. I do not think it would be safe to conclude that any visit to him by [NAME_5] or [NAME_3] occurred. [NAME_5]'s evidence, which I accept, was that

he first spoke to [NAME_28] after he went into occupation.

68.

A more significant piece of documentary evidence is [NAME_17]'s note of the instructions he received from [NAME_5] on 30 March 1985, to which I referred earlier in these reasons in respect of the representation made concerning timber on _ the property. That note indicates that [NAME_5]'s complaint to [NAME_17], concerning the subdivision question, was that it had been represented that blocks could be sold for $50,000 to $60,000, but they were really only saleable for $30,000 to $35,000. Obviously enough, if the blocks had in fact been worth as much as was represented, substantial expenses could have been involved in their subdivision without the economics of the project being seriously affected. The profit would have been large enough to meet the cost comfortably. But once it was realized that the return was likely to be little more than half that which had been anticipated, the question arose whether the cost of subdivision and the loss of value to the farm itself as a totality would make the game not worth the candle. [NAME_23]'s advice to [NAME_5] was that "the cost factor in the subdivision would be more than possibly was warranted". He thought

subdivision in the Nambucca Shire was "very costly".

But if the applicants' true complaint related to the price which could be obtained for the blocks, as [NAME_17]'s note suggests, that 1s not a matter for which [NAME_4] can be held responsible. [NAME_23]'s evidence makes it clear that about the end of 1984 there was a sharp and substantial drop in land values in the Thumb Creek area, so that a_ representation, made six months earlier, as to the price which could be obtained for a block of land would not be shown to have been' incorrect

simply because that price could no longer be obtained.

69.

The applicants' case at the hearing was that [NAME_4] had gone further, and had represented that he would complete the subdivision at his own expense. Their evidence as to this, however, was somewhat equivocal. [NAME_5] at one point in his evidence quoted [NAME_4] as saying: "You could subdivide and once portion five is subdivided you could sell off a couple of blocks to pay your mortgage." Elsewhere in his evidence, he referred to [NAME_4] making statements about going ahead with the subdivision and completing it. But he also said: "It was not clear in my mind as to whether the roadwork had to be (done)

straight away or had been arranged to be done later."

It is common ground that [NAME_4] did mention the subdivision question at an early stage. He says himself that he told the applicants at the February meeting that he "had put in for a subdivision over the front and that the house block then would be attached to four" (i.e. portion four). He went on to say that he showed them the plans and told them he had got it "passed in principle only". According to this version, there was no reference either to the fact that it would be very costly to complete the subdivision, or to any suggestion that [NAME_4] was giving an assurance he would in fact complete it at his own expense. At the same time, there was perhaps some ambiguity in

the statement "the house block then would be attached to

(portion) four", which might have been taken to suggest the proposal was going to be implemented. [NAME_16] said that "on more than one occasion" [NAME_4] said to him "I have had a

plan of subdivision approved by the Shire," and [NAME_16]

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added "full stop". [NAME_16] himself in a letter he wrote on 3 November 1984 forwarding a copy of the final form of the contract and a memorandum of transfer executed by the vendor to [NAME_17] wrote:

"Both documents are executed in escrow pending

resolution by the parties as to whether' the

purchaser shall have the right to sell and

retain the proceeds of sale of certain

subdivided blocks ... ."

[NAME_17] said:

"There was some talk about the land being subdivided ... ."

A disquieting aspect of the evidence is a note dated 13 February 1985 in [NAME_16]'s file, which arises out of an attempt by [NAME_4] to assign the mortgage. Apparently, a question had been raised by the proposed assignee concerning the right to sell a subdivided block, conferred on the mortgagor by a special condition, which of course might well have been thought to reduce to some extent the value of the security. The note indicates that [NAME_4] had telephoned to say that [NAME_5] could not excise one block because "council has approved a plan for the subdivision of four blocks out of the 180 acre parcel. ... [NAME_4] says there is an amount of about $22,000 payable to council re contributions, as well as survey fees and _ road construction costs." This suggests that [NAME_4] was very well aware that the right to sell a subdivided block was an illusory

one, since the cost of subdivision would be prohibitive.

It 1s difficult to believe that [NAME_3] and [NAME_5] were not given to understand that subdivision was a

71.

practical reality. Otherwise, there would have been no point in [NAME_4] telling them about the approval he had obtained from the council. In fact they appear to have gained that impression, since it was a matter they thought of sufficient importance to tell [NAME_17] about it in terms which elicited from him the reaction that it needed to be made the subject of enquiry. Nevertheless, not without some misgiving, I am unable to conclude positively that [NAME_4] represented he would complete the subdivision at his own expense. I think he probably suppressed the costliness of the proposal, and put it in the most favourable light, but that is not the way the applicants' case has been

presented.

The fact that I have not been prepared to accept all of the applicants' evidence on some points, including this point, has led me to examine their evidence on other questions with care. However, it will be apparent that it has not led me to reject that evidence in respect of a number of critical matters, or, indeed, in respect of the substance of their account of the

development of the transaction.

Availability of work in the area

[NAME_5]'s evidence was that in the telephone conversation in early February 1984 [NAME_4], after referring to timber getting as something to be done while the cattle herd was being built up to a sufficient size, added: "If you ever get short of work, there 1s plenty of work up in the valley." He mentioned road making and slashing, and said that he would teach [NAME_5] how to do the work and lend him equipment he would

need.

72.

The applicants also relied on the evidence of [NAME_5] who described a telephone conversation, following her visit to the property, in which [NAME_4] said "that he had told [NAME_5] that there was other work available around the district, that would bring extra income to us, and that he would introduce [NAME_5] to people in the district and he would help

him as much as he could to obtain extra work."

[NAME_4] disputed this evidence. But in cross—-examination, after denying that [NAME_5] or [NAME_3] asked as to how much the farm would produce by way of income, or how much the expenses of running it were, he said: "I think [NAME_5]

did ask me, could he get work in the area?" [NAME_4] claimed

his reply was: "I more or less said if he could work, if he wanted work and he was willing to work, there would be work. ... I never said what work or what you had to do or anything." I

think it is unlikely that such an uninformative reply was given,

and I accept the evidence of [NAME_5] on this matter.

In fact, the evidence shows there was in 1984, as [NAME_22] said, "very little" work available in the area. What work there was, generally required skills which [NAME_5] could not be expected to have. [NAME_21], who had been raised on a dairy farm, and owned land at Thumb Creek between 1982 and 1985, said he did contract work in the area, but the work he was able to obtain "just sort of covered the cost of running the machinery". He said: "There was very little work around," and

gave as a reason for leaving the district at the end of 1985 that

73.

"there was no work in the district that I could see." [NAME_15], an agricultural worker who had lived all his life in the [NAME_8] area, said there was some work, though there were problems about getting paid, operating tractors in gullies and on ridges, which was dangerous work requiring experience in the

handling of tractors in that kind of country.

I am satisfied that the representation about the availability of work was quite misleading, and that [NAME_4], who had lived in the area about which he made the representation

for a considerable period, was well aware of the facts.

Nursery in Purgatory The applicants alleged that [NAME_4] represented that

part of the rainforest area was suitable for the establishment of a nursery. There is no doubt that [NAME_4] told them he had procured native plants, stag horns, etc., from that area, which he had sold to a nursery. He denies that he suggested the applicants would be able to establish a nursery in the Purgatory area. However, it seems to me not an unlikely thing to suggest, and if it had been suggested, I can see no evidence that the suggestion would have been false. The applicants do not claim that the representation extended to any particular size of nursery operation, and at most, the suggestion appears to have been that a nursery could be established as an adjunct to. the collection of plants growing naturally in the rainforest, which the evidence discloses [NAME_4] did, ona very small. scale, exploit commercially from time to time. He had last done so in 1980, and the most he had received for the plants he had collected was about $50.

74.

Agistment of horses on portion five

An allegation is pleaded that portion five was suited to the agistment of horses, but this allegation was not seriously pressed at the hearing. The area in question 1s the very area which was proposed to be subdivided and sold off. It follows that whether or not it was suitable for the agistment of horses was of little materiality. In fact, the evidence shows horses had been agisted there, though it was not particularly suitable for use in that way. When, some years earlier, [NAME_4] had contracted to provide agistment for a breeder of quarter horses during a drought affecting the breeder's own property at Scone, the river flats had been utilized almost exclusively for the

purpose.

[NAME_3] made it clear that at the time the agistment of horses on portion five was mentioned, she was not interested in that. [NAME_5]'s evidence was equally dismissive of the question; he quoted [NAME_4] as saying concerning portion five: "Well, that block across the road is not much good to you anyway. All it's good for is agisting horses. ... You make your main

money out of cattle and timber."

That the respondent would maintain the property until the

applicants took possession and that certain farm equipment would

be in good condition

There was certain farm equipment included in the sale, and there was evidence of various difficulties which [NAME_5]

encountered in attempting to operate the equipment. However, he

75.

was a [NAME_15] man, still in his twenties, who had grown up in the town of Geelong and was totally inexperienced in the conduct of a farm. I do not think any inference can fairly be drawn that the

equipment was not, when he took it over, in proper running order.

On the other hand, I am satisfied that when the applicants took over the farm it was in a state of very considerable neglect. The respondent denied this, and witnesses were called on both sides who gave completely different accounts of the condition of the farm at that time. I do not think it is necessary to say more than that I accept in substance the evidence of the applicants and their witnesses on this matter. It may be that the state of the farm is to be explained by reference to the respondent's absences in Queensland, or his illness in October, or frustration on his part at the continued delays in the progress of the transaction, or a combination of some or all of these factors. I think [NAME_3] probably exaggerated some details bearing on the extent of the neglect, but I accept the evidence of [NAME_5] concerning it, and I think it was in fact quite considerable. This matter does not warrant further discussion, having regard to the view I have taken concerning much more important representations, and the fact that the property was in any event incapable of sustaining a

viable farming operation.

I have next to consider the effect of my findings' that certain of the representations made by [NAME_4] were, to his knowledge, false. They were made for the purpose of inducing

[NAME_3] and [NAME_5] to enter into the transaction, and I

76.

conclude that they did in fact do so. I am assisted in reaching that conclusion by the principles which are discussed by Wilson

J. in Gould ov. vVaggelas (1985) 157 C.L.R. 215 at 237-9.

Accordingly I think the applicants are entitled to succeed upon their common law claim for deceit. The normal measure of damages on that basis would be the difference between the real value of the property at the time of the purchase and what the applicants

paid for it: Gould's case at 220, per Gibbs C.J.

It will be recalled that contracts were originally exchanged in June 1984. Oral agreement had been concluded somewhat earlier, but at any rate upon exchange there was a binding contract, notwithstanding that subsequently variations were agreed upon and a fresh form of written contract substituted. Evidence was given by [NAME_23], who impressed me as well qualified by great experience as an auctioneer, stock and station agent and real estate agent to give such evidence, and who said he had frequently been asked to give his opinion concerning values of properties and to provide valuations for the National Australia Bank and the ANZ Bank, that he inspected the property at the request of [NAME_5] on a date which he could not recall precisely but which I think was probably early in 1985. He thought the property was then worth $150,000, but having regard to the deterioration in property values in the area to which I have already referred, which he thought had taken place over the five or six months prior to his inspection of the property in question, he expressed the opinion that the property "may have been worth possibly $200,000 or something like that"

five or six months earlier. The respondent did not call any

77.

evidence to rebut [NAME_23]'s evidence concerning the true value of the property. In [NAME_16]'s file, which was tendered in evidence, there is a copy of a letter dated 18 February 1985 to [COMPANY_29], written on behalf of [NAME_4], which asserts that the value of the property was indicated by a valuer of [NAME_8] as "around $200,000". This certainly confirms that the value was much less than the price at which the property was sold. I accept the evidence of [NAME_23] and conclude that, at the time of the purchase, the true value of the property was $200,000 plus the value of the cattle and equipment which were included in the transaction. Almost all the cattle were in fact sold by [NAME_23] on behalf of [NAME_5] for a little over $20,000. On all the evidence, and taking into account the value of the equipment and of the few additional cattle, I conclude that the true value of what was purchased at the time of purchase was $240,000. By reason of the misrepresentations the applicants were induced to purchase that property in the name of [NAME_3] for $315,000, and to enter into a mortgage to secure the sum of $123,500 in order to complete the purchase. I think they have sustained damages in the sum of $75,000 together with the amount of any interest paid or payable pursuant to the terms of the

mortgage in respect of that sum of $75,000.

But the applicants also seek relief under s.87 of the

Trade Practices Act, and if they are entitled to relief under

that Act it seems to me it would be appropriate to exercise the power conferred by 6.87 so as to declare void the contract and the mortgage to the extent that they require payment of the sum

of $75,000 and any interest thereon, and to do so ab initio. It

78.

would then of course be inappropriate to award damages on the basis stated above and, in all the circumstances of this case, including the applicants' affirmation of the purchase and at the same time failure to take reasonable steps, such as by attempting to resell the property promptly at the appropriate price, to mitigate their loss, I do not think any further order of

compensation should be made.

It as therefore necessary to consider whether' the applicants are also entitled to succeed under the Trade Practices Act. The respondent not being a corporation, that Act is submitted by the applicants to be attracted, by virtue of its extended operation pursuant to s.6(3), in respect of his engaging in conduct to the extent to which the conduct involves the use of

telephonic services: see Smolonogov v. O'Brien (1982) 67 F.L.R.

311; O'Brien v. Smolonogov (1983) 53 A.L.R. 107 at 108. The

misrepresentations which I have' found established were all made by telephone, though there were repetitions in face to face interviews. Those repetitions are of course available under the common law count, and are of evidentiary value in respect of the question whether the statements by telephone were in fact made. In such a case, subsequent statements may also bear on whether or not a misrepresentation has been qualified or corrected, and whether it has continued to have an operative influence. I do not think it can be right to say, however, certainly in the circumstances of this case, that the repetition of a misrepresentation deprives the original misrepresentation of its effect and substitutes that of the later one. Both may continue

to operate, one being simply reinforced by the other.

79.

In [NAME_30] v. [NAME_17] (supra), a similar situation

arose. A transaction of purchase was initiated by a telephone conversation, in which misleading statements were made, but no decision to buy was made until the purchaser had seen the vendor personally at his home, when there was a repetition of what had

been said on the telephone. Ellicott J. at 325 said:

"The question which arises is whether in these circumstances the telephone conversation can be said to have induced or caused the applicants to enter into the contract. In my opinion, on the facts of this case, the telephone conversation was part of a course of conduct embarked on by the respondents to dispose of their land at Jindabyne. That conduct included placing the advertisement in the [NAME_31] inviting people to ring, holding the consequent telephone conversation and personal conversation at the respondent's home and attending the respondent's solicitor's office at the same time as_ the applicants the next morning to have the contract prepared and signed and the deposit paid.

In such circumstances it may not be possible to say of any particular aspect of the conduct that it alone induced the contract. Because the telephone conversation was, in the events which happened, an integral part of what took place, I think it is proper to conclude that the contract was induced by the respondents' false or misleading statements during the telephone conversation, albeit in conjunction with the advertisement and the conversations at the respondent's home."

Ellicott J. regarded the effect of the telephone conversation as in that case persisting through the succeeding events, and I take the same view in the present case. Although the judgment of Ellicott J. was overruled on appeal, that was ona different

issue.

80.

But the decision on appeal in [NAME_17] v. [NAME_30]

(supra) was the foundation of a submission, which [NAME_10] made, that the misleading conduct I have found established was not engaged in by the respondent "in trade or commerce" within the meaning of ss.52 and 53A of the Trade Practices Act. In that case, the [ADDRESS] applied certain American decisions in which the view has been taken that a private sale of property by an individual is not conduct in trade or commerce unless it is done in the course of a business activity, or otherwise arises in what

has been described as a business context.

However, in applying the American decisions, the joint

judgment of the [ADDRESS] noted (at 113):

"The land itself was not used for any business activity: it was not used for farming or grazing."

The judgment then continued:

"It follows, in our opinion, that the only possible feature of the case which could conceivably be relied upon to suggest that the impuqned conduct occurred in trade or commerce was the resort by the appellants to a newspaper as a medium of public advertisement of the land and the use made by the parties of the telephone for the purpose of conducting negotiations. It is true, as the learned judge observed, that the use of such facilities is common practice in the conduct of trade or commerce. ... But, in our view, the mere use, by a person not acting in the course of carrying on a business, of facilities commonly employed in commercial transactions, cannot transform a dealing which lacks any business' character into something done in trade or commerce. ... The conduct complained of was not something done by the appellants in the course of carrying on a business and it lacked trading or commercial character aS a transaction. It thus fell outside the scope of s.53A."

81.

In Bevanere Pty Ltd v. Lubidineuse (1985) 7 F.C.R. 324,

a case arose which was on the other side of the line. There, misleading statements were made by the vendor of a beauty clinic business. On the appeal, the submission was pressed that the conduct had not occurred in trade or commerce, but during the sale of a capital asset. [ADDRESS] rejected this submission in a joint judgment, holding that the sale of the clinic was "part and parcel of the totality of the appellant's activities in trade or commerce." At 331 the joint judgment distinguishes the judgment of the Court which decided [NAME_17]'s case, observing:

"The court was careful to point out that' the

land which was sold in that case was not used

for any business activity. Nothing was. said

in [NAME_17]'s case that lends support to the

proposition that the sale of a capital item

used for business purposes will not

constitute conduct in trade or commerce

unless it forms part of a business of buying or selling such capital assets."

The joint judgment refers to the wide meaning given to the terms

"trade" and "commerce" in Re Ku-ring-gai Co-operative Building

Society (No 12) Ltd (1978) 22 A.L.R. 621, and points out at 332:

"(I)t by no means followed from the appellant's sale of the beauty clinic in the Strand Arcade that it would not engage in other commercial activities elsewhere. It is not uncommon for a corporation to acquire and dispose of businesses during the course of 1ts corporate life and we see no sound reason for excluding an obviously commercial transaction from a corporation's conduct in trade or commerce merely because the transaction is the sale of the corporation's principal, or sole, business undertaking."

82.

It may be commented that, similarly, a farmer, other than a hobby farmer or a peasant farmer, commonly carries on business activities which he transfers from farm to farm over the course of the pursuit of his farming. In the present case, [NAME_4] dealt commercially in horses upon a farm near Wyong from which he moved to the property in question at Thumb Creek, and, after the sale the subject of these proceedings, he removed farming equipment, which was not included in the sale, to another property near Tamworth where he has continued to deal commercially in horses. It is true that during the long interval at Thumb Creek he engaged in other activities, such as cattle breeding and some non-farming activities, but his evidence makes it clear that at all times he also bred some horses, even if only in small numbers, for sale as part of his farming business. In any event, the continuity of farming activities does not depend on the breeding of a particular kind of animal; commercial operations were pursued systematically, if not on a large scale, on a succession of farms in the course of the conduct of which

the subject property was acquired and later disposed of.

There can, of course, be no doubt that the products of a

farm may be the subject of trade and commerce (see O'Sullivan v.

Noarlunga Meat Limited (1954) 92 C.L.R. 565 at 596, per Fullagar

J.), and I do not think a narrow construction should be adopted which excludes from trade and commerce the dealings with those very commodities by the farmers who produce them. Having produced them, they deal with them in the same manner, relevantly, as do other persons who deal with them in trade and

commerce thereafter. It is true that production and

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manufacturing may be distinguished from commerce, as is pointed out in the joint judgment of Dixon C.J., McTiernan, Webb and

Kitto JJ. in Grannall ov. [COMPANY_35] (1955) 93 C.L.R. 55 at 77-8 where, however, a citation is made from a judgment of Rutledge J. of the Supreme Court of the United States which emphasizes the "economic continuity" between the former and the latter. But no one suggests that a manufacturer may not be subject, in relation to a sale of his

manufactured goods, to the provisions of s.52 of the Trade

Practices Act, simply because he is a manufacturer, and I see no reason why a primary producer is not ina precisely similar position with regard to a sale of the goods he produces. If that is so, the reasoning of the [ADDRESS] in [NAME_1]'s case seems to me to demand that a sale of the capital asset, by virtue of the ownership of which the primary producer has been carrying on

his business, may also be a transaction in trade and commerce.

In the decision of the [ADDRESS] in the Ku-ring-gai case (supra) and in the recent decision of French J. in Orison

Pty Ltd v. Strategic Minerals Corporation NL (1987) 77 A.L.R. 141

at 157-8 a very wide ambit has been given to the expression "in

trade or commerce". See also Patrick v. Steel Mains Pty Ltd

(1987) 77 A.L.R. 133 at 136.

In the Ku-ring-gai case at 624-5 Bowen C.J. said:

"The terms 'trade' and 'commerce' are ordinary terms which describe all the mutual communings, the negotiations verbal and by correspondence, the bargain, the transport and the delivery which comprise commercial arrangements ... . The word 'trade' is used with its accepted English meaning: traffic

84.

by way of sale commercial

dealing ... ."

of exchange or

At 648-9 Deane J. said:

"If the scope of the phrase 'trade Or commerce' in s 47 of the Act were restricted to ordinary trading and commercial activities in open markets, there would plainly be a

great deal to be said for the applicants' submission that their lending to their members is not in such trade or commerce. The phrase cannot, however, in my view

properly be regarded as so restricted.

The terms 'trade' and terms of art. They

'commerce' are not are expressions of fact and terms of common' knowledge. While the particular instances that may fall within them will depend upon the varying phases of development of trade, commerce and commercial communication, the terms are clearly of the widest import: see, generally, [COMPANY_36] v. State of Queensland (1920) 28 CLR' 530

at 546ff; Bank of New South Wales ve Commonwealth (1948) 76 CLR JI at 284ff and 361f£. They are not restricted to dealings

or communications

described as being sense that they between strangers

objective of profit-making.

include commercial finance between a which are ordinary

while being marked by a degree

compatible with a profit-making.

conclusion that,

which

are within

or business company and its

not within the commercial commercial in

can properly be at arms length in the open markets. or or have a dominant They are apt to dealings in members mainstream of activities and which, character, are

of altruism which is not

dominant objective of

I have already expressed the

notwithstanding the

particular nature of the applicants and the

particular their lending

character

of their activities,

to their members are commercial or business dealings in finance.

In my view,

that lending 1s, for the purposes of s 47 of the Act, in trade or commerce."

In the Ku-ring-gai case the majority considered that the

provision, not for a profit but as a social service, of loans

to

members restricted to persons within a low income range, pursuant

to legislative provisions and

utilizing funds made available

by

hn

85.

governmental intervention, was nevertheless an operation which could be said to be carried on in trade or commerce. It seems to me that it would not be consistent with this wide meaning of the

phrase to exclude the operations of farmers.

For these reasons, I hold that the applicants have also

made out their case under s.52 of the Trade Practices Act. Upon

appropriate short minutes being brought in, I shall make an order

in the terms I have already indicated.

I certify that this and the preceding eighty-four (84) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett.

Awe dude Associate

Dated: 28 July 1988.

Counsel for the Applicants: [redacted] Solicitors for the Applicants: [redacted] Counsel for the Respondent: [redacted] Solicitors for the Respondent: [redacted] Dates of hearing: 9,10,11 July 1986

7, 27 August 1986 10,11,12,13,14 November

2,3,4,5,6,9,10,11 March 27,28,29,30 April 1987

1 May 1987

9,12,16 June 1987