FEDERAL COURT OF AUSTRALIA Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189 COURTS AND JUDICIAL SYSTEM – appeal – judgment at first instance delivered 22 months after appellant's witnesses gave evidence – judgment reserved for 17 months –excessive delay – duty of trial judge in those circumstances to give more comprehensive reasons – obligation to show that delay had not affected decision – appellate court required to take delay into account when reviewing findings – primary judge's reasons inadequate in several material respects – no findings in relation to alternative causes of action – re-trial ordered. Trade Practices Act 1974 (Cth), ss 82, 87 Fair Trading Act 1989 (Qld) ss 99, 100 Fox v Percy (2003) 197 ALR 201 applied Boodhoo v Attorney-General of Trinidad and Tobago [2004] 1 WLR 1689 referred to State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306 referred to Bartlem Pty Ltd Cox Industries (Australia) Pty Ltd [2002] FCAFC 224 referred to Hadid v Redpath [2001] NSWCA 416 applied R v Maxwell (unreported, New South Wales Court of Criminal Appeal, Spigelman CJ, Sperling and Hidden JJ, 23 December 1998) applied Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149 referred to NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 1 referred to Goose v Wilson Sandford & Co (unreported, England and Wales Court of Appeal (Civil Division), Gibson, Brooke, Mummery LJ, 13 February 1998) applied Eckersley v Binnie (1988) 18 ConLR 1 applied Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 applied Customs and Excise Commissioner v A [2003] 2 All ER 736 referred to Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 referred to Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 referred to Mifsud v Campbell (1991) 21 NSWLR 725 referred to Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 referred to Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980-1981) 146 CLR 336 referred to Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 referred to Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462 referred to Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48 referred to Henville v Walker (2001) 206 CLR 459 referred to I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 referred to John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR 41-249 referred to Bowler v Hilda Pty Ltd (1998) 80 FCR 191 referred to Heydon v NRMA Ltd (2000) 51 NSWLR 1 referred to Breen v Williams (1995-1996) 186 CLR 71 referred to Pilmer v Duke Group Ltd (in Liq) (2001) 207 CLR 165 Hospital Products Ltd v Unites States Surgical Corporation (1984) 156 CLR 41 referred to Maguire v Makaronis (1996-1997) 188 CLR 449 referred to Daly v Sydney Stock Exchange Ltd (1985-1986) 160 CLR 371 referred to McKenzie v McDonald [1927] VLR 134 referred to Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 referred to Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 referred to Blackwell v Barroile Pty Ltd (1994) 51 FCR 348 referred to Layton v Stewart [1994] ANZ Convenience R 283 referred to Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 referred to Clark Boyce v Mouat [1994] 1 AC 428 referred to Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 referred to Bristol and West Building Society v Mothew (C.A.) [1998] Ch 1 referred to Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 referred to Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 referred to Brickenden v London Loan & Savings Co [1934] 3 DLR 465 referred to Holmes v Jones (1907) 4 CLR 1692 referred to Potts v Miller (1940) 64 CLR 282 referred to Toteff v Antonas (1952) 87 CLR 647 referred to Gould v Vaggelas (1983-1985) 157 CLR 215 referred to Marks v GIO Australia Holdings (1998) 196 CLR 494 referred to Gates v City Mutual Life Assurance Society Ltd (1985-1986) 160 CLR 1 referred to Kizbeau Pty Ltd v W G & B Pty Ltd (1985) 184 CLR 281 referred to Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 referred to Murphy v Overton Investments Pty Ltd (2004) 204 ALR 26 referred to Manwelland Pty Ltd v Dames & Moore Pty Ltd (2001) ATPR 41-845 distinguished Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271 doubted EXPECTATIONS PTY LTD v PRD REALTY PTY LTD and GORDON DOUGLAS Q164 of 2003 CARR, EMMETT & GYLES JJ 28 JULY 2004 PERTH (Heard in Brisbane) IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q164 OF 2003 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: EXPECTATION PTY LTD (ACN 009 030 102) APPLICANT AND: PRD REALTY PTY LTD (ACN 009 954 956) FIRST RESPONDENT GORDON DOUGLAS SECOND RESPONDENT JUDGES: CARR, EMMETT & GYLES JJ DATE OF ORDER: 28 JULY 2004 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The appeal be allowed in part. 2. Orders 1 and 2 made on 9 October 2003 be set aside and in lieu thereof there be substituted the following orders: '1 The proceeding be dismissed so far as concerns: (a) all claims for relief as against the third respondent, and (b) all claims for relief as against the first and second respondents related to the purchase by the applicant of the shopping centre property known as 'Broadway on the Mall'. 2 The applicant pay the first and second respondents' costs of the part of the proceeding referred to in paragraph 1(b), save and except the costs of the first and second respondents in relation to the issue of an agreement of compromise, on a party and party basis.' 3. There be a new trial of the remaining issues in the proceeding before a different judge. 4. The question of the costs of the trial of the balance of the proceeding at first instance await the outcome of the new trial and be reserved for decision by the judge hearing that trial. 5. The first and second respondents pay 60 per cent of the appellant's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q164 OF 2003 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: EXPECTATION PTY LTD (ACN 009 030 102) APPLICANT AND: PRD REALTY PTY LTD (ACN 009 954 956) FIRST RESPONDENT GORDON DOUGLAS SECOND RESPONDENT JUDGES: CARR, EMMETT & GYLES JJ DATE: 28 JULY 2004 PLACE: BRISBANE REASONS FOR JUDGMENT THE COURT 2 INTRODUCTION 2 FACTUAL BACKGROUND 4 THE BENOWA CENTRE 6 THE BROADWAY CENTRE 8 EXPECTATION'S PLEADED CLAIMS 8 THE RELATIONSHIP BETWEEN PRD AND EXPECTATION 8 Contract Terms 8 Common Law Duty Of Care 9 BREACH OF DUTY OF CARE AND BREACH OF CONTRACT (BENOWA) 10 MISLEADING AND DECEPTIVE CONDUCT (BENOWA) 13 BREACH OF FIDUCIARY DUTY (BENOWA) 13 THE BROADWAY CENTRE 14 THE DECISION OF THE PRIMARY JUDGE 16 THE BENOWA CENTRE 16 THE BROADWAY CENTRE 17 THE ISSUES ON APPEAL 18 DELAY IN HEARING AND DETERMINING EXPECTATION'S CLAIMS 18 EXPECTATION'S COMPLAINTS 18 APPLICABLE PRINCIPLES 20 ISSUES CONCERNING THE BENOWA CENTRE 25 FINDING OF NO LOSS 26 THE 8 PER CENT GROWTH REPRESENTATION 29 THE URGENCY REPRESENTATIONS 47 THE SPECIALTY RENT REPRESENTATIONS 51 FAILURE TO DISCLOSE RELEVANT FACTS 55 CONTRACT AND TORT CLAIMS 58 BREACH OF FIDUCIARY DUTY 61 DAMAGES 80 MR DOUGLAS 85 CONCLUSION AS TO BENOWA CENTRE 85 ISSUES CONCERNING THE BROADWAY CENTRE 85 THE FINDINGS OF THE PRIMARY JUDGE 86 THE EVIDENCE 88 WAS THERE MISLEADING CONDUCT? 104 NEGLIGENCE AND BREACH OF THE CONTRACT TERMS 108 CONCLUSION AS TO BROADWAY CENTRE 108 DISPOSITION OF THE APPEAL 109 THE COURT: INTRODUCTION 1 The first respondent, PRD Realty Pty Limited ('PRD'), was at relevant times a real estate agent carrying on business in and around Brisbane and the Gold Coast in Queensland. In 1992, the appellant, Expectation Pty Limited ('Expectation'), retained PRD to advise it and act on its behalf in connection with proposed investments in real estate. The retainer occurred as a consequence of discussions between the second respondent, Mr Gordon Douglas, who is a director of PRD, and Mr Daniel Martin Hill, a director of Expectation. 2 In a proceeding commenced in the Court, Expectation claimed damages pursuant to s 82 of the Trade Practices Act 1974 and s 99 of the Fair Trading Act 1989 (Qld) (together 'the Consumer Legislation'), together with orders pursuant to s 87 of the Trade Practices Act and s 100 of the Fair Trading Act. Alternatively, Expectation claimed damages for negligence, breach of fiduciary duty and breach of contract. Its claims were made against PRD and Mr Douglas in relation to agreements entered into by Expectation for the purchase by Expectation of the Benowa Gardens Shopping Centre, situated on the corner of Ashmore Road and Benowa Road, the Gold Coast ('the Benowa Centre') and the Broadway on the Mall Shopping Complex, situated in Queen Street, Brisbane ('the Broadway Centre'). 3 Expectation made separate and independent claims in respect of the Benowa Centre and the Broadway Centre. However, both claims were founded upon the relationship that existed between Expectation and PRD. Thus, Expectation and PRD were parties to an agreement that was entered into in 1992 and varied in 1993. By that agreement, PRD agreed to act for Expectation in locating investments, investigating and evaluating those investments and then making recommendations as to purchase of such investments. Expectation also asserted that, by reason of various facts, PRD and Mr Douglas were in a relationship of proximity to Expectation, such that each of them was under a duty to Expectation to take reasonable care in proffering advice to Expectation. 4 In addition, Expectation alleged that, in connection with the entry by Expectation into the agreement to buy the Benowa Centre, PRD and Mr Douglas engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of the Consumer Legislation. Expectation also asserted that, by that conduct, it acted in breach of the agreement between them and in breach of the duty to take reasonable care in proffering advice in connection with the proposed purchase. Finally, Expectation asserted that the relationship between it and PRD was such as to give rise to fiduciary duties on the part of PRD and that PRD acted in breach of those duties in connection with the purchase of the Benowa Centre. 5 Expectation also asserted that, in relation to its entry into the agreement to buy the Broadway Centre, PRD engaged in conduct in contravention of the Consumer Legislation and acted in breach of its obligations under the agreement between them and of its duty to take reasonable care in the proffering of advice in connection with the proposed purchase. 6 On 9 October 2003, a judge of the Court ordered that the proceeding be dismissed and ordered Expectation to pay the costs of PRD and Mr Douglas. His Honour ordered Expectation to pay those costs after 19 September 1999 on the basis that all costs of PRD and Mr Douglas be paid by Expectation except in so far as they were of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, PRD and Mr Douglas would be completely indemnified by Expectation for their costs after that date (Expectation Pty Ltd v PRD Realty Pty Ltd [2003] FCA 175; Expectation Pty Ltd v PRD Realty Pty Ltd [2003] FCA 1086). 7 Expectation now appeals from those orders. 8 There is no need, for the purposes of this appeal, to refer to the proceeding at first instance between Expectation and a Mr John Hammond. Mr Hammond was joined as third respondent because, in their defence, PRD and Mr Douglas pleaded a compromise agreement in which Mr Hammond was involved. The appeal is not concerned with that aspect of the proceeding. FACTUAL BACKGROUND 9 The central representative of Expectation was Mr Hill. Mr Hill lives in Monaco. The events with which this proceeding is concerned took place over ten years ago, starting in late 1992. 10 Mr Hill, who had previously lived in Australia, returned to this country, in particular to Queensland, on 15 December 1992. He became re-acquainted with Mr Douglas who took him on a tour of Gold Coast properties over a number of days. Mr Douglas told Mr Hill that real estate was 'the way to go'. Mr Hill became very interested in engaging in property development through Mr Douglas and PRD as a result of his conversations with Mr Douglas and the tour which he had been given of the Gold Coast property market. 11 PRD, through Mr Douglas, agreed with Expectation, through Mr Hill, that PRD would act for Expectation in locating investments, investigating and evaluating those investments and then making recommendations whether to purchase. The arrangement was that, if Expectation decided to accept any particular recommendation, then PRD and Mr Douglas would be involved in the negotiations for those purchases. 12 Mr Hill left Australia on 13 January 1993. 13 In March 1993, Mr Douglas recommended to Mr Hill that Expectation should purchase a broad acre subdivision known as Chancellor Park. Shortly before Mr Douglas' recommendation about Chancellor Park, he had referred Mr Hill to Mr Anthony William Hickey, a Gold Coast solicitor. In response to Mr Douglas' recommendation, Mr Hill told him that he wanted Mr Anderson, an accountant in whom Mr Hill had confidence, to carry out due diligence inquiries on that project and that he wanted Mr Hickey to do all the legal work. 14 On 24 May 1993, Expectation entered into a joint venture agreement whereby it acquired a two-thirds interest in the Chancellor Park project. PRD was the vendor's agent in that transaction. The purchase was settled on 11 June 1993 and PRD was paid commission of $100,450 by the vendor. Mr Douglas and Mr Hickey were appointed by Expectation to represent it at management committee meetings of the joint venturers. PRD was appointed as project manager and selling agent. 15 At about the same time, Mr Douglas recommended to Mr Hill that he purchase a further property, known as Canterbury Downs. That was also a broad acre subdivision. Expectation purchased Canterbury Downs for a price of $3.5 million, with settlement taking place on 1 July 1993. The vendor paid PRD commission on the purchase. Expectation subsequently appointed PRD as the sales agent for the Canterbury Downs estate and PRD earned commissions from the subsequent sales of allotments in a subdivision of the property. 16 In July 1993, Mr Douglas recommended to Mr Hill the purchase of a house block at Mermaid Beach for approximately $1 million. Mr Hill purchased the block. 17 During this time, Mr Hill kept in telephone contact with Mr Douglas and also with Mr John Langford. Mr Langford was employed by PRD in relation to commercial and retail property transactions. He was general manager of PRD's Gold Coast office. Through Mr Langford, PRD set about finding, investigating and evaluating further commercial property investments for Expectation. Properties considered included the Optus Centre in Sydney and an Australian Taxation Office building in Brisbane. 18 In one telephone conversation, Mr Hill told Mr Douglas that his former wife, Ms Daisy Hill had about $7 million, which needed to be invested in a stable, well-yielding, commercial investment. He said that she would lend the money to Expectation to enable it to make the purchase on trust for the Daisy Hill Family Trust ('the Trust') and Expectation would need to borrow the remainder. On 27 July 1993, Mr Douglas informed Mr Langford that Mr Hill was seeking a commercial property for Daisy Hill at a price of between $10 million and $13 million. THE BENOWA CENTRE 19 The Benowa Centre had opened for trading on 30 September 1992. PRD acted as the leasing agent for the Benowa Centre and also acted as centre manager from the date of the opening. 20 On 21 June 1993, Benoco Pty Limited ('Benoco'), the owner of the Benowa Centre, decided to put the Benowa Centre on the market, initially by way of inviting expressions of interest. Benoco appointed PRD as agent for the sale of the Benowa Centre. Benowa was granted a sole agency for a limited period expiring initially on 31 December 1993, which was extended to 15 February 1994. The individual agent handling the transaction on behalf of PRD was Mr Bradley Johnston. 21 On 22 November 1993, Mr Hill returned to Queensland. On Friday, 26 November 1993, he inspected the Benowa Centre with Mr Douglas and Mr Kenneth Cooney, who was in charge of PRD's shopping centre management activities. Mr Cooney was very experienced in retail shopping centres, having previously been the manager of a large and successful shopping centre on the Gold Coast. 22 Part of Expectation's case was that during the inspection of the Benowa Centre, Mr Cooney, with the agreement of Mr Douglas, orally represented to Mr Hill that: * the rentals that could be demanded from tenants of specialty shops at the Benowa Centre had good growth prospects, and this would result in at least an 8 per cent growth in net income from the Benowa Centre per year; * the tenants of specialty shops in the Benowa Centre were paying not more than an appropriate market rent; and * the value of the Benowa Centre was at least $15 million. 23 Expectation also claimed that on a number of occasions at or around this time, Mr Douglas represented to Mr Hill that there was an urgent need for Expectation to make an offer in view of the fact that: · there were other interested purchasers who were in a position to make, or who had made, an offer for the Benowa Centre; · Benoco would not consider any form of conditional contract; and · Expectation would have to offer $15 million cash to secure the purchase of the Benowa Centre. 24 At some time after 26 November 1993, Mr Hill instructed Mr Hickey to convey to Benoco an expression of interest on Expectation's part in Benowa Gardens at $14.1 million. Mr Hickey did that and, on 3 December 1993, Expectation executed a contract to purchase the Benowa Centre for $15 million, with a deposit of $100,000. Benoco executed the contract of sale on 8 December 1993. 25 On 15 December 1993, Expectation, through Mr Hickey, applied for finance from Australia and New Zealand Banking Group Limited ('ANZ Bank') in respect of the Benowa Centre purchase. On the same day Mr Hickey retained a valuer, Mr Lloyd Parsons, of HTW Valuers (Gold Coast) Pty Limited ('HTW'), to value the Benowa Centre. Mr Parsons valued the Benowa Centre at $15 million. 26 On 25 January 1994, ANZ Bank retained Richard Ellis (Queensland) Holdings Pty Limited ('Richard Ellis'), real estate agents, to value the Benowa Centre. On 27 January 1994, Mr Brian Cox of Richard Ellis provided a valuation of the Benowa Centre in the sum of $12.5 million. 27 On 28 January 1994, Mr Parsons sent a report to Mr Hickey about the Richard Ellis valuation. In that report he described the capitalisation rate of 13 per cent adopted by Richard Ellis as 'unrealistic'. On the same day Mr Cooney sent Mr Hickey his written comments, which were also highly critical of the Richard Ellis valuation. 28 Settlement of the contract for the purchase of the Benowa Centre took place on 7 February 1994. Subsequently, in December 1997 Expectation sold the Benowa Centre for $13.6 million, being $1.4 million less than it had paid for it. THE BROADWAY CENTRE 29 Mr Richard Barber of Price Waterhouse ('the Receiver'), who was the receiver and manager of Queen Street Mall Limited, the owner of the Broadway Centre ('the Broadway Vendor'), sent to Mr Colin Peet of PRD a letter dated 6 January 1994 ('the Covering Letter'). Enclosed with the Covering Letter were nine pages of schedules consisting of budgets and forecasts in relation to the Broadway Centre ('the Schedules'). The Covering Letter stated that the contents of the Schedules were not audited and that Price Waterhouse took no responsibility for, nor warranted the accuracy or reliability of, the Schedules. 30 On 9 January 1994, Mr Hill inspected the Broadway Centre with Messrs Douglas and Cooney. In the course of the inspection there were discussions concerning the income from the Broadway Centre. A copy of the Schedules was given to Mr Hill. Expectation claimed that, by giving Mr Hill the Schedules and by certain statements made in the course of the inspection, PRD and Mr Douglas represented to Mr Hill that the income of the Broadway Centre was $2.45 million. Expectation claimed that, in reliance on that representation, it agreed to buy the Broadway Centre for $31.5 million and paid a non-refundable deposit of $100,000 and thereafter incurred expenses in investigation of the Broadway Centre. That investigation showed that the income was substantially less than $2.45 million and, accordingly, Expectation terminated the contract and the deposit of $100,000 was forfeited and the investigation expenses were lost. EXPECTATION'S PLEADED CLAIMS THE RELATIONSHIP BETWEEN PRD AND EXPECTATION Contract Terms 31 Expectation asserted, in its second further amended statement of claim ('the Statement of Claim'), that, as from 16 July 1993, there was an agreement in force between Expectation and PRD that PRD would act as Expectation's purchasing agent in respect of commercial properties ('the 1993 Appointment'). Expectation asserted that the terms of the 1993 Appointment included the following ('the Contract Terms'): (i) PRD would act as exclusive purchasing agent for Expectation, would locate properties for investment, would investigate each such investment opportunity and would make recommendations to Expectation as to the purchase or otherwise of the property. (ii) When instructed to do so, PRD would negotiate the purchase of the identified property as the agent of Expectation. (iii) PRD would be remunerated by the payment of a commission. In circumstances where PRD did not have the listing for the commercial property, Expectation would pay to PRD a commission of 2.5 per cent calculated on the purchase price. (iv) PRD would exercise due care and skill in the performance of the obligations stated above. (v) PRD would act honestly and in the best interests of Expectation. Common Law Duty Of Care 32 Expectation also asserted in the Statement of Claim that PRD and Mr Douglas were in a relationship of proximity to Expectation arising from the following facts: (i) In about November 1992 Expectation appointed PRD to advise Expectation in relation to possible real estate investments and to act as the agent for Expectation in relation to the investigation, negotiations for, and purchase of such real estate investments. (ii) Pursuant to that appointment, PRD, by and through Mr Douglas, located, recommended and negotiated the purchase of a number of parcels of land for Expectation in May 1993 (Chancellor Park) and July 1993 (Canterbury Downs) and for Mr Hill in July 1993 (Mermaid Beach). (iii) On or about 16 July 1993 Expectation and PRD entered into the 1993 Appointment. (iv) Between July and November 1993 Expectation advised PRD that it wished PRD to investigate and recommend to Expectation the purchase of a retail shopping centre suitable for investment by Expectation. (v) Mr Douglas knew that Mr Hill and Expectation relied on him for advice in relation to land purchases in general and that Expectation was likely to follow, and act on, that advice. (vi) The knowledge of Mr Douglas was the knowledge of PRD. 33 Expectation claimed in substance that, by reason of that relationship of proximity, each of PRD and Mr Douglas was under a duty to Expectation to take reasonable care in proffering advice in relation to the proposed purchase of any shopping centre. BREACH OF DUTY OF CARE AND BREACH OF CONTRACT (BENOWA) 34 Expectation made the following allegations in relation to the Benowa Centre: (i) In November and December 1993 PRD was acting as managing agent of the Benowa Centre. (ii) Between 22 November and 2 December 1993 PRD recommended to Expectation that it make an unconditional offer to purchase the Benowa Centre for $15 million and informed Expectation that Benoco would not, in Mr Douglas's view, accept anything less than an unconditional offer at the asking price of $15 million ('the Recommendation'). (iii) By making the Recommendation, PRD impliedly made the following representations ('the Implied Representations'): (a) the Benowa Centre had a value of at least $15 million; (b) PRD and Mr Douglas had reasonable grounds for holding and expressing the opinion that the value of the Benowa Centre was $15 million; (c) PRD and Mr Douglas had valid and honest grounds for holding the stated view that Benoco would not accept anything less than an unconditional offer at $15 million. (iv) Between 22 November and 2 December 1993 PRD made the following representations ('the Express Representations') to Expectation: (a) the rentals that could be demanded from tenants of specialty shops in the Benowa Centre had good 'prospects' and this would result in at least an 8 per cent growth in net income from the Benowa Centre per year ('the 8 per cent Growth Representation'). (b) there was an urgent need for Expectation to make an offer ('the Urgency Representation'); (c) the tenants of specialty shops in the Benowa Centre were paying not more than an appropriate market rent ('the Specialty Rent Representation'); (d) Benoco would not consider any form of conditional contract; (e) Expectation would have to offer $15 million cash to secure the purchase of the Benowa Centre. (f) the value of the Benowa Centre was at least $15 million; 35 There is a degree of overlap between the Implied Representations and the Express Representations. Thus, representations (iii)(a) and (iv)(f) are to the same effect. Representation (iii)(b) is clearly related to those representations. It is convenient to refer to all three as 'the Value Representations'. Further, representation (iii)(c) clearly overlaps with representations (iv)(d) and (iv)(e). It is convenient to refer to those as 'the Unconditional Price Representations'. 36 Thus, the representations alleged, both express and implied, may be summarised as follows: * the 8 per cent Growth Representation; * the Urgency Representation; * the Specialty Rent Representation; * the Value Representations; * the Unconditional Price Representations. 37 Expectation claimed that in proffering advice in relation to the proposed purchase of the Benowa Centre, PRD and Mr Douglas were under a duty to take care, before PRD and Mr Douglas advised the purchase of the Benowa Centre, that: (i) adequate enquiry was made into the value of the Benowa Centre; (ii) disclosure of all relevant information affecting the value of the Benowa Centre was made; (iii) adequate inquiry and disclosure of all relevant information was made as to the market rent of the specialty shops and the likely or sustainable rate of income growth of the Benowa Centre. Expectation asserted that PRD and Mr Douglas made the Recommendation, the Express Representations and the Implied Representations in breach of that duty to take care, in that the Recommendation, the Express Representations and the Implied Representations were made without: (i) making any or any adequate enquiry as to the value of the Benowa Centre; (ii) making any or any adequate enquiry or assessment as to the market rent of the specialty shops in the Benowa Centre; (iii) making any or any adequate enquiry as to the likely rate of income growth from the Benowa Centre in ensuing years; (iv) having any or any adequate regard to the interests of Expectation; (v) taking any adequate steps to disclose all relevant information affecting the value of the Benowa Centre prior to advising its purchase. 38 Expectation asserted that, on or about 8 December 1993, in reliance upon the Recommendation, the Implied Representations and the Express Representations, Expectation entered into an unconditional contract in writing to purchase the Benowa Centre for $15 million and on or about 7 February 1994 settled that contract and paid the purchase price of $15 million to Benoco. Expectation claimed that it suffered loss and damage in consequence, in that Expectation purchased the Benowa Centre for $15 million when its true value was $12.05 million or thereabouts. 39 Expectation also asserted that PRD acted in breach of the Contract Terms by: (i) making the Recommendation, the Express Representations and the Implied Representations negligently; (ii) failing to disclose to Expectation the following facts ('the Relevant Facts'): (a) on or about 29 July 1993 PRD and Benoco agreed a sliding scale of commission; (b) in August 1993 PRD sought a sole agency in respect of the sale of the Benowa Centre; (c) on 25 October 1993 PRD was formally appointed as Benoco's sole agent for the sale of the Benowa Centre; (d) Benoco directed PRD to keep marketing information confidential from prospective purchasers; (e) no other person had expressed an interest in the Benowa Centre at $15 million; (f) the opinion of PRD and Mr Douglas was that the asking price for the Benowa Centre of $15 million was a disadvantage to its sale; (g) the value of the Benowa Centre was no more than $12.05 million; (h) rents payable by tenants of specialty shops in the Benowa Centre were significantly higher than the appropriate market rent; (i) Benoco was prepared to consider a contract that was not unconditional and at a price less than $15 million; (j) none of the other persons who had expressed any interest in the Benowa Centre was in a position to make or had made an offer for the Benowa Centre that was capable of acceptance; (iii) Mr Douglas's stating, in or about November 1993, that he agreed with a statement made in or about November 1993 by Mr Cooney to Mr Hill ('the 8 Per Cent Statement') that an 8 per cent growth in net income per annum would be achieved from the Benowa Centre. 40 Expectation claimed that it suffered loss and damage as a consequence of that breach in that it purchased the Benowa Centre for $15 million when its true value was $12.05 million or thereabouts. MISLEADING AND DECEPTIVE CONDUCT (BENOWA) 41 Expectation also alleged that, by making the Implied Representations and the Express Representations and by failing to disclose the Relevant Facts, PRD and Mr Douglas engaged in conduct in contravention of the Consumer Legislation. It asserted that, in reliance upon that conduct, it entered into the agreement to buy the Benowa Centre for $15 million on or about 8 December 1993 and settled that agreement and paid the purchase price of $15 million to Benoco on or about 7 February 1994. It claimed that it has suffered loss and damage by the conduct in that the true value of the Benowa Centre was $12.05 million or thereabouts. BREACH OF FIDUCIARY DUTY (BENOWA) 42 Finally, Expectation asserted in relation to the Benowa Centre that, since: * at all material times PRD acted as managing agent of the Benowa Centre, * Expectation and PRD were parties to the 1993 Appointment containing the Contract Terms, and · pursuant to the earlier arrangement between them, PRD had located, recommended and negotiated the purchase of the land at Chancellor Park and at Canterbury Downs for Expectation and at Mermaid Beach for Mr Hill, PRD and Mr Douglas at all material times owed to Expectation a duty not to allow: (a) their personal interests to come into conflict with their duty to act in the interests of Expectation; (b) their duty to any other person to come into conflict with their duty to act in the interests of Expectation. 43 Expectation asserted that the conduct of PRD and Mr Douglas, in making the Recommendation, in making the Implied Representations and the Express Representations and in failing to disclose the Relevant Facts, was in breach of that duty, which was characterised in the Statement of Claim as a 'fiduciary duty'. 44 Expectation then claimed that, in reliance on the conduct of PRD and Mr Douglas that was in breach of that fiduciary duty, it entered into the contract to buy the Benowa Centre and settled that contract and thereby suffered the loss and damage in that it paid $15 million when the true value was $12.05 million or thereabouts. THE BROADWAY CENTRE 45 Expectation alleged in the Statement of Claim that, on or about 9 January 1994, Mr Douglas made the following statements to Mr Hill ('the Broadway Statements'): (i) the net income of the Broadway Centre was in the order of $2.45 million; (ii) PRD had received the Schedules containing information about the income and outgoings of the Broadway Centre prepared on behalf of the Broadway Vendor; (iii) the Schedules contained a statement that net income of the Broadway Centre from rental was in the order of $2.45 million; (iv) PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million. Expectation complained that, at that time, Mr Douglas gave a copy of the Schedules to Mr Hill but did not disclose to Mr Hill that a copy of the Covering Letter was in PRD's possession and did not disclose to Mr Hill the contents of the Covering Letter. 46 Expectation asserted that, by making the Broadway Statements and giving a copy of the Schedules to Mr Hill without making that disclosure, PRD and Mr Douglas impliedly represented that: (i) the Schedules contained an accurate statement of the net income of the Broadway Centre; (ii) the figures in the Schedules had been verified; (iii) the Schedules contained figures for the net income of the Broadway Centre verified by Price Waterhouse; ('the Broadway Representations'). 47 The Statement of Claim then alleged that, in contravention of the Consumer Legislation, the conduct on the part of Mr Douglas and PRD alleged above, that is: making the Broadway Statements, giving a copy of the Schedules to Mr Hill without the disclosure and making the Broadway Representations, was misleading and deceptive or likely to mislead and deceive in that: (i) the net income of the Broadway Centre was in the order of $1.8 million and was not $2.45 million; (ii) the Schedules: (a) contained only a budget summary of the income and expenditure for the year ended 30 June 1994; (b) contained figures that were unaudited; (c) did not contain the net income of the Broadway Centre; (d) did not contain figures verified by Price Waterhouse; (iii) the Schedules, considered without the Covering Letter, were likely to create a misleading impression of the accuracy of, and the reliance that might reasonably be placed on, their contents. 48 The Statement of Claim then alleged that, by reason of the conduct on the part of PRD and Mr Douglas alleged above, Mr Hill caused Expectation to enter into a contract to buy the Broadway Centre on 18 January 1994 ('the Broadway Contract'), to pay $100,000 as a non-refundable deposit to the Broadway Vendor and to pay professional fees to conduct a due diligence investigation into the proposed purchase of the Broadway Centre. 49 During the course of that due diligence investigation, Expectation learned that the true net income of the Broadway Centre was in the order of $1.8 million. As a consequence of that discovery, Expectation declined to proceed further with the proposed purchase and lost the non-refundable deposit of $100,000 and the professional fees that it paid out. 50 Expectation also asserted that in acting as alleged above Mr Douglas, for himself and on behalf of PRD, acted negligently in that he knew, or ought to have known, that to inform Mr Hill of the contents of the Schedules without reference to the contents of the Covering Letter created a misleading impression of the reliance that Mr Hill and Expectation could reasonably place on the net income stated in the Schedules. 51 Finally, Expectation also alleged in the Statement of Claim that, by the conduct alleged, PRD acted in breach of the Contract Terms, namely, that PRD would exercise due care and skill in the performance of its obligations under the 1993 Appointment and would act honestly and in the best interests of Expectation. 52 Expectation claimed the same damages for negligence and for breach of contract as is claimed in respect of the alleged contravention of the Consumer Legislation. THE DECISION OF THE PRIMARY JUDGE THE BENOWA CENTRE 53 The primary judge accepted that Mr Douglas recommended to Mr Hill that Expectation make an unconditional offer to purchase the Benowa Centre for $15 million. His Honour also accepted that Mr Douglas said that, in his opinion, Benoco would accept nothing less than an unconditional offer of $15 million. His Honour accepted that Mr Douglas and the other representatives of PRD believed, in late November 1993, that Benoco would accept an offer of $15 million or thereabouts and that Expectation would have to make an unconditional offer of around $15 million in order to buy the Benowa Centre. His Honour accepted that that belief was based on reasonable grounds. 54 His Honour was satisfied that there were reasonable grounds for the Implied Representations. His Honour found that the Express Representations were not made and that Mr Cooney did not say that the value of the Benowa Centre was at least $15 million. His Honour also concluded that, while there was a representation that the tenants of specialty shops in the Benowa Centre were paying not more than an appropriate market rent, that was an honest and reasonably based opinion of Mr Cooney and involved no misrepresentation. 55 However, his Honour did not accept that Mr Cooney made the 8 Per Cent Statement. Further, his Honour concluded that, even if there had been an assurance that there would be 8 per cent growth per year, Expectation was not misled by any such assurance. His Honour did not accept that Expectation was induced by, or relied on, any representation made by PRD about the Benowa Centre. 56 In any event, his Honour concluded that, at the time the contract to buy the Benowa Centre was entered into by Expectation, the value of the Benowa Centre was approximately $15 million. Accordingly, Expectation suffered no loss or damage by reason of its purchase of the Benowa Centre. 57 His Honour did not make determinations about Expectation's claims to be entitled to damages in respect of some of the Consumer Legislation claims and for breach of the Contract Terms, negligence or breach of fiduciary duty in connection with the purchase of the Benowa Centre. Nevertheless, his Honour dismissed the application in so far as it related to the purchase by Expectation of the Benowa Centre. THE BROADWAY CENTRE 58 In relation to the claims arising out of the contract to buy the Broadway Centre, the primary judge was satisfied that Mr Douglas did not tell Mr Hill that PRD had checked out the net income with the management of the Broadway Centre and verified it at $2.45 million. In any event, his Honour concluded that Expectation did not enter into the contract to buy the Broadway Centre in reliance on the representations pleaded. His Honour therefore dismissed the application in so far as it related to the agreement to buy the Broadway Centre. His Honour made no specific determinations in relation to the causes of action alleged concerning contravention of the Consumer Legislation, breach of the Contract Terms and negligence. However, since each of the causes of action relied on by Expectation depended upon the same factual assertions, having concluded that much of the impugned conduct had not occurred and that, in any event, there was no reliance on any relevant conduct, it was unnecessary for his Honour to make any specific determination in relation to any particular cause of action. THE ISSUES ON APPEAL 59 In its notice of appeal, Expectation complains about delay on the part of the primary judge in deciding the proceeding. Expectation also challenges many adverse findings made by the primary judge. In addition, it complains of the failure by the primary judge to determine any causes of action pleaded other than some of those based on contravention of the Consumer Legislation. 60 It is necessary to consider the grounds of appeal under a number of heads, which may be summarised as follows: (a) Delay in Hearing and Determining Expectation's Claims (b) Issues Concerning The Benowa Centre Finding of No Loss 8 per cent Growth Representation Urgency Representation Specialty Rent Representation Failure to Disclose the Relevant Facts Contract and Tort Claims Fiduciary Duty Claims (c) Issues Concerning the Broadway Centre Was there Misleading Conduct? Negligence and Breach of the Contract Terms DELAY IN HEARING AND DETERMINING EXPECTATION'S CLAIMS EXPECTATION'S COMPLAINTS 61 Expectation complains about the delay between the completion of final addresses on behalf of the parties and the publishing of the reasons of the primary judge for the findings made and the conclusions reached by him. Expectation contends that the delay was inordinate and gave rise to errors on the part of the primary judge in his assessment of the evidence and in the findings made and conclusions reached by him. Specifically, Expectation suggests that that delay may explain the failure of the primary judge to make a determination about certain of the causes of action relied on by Expectation. Expectation also suggests that the delay may explain the failure of the primary judge to make findings with respect to critical evidence. 62 The events that are the subject of Expectation's claims occurred in late 1993 and early 1994. The proceeding was commenced on 5 December 1996. The trial was originally fixed to commence on 13 December 1999. However, on that day, the hearing was vacated as a consequence of an application made by PRD and Mr Douglas to amend their defence. 63 The trial actually commenced on 8 May 2001 and proceeded over eleven days before it was adjourned for further hearing on 24 May 2001. The evidence of Expectation witnesses, including Mr Hill, was given on 9, 10, 11, 14, 15, 16 and 17 May 2001. Because of the unavailability of the primary judge on 24 May 2001, the trial did not resume until 6 August 2001. The trial then proceeded over a further three days when it was adjourned to 15 October 2001. Final addresses concluded on 16 October 2001. 64 However, it was not until 11 March 2003 that the primary judge published his reasons for concluding that Expectation's claims against both PRD and Mr Douglas should be dismissed. No orders were made at that stage, his Honour indicating that he would hear the parties as to the orders that should be made to give effect to those reasons and on the question of costs. Following receipt of written submissions from the parties on the question of costs, his Honour finally made orders on 9 October 2003. 65 The specific complaints made by Expectation concerning the reasons of the primary judge may be summarised as follows: * His Honour failed to give full and comprehensive reasons dealing with all significant evidence and issues. * His Honour treated Expectation's case as being unsupported by any contemporaneous documents or corroboration when, in fact, its case was amply supported in both respects. * His Honour wrongly held that the contentions advanced on behalf of PRD and Mr Douglas were supported by the evidence. * His Honour either ignored or misconstrued significant contemporaneous documents. * Any advantage that his Honour would have had through seeing and hearing the witnesses was lost. Specifically, critical findings based on the demeanour of the witnesses Messrs Hill and McLernon (directors of Expectation) were suspect, since they were made almost two years after those witnesses gave their evidence. * His Honour overlooked a great deal of the evidence adduced at the trial. * Certain of the causes of action asserted by Expectation were not considered or made the subject of express determination in his Honour's reasons. APPLICABLE PRINCIPLES 66 At the best of times, the mere fact that a trial judge necessarily reaches a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by an appellate court of the functions imposed upon it by statute. In particular cases, incontrovertible facts or uncontested testimony may demonstrate that the trial judge's conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings (Fox v Percy (2003) 197 ALR 201 at [28]). 67 Appellate judges have long given, as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible for an appellate court. On the other hand, for almost as long, appellate judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Fox v Percy at [30]). In any event, it is appropriate to have some doubt about the ability of judges, or anyone else, to tell truth from falsehood accurately on the basis of the appearance of witnesses. Such considerations should encourage trial judges and appellate judges to limit their reliance on the appearance of witnesses and to reach conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events (Fox v Percy at [31]). 68 Where there are relevant contemporaneous materials, such as file notes and correspondence, and there is significant delay between the hearing of evidence and the giving of reasons for conclusions, being reasons that do not advert to the contemporaneous materials and do not give specific reasoning for accepting or rejecting the evidence of particular witnesses, the conclusions reached should be given careful scrutiny and consideration by an appellate court where the findings are challenged on appeal. 69 Delay between the taking of evidence and the making of a decision is not, of itself, a ground of appeal, unless the judge could no longer produce a proper judgment or the parties are unable to obtain from the decision the benefit which they should (cf Boodhoo v Attorney-General of Trinidad and Tobago [2004] 1 WLR 1689 at [11]–[12]). Nor does such delay of itself indicate that a trial has miscarried or that a verdict is in any manner unsafe. However, where there is significant delay in giving judgment, it is incumbent upon an appellate court to look with special care at any finding of fact challenged on appeal. In ordinary circumstances, where there is a conflict of evidence, the trial judge who has seen and heard the witnesses, has an advantage. 70 That advantage includes seeing the oral and documentary evidence unfold in a coherent manner, which cannot be replicated on appeal (State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306, 160 ALR 588 per Kirby J at [90]; Bartlem Pty Ltd v Cox Industries (Australia) Pty Ltd [2002] FCAFC 224, 55 IPR 449 at [87]). That advantage will ordinarily prove decisive on appeal unless it can be shown that the trial judge failed to use or misused such an advantage. The mere fact of a long delay itself weakens a trial judge's advantage. Thus, delay must be taken into account when reviewing findings made by a trial judge after a significant delay from the time when the relevant evidence was given. 71 In the normal course, statements made by a trial judge of a general assertive character can be accepted as encompassing a detailed consideration of the evidence. However, where there is significant delay, such statements should be treated with some reserve. After a significant delay, a more comprehensive statement of the relevant evidence than would normally be required should be provided by the trial judge in order to make manifest, to the parties and the public, that the delay has not affected the decision. 72 In cases not affected by delay, an appellate court is entitled to assume that the mere failure to refer to evidence does not mean that it has been overlooked or that other forms of error have occurred. However, where there is significant delay, no favourable assumptions can be made. In such circumstances, it is up to the trial judge to put beyond question any suggestion that he or she has lost an understanding of the issues. Where there is significant delay, it is incumbent upon a trial judge to inform the parties of the reasons why the evidence of a particular witness has been rejected. It is necessary for the trial judge to say why he or she prefers the evidence of one witness over the evidence of other witnesses (Hadid v Redpath [2001] NSWCA 416 at [34] and [53]). 73 Of course, where the trial judge, notwithstanding significant delay, demonstrates by his or her reasons that full consideration has been given to all of the evidence, the parties and the public may be satisfied that the delay has not affected the decision. More specifically, if the reasons demonstrate that the delay has not weakened the trial judge's advantage, confidence will be maintained in the decision. For example, it would be open to a trial judge to explain in the course of giving reasons that contemporaneous notes were made of impressions formed as evidence was given by witnesses of importance (see R v Maxwell (unreported, New South Wales Court of Criminal Appeal, Spigelman CJ, Sperling and Hidden JJ, 23 December 1998)). 74 The problem is not restricted to fading memory. A judge who comes to make an inordinately delayed decision will inevitably be subjected to great pressure to complete and publish the judgment. A conscientious judge could not but feel that pressure. It is almost inevitable that there will also be some form of external pressure – whether from the parties, the management of the Court, the press or parliamentarians. That pressure could well unconsciously affect the process of decision-making and the process of giving reasons for decision. The decision that is easiest to make and express will have great psychological attraction. As was recently said by the Western Australian Court of Appeal in Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149, in the course of a valuable review of the significance of delay in the delivery of judgments: '…a long delay can give rise to disquiet … because of the suspicion, on the part of the losing party, that the task may have become too much for the trial Judge and that he or she had been unable, in the end, to grapple adequately with the issues.' ([31]). 75 As mentioned above, almost seventeen months expired between the time when his Honour reserved judgment (16 October 2001) and 11 March 2003, the date upon which he delivered his first set of reasons and more than 21 months between the completion of evidence and the first set of reasons. The latter period was regarded as the most cogent by Hill J in NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 1 at [17]. This delay was grossly inordinate. In Hadid v Redpath [2001] NSWCA 416 it was submitted that, at some point, the passing of time from the moment when judgment is reserved causes a delay to arise that alters the normal approach of an appellate court. 76 Counsel for the appellant described this type of delay as 'operative delay'. Although the Court of Appeal in Hadid did not have to decide whether the point on which the appeal succeeded in that matter was the result of delay, Heydon JA, at [33]-[38] set out the appellant's submissions in some detail, without any apparent disapproval. We think that the expression 'operative delay' is a useful one as a description of the type of delay which has the consequences (both for a primary judge and an appellate court), discussed in the relevant authorities referred to below. 77 The leading case in this area appears to be the decision of the English Court of Appeal in Goose v Wilson Sandford & Co (unreported, England and Wales Court of Appeal (Civil Division), Gibson, Brooke, Mummery LJ, 13 February 1998). The approach taken by the Court of Appeal in that matter has been adopted by the New South Wales Court of Criminal Appeal in R v Maxwell, was cited with apparent approval in Hadid v Redpath (at [29]) and more recently by Finkelstein J in NAIS v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 1 at [53]. 78 In Goose the delay was approximately 21 months. Their Lordships said this (at [113]): 'Because of the delay in giving judgment, it has been incumbent on us to look with especial care at any finding of fact which is now challenged. In ordinary circumstances where there is a conflict of evidence a judge who has seen and heard the witnesses has an advantage, denied to an appellate court, which is likely to prove decisive on an appeal unless it can be shown that he failed to use, or misused, this advantage. We do not lose sight of the fact that the judge had transcripts of the evidence, as well as very extensive written submissions from counsel. But the very fact of the huge delay in itself weakened the judge's advantage, and this consideration had to be taken into account when we reviewed the material which was before the judge. In a case as complex as this, it is not uncommon for a judge to form an initial impression of the likely result at the end of the evidence, but when he has come to study the evidence (both oral and written) and the submissions he has received with greater care, he will then go back to consider the effect the witnesses made on him when they gave evidence about the matters that are now troubling him. At a distance of 20 months, Harman J. denied himself the opportunity of making this further check in any meaningful way.' 79 In R v Maxwell, the New South Wales Court of Criminal Appeal, having adopted the approach of the English Court of Appeal in Goose made the following observations (at [25]): 'Considerations such as these have informed this Court in its review of the reasons for judgment given by his Honour, specifically the statements made by his Honour in his judgment of a general assertive character, which in the normal course would be accepted as encompassing a detailed consideration of the evidence before him, have been treated by us with reserve. Indeed, a delay of the order of ten months is, of itself, such as to require a more comprehensive statement of the relevant evidence than would normally be required, in order to manifest, for the parties and the public, that the delay has not affected the decision.' 80 The delay in the present case went beyond the minimum period of 'operative delay'. In those circumstances, in his reasons for judgment his Honour was required to carry out a detailed consideration i.e. a more comprehensive statement of the relevant evidence (to use the words of the Court of Criminal Appeal in Maxwell) than would normally be required. The purpose of doing so would have been to demonstrate to all concerned that the delay had not affected his decision. This is not a case in which, sitting as an appellate court, it can be assumed that the mere failure to refer to evidence did not mean that it had been overlooked. 81 In the absence of some special circumstances, where his Honour rejected the evidence of the witness on grounds of lack of credit, one would expect him to explain how, despite the delay, he was well able to recollect the oral testimony. Also, as a general rule, if part of that rejection depended upon contemporary documents, or the lack of such contemporary documents, his Honour should in his reasons have gone to those documents and (in the latter case) stated with requisite satisfaction that there were no such contemporaneous documents. As the Court of Criminal Appeal said in Maxwell, at [46]: 'The Appellant had a right to expect that the arguments put on his behalf would be dealt with in such a way that he could be satisfied that they had been understood and, either accepted, or, if rejected, that the rejection was based on a clear and rational process of reasoning.' 82 Nothing turns on the fact that Maxwell was a criminal case. None of the authorities suggests that a different appellate approach applies in a civil case to that which should be adopted in a criminal appeal. In relation to the primary judge's rejection of the appellant's expert evidence about value, in so rejecting that evidence his Honour was obliged to provide what Bingham LJ described in Eckersley v Binnie (1988) 18 ConLR 1 at 77-78 as 'a coherent reasoned rebuttal' of a 'coherent reasoned opinion' unless that opinion could be discounted for other reasons. That observation was referred to by Henry LJ in Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 at 381-2 where his Lordship said: '…where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, the judge must enter into the issues canvassed before him and explain why he prefers one case over the other. This is likely to apply particularly in litigation where as here there is disputed expert evidence…' 83 Nothing we have said should be taken to encourage over lengthy judgments in the usual case, the undesirability of which has been commented upon recently in Customs and Excise Commissioners v A [2003] 2 All ER 736 at 753–754 and Digi-Tech (Australia) Ltd v Brand [2004] NSWCA 58 at [287]–[290] (see also Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 per Meagher JA at 443; Mifsud v Campbell (1991) 21 NSWLR 725 per Samuels JA at 728; and Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at [62]). ISSUES CONCERNING THE BENOWA CENTRE 84 The primary judge held that Expectation sustained no loss by reason of its purchase of Benowa Gardens because the value of the Benowa Centre as at December 1993 was approximately (presumably no less than) $15 million. This was a crucial finding as, if correct, it was a complete answer to Expectation's case as presented. This is the way in which the case for damages was put at trial on behalf of Expectation. The damages were claimed on the same basis for each cause of action – the difference between the price paid and the real value of the Centre. The significance of the finding is consistent with Expectation not having asked the Judge after delivery of his reasons and before formal orders were made to deal with those issues which were not canvassed by him. There was no point in doing so as it had been found that no loss had been established. If the finding is upheld, it is a complete answer to the grounds of appeal. Correspondingly, if it is not upheld, the consequence is that a new trial necessarily follows in relation to issues not determined at trial unless those issues are without substance. It is therefore logical to deal with this finding first. FINDING OF NO LOSS 85 There were two contemporaneous professional valuations. The first, dated 20 December 1993, was by Mr Parsons of HTW. It was commissioned by Expectation after the contract to purchase had been entered into, for the purpose of submitting to financiers. Mr Parsons noted the purchase price of $15 million and took it into account as evidence of an arm's length transaction. Not surprisingly, Mr Parsons arrived at a value of $15 million, having applied a capitalisation rate of 11% to the estimated rentals. The second valuation, dated 27 January 1994, was by Mr Cox of Richard Ellis. It had been commissioned by the ANZ Bank, which was considering providing finance for the purchase. Mr Cox arrived at a valuation of $12.5 million, having applied a capitalisation rate of 13% to a roughly equivalent estimated rental income to that used by Mr Parsons. Each valuer was called to give evidence and each was subject to detailed cross-examination as to a number of relevant issues. Each of Messrs Cox and Parsons was respectively supported by an ex post facto valuation by another qualified valuer. There was a body of evidence that related to the correctness of the factual assumptions made by the valuers, including post purchase experience, and as to transactions said to be comparable. 86 Each party made detailed submissions at trial as to the valuation of the Benowa Centre, including analyses of the evidence of the competing valuers and of the other evidence that related to the valuers' opinions. The reasons for judgment do not include an adequate account of the competing cases on valuation or reveal a reasoned choice between them. Rather, a capitalisation rate of 11% was chosen with very sparse justification and without expressly adopting the reasoning of any valuer. Valuation is a matter of estimation and judgment and the decision of a trial judge is not lightly set aside (Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980–1981) 146 CLR 336 per Mason J at 381) and a trial judge is normally entitled to accept the opinion of an expert on valuation without giving elaborate reasons (Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 381F, 386F–387C). However, the delay in delivering judgment meant that more than that was required in this case. In any event, the difference between the valuers in this case largely depended upon a view as to whether the claimed level of rental income was truly maintainable into the future and as to the prospects for growth of rental income in the future. There was a body of evidence on those issues that was not adequately analysed in the reasons for judgment (cf Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462 at [8]–[9], [26]–[29]). 87 Furthermore, the fact that Mr Parsons took the contract price into account in his valuation required that his opinion be scrutinised with particular care. The issue to be decided was whether that price did in fact reflect true value. The approach of the primary judge reveals a similar problem. After indicating his view as to the net annual income and the appropriate capitalisation rate and so arriving at a valuation of approximately $15 million, the primary judge said at [80]: 'That valuation is consistent with … the evidence of Mr Fraser as to the minimum amount which an astute, informed and not anxious vendor was prepared to sell the centre for in December 1993: see Spencer v The Commonwealth (1907) 5 CLR 418 at 432. Mr Fraser's evidence in this regard was not affected by any interest in the outcome of the proceedings and was not the subject of cross-examination.' (emphasis added) 88 Later, in dealing with the evidence of the valuers relied upon by Expectation, the primary judge said at [83]: 'Moreover, it seems to me that the valuations of Mr Cox and also of Mr McRae are quite inconsistent with the uncontradicted evidence of Mr Fraser that Benoco Pty Ltd, an astute, informed and not anxious vendor, was not prepared to sell the centre for less than $15 million in December 1993.' (emphasis added) 89 Allan Fraser did not give that evidence. He was not in a position to give that evidence. He was not the decision maker. Benoco was a subsidiary of the Lion Nathan Group. Mr Fraser's primary role was as an employee of the Magellan Group (Qld) Limited (Magellan). Mr Geoffrey Laurence of the Lion Nathan Group was the person with whom Mr Fraser liaised and from whom he took instructions. Mr Fraser did not give evidence that he actually knew at any time what Benoco would accept until the only unconditional offer was made and accepted. Mr Fraser did give evidence that Benoco regarded the property as worth $15 million. Even if Mr Fraser were in a position to give ex post facto evidence as to Benoco's opinion of value, its effect is not as described by the primary judge. His actual evidence was irrelevant to the issue at hand, which was market value. 90 A vendor's subjective opinion as to worth is of no relevance to that question. Even if Mr Fraser were able to give the evidence attributed to him (and had done so) it would still have been irrelevant or of virtually no weight on the issue of market value. A vendor's uncommunicated decision not to sell simply does not establish or even verify a market valuation. It might be based upon quite erroneous or idiosyncratic views. It has not been put to the test. A vendor's open offer to sell at a particular price might be of some relevance to market value in the same way that an actual unconditional open offer by a purchaser with the means to effect the purchase might have some relevance to market value. A vendor's offer might set the top limit and a prospective purchaser's offer the bottom limit. (The discussion of the authorities in the Full Court in Cordelia Holdings Pty Ltd v Newkey Investments Pty Ltd [2004] FCAFC 48 at [121]–[129] exemplifies the difficulties inherent in evidence of this kind.) 91 The primary judge also fell into error when he said that the value of approximately $15 million was 'consistent with the actual market responses to the marketing of the Centre in late 1993' (par [80]). This in turn is linked with the use by Mr Parsons of the contract price of $15 million in issue in the present case in forming his opinion as to market price. That circumstance was relied upon by him both in the contemporaneous valuation and in a later report justifying his position. He assumed that that contract price had been arrived at after a marketing campaign, which had attracted a great deal of response. Mr Parsons could not be criticised for attributing considerable significance to that fact upon the assumption that he made. An arm's length contract arrived at after a wide marketing campaign would be the best evidence of market value. It would not have been unreasonable for Mr Parsons to assume that this was an arm's length transaction of that nature. However, the primary judge had before him a significant amount of evidence to the contrary of that assumption. 92 It is sufficient for present purposes to note that after several months of a marketing campaign during which more than 100 information packages were distributed to potential purchasers, Expectation made the only offer to purchase. The only other prospective unconditional purchaser at the end of the process had not indicated any interest beyond $14 million. The offer of $15 million by Expectation was based upon the recommendation from PRD that is impugned in this case. That offer cannot be relied upon as establishing or confirming true market value for the purpose of defending the recommendation that is impugned. The primary judge's reliance upon the sale of the Benowa Centre two years later at $13.6 million to support the sale price of $15 million was also misplaced. It follows that his Honour's finding should not stand. We shall return later to consider an alternative contention of no loss. 93 As the finding of no loss made by the primary judge cannot stand, it becomes necessary to consider the balance of the issues relating to the Benowa Centre. We shall first consider the issue that was decided, and then consider those that were not. THE 8 PER CENT GROWTH REPRESENTATION 94 The primary judge did not accept that Mr Cooney made the 8 Per Cent Growth Representation as alleged in the Statement of Claim. That is to say, his Honour did not accept that Mr Cooney stated that there would be an 8 per cent growth in net income from the Benowa Centre per year. His Honour was satisfied that there was no express representation by Mr Cooney that there would be an 8 per cent growth in net income from the Benowa Centre per year. 95 Evidence by Mr Hill as to the alleged representation that there would be an 8 per cent growth in rental income from the Benowa Centre was given both in writing and orally. The primary judge dealt with the evidence given by Mr Hill as follows: '59. I simply do not accept that Mr Hill asked Mr Douglas what sort of growth was in the centre and that after Mr Douglas had left and on his return said to Mr Hill: "The growth in the centre would be 8%". I do not believe that Mr Hill said to Mr Douglas: "I'm relying on you and I'm relying on your staff and your interpretation of their ability. I don't want something with hassles and secondly, it really has to – the income has to be secure income with no problems associated with it. The centre has to be very good value in this climate and we've got to be assured that the growth is there." 60. I do not accept that Mr Hill told Mr Douglas: "The rents had to be at market value. They has to be secure and naturally if it was a gem you had to have growth, an 8% growth. He indicated that his people had informed him and it was his opinion that the centre would have 8% growth and that the income of 1.69 was very secure." 61. I further reject the account by Mr Hill in his oral evidence that at the conclusion of the walk through he said to Ken Cooney in the presence of Mr Douglas: "'I'm going to ask you some questions in front of Gordie, and I'm going to take these as if they come out of your mouth, Gordie, or on your head,' combination of both or whatever. And I said, 'Ken, the income of 1.69: is that the real income of this centre? What we are receiving in money, what it's receiving in real money?' He said, 'Yes.' I said, 'Are all the tenancies at fair market rent?' 'Yes.' I said, 'Are any of the tenants being supported?' 'No,' he said, and I said, 'One of the most important factors, Ken, is Gordon has informed me that he's told me that you told him that this centre will have 8 per cent growth in the rentals,' and he said, 'Yes.' His words I think were, 'Absolutely.' And he said, 'But there is trouble with the Fruit Barn.' I said … 'What's the possibilities of re-letting the Fruit Barn?' He said I believe it would be re-let in a few days because the centre has got [the demand] … but I'm – I went down the centre the other day and some bits came back a bit better." 62. In his affidavit of 14 January 1999 at par 106, Mr Hill says he stood Mr Cooney to one side and said to Mr Douglas words to the effect of: "Gordon, I am going to ask Ken a number of questions in front of you. Now remember what I have already told you. He is your man, and I will be relying on what he says as though it is coming from your mouth." According to the affidavit, Mr Hill proceeded to address Mr Cooney as follows: "I asked him what was the position with the net rental. Cooney answered it was secure and would go at 8% per annum. I asked him were all the shops rented at a fair market rent. Cooney answered 'Absolutely'. I asked him if the 8% growth per year was something he was totally confident of. Cooney said he was, and that it he had the money, he would personally guarantee it. I asked what was the net rent. Cooney said '$1.69 million'. I asked him whether the Fruit Barn's area could be easily re-let. Cooney said it could be re-let in a matter of days. I asked him if any of the tenants were getting any assistance. In reply Cooney said 'Absolutely not'." According to his affidavit, Mr Hill then spoke to Mr Douglas: "I then said to Gordon words to the effect that as Cooney worked for Gordon, it is on Gordon's head as to what Cooney had said; and that they were matters that were important to me. Gordon said words to the effect that Cooney had worked at Pacific Fair and he was the best in the business, and that Gordon stood by everything he had said."' 96 His Honour did not give reasons for not accepting Mr Hill's evidence and for rejecting the account given by him. Rather, having recounted Mr Hill's evidence, his Honour simply stated that he accepted the 'evidence of Mr Cooney on this aspect'. His Honour then set out Mr Cooney's evidence as follows: 'I met Gordon Douglas and Danny Hill in the car park of the centre. It was later in an afternoon. We walked towards the entrance of the mall and this was the newsagent entrance which is on the right-hand side. We entered the mall, the three of us, and proceeded to walk down it making – I made general overview about trading of various speciality shops, who was trading well, who was not trading so well. Comments like, 'This is a good performer,' or 'This retailer is not performing so well,' for various reasons. There were four retailers specifically that weren't trading well. They were the South American Food called La Casina, a hardware store, Cooneys Handbags, which is no relation to myself or my family, and also one of the Leyland Brothers had a fashion store and that wasn't trading too well. During this inspection, and it was a general overview, there was nothing asked of any depth in terms of lease conditions or terms. It was constantly interrupted by Hill referring to various female shoppers in the centre and walked over towards Bi-Lo and I made a comment about Bi-Lo trading well and it being a Coles-Myer covenant, just in general terms. We then proceeded to the other side of the mall and out through doors that – on the right-hand side was fruit and veg store. This store was a large tenancy of 500 square metres and it was a concern to me and I explained to Hill that this tenant was not going to survive. He had trading problems. It was a large tenancy. We would have to come up with a strategy of either finding another fruit and veg operator or subdividing the shop into smaller shops. … We then walked over towards the icecream shop, which was directly opposite. This shop was run by a husband and wife team, mainly by the wife. This tenancy also was going to fold and not – cease to exist much longer. I explained that to Hill that that tenancy wouldn't last. We then walked under the concourse towards the Bank of Queensland and Hill stopped us and he asked the question, 'Is this a good centre?' I said it was – 'It was a neighbourhood centre that dominated its trade area and it was performing well.' He then asked, would he get an 8 per cent return on his investment and I indicated that as the majority of speciality shops are on 8 per cent, notwithstanding the fruit and vegie shop's problems, I was confident he would get an 8 per cent return on his investment. He then asked the question about market rent – were the retailers paying market rent and I indicated that, yes, they were paying market rent and that approximately the net rent was 1.5 million. We then stepped off the pavement and walked up the hill to the carpark towards KFC and Gordon Douglas starting making comments about growth potential for this centre. He indicated to the vacant land towards KFC and beyond and around saying that there was a lot of potential – future potential, in terms of subdivisions, more housing and more customers. With that, the meeting finished, they said goodbye and Gordon and Mr Hill drove off.' 97 His Honour found that the first allegation of a representation that the Benowa Centre could achieve 8 per cent growth was not made by Mr Hill until October 1994. His Honour considered that it was significant that, at meetings concerning two valuations of the Benowa Centre that were received by Expectation, neither Mr Douglas nor Mr Cooney stated that the Benowa Centre would achieve 8 per cent growth. His Honour observed that Mr Hill did not at that time assert that there had previously been such a representation. Nor did Mr Hill point out that the view that the Benowa Centre would achieve 8 per cent growth was contrary to one of the valuations. 98 Expectation complains that the primary judge advanced no reason as to why his Honour preferred Mr Cooney's version of the discussion during the 'walk through' inspection of the Benowa Centre rather than Mr Hill's versions. For example, it might have been possible to point to inconsistencies in Mr Hill's oral and written versions of the discussion. His Honour did not attempt to do so. 99 Ordinarily, one would assume that a trial judge, having rejected the evidence of one witness and having accepted the contrary evidence of another witness, had had regard to and relied upon the advantage that a trial judge has of seeing witnesses give evidence in the witness box. Where judgment is delivered soon after the evidence is given, that assumption can be readily made even though the trial judge does not say expressly that reliance has been placed upon demeanour and the advantage of seeing the witnesses in the witness box. Even then, however, where there is contemporaneous objective material that has a bearing on the matters that are the subject of the evidence of witnesses, reliance on that material will be more reliable than reliance upon observations of the demeanour of witnesses in the witness box. 100 Having regard to the extensive delay between the time when Messrs Hill and Cooney gave evidence and the time when the primary judge published reasons for his conclusions, it was incumbent upon his Honour to give specific reasons for rejecting the evidence of Mr Hill and accepting the evidence of Mr Cooney. Specifically, it was incumbent upon his Honour to deal with the submissions made to him concerning the relevance of contemporaneous objective material, such as correspondence and file notes in relation to that matter. It is unfortunate that his Honour failed to do so. 101 It is common ground that the expression '8 per cent' was mentioned in the context of the discussion concerning the Benowa Centre. It is also common ground that Mr Hill asked questions about whether the lessees were paying market rent. The essential difference between Mr Hill's version and Mr Cooney's version is that Mr Hill said that he asked about rental growth whereas Mr Cooney said that Mr Hill asked about return on investment. 102 It is inherently more likely that, in the context of the expression '8 per cent', Mr Hill would have spoken of rental growth rather than return on investment. Within weeks, the question arose as to whether the return or yield was likely to be between 11 per cent and 13 per cent. At no stage was there any suggestion that Mr Hill was interested in a return or yield of 8 per cent. However, the absence of any reasoning by the primary judge does not enable the reader of his Honour's reasons to discern whether his Honour considered it inherently more likely, in the circumstances, that there was a discussion about return or yield rather than growth, in the context of the mention of the expression '8 per cent'. 103 Mr Hickey was Expectation's solicitor. His Honour observed that, if there had been a representation to Mr Hill of at least 8 per cent growth in net income from the Benowa Centre per year, it was remarkable that Mr Hill did not inform Mr Hickey of that point and that Mr Hickey made no record of the matter when he commenced his inspection of the leases on 30 November 1993. However, his Honour did not, in dealing with the allegations by Mr Hill that a representation concerning 8 per cent growth had been made, refer to contemporaneous diary notes made by Mr Hickey and admissions made by Mr Cooney. One of the complaints made on behalf of Expectation is that his Honour failed to have regard to Mr Hickey's diary notes that record that Mr Hill informed him of the 8 per cent growth representation. Expectation contends that, having regard to the delay, there is a real risk that the primary judge overlooked those matters. 104 His Honour purported to consider the contents of diary notes made by Mr Hickey in relation to certain issues. However, his Honour failed to make any reference to those diary notes when dealing with the question of whether a representation as to 8 per cent growth had been made by Mr Cooney or had been confirmed by Mr Douglas. It is necessary to examine the diary notes in some detail. 105 A diary note of 30 November 1993 made by Mr Hickey records a meeting involving Messrs Hickey, Douglas, Langford and Hill. Mr Hickey originally mistakenly asserted in his written evidence that Mr Hill had made mention of the 8 per cent growth representation at that meeting. However, Mr Hickey corrected that assertion during his oral evidence in chief. His Honour characterised this matter as a 'serious misstatement'. In any event, the diary note of 30 November 1993 refers to 'yield 10.6 per cent on passing'. That is a reference to the rent payable under the leases as producing an expected yield of 10.6 per cent. Such a note is inconsistent with the proposition that statements made by PRD related to an 8 per cent return rather than 8 per cent growth. 106 On or about 23 December 1993, Mr Hickey received a valuation from HTW. Mr Parsons expressed the opinion that 'a reasonable security assessment' of the Benowa Centre was $15 million. The valuation included the statement that net maintainable annual income was assessed at $1,646,328 and that a yield of 11 per cent had been adopted in making the valuation. 107 On 27 January 1994, Mr Hickey received a copy of the valuation of the Benowa Centre by Richard Ellis. The value of the Benowa Centre was given at $12.5 million. That valuation was based on a yield of 13 per cent. Mr Hickey telephoned Mr Hill and told him about the valuation from Richard Ellis. 108 On 28 January 1994, Mr Cooney sent to Mr Hickey his comments on the Richard Ellis valuation. Those comments included the following: 'I expect sales will continue to grow in 1994. Rents will not escalate downwards.' Those comments are consistent with assurances being given that there will be growth in rental income from the Centre. The primary judge made no reference to the document in his reasons. 109 Mr Hickey said that, on 30 January 1994, he had a conversation with Mr Hill, who said words to the effect that he had been told by Mr Douglas and Mr Cooney that the Benowa Centre had a yield of 11 per cent and a per annum rental growth of 8 per cent. That is corroborated by Mr Hickey's contemporaneous file note saying 'Told roughly 11% yield & 8% growth'. The primary judge made no mention of that diary note or of Mr Hickey's evidence as to the substance of the conversation. 110 On 31 January 1994, Mr Hickey spoke to Mr McLernon, when he discussed the valuation by HTW. His diary note of 31 January 1994 records that he discussed '8% growth in rent'. The same diary note records a telephone call to Mr Douglas where '8% growth' was mentioned. The primary judge made no reference to that diary note. 111 Mr Hickey also made a diary note on 1 February 1994, referring to a telephone conference with Messrs Douglas, Peet, Langford, Cooney, Parsons, Hill and Mr McLernon. Mr Hickey's note refers to 'growth'. The primary judge made no reference to this diary note. 112 On 2 February 1994, Mr Cooney sent a memorandum to Mr Hickey, describing the Benowa Centre in some detail. The memorandum contains the following: 'Since mid 1993… the centre's turnover increased dramatically with the majority of retailers reporting sales in excess of the previous month. This trend continued to a situation now where we have in December the specialty shops were 20% up on the previous December. These results prove that Benowa is achieving its market share within the primary catchment area, that is a drive time of between 7 and 10 minutes from the centre. … In commenting about specialty shop rental levels in comparison with other centres, there is no comparison with Benowa Gardens to other neighbourhood centres because of its presentation standards, shop fronts, enclosed mall, air conditioned and key specialty shop retailers… I am quite comfortable with the rental levels being achieved in fact I negotiated the first year's rental increases with all retailers. The increases were achieved without any fuss. There were three retailers who were suffering slightly and their rental increases were not set at the maximum percentage. I am quite happy with the occupancy cost levels with the majority of retailers, the exceptions are La Cosina, a takeaway which is run by a husband and wife team at 27.39%; this level of occupancy cost is not excessive when run by a husband and wife team. Occupancy costs in relation to sales are rent plus outgoings as a percentage of turnover. … Retailing has turned a corner on the Gold Coast and in SE Queensland, retailers are increasing their sales. We believe that this aspect of more confidence in the market place and the future growth of residential in the primary trade area of Benowa, the centre is set for very positive growth in the future. I see no problems of obtaining maximum percentage rent increases of around 8% when they fall due in September.' The memorandum is capable of corroborating that statements were made by Mr Cooney concerning the prospect of growth in rental of the Benowa Centre. However, the primary judge made no mention of it in the present context. 113 The manager of the Benowa Centre, Ms Christie Mary Allison, said that she had a telephone conference with Messrs Douglas, Adler, Johnston, Cooney and Hill. It is likely that the conversation took place after the September 1994 rent reviews. Ms Allison said that Mr Hill said to Mr Cooney words to the effect that he could not decide if Mr Cooney was a criminal or just plain incompetent and that Mr Cooney told him that there was 8 per cent growth 'across the board in Benowa Gardens'. She said that Mr Cooney went red in the face and stuttered and started to answer Mr Hill by saying what he meant when he had said '8 per cent', but Mr Hill cut him off. She said Mr Hill brushed aside Mr Cooney's attempted statement and said to him words to the effect that he had told Mr Hill '8 per cent across the board'. Mr Hill then asked Mr Douglas whether Mr Douglas remembered him saying that. 114 That is the evidence to which the primary judge was referring in saying that the first allegation of a representation that the Centre could achieve 8 per cent growth was made by Mr Hill in October 1994. However, the file notes described above are certainly capable of supporting a finding that there was an allegation of a representation concerning, '8% growth' made before October 1994, namely, at the end of January and early February 1994. 115 On 25 October 1994, Mr Cooney sent a memorandum to Mr Hill and Mr Douglas saying: 'During our brief walk around the [Benowa] Centre with Gordon, you asked me: (1) Is this a good Centre? (2) Would it show an 8% return? My replies were as follows: "The Centre is performing well. It is a neighbourhood Centre (supermarket anchored) and dominates its local market. Gordon added that the Centre's market will grow due to population growth in the area." "The majority of specialty shops are on 8% annual increases and I am confident we will achieve those increases. …" We have just completed the rent review process. All retailers are being billed the maximum increase as from 1/10/94. However, there are four exceptions. …' 116 The reference to 'an 8% return' is curious. Having regard to the subsequent reference to growth in the Benowa Centre's market due to population growth and '8% annual increases' in relation to the majority of specialty shops, it is more likely than not that the reference to '8 per cent return' was intended to be a reference to 8 per cent growth. That is all the more likely when one has regard to the fact the valuations that had been prepared in early 1994 referred to returns or yields of between 11 per cent and 13 per cent. No one had suggested that a return or yield of 8 per cent was in contemplation. In any event, the primary judge made no reference to the memorandum. 117 On 11 November 1994, Mr Cooney sent a further memorandum to Mr Hill saying relevantly: 'As I recall it, your issues are that I said to you: 1. The rent roll was $1.7 million; 2. You would achieve an 8% growth rate; 3. I could relet the fruit & vegetable barn in days or very quickly. I recall the day very well. The three of us walked the mall and external shops, Gordon, you and me. It definitely was not the two of us. I remember telling you that the majority of shops are on an 8% maximum rent increase therefore you would achieve around 8%. (I was optimistic we would get the maximum increase because confidence in the economy had turned in November on the Gold Coast and retailing was picking up). As it transpired, with the exception of four shops… all speciality shops have been billed maximum increases from the due date. (The majority are 8% some 6% some 4%). …' 118 The reference to Mr Hill's 'issues' being that Mr Cooney said 'You would achieve an 8% growth rate' without a denial is corroboration by Mr Cooney that something was said about an 8 per cent growth rate. The primary judge referred to the memorandum but did not attach any corroborative significance to it. 119 On 21 November 1994, Mr Cooney sent a third communication to Mr Hill saying 'the major issue is the 8% rental growth'. The letter went on to say: 'When we walked around the centre I made the comment that I thought we would be able to achieve an 8% increase. I was referring to the majority of specialty shops which I knew had an 8% maximum level, and was confident we would achieve these levels'. 120 That statement by Mr Cooney was not referred to by the primary judge in his reasons, although his Honour referred to the communication of 21 November 1994 as a response by Mr Cooney to the allegation of a representation that the Benowa Centre could achieve 8 per cent growth. It is significant that, such an allegation having been made, Mr Cooney did not deny that he had said such a thing when he had the opportunity to do so in the communication of 21 November 1994. He did not deny that he made the comment; he simply went on to explain what he meant by his comment. 121 The absence of a detailed explanation by the primary judge as to why he preferred the evidence of Mr Cooney to that of Mr Hill, in conjunction with the failure to refer to contemporaneous documents that may serve as corroboration of the allegation made by Mr Hill concerning the 8 per cent growth representation, is very significant when regard is had to the lapse of time from when the oral evidence was given and his Honour's reasons were published. It may be that his Honour formed a firm view concerning the credibility of Mr Hill on the basis of his appearance in the witness box and regarded the contemporaneous file notes as equivocal. However, even if the reasons had been published within a short time after the oral evidence was given, it would nevertheless have been incumbent upon his Honour to deal with the submissions of Expectation as to the significance of the contemporaneous material. Having regard to the significant delay, there must be a real risk that his Honour overlooked the contemporaneous file notes and the submissions made concerning their significance. 122 Putting aside an assessment of the credibility of the witnesses, the objective contemporaneous evidence tends to suggest that some mention was made by Mr Cooney or Mr Douglas of '8 per cent growth' in the context of rent from the Benowa Centre. Whether a reference to that phrase amounted to a representation that the rentals that could be demanded from tenants would result in at least an 8 per cent growth across the board in net income from the Benowa Centre per year might be a different matter. However, the failure by his Honour to deal with the contemporaneous materials and to explain why, in the light of those materials, preference should be given to Mr Cooney's rather than Mr Hill's version of the discussion during the inspection of the Benowa centre leads to the conclusion that it would be inappropriate for his Honour's finding to stand. However, whether, and if so what, relief should be granted on appeal in consequence of that conclusion will depend upon the resolution of other issues. 123 Having rejected Mr Hill's evidence on the question of a representation as to 8 per cent growth, the primary judge concluded that, in any event, Expectation was not misled by any such misrepresentation. The primary judge said that he did not accept Expectation's case that it was induced by, and relied on, the representations alleged to have been made by PRD about the Benowa Centre. In particular, his Honour referred to a sales brochure and a document entitled 'Investment Report' Provided to Expectation. The Investment Report contained a detailed tenancy schedule, which recorded the terms of the rent increases for each of the tenants of the Benowa Centre. Further, Mr Hickey conducted an examination of the leases themselves on behalf of Expectation in order to determine their terms. Mr Hickey knew that not all of the leases contained provisions for 8 per cent rent increases. 124 They are matters that are relevant to the question of whether any reliance was, in truth, placed on informal oral statements made in the course of the inspection of the Benowa Centre. The view might be held that it is inherently unlikely that an investment of $15 million would be made in the purchase of a shopping centre on the basis of informal oral statements made without any subsequent written confirmation of them. 125 The primary judge characterised as an 'incredible story' Mr Hill's evidence that he was going to ask questions of Mr Cooney and rely on his answers as if they were from the mouth of Mr Douglas. Given the relationship between Mr Hill and Mr Douglas, it is not necessarily incredible that Mr Hill might have taken the stance he claimed, of stating that he would rely on Mr Cooney's response to his questions as a response by Mr Douglas. Further, if Mr Hill's evidence of the representation were accepted, it could put his evidence of reliance in a different light. 126 The Investment Report was apparently prepared by PRD in its capacity as sole marketing agent of the Benowa Centre. The Investment Report was provided to Mr Hickey and Mr Hickey forwarded a copy of it to Mr McLernon. However, Mr Hill denied that he had been provided with a copy of the Investment Report and Expectation contended that, even if Mr Hill had been provided with it, it was highly improbable that he would have read it. Expectation asserted in its written submissions that, if it had ever been drawn to the attention of Mr Hill, Expectation would not have proceeded with the purchase of Benowa Gardens. 127 Significantly, the Investment Report contains a section entitled 'Lease Structure and Tenancy Schedule'. That section included the following: 'Growth & Reviews All leases, except for the anchor tenant, provide for annual rent reviews throughout the term by various formulas. Refer to the tenancy schedule for the various rent review formulas for the specialty shops, which generally range from a minimum annual increase by the Consumer Price Index All Groups Brisbane, to a fixed annual increase of 8%. In addition to these annual reviews most leases have provision for the payment of turnover rent in addition to base rent. Anchor Tenants Bi-Lo Supermarket and KFC leases are industry standard long term retail leases. Both operate on a base rental and a percentage of turnover factor. · Bi-Lo Supermarket Bi-Lo's term is for 10 years, with two Rights of Renewal for five years. Rent payable is the greater of base rent or percentage rent. The percentage rent is calculated at 1.5% of the annual turnover. Base rent for Year 1 to Year 5 inclusive is $198,000 per annum. Years 6 to 10 inclusive is half of the total base rent and percentage rent payable in Years 4 and 5. · KFC KFC's term is for 15 years, with two Rights of Renewal for 5 years. Rent payable is the greater of base rent or percentage rent. The percentage rent is 2.25% of annual turnover. Base rent for Years 1 to 5 inclusive is reviewed to CPI to a maximum of 7%. Base rent for Year 6 and Year 11 is the total of the previous two years base rent and percentage rent divided by two. Year 7 to Year 10 inclusive, and Year 12 to 15 inclusive, are also reviewed to CPI to a maximum of 7%. Specialty Shops Specialty Shops are generally five year terms with Rights of Renewal. Annual increases vary from a minimum CPI annual increase to an 8% annual increase, with a market review at Year 4 at the lessor's discretion. All leases contain a base rental and most are supported by a percentage of turnover factor. This percentage varies according to the standard set for the use, but generally is between 1% and 8%. The main terms and conditions are indicated in the Tenancy Schedule. · Promotion All specialty tenants, except Shop 1 Benowa Gardens Fruit Market and M2 Bertsos Medical, pay a promotion levy calculated at 5% of base rent, which is paid by a fixed monthly charge. The promotional contribution is expended by the lessor on centre promotion.' 128 The Investment Report described the lease terms in the following way: 'Lease Terms Bi-Lo Supermarket; 10 year term with 2 x 5 year rights of renewal. Year 1 to Year 5 inclusive $198,000 fixed rent per annum. Year 6 to Year 10 inclusive half of total base rent and percentage rent payable in Years 4 and 5. KFC; 15 year term with 2 x 5 year rights of renewal. Year 1 to Year 5 inclusive review to CPI to a maximum of 7%. Year 6 and Year 11 total of previous two years divided by two. Year 7 to Year 10 inclusive and Year 12 to Year 15 inclusive review to CPI to a maximum of 7%. Specialty Shops; generally 5 year terms, with annual increases ranging from minimum CPI annual increase to 8% annual increase, and a market review at Year 4 at the lessor's discretion. Refer to the Tenancy Schedule for individual tenancy details.' 129 The 'Tenancy Schedule', which forms part of the Investment Report, summarises the review provisions of the leases. It shows that for many, but not all, of the specialty leases, there is a rent review clause. Some review clauses are described as 'CPI/8%>'. For some the description is simply 'CPI' and for others it is 'CPI/MKT'. 130 More significantly, in relation to the major tenant, Bi-Lo Pty Ltd, the tenancy schedule says the following: 'Yr1 to Yr 5 incl. $198,000 fixed pa Yr6 to Yr10 incl. Half of total base rent and % rent payable in Years 4 & 5.' That is to say, there is clearly no rent review clause that would entitle the landlord to increase the rent annually. 131 The effect of the alleged representation is that the total rent receivable in respect of the Benowa Centre would increase across the board at the rate of 8 per cent annually. A purchaser intending to acquire the Benowa Centre for $15 million could hardly expect the agent of the seller to be making a representation as to an increase in the rent payable by Bi-Lo Pty Ltd in circumstances where there was no entitlement to increase the rent. The only possible increase would be derived from an increase in the percentage rent, which was shown in the tenancy schedule as '1.5' for Bi-Lo Pty Ltd. That must be taken to be a percentage of turnover. 132 Expectation contended that, because each of the leases provided for an element of rent that included a percentage of turnover, there was a possibility of 8 per cent growth across the board. On the other hand, in cross-examination, Mr McLernon said: 'They all had percentage rents that in theory could get you to 8 per cent easily, but I'm not saying that was my expectation at the time, but if you put it as legally can they get there… your proposition is wrong with respect.' 133 In his written statement, Mr McLernon said that he had a conversation with Mr Hill by telephone in early November 1993. The statement said: 'Hill said to me words to the effect that Douglas had identified a shopping centre opportunity which appeared to match what he wanted for the trust. Hill said (words to the effect) that Douglas had come up with a shopping centre which Hill thought would suit us; that Hill had told Douglas that this was an opportunity for Daisy Hill and that Daisy would be providing the majority of the purchase price; that Douglas had recommended the purchase at $15M and assured Hill that there was an 8% growth factor; that Hill had met with Douglas' right hand man who used to run Pacific Fair and knew all about shopping centres; that they (PRD) said that this was the best shopping centre investment available; that we would not be doing due diligence because we did not have the time and we did not have the people there anyway; and that the offer had to be unconditional.' 134 That assertion must be considered in the light of a letter of 2 December 1993 that Mr Hickey wrote to the directors of Expectation, relevantly saying: 'We confirm that Mr Hill has made a recommendation to the Daisy Hill Trust that this property be acquired. The property is recommended by Mr Gordon Douglas managing director of PRD Realty on the Gold Coast. We enclose a sales brochure in respect of the project for your information. … In respect of the lease documentation we confirm that two of the writers solicitors spent approximately 10 hours in Brisbane examining in detail all lease documentation relevant to the centre. A separate report in respect of that lease documentation is being prepared and we will forward the same to you during the course of the day. Once you have had all material would you please confirm that the writer is instructed to proceed to sign, as attorney for Expectation Pty Ltd, the contract…' 135 The 'Sales Brochure' referred to in the letter of 2 December 1993 contained a description of 'lease terms' in identical terms to those contained in the Investment Report referred to above. As with the 'Investment Report', that section invites reference to the 'Tenancy Schedule'. The Sales Brochure contains a brief description of each tenant and the usage of the leased premises. That is followed by a 'Tenancy Profile' describing each tenant. It is not clear whether the Tenancy Schedule that was attached to the Investment Report was also included with the Sales Brochure. Clearly enough, however, a prospective investor interested in the terms of any rent review provisions under the leases was informed by the Sales Brochure that there was information available that would cast light on those questions. 136 The 'separate report' referred to in Mr Hickey's letter of 2 December 1993 is a memorandum dated 2 December 1993 from Mr Paul Brinsmead to Mr Hickey. That memorandum contains the following: 'The following leases have some significant points to note: Shop No. 41 Bi-Lo Pty Ltd. … 2. The second leased year commenced on the 1st October 1993. There are arrears of outgoings owing of $5,095.30. I am advised that there is not a dispute. I am advised that there is simply an accounting error by Bi-Lo as they believed that there is a two year capped rate and centre management has just verified with them that it is in fact capped for one year. I am to be supplied with the offer to Lease which I am told verifies one year capped outgoings. … Shop 1 Benowa Gardens Fruit Market Pty Ltd 1. The original lease provided for rental of $93,500.00 which was to increase by the Consumer Price Index only and there was no percentage rental… 2. …There are also substantial arrears of rental of $15,583.32 and outstanding outgoings of $8,778.12. 3. I am advised that a without prejudice proposal has been put to the tenant and the tenant has until the close of business on Friday the 3rd December 1993 to accept that proposal… (b) Percentage rental is to be included in the lease at a rate of 7.5%. … I am advised that this is a real problem tenancy. … Shop No. 12 to Dyson (Hardware Shop) 1. This lease commenced on the 1st December 1993. There is a moratorium for payment of any promotional levies until 1994. There are no moratoriums on payment of rent. Shop 17 to Senbar Pty Ltd (Travel agency) 1. Rental is payable in the amount of $23,960.00 or $1,196.67 per month. They are in arrears of rental and outgoings and other costs of $4,696.12. I am advised that there has been an agreement reached to repay arrears of rental and that has been documented in exchange of letters with centre management. I am to be provided with these letters. I am advised that this tenancy is a little bit shaky but they believe that the tenant should be okay. Shops No. 8 and 23 (delicatessen and childrens fashion) 1. Both of these tenancies are in arrears. I am advised that there are no problems with these tenancies and it is simply a matter of rental being paid late. … Shop 25 to Cooney (Bags and travel goods) 1. This had on file a Deed of Surrender which was to be surrendered as at the 31st December 1993. Accordingly this will also be a vacant tenancy. … Shop 31 Please note that this is a vacant tenancy. Shop M1 to Richard Lee Pty Ltd (dentist) The Guarantee on this Lease is executed by one of the Guarantors under power of attorney. Bruce is researching whether this is a binding guarantee. … Shop No M2 to Bertsos Medical Pty Ltd … 2. There is a rental moratorium. The lease commenced on the 1st August, 1993. No rent is payable for the first 7 months and so rent is not payable until the 1st March, 1994. Lease Shop No R3 to Kentucky Fried Chicken 1. Clause 21.1 provides that the tenant has a right to terminate on three months notice if the supermarket becomes vacant. 2. There is a further clause which provides that after the expiration of the 11th year if: (a) the base rent in two consecutive years exceeds 5% of gross receipts and; … Then the lessee is entitled to terminate the lease on three months notice. … General comments 1. Generally the leases are good leases and wherever there were companies they were supported by directors guarantees (except the major tenants e.g. Bi-Lo, KFC, ANZ, Bank of Queensland etc.). 2. The leases generally are for a period of five years with a five year option. There are a number of leases that are for three years and some as high as 15 years. 3. Most rental reviews are to be CPI or 8% whichever is the larger. There are some leases, however which are CPI only. 3. Most leases contain turnover rent of between 1% to 8%. Most are 8%. … Please note that we are still waiting to receive details on payments of security deposits. These are not substantial and they tend to be one months rental if at all.' 137 The clear references in Mr Brimsmead's report to the difficulties with some tenants must throw doubt on the possibility that there will be an across the board growth in rental income of 8 per cent, as the increase in some tenancies would need to exceed 8 per cent in order to make up for a shortfall in other tenancies. 138 Expectation received a copy of Mr Brimsmead's report. The view could be taken that, having received that report, the Investment Report and the Sales Brochure, it is unlikely that the directors of Expectation would rely on an informal oral statement that there would be an across the board growth in rent each year of 8 per cent. 139 Expectation's answer to that proposition is that it is unlikely that Mr Hill would have bothered to read the documents in light of 'the strong and clear representations that had been made'. However, that is hardly an accurate description of the oral statements alleged to give rise to the 8 per cent growth representation. Even if Mr Hill's version of the discussion is accepted, it could be regarded as foolhardy to rely on the statements by Mr Douglas and Mr Cooney in the face of the written details furnished to Expectation. 140 In his written statement, Mr McLernon said: '76 On 1 February 1994, a telephone hook up was arranged between Hill, myself, Douglas, Colin Peet, Langford, Cooney and Lloyd Parsons of Herron Todd White. The PRD representatives and Parsons again said words to the effect that the Centre was worth $15M, that the centre was not over-rented and that 8% growth would be achieved.' 141 Expectation draws attention to Mr Cooney's note to Mr Hickey of 2 February 1994 to the effect that rent increases of 8 per cent would be obtained when they fell due in September. Mr Cooney's note to Mr Hickey of 2 February 1994 was a response to the valuation received from Mr Cox. Mr Cooney's note is set out at [112] above: 142 While the memorandum is capable of corroborating a prospect of growth in rental, those statements of themselves are hardly corroborative of a representation of a yearly 8 per cent growth across the board. They are simply statements that, where the leases entitle the landlord to an increase of 8 per cent, those increases would be applied. If there had been reliance upon an oral representation that there would be an increase of 8 per cent across the board, some query of Mr Cooney by Expectation might have been expected. 143 In cross examination, Mr McLernon would not agree that what Mr Cooney said was 'I think you'll get the 8 per cent rent increases in respect of the specialty shops'. Mr McLernon certainly made no note of the conversation. He did not write to Mr Cooney, upon receipt of his note of 2 February 2004, to contradict him. Mr McLernon could not recall why he did not respond in writing other than to assert, unresponsively, 'I had conversations with other people about the question of the 8 per cent growth, maybe even on that same day but certainly around the time'. 144 In the light of Mr Cooney's note, in conjunction with Mr Brimsmead's report, the Sales Brochure and the Investment Report, the view could be taken that a rational investor would not invest $15 million in reliance upon the informal oral statements alleged to have been made by Messrs Cooney and Douglas and to ignore the specific information given in the Investment Report, the Sales Brochure and Mr Brimsmead's note concerning the provisions of the leases as to rent review. 145 The primary judge did not analyse the evidence or reason in that way but, rather, expressed a broad conclusion. That was certainly not adequate in the circumstances. In addition, the sweeping conclusions of the primary judge as to the credit of the witnesses called for Expectation, made in respect of the making of the 8 per cent Growth Representation, must have inevitably affected his assessment of their credit in relation to the issue of reliance. Furthermore, it needs to be borne in mind that it is not necessary to establish that a misleading representation was the sole or dominant cause of entry into the transaction; it is sufficient if it materially contributed to the decision. It would be an unusual case where representations relevant to the subject matter of a transaction would have no material contribution to the decision to enter the transaction (Henville v Walker (2001) 206 CLR 459 at [14], [61] and [63] and I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at [33], [57], [62] and [90]). 146 The finding of no reliance cannot stand. It follows that the finding on the 8 per cent Growth Representation cannot stand. THE URGENCY REPRESENTATIONS 147 The essence of the complaint is that the primary judge failed to make any findings about the Urgency Representations. The allegation in the Statement of Claim was that PRD, by Mr Douglas, represented to Expectation, by Mr Hill, on a number of occasions, that there was an urgent need for Expectation to make an offer for Benowa Gardens in view of the fact that there were other persons who were interested purchasers and in a position to make, or had made, an offer for the Centre. 148 The relevant part of the defence of PRD and Mr Douglas to the plea was not clearly worded. It would seem that their position was to admit that PRD told Mr Hill that it believed that Benoco would accept an unconditional offer of $15 million or thereabouts for the sale of the Benowa Centre prior to 2 December 1993, but otherwise it did not admit the allegations. 149 The evidence before the primary judge relevant to the Urgency Representations included the following: (a) Mr Hickey's evidence that: (i) on 29 November 1993 he received a telephone call from Mr Douglas who told him that he was with Mr Hill, that they had just inspected the Centre and that Mr Hill had agreed to purchase it at a price of $15 million; (ii) Mr Douglas had told him (Mr Hickey) that 'several other parties had submitted serious expressions of interest and competition to purchase the Centre was intense', that the tender period had closed, but Mr Douglas had persuaded the vendor to re-open it in order to give Expectation an opportunity to submit an expression of interest and that Expectation had to act quickly and make a good offer in order for it to be accepted by the vendor; (iii) when he asked Mr Douglas whether there was time to do a 'due diligence' and whether to make the offer subject to finance, Mr Douglas had replied that there was no time for due diligence, that he had looked at the Centre and had told Mr Hill that it was a good buy, that a number of competitive tenders had already been submitted, and unless Expectation made its offer unconditional it would not succeed. (b) A written statement made by Mr Douglas earlier in the proceedings in these terms: 'I simply informed Hill that if they wished to become involved in the tender process and compete with other potential purchasers of the centre, he'd have to move quickly to formalise his expression of interest. … This was so because when the availability of the centre was first raised with him by John Langford, he was made fully aware that the short tender process was due to close on 3 December.' Mr Douglas, in cross-examination, said that those statements were wrong. (c) Mr Hill's evidence that Mr Douglas had told him that he had strong competition from two investors, one a foreign investor and the other a buyer from Brisbane; (d) A fax of 2 December 1993 sent at 2.18 pm from Mr Johnston to Mr Hickey which, omitting formal parts read as follows: 'BENOWA GARDENS SHOPPING CENTRE I write to confirm the closing time and address of all Contracts for the purchase of the above property are to be lodged no later than 4 pm on 3 December 1993 at the premises of: O'Shea Corser & Wadley 5th Level 307 Queen Street BRISBANE QLD 4000 Attention: Mr David Phipps.' 150 The only findings made by the primary judge which were potentially relevant to this issue were as follows: '[57] I accept that Mr Douglas said that he thought the centre was worth around $15 million; that he had explained to Mr Hill that a tender process was in place and there had to be an Expression of Interest in the tender; that the Expressions of Interest were due on 25 November 1993; that a number of people had lodged Expressions of Interest; and that if Expectation wanted the shopping centre, Mr Douglas told Mr Hill what he thought the vendor would take … … [65] I accept that Mr Douglas and the other representatives of PRD Realty believed in late November 1993 that the vendor Benoco would accept an offer of $15 million or thereabouts, and that Expectation would have to make an unconditional offer of around $15 million in order to buy the property; and, further, that this belief was based on reasonable grounds. Mr Fraser, a director of Benoco, gave evidence that so far as the vendor was concerned, Benowa Gardens was "worth all of $15 million". Mr Fraser gave further evidence that if the sales campaign had not produced an unconditional offer at $15 million or very close thereto, the vendor would have looked seriously at entering into the conditional contract at $16.3 million offered by Roger Simpson. … [73] I have considered in this regard [the rejection of Mr Hill's account as being unreliable and dishonest] the diary notes of Mr Hickey as touching on questions of credibility in respect of the representations said to ground the cause of action of Expectation. The Hickey diary notes, Exhibit 46 AWH1, AWH2 and AWH3 record nothing about the lodging of the expression of interest or its quantum, or about the vendor being persuaded to extend the time for making expressions of interest. There is no mention of an expression of interest at $14.1 million or any other figure, and the contents of AWH3 are concerned with the financing of the acquisition on the basis of a $15 million offer which Mr Hill was committed to make by the following Friday 3 December 1993.' 151 The submissions on behalf of PRD and Mr Douglas in the appeal in relation to these grounds went to what might be described as the merits of their defence, rather than to whether his Honour had made any finding in relation to the Urgency Representations or whether he should have done so. 152 The evidence was, contrary to his Honour's reference to Mr Simpson's offer, that no offers (i.e. offers capable of acceptance) had ever been made to purchase the Centre. The offer by Expectation was the only such offer. 153 There was evidence that Benoco would have considered entering into a conditional contract. There was also evidence that $15 million was at the top of the range of the Benoco's assessment of a realisable price. 154 The case advanced by Expectation was that, by the Urgency Representations, it was rendered unable to carry out 'due diligence'. There was no time to obtain a valuation or assess whether the rents being paid were in fact appropriate market rents and whether in fact all of the rents were being paid. On this latter matter, PRD knew that $100,000 of rent due in the previous year had been written off. (It will be recalled that PRD was the managing agent for the Centre). There is some debate between the parties about whether the rents were actually written off or only notionally written off in respect of premises vacant as at 30 June 1993. 155 His Honour ought to have made findings in relation to the Urgency Representations. He did not make the necessary findings. It may well have transpired that his Honour would have rejected the evidence, some of which has been summarised above. But if he had engaged in that exercise, he would have been required (due to the elapse of time) to descend to some detailed reasoning and analysis of the evidence. 156 It is not necessary, or indeed possible, for this Full Court to decide whether there is any merit in this part of the case (i.e. the case based upon the Urgency Representations). It was open to the primary judge, on the evidence before him, to make findings in favour of Expectation's case as pleaded. It is sufficient to hold that Expectation has made out the grounds of its notice of appeal relating to the Urgency Representations. Expectation was denied the right to have this issue properly tried and determined. THE SPECIALTY RENT REPRESENTATIONS 157 Expectation's complaint here is that the primary judge had found that Mr Cooney had told Mr Hill that 'the tenants of specialty shops in the Centre were paying not more than an appropriate market rent', but had failed to find whether that representation was misleading or deceptive and that he should have so found. 158 In the Statement of Claim Expectation pleaded that, on the occasion of the inspection of the Benowa Centre, Mr Cooney told Mr Hill that the tenants of specialty shops were paying not more than an appropriate market rent. That part of the defence that purports to be a response to various allegations, including that allegation, does not descend to any specificity in relation to that allegation. The result is, again, simply a non-admission of the plea. 159 The first leg of Expectation's complaint is clearly correct. It can be seen that his Honour found that the representation had been made. At paragraph [68] his Honour said: 'The representation "the tenants of speciality shops in the centre were paying not more than an appropriate market rent" was an honest and reasonably based opinion of Mr Cooney and involved no misrepresentation.' 160 Earlier, at par [57] of his reasons, the primary judge had made these findings about what Mr Cooney had said during the inspection: 'I accept that Mr Cooney told Mr Hill during the inspection that he thought the shopping centre would perform, and that in a general sense the tenants would perform, and that Mr Hill asked Mr Cooney whether the shops were at fair market rent and that Mr Cooney had replied that he believed they were well rented; and that when Mr Hill asked whether the Fruit Barn could be easily re-let, Mr Cooney advised that it could be "reasonably re-let over a reasonable period of time".' 161 Earlier still in his reasons, his Honour made the following observation in relation to the Benowa Centre at the time of purchase: 'It faced competition from Ashmore City, Ashmore Plaza, and Southport Park. The anchor tenant, Bi-Lo, could not be regarded as comparable to either Coles or Woolworths, but the centre was designed to have a basic Bi-Lo supermarket with a wide range of speciality stores which, as its developer had planned, paid a much higher rate per square metre than the anchor tenant. The second largest tenant, the Fruit Barn, was a problem tenancy and there were difficulties with the level of specialty store rents, the level of vacancies, and arrears of rental collections.' (emphasis added) Expectation maintains that his Honour's conclusion that Mr Cooney's representation 'involved no misrepresentation' was quite inconsistent with this earlier finding. 162 Furthermore, the reference to Mr Cooney's opinion as being 'reasonably based' showed, so it was submitted, that the primary judge must have either erroneously characterised the representation as one concerning a future matter, or had misconceived the law. Senior counsel for Expectation pointed out that Mr Cooney's statement was not made with respect to a future matter, but concerned the current rents paid by the tenants of the specialty shops. In those circumstances, so it was submitted, s 51A of the Trade Practices Act was of no relevance and would not relieve the representor of liability with respect to statements made concerning present matters. 163 There was the following exchange in the course of Mr Douglas's cross-examination about what Mr Hill had asked Mr Cooney: 'And he asked whether the shops were at fair market rent. I think you agree with that one? --- Yes, yes. Yes, he did, yes. And Mr Cooney answered, "Absolutely"? --- He believed they were well rented, yes.' 164 Mr Cooney's evidence on this matter was that Mr Hill: 'Asked the question about market rent – were the retailers paying market rent and I indicated that yes, they were paying market rent and that approximately the net rent was $1.5 million.' 165 Expectation argued that Mr Cooney's statement was plainly misleading and, as such, his Honour should have found that it contravened s 52 of the Trade Practices Act(and the corresponding State provision). Expectation submitted that his Honour then should have considered whether it had relied on that representation and if so whether it had suffered any loss or damage. 166 His Honour's finding that there were difficulties with the level of specialty store rents must be taken to indicate that they were too high rather than too low. The context is one of the second largest tenant (not a specialty store) being a problem tenancy, vacancies and arrears of rental collections. That is not a context that suggests that the difficulties (from the lessor's point of view) were that the rents were too low. It is difficult to reconcile his Honour's finding about those difficulties with his conclusion that Mr Cooney's opinion was reasonably based. 167 PRD and Mr Douglas submitted that Mr Cooney's statement was only an expression of his opinion and that the 'operative' representation was to the effect that the opinion was honestly held and that there existed an adequate foundation for the expression of that opinion. But the representation was not pleaded as having been expressed as an opinion. PRD and Mr Douglas did not plead that Mr Cooney's statement was merely the expression of an opinion. 168 It is not axiomatic that a statement to the effect that tenants of specialty shops were paying not more than an appropriate market rent must be one of opinion. Depending upon the circumstances, the question whether specialty shops were paying more than an appropriate market rent could be one of fact capable of proof by reference to comparable rentals then being paid in the market. There may be borderline problems where excessiveness or inappropriateness might be a question of opinion (John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR 41–249; Bowler v Hilda Pty Ltd (1998) 80 FCR 191; Heydon v NRMA Ltd (2000) 51 NSWLR 1 at [307], [431]–[432]). But there might also be sufficient evidence to be able to establish as a fact whether the statement was true or untrue. 169 The problem is not only one of pleading. It is compounded by the circumstance that his Honour, if he found that Mr Cooney's statement was one of opinion only, did not disclose the reasoning upon which he reached that conclusion. Given the time for which judgment was reserved, it was incumbent upon his Honour to expose that process of reasoning and consideration of the relevant evidence. It is necessary for this Full Court to consider that evidence. 170 There was a considerable body of evidence to the effect that the specialty store rents were above market levels and unsustainable. That evidence included the following: (a) The facts set out in Mr Cox's letter of 27 January 1994 upon which he based the valuation, which he provided to the ANZ Bank, namely: (i) that of the 28 specialty tenants who were required to provide turnover figures, 16 had occupancy costs greater than 16 per cent of turnover, with six of those being over 30 per cent. The widely acknowledged measure was that specialty tenant occupancy costs should be within a range of 10 per cent to 15 per cent of turnover depending on the type of trader; (ii) a table comparing the base rentals for five of the specialty tenancies at the Centre (bank, butcher, delicatessen, newsagent and bakery) with those paid at comparable premises in six other shopping centres, including two which had Coles as a major tenant. The figures in that table show, quite starkly, that the corresponding specialty tenants at the Centre were paying very much higher base rentals per square metre per annum than those at the other six centres; (b) Mr Cox's opinion that, given high occupancy costs, it was anticipated that specialty rentals would, by necessity, be reduced to sustainable levels over the next 12 to 18 months; (c) Mr Cox's further opinion that for valuation purposes a capitalisation of 12 per cent would have been appropriate if the specialty rentals were at sustainable levels, but given the then current situation of excessive specialty rentals, there was a greater risk and uncertainty of maintaining the income level, limited prospect of growth and in those circumstances a capitalisation rate of 13 per cent should be applied. (d) Mr Johnston's internal note dated 29 July 1993, reporting in relation to the proposed marketing of the Centre. In cross-examination Mr Johnston put the date of preparation of that document as being closer to 1 October 1993, which made it even more current. In his report, under the heading 'Disadvantages' the first item that Mr Johnston listed was 'Full Speciality Rents'. (e) Ms Allison's evidence. Ms Allison became the Centre Manager on 20 September 1993. Her evidence included the following: 'Once I became familiar with the workings of Benowa Gardens, I formed a view that the centre was overrented and the tenants were struggling to pay their rent and outgoings. In some cases, such as the ice-cream shop, some tenants were barely making ends meet.' (f) On 5 November 1993 Ms Allison reported to the then owner of the shopping centre that there remained arrears of rent owing as at 30 June 1993, referrable to 13 tenants, in a total sum of $126,578.85. Of that amount $22,520.76 was paid after 30 June 1993, but the owner wrote off about $100,000. 171 There was evidence that put in issue Mr Cox's opinion concerning the rents paid by the specialty tenants. For example, there was evidence that it was fundamentally erroneous to use occupancy cost figures drawn from an initial trading period and that the premises listed in Mr Cox's table were smaller at the Benowa Centre compared to equivalent premises at other shopping centres, thereby resulting in higher rents per square metre. 172 But his Honour made no reference to any of that evidence in his reasons. Had he done so, it would have been open to him to find that whether or not the tenants of the specialty shops in the Benowa Centre were paying more than an appropriate market rent was one of fact and that Mr Cooney's statement was also one of fact. 173 If Mr Cooney's statement had been found to be one of fact then, even if it had been honestly and reasonably based, that circumstance would not provide a defence to an allegation of a contravention of s 52 of the TPA. If a statement is made about an existing fact, and that statement is wrong, then, for the purposes of s 52, the stage is set for a finding of misleading or deceptive conduct. In any event, his Honour gave no reasons for his conclusion that Mr Cooney's statement was honestly and reasonably based. 174 In his very brief assessment that Mr Cooney's statement involved no misrepresentation, his Honour erred in giving insufficient reasons for that conclusion. In those circumstances, Expectation was also denied a fair hearing and determination of that issue. FAILURE TO DISCLOSE RELEVANT FACTS 175 Expectation asserts that the primary judge failed to make any or any sufficient findings in relation to what might be described as its 'non-disclosure case'. There were five matters of non-disclosure that were said by Expectation to amount to misleading or deceptive conduct, namely: (a) that rents payable by tenants of specialty shops in the Benowa Centre were significantly higher than the appropriate market rent; (b) that the only persons other than Expectation who had expressed any interest in the Benowa Centre were persons contacted by PRD as agents for the sale of the Benowa Centre, and none of them was in a position to, or did, make an offer which was capable of acceptance; (c) that on or about 29 July 1993 PRD and Benoco had agreed to a sliding scale of commission, the effect of which was that the greater the sale price the greater was the percentage upon which PRD's commission was calculated; (d) that Benoco had directed PRD to keep marketing information, and in particular information as to rent reviews, confidential from prospective purchasers; and (e) PRD's opinion that the sale price for the Benowa Centre of $15 million was a disadvantage to its sale. 176 Once again, other than a non-admission, there was no plea in the defence in respect of the allegations made in the relevant paragraphs. PRD and Mr Douglas admitted that the commission arrangements were not disclosed, but denied 'the truth of the matters' alleged. Allegation (d) above was simply the subject of a non-admission in the defence. 177 PRD and Mr Douglas did not deny that the primary judge had failed to make findings about these matters. As to the rents, they asserted that Expectation's case failed because they (PRD and Mr Douglas) did not hold the belief or opinion that Expectation alleges they ought to have disclosed. As to the degree of interest in the Benowa Centre, PRD and Mr Douglas contended that the primary judge's finding about Mr Hill's awareness of PRD's role disposed of this aspect of the case. That is, so they claimed, Mr Hill was not entitled to believe that PRD would reveal confidential details. In any event, so it was put, there was no evidence that they intentionally withheld the information, a further offer was expected from Mr George and they were not to know that Expectation would be the only offeror. 178 In respect of the commission, PRD and Mr Douglas submitted that Expectation's case foundered because of the primary judge's finding that Mr Hill was aware that PRD was acting for Benoco and that in this connection 'the higher the price, the higher the commission'. However, that was not the point being made by Expectation. The point being made by Expectation was that there was an escalating rate of commission, depending upon the sale price. On this matter PRD and Mr Douglas argued that there was no evidence that they knew this information should have been disclosed to Expectation, but intentionally withheld it. 179 In relation to the allegation concerning confidentiality of marketing information, PRD and Mr Douglas asserted that the relevant direction was about the channel of communication, that there could be no suggestion that the non-disclosure left Expectation with a misleading or deceptive impression and again that there was no evidence that they knew that this information should have been disclosed to Expectation, but intentionally withheld it. 180 As to the final non-disclosure, the principal submission of PRD and Mr Douglas was that Expectation's case foundered at the first hurdle due to the trial judge's findings (in relation to Mr Douglas' recommendation to Expectation that it should offer to purchase the Benowa Centre for $15 million) and his further finding that PRD and Mr Douglas did not hold the opinion that the sale price for the Benowa Centre of $15 million was a disadvantage to its sale. 181 It is conceded that his Honour made no specific findings in relation to these pleas. 182 The question that his Honour had to decide was whether there had been such disclosures. If there had not, he then had to decide whether, in all the circumstances, such failure to disclose caused PRD's conduct to be misleading or deceptive. He may also have been obliged to find whether the non-disclosure was deliberate. 183 There was a case to answer in relation to non-disclosure of the significantly higher than appropriate market rents for the specialty shops. To some extent this overlaps with the conclusions above in relation to the Specialty Rent Representation. There should also have been some findings on the matter of disclosure of the actual level of interest, in the context of his Honour's finding that Mr Douglas had told Mr Hill that '… a number of people had lodged Expressions of Interest …'. 184 As mentioned above, the fact was that the percentage rate of commission escalated as the purchase price increased. Again it was a fact that Benoco had made careful stipulations restricting access to marketing information. There was also evidence that PRD regarded the sale price of $15 million as a disadvantage to its sale. 185 All of these matters were in the context of a finding by the primary judge that the arrangement between Expectation and PRD was that PRD would locate, investigate and evaluate investments, and make recommendations as to purchase, even if PRD was in the position of vendor's agent. 186 In those circumstances, it was at least strongly arguable that Expectation had a reasonable expectation that it would be informed by PRD of anything which might be material to Expectation's decision whether or not to purchase the Benowa Centre and, in particular, to anything which might put a different colour on the factual information and recommendation provided by PRD to Expectation. 187 It was open on the evidence before the primary judge to find that such non-disclosure was deliberate, that in the context of what had been disclosed, failure to disclose some or all of these matters caused PRD to engage in misleading or deceptive conduct upon which Expectation relied when it decided to purchase the Benowa Centre. 188 Once again, Expectation was deprived of a fair hearing and determination of this issue. The grounds of appeal relating to failure to disclose the Relevant Facts have been made out. CONTRACT AND TORT CLAIMS 189 In his reasons published on 11 March 2003, the primary judge referred to Expectation's claims based on breach of contract and negligence in relation to the Benowa Centre. However, his Honour did not deal with those claims at all. No findings were made and no decision was given in relation to them. 190 The primary judge specifically found that there was an agreement whereby PRD agreed to act for Expectation in locating investments, investigating and evaluating those investments and then making recommendations as to purchase of such investments. If Expectation decided to accept any particular recommendation then PRD, through Mr Douglas, was to be involved in the negotiations for those purchases. It would be expected that that recommendation would be subject to due diligence, and it was for Expectation to decide whether to accept any particular recommendation. That arrangement applied even if PRD was in the position of vendor's agent (see [25] and [39]). 191 It was common ground that there was an agreement between Expectation and PRD, made in or about July 1993. PRD admitted that it agreed to act as the purchasing agent of Expectation in respect of commercial properties that were not already listed by the vendor thereof for sale by PRD. However, PRD denied that it agreed to act as purchasing agent for Expectation in relation to property that was already listed by the vendor for sale through the agency of PRD. That issue was not resolved. 192 The terms of the agreement found by his Honour were not significantly different from the terms of the 1993 Appointment as pleaded by Expectation. In the light of the conclusion that there was such an agreement between PRD and Expectation, it was incumbent upon the primary judge to examine and decide the allegations made by Expectation in the Statement of Claim that there was a breach of the Contract Terms. 193 Expectation alleged that one of the Contract Terms was that PRD would exercise due care and skill in the performance of its duties and would act honestly and in the best interests of Expectation. PRD admitted that it was obliged by the 1993 Appointment to exercise reasonable care pursuant to the arrangement and to act honestly in performing its duties. PRD otherwise denied the allegations made concerning the implied terms of the 1993 Appointment. 194 In the light of his Honour's findings and the admissions made by PRD and Mr Douglas, it was incumbent upon the primary judge to make a determination of whether there was conduct on the part of PRD that was a breach either of the term alleged by Expectation or, at the very least, of the term admitted by PRD. If an examination of the evidence indicates that there was at least an arguable case that there was a breach of either such term, Expectation is entitled to succeed on the appeal in relation to the ground that his Honour failed to deal with a significant issue in the proceeding. The matter would then have to be remitted for further determination by the primary judge or for a new trial on that question, unless the Full Court concluded that on the evidence before the primary judge, further trial of that question would be futile. 195 Expectation asserts that the misleading representations allegedly made concerning Benowa Gardens and the failure to disclose material facts concerning the proposed purchase constituted breaches of the implied terms of the 1993 Appointment. For reasons advanced elsewhere, there was at least an arguable case that what PRD allegedly represented to Expectation was, in large measure, without factual foundation. Similarly, there is an arguable case that what PRD allegedly failed to disclose to Expectation concerning the purchase could have been critical to a decision whether or not to purchase Benowa Gardens. It is therefore arguable that, had the primary judge considered Expectation's contractual claim, his Honour would have concluded that there was a breach by PRD of the terms of the 1993 Appointment. 196 In relation to the claim in tort based on negligence, the primary judge observed that a very real difficulty in the case was the conflict of duties that arose because PRD was the vendor's agent in the sale of Benowa Gardens and was also acting as buying agent and advisor to Expectation concerning real estate acquisitions. However, his Honour made no finding as to whether the relationship between Expectation and PRD was one of such proximity that there was a duty to take care in giving advice as agent for Expectation. 197 In one sense, it does not matter because PRD admitted that it had a contractual obligation to exercise reasonable care in performing its duties under its agreement with Expectation and was under a contractual duty to act honestly in performing those duties. Nevertheless, the primary judge failed to consider and make a determination concerning the content of that duty in the context of the claims made by Expectation that PRD breached that duty. 198 It appears that Expectation formulated its case as to breach of a contractual obligation to take care and in the same way as its case as to breach of a general law duty to take care by reason of proximity. Thus, subject to the question of the measure of damage, there is no real utility in considering the causes of action separately. That is to say, if Expectation establishes its cause of action for breach of a contractual duty to take care, there would be no need to consider the claim based in tort. On the other hand, if Expectation failed in its contractual claim, it would, of necessity, fail in its claim in tort. 199 The measure of damages for breach of contract is not necessarily the same as the measure of damage for breach of a common law duty to take care. However, no argument was advanced on behalf of Expectation that the measure of damages would result in any different verdict in the circumstances of this case. 200 It was at least arguable that a duty to exercise reasonable care entailed that PRD undertake an adequate investigation and evaluation of the proposed purchase and make proper enquiry as to such matters as the market rent for the specialty stores and the likely sustainable rate of income growth before recommending that Expectation purchase the Benowa Centre. Such a duty was imposed by the terms of the 1993 Appointment whereby PRD agreed to act for Expectation in investigating and evaluating proposed investments and making recommendations as to purchase. 201 It is arguable that the obligation to investigate and evaluate the investment was more pronounced because of the statements by Mr Douglas that there was no time within which to undertake due diligence, as a consequence of which, Expectation was completely reliant on PRD to have undertaken a proper investigation and evaluation before making any recommendation concerning it. There was material upon which the trial judge could have found that PRD and Mr Douglas breached the duty to take care in the investigation and evaluation of the proposed investment, if the representations alleged are found to have been made. 202 The primary judge dismissed the proceeding because of his Honour's conclusion that certain of the Express Representations and the Implied Representations had not been made, and that, in any event, there had been no reliance on any representations that had been made. That was sufficient to dispose of the three causes of action based on the representations. In the light of the conclusions reached above in relation to the factual issues, the appeal should be upheld in so far as it relies on dismissal of the claims based on contravention of the Consumer Legislation, breach of contract or negligence. BREACH OF FIDUCIARY DUTY 203 Early in the judgment, the primary judge said: 'A very real difficulty in this case is the conflict of interest and of duty that arises because PRD Realty was the vendor's agent in the sale of Benowa Gardens, and Mr Douglas also acted as buying agent and adviser to Mr Hill and Expectation concerning real estate acquisitions.' 204 There was a further complication. If Expectation purchased the Benowa Centre, PRD would maintain its position as manager of the Centre. That would not be assured if there were an outside purchaser. Having made various ancillary findings, the primary judge said: 'In my opinion, the nature of the arrangement in place between Mr Douglas and Mr Hill at the time of the acquisition of Benowa Gardens was that PRD Realty, through Mr Douglas (and Mr Longford [sic] in relation to commercial premises), would locate, investigate and evaluate investments, and make recommendations as to purchase. It would be expected that that recommendation would be subject to due diligence, and it was for Expectation to decide whether to accept any particular recommendation. This arrangement applied even if PRD Realty was in the position of vendor's agent.' 205 His Honour found that Mr Douglas had recommended to Mr Hill that Expectation make an unconditional offer to purchase the Benowa Centre for $15 million and that in his opinion the Benoco would accept nothing less than an unconditional offer at $15 million. That recommendation was accepted, the offer was made and the contract eventuated. It was also found that PRD was the sole agent for Benoco for sale of the Benowa Centre and acted as such. It received commission on the sale. Furthermore, at all relevant times, PRD was the managing agent for Benoco and had been since its inception. It also acted for the only other potential purchaser. Thus, PRD was wearing four hats – agent for sale for Benoco, agent for the purchaser, the actual and (hopefully) prospective managing agent for the Benowa Centre and agent for another purchaser. PRD had much to gain from the acceptance by Mr Hill of the recommendation from Mr Douglas and much knowledge that would be useful to Expectation. 206 The facts reveal an arguable case of both a conflict of duty and duty (as between duties to Benoco and the purchaser and as between duties to the two purchasers) and conflict between duty and interest (between the duty to the purchaser on the one hand and the interests of PRD in the earning of commission and the securing of an ongoing role as manager of the Benowa Centre on the other). (See Finn, Fiduciary Obligations, ch 21 and ch 22; Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 3rd ed, ch 5.) The existence of those conflicts was fundamental to the resolution of the case and the ramifications of them required to be examined. A case of breach of fiduciary duty was pleaded and pursued but was not dealt with in the reasons for judgment. 207 It is necessary to say something more about the relationship between Mr Hill and Mr Douglas. Mr Hill was a wealthy man who was based in Monaco and had business connections with Western Australia and business associates based in Perth. He was an experienced businessman but with no particular expertise in relation to property. Mr Hill was introduced to Mr Douglas by the brother of Mr Douglas who was a stockbroker with whom Mr Hill did business. A personal relationship developed which led to a business relationship. Mr Douglas recommended real estate in Queensland as an investment, and thereafter acted as an adviser to Mr Hill through PRD of which Mr Douglas was a principal. This led to the dealings between Expectation and PRD. PRD introduced various properties to Mr Hill. Expectation was to acquire title to the properties. Two had been acquired prior to the introduction of Mr Hill to the Benowa Centre. The interest in the Benowa Centre was to be held by Expectation on trust for Mr Hill's former wife. The following passage from a letter written by Langford concerning the Broadway Centre on 7 January 1994 is revealing: 'I confirm that we are retained by a major off shore based purchaser to seek suitable investments on his behalf. He is based on Europe, but has Australian residency and has made the decision to shift his asset base to Australia. We have a long standing relationship with this client and have concluded business on his behalf. We further confirm that we are acting for the purchaser and we will therefore not be seeking commission from you, the vendor. To prevent any conflicts in our agency practice, this matter will be handled on a highly confidential basis. Transactions concluded on behalf of this purchaser include a neighbourhood shopping centre anchored by a supermarket with 34 specialty shops. This property has been acquired on a cash basis and will be put into a trust vehicle for the client's family. He has also purchased two major residential sub-divisions in Queensland. The first is known as Sippy Downs on the Sunshine Coast, and consists of a 280 ha parcel which will ultimately be sub-divided into 4,000 residential allotments. He has also purchased a 330 ha sub-division on the Gold Coast, which is currently being sub-divided. These purchases were on a cash basis, but the balance of the land development will be funded by an Australian bank.' 208 Mr Douglas was alive to the problem of conflict of interests. Hence the letter referred to by the primary judge that, no doubt, formed a basis for the primary judge's finding as to the nature of relationship set out above. If Mr Douglas had simply introduced Mr Hill to the property and let him make his own inquiries and his own decision, there may well have been no problem. That did not happen in the case of the Benowa Centre. There was active encouragement to buy, coupled with a recommendation as to the price that would be required to secure the purchase, and a time scale which did not permit the kind of orderly and thorough process of due diligence which Mr Hill and his associates would have been able to organise given time. It will be as well to consider the conduct of PRD in more detail before considering the authorities. Much of that conduct has been considered in relation to the misleading conduct case but it is useful to set it out from the perspective of this cause of action. Consideration will not be given to contentious evidence of the Expectation witnesses. Concentration will be upon PRD's witnesses and the contemporaneous documents. 209 In the first place, Expectation was not told all that was of relevance about the arrangements between PRD and Benoco. There was a special commission agreement which differed from the usual scale, and which gave more than usual incentive to PRD to obtain a maximum price. This incentive went beyond the generally understood 'the higher the price, the higher the commission' referred to by the primary judge. Further, the internal arrangements within PRD were such that those involved in formulating the recommendation to Expectation would benefit directly (Mr Langford received $6975 and Mr Johnston received $69,982.50) or (in the case of Mr Douglas who was a principal) indirectly from the receipt of the commission. Mr Langford explained the direct payments to himself on the basis that it was a reward as he had invested a great deal of time with Mr Hill, and the payment to Mr Johnston as he handled the entire marketing program and transaction for the vendor. He described the commission earned above the usual rate as a 'bonus'. PRD's sole agency was to end in February 1994. There was a powerful incentive for those involved in the recommendation to achieve a sale at an inflated price; making the recommendation to purchase at $15 million and creating the need for urgency achieved those objectives. That price was at the top of the range or above it and, knowing what they did, the PRD personnel could be virtually certain that it would be accepted by Benoco. 210 In the second place, it is clear that there was a considerable amount of information (including informed opinion) known collectively to the servants and agents of PRD about the sale process, the operation of the Benowa Centre and its value, which bore upon the acceptance of PRD's recommendation to buy but which was not disclosed to Expectation. To recommend an unconditional offer of $15 million at the time it was made without the opportunity of carrying out full due diligence could not be justified knowing all that the relevant employees of PRD knew. 211 It is instructive to view the matter from the point of view of PRD and Benoco. After construction, the Benowa Centre opened for trade in September 1992. PRD was the manager of the Benowa Centre from inception and was responsible for leasing. The Benowa Centre was the only shopping centre managed by PRD. Mr Cooney was 'head hunted' from the successful Pacific Fair Centre in July/August 1992 to establish and expand that area of PRD's operations. He acted as manager of the Benowa Centre until the employment of Christie Allison in that role in September 1993. Cooney continued to supervise Ms Allison until 1995. The developer, Benoco, was a subsidiary of the publicly listed Lion Nathan Group and intended to sell once the Benowa Centre was fully leased and operating. Geoffrey Laurence was the person who gave instructions on behalf of Benoco. It had engaged a company called Magellan Group (Qld) Limited ('Magellan') that had a head office in New Zealand but had staff in Queensland to sell the property. Allan Fraser was the responsible officer of Magellan. He worked in New Zealand but travelled to Brisbane as necessary. Ralph Gehrman was the local manager of Magellan. Magellan in turn engaged PRD to act on the sale, Bradley Johnston being the responsible officer of PRD for that purpose. Mr Johnston was described by Mr Fraser as a specialist shopping centre sales agent in the Gold Coast area who was very professional. Mr Johnston reported to John Langford who was the Queensland Commercial Director of PRD. 212 In June 1993 Benoco sought a marketing plan from Magellan, which consulted Mr Johnston. Points for discussion prepared by Mr Johnston on 29 July 1993 show that, if a capitalisation rate of 11 per cent was achieved, the rate of commission would rise. Amongst his comments was a summary of disadvantages: '1) Full Speciality Rents 2) Unproven Trading Record 3) Price level' 213 By 3 August 1993 it had been decided that the sale would proceed by way of 'Expression of Interest Tender'. The question of the first annual rent reviews for tenants also arose by August and there was considerable discussion about that issue between Messrs Fraser, Gehrman and Cooney with a detailed examination of the performance and prospects of each tenant. In addition, PRD made a weekly report to Magellan as to the operation of the Benowa Centre, including comments about problems with tenants. There were quite a number. The existence of problems with the operation of the Benowa Centre was confirmed by the evidence of Ms Allison, who was not challenged on credit. 214 PRD was completely informed as to the financial performance of the Benowa Centre as its manager. The rent review decisions were made by 10 September, and did not involve all tenants being subject to the maximum increase. In October, Mr Johnston was provided by Magellan with analyses of sales for the first year of operation which: '… should only be used for your personal information and is not to be released to prospective purchasers.' 215 On 25 October PRD was engaged as sole agent for sale for a period expiring initially on 31 December 1993, extended later to 15 February 1994. The commission arrangements were as follows: '(a) If the sale price of the property represents the net rental income of the property capitalised at the rate of 11.25% or above, commission shall equal 1.5% of the sale price. (b) If the sale price of the property represents net rental income of the property capitalised at a rate exceeding 11% but less than 11.25%, commission shall equal 1.7% of the sale price. (c) If the sale price of the property represents net rental income of the property capitalised at a rate of 10.85% or above but not exceeding 11%, commission shall equal 1.8%. (d) If the sale price of the property represents net rental income of the property capitalised at a rate which is less than 10.85%, commission shall equal 2% of the sale price. "net rental income" means the projected annual rental income of the property at the date of the Contract of Sale for the year ending 30th June 1994 calculated on the assumption that the property was fully leased for the whole of the year less the projected annual outgoings with respect to the property for the year ending 30th June 1994 as determined by the Principal.' 216 The normal rate of commission applied up to a capitalisation rate of 11.25 per cent, but thereafter the lower the capitalisation rate (and so the higher the price) the higher the rate of commission. In that event PRD would receive not only an increase in commission by reason of the increased price, but also by reason of the increased rate. That arrangement was described in the documents as 'Commission + incentive' and Mr Langford described the increasing rate as a 'bonus'. There is no suggestion that it was disclosed to Expectation. 217 A brochure and an information memorandum were prepared and the marketing program was launched on 14 October 1993. The closing date for the Expressions of Interest was Thursday 25 November 1993. Mr Johnston's evidence was that Mr Langford approached him prior to 16 November 1993 for a property report as Mr Douglas had a client who might be interested in purchasing the property. 218 Mr Johnston's report to Magellan of 16 November was as follows (omitting formal parts): 'MARKETING – BENOWA GARDENS SHOPPING CENTRE As requested we make the following points in the Marketing to date of the above property. PROPERTY REPORTS ISSUED 105 OFFSHORE REACTION Minimal due to price bracket and lack of understanding of retail property including perceived difficulty of Management. GENERAL REACTION Although excellent enquiry has been generated it has been compounded that most cash rich private Australian investors top out at approx $10m, with the Property Trusts and Institutions looking at property of a greater value. As always discussed it was to be a unique buyer for Benowa as the more experienced type of retail buyer would discount the yield because of the ratio of speciality shops to major tenant and lack of expansion potential. The above reasons plus the perception that the rents of Benowa are full were given as reasons why Mercantile Mutual will not proceed. POSITIVE ENQUIRY INCLUDES 1. Roger Simpson – Contract issued – awaiting confirmation of loan facility. Very interested. Will lodge Expression of Interest. 2. Keith George – Very interested – a figure of $14m has been discussed. A Property Report has been requested to be sent to National Bank Head Office Brisbane for finance approval. 3. Pat Corrigan – Has commissioner a Mr Terry Green to complete due diligence. Mr Green is due on the Coast this week. 4. Salim Merchant – Mr Murmom (Dubai) – Very interested, however substantial deposit monies are tied up in a Court Action with the date yet to be established. Mr Merchant will go to Dubai to entice Mr Murmon and other friends to purchase this property, however with time running out it could be difficult for this client to perform. 5. Schroder Australia Ltd – Yet to complete due diligence. Have not inspected property. 6. Kel Netting – Mr Kataoka (Japan) – Client has made no contact to date. Mr Netting believes client is interested. 7. John Langford – European client – Arriving Australia/Gold Coast 22/11/93. As discussed previously property has been recommended to purchase. Late interest is yet to be qualified with Singaporean interest from one client through CKS-PRD expected plus another client from Singapore through Citibank. I will keep you informed of further progress and suggest a strategy meeting be held at your earliest convenience.' (emphasis added) The source of the statement concerning Mr George is not disclosed. 219 The monthly report of 18 November 1993 included the following: 'Sale Preparation and Divestment Programme Expressions of Interest close next Thursday, 25 November, 1993. To date 105 Investment Reports have been issued. Limited interest has been generated in Singapore and Hong Kong. CKS – PRD Singapore have confirmed genuine interest by a Singaporean investor. Also, the Singapore office of Citibank has confirmed interest by one of their clients. PRD's John Langford has recommended the property to his European client who arrives in Australia on the 22nd. Schroders Australia Limited are continuing with their due diligence, however they have not inspected the property. Mercantile Mutual are not proceeding. The reasons given are: · ratio of specialty shops to anchor tenants is too high. · limited future expansion potential. · consider the rents are too "full". PRD have identified three onshore private investors who have seriously investigated this investment. Two of the three private investors have submitted the investment package to their financiers for finance approval. The third Sydney based investor will be inspecting the property this Friday.' (emphasis added) 220 On 18 November 1993 Geoffrey L Irvine and Associates C/- R Simpson submitted an Expression of Interest at $16.3m conditional on obtaining finance from the United States. 221 On 24 November Rick Bird of PRD submitted a letter from Keith George under cover of the following: 'RE: BENOWA GARDEN SHOPPING CENTRE I have attached an expression of interest from Mr. Keith George for the purchase of this shopping centre. As you can see in the letter he has not nominated a price at this stage but has reiterated to me that he wishes to meet with the vendors [sic] representatives on Monday 29th November, 1993 at 1:00 p.m. to negotiate acquisition. Mr. George, as you would be aware is a long term client of this company and is well acquainted with Gordon Douglas and myself. His current financial position is that amongst other assets he is the owner of the "Quay West" site in Alice Street in the Brisbane CBD. This site is currently under contract to Mirvac Projects Pty Ltd for $6m. I understand there is no mortgage over the property and Mirvac is due to settle in mid February 1994. The unit and hotel suites proposed for the site are now over 75% sold on unconditional contracts and Mirvac has invested substantial non-refundable deposit monies, architect and consultancy costs and marketing costs in the project. It is our opinion that there is no likelihood of the project not proceeding. At Mr. George's request we forwarded an Investment Report to his Bank Manager at National Australia Bank recently and subsequently Mr. George has advised that he has finance approval to acquire the property after settlement of the Alice Street sale. We look forward to hearing confirmation of the appointment with the vendor as soon as possible and if you require any further information please do not hesitate to contact me.' (emphasis added) The so called 'expression of interest' from Mr George was not on the required form. It was a letter to Rick Bird of PRD dated 25 November 1993 as follows: 'Re: Benowa Gardens Shopping Centre I would like to lodge a strong expression of interest in acquiring the above shopping centre. At this stage I don't want to make a formal offer but I am sure that if I could meet with the principals of the centre, an exchange could eventuate. I await a reply.' 222 Thus, at the close of the nominated period, the only Expression of Interest was that from Simpson and that was conditional on finance from the United States. 223 Mr Hill came back to Australia on 22 November 1993 and, between 24 and 26 November 1993, Mr Hill met with Mr Douglas and Mr Langford and discussed the possible acquisition of the Benowa Centre. 224 On 26 November 1993 Mr Hill inspected the Benowa Centre with Messrs Douglas and Cooney. That event, and that which immediately followed it, has been discussed in relation to the misleading conduct case. 225 On 29 November 1993 Mr Johnston wrote to Mr Bird as follows: 'Thank you for your letter dated 24 November, summarising Mr K W George's interest in the purchase of the above property. We confirm a meeting between Mr George and the Vendors at 1pm on Monday 29 November at the offices of Magellan on Level 30 Riverside Centre. Given Mr George's non-commitment to an indication of purchase price, the Vendors have requested that this be qualified early in the meeting.' 226 On 29 November at 10.30 am Mr Johnston met Mr Fraser. Mr Johnston proposed the following agenda: '1. Balance of Marketing money. 2. Extension of Agency to 15 February 1994. Original advice as to yield range 11 – 11.5% Original perceived price target – asking price $14.8 mil Comparison sale of other property – Helensvale 11% + West Burleigh 11% + POINTS TO MENTION Every point ever previously discussed surfaced as a discussion point with prospective purchasers ie: - Proportion of Speciality to Major - Level of Rent (full rent) - Lack of Expansion - Price Bracket - Fruit Barn Operator LET'S NOT LOSE MOMENTUM Given we have intensely worked property (over 110 enquiries,), we have created a competitive atmosphere. 1. Roger Simpson $16.3m 2. Danny Hill $14.1m 3. Keith George ? 4. Salim Merchant ?' (emphasis added) 227 On the same day at 1 pm Messrs Johnston and Fraser met Messrs George and Bird. Mr George expressed interest at $14 million but Mr Fraser indicated that would not be acceptable. 228 Mr Johnston gave the following evidence: 'Throughout this period I recall that Gordon Douglas and John Langford came into my office at different times to discuss the property. I recall that Gordon Douglas was very keen to ensure that Hill got the right property and that he paid as little as possible for it. Hill was a very good client of Gordon Douglas. In fact, I would say that he was his best client. Because of this, he was very concerned to ensure that he did not purchase a property that was not good or for too much.' (emphasis added) 229 On 30 November 1993 Mr Fraser reported to Mr Laurence as follows: 'Further to our various telephone conversations in recent days, I set out below a summary of the Expressions of Interest offerees following interview and investigation in Brisbane over the last two days. Ralph has forwarded to you yesterday the actual Expression of Interest responses and we have subsequently endeavoured to determine as much information about each party as possible. We have reviewed our ongoing programme with Brad Johnstone in the context of the various responses from the offering parties and have determined that the "mini-tender" proposed under our original pre-sale documentation and current programme be closed this Friday at 4.00pm, rather than the following Thursday as earlier proposed. This format suits the two strongest runners and has arisen from their responses and preferred programme. David Phipps has undertaken to complete a final draft of the contract by midday Thursday and this will be circulated to the parties on that day. Details of the bidders are as follows: 1. Roger Simpson Roger comes from Toormina which is located about 35 kilometres south of Coffs Harbour on the New South Wales coast. He has expressed an interest in purchasing Benowa at a price of $16.3m. The key feature of his offer being the procurement of funding ex-USA. We believe that he genuinely wishes to purchase the property and has relayed to me in a phone call his view that the property is an excellent prospect and one he would certainly wish to acquire. The issue for Roger is that his finance is not coming together and in fact is now proving frustrating in his bid to procure Benowa and two further properties financed from the same source. He has previously had approved $38.5m for the purchase of a shopping centre in Australia from this source, but was unfortunately the under-bidder. This property was the Stafford City Shopping Centre on the northside of Brisbane, and PRD have confirmed his performance on that occasion. His current endeavour is to put together a borrowing of $43m which would fund Benowa and two other prospects he is currently bidding for. Today he has told me that he does not believe he will confirm his finance within sufficient time to participate in the mini-tender. He has assured me that if there is any chance of him achieving satisfactory arrangements with his financing source, he will submit an unconditional offer. I have questioned him at length over his logic in persisting with the USA funding rather than endeavouring to put the finance together on shore and he assures me on shore finance would not work for him in the structure he is proposing. His financing appears to revolve around 10 year money at very favourable interest rates, which he does not believe is able to be duplicated in Australia. He has previously dealt with a certain person in the United States who is now away on leave. His "stand in" is "reinventing the wheel" with Roger and progress has slowed considerably. Summary I do not believe Roger Simpson will perform in the mini-tender (either this Friday close or next Thursday if that date was chosen) and can be discounted as a potential purchaser of the centre. Brad Johnston is also of this view. 2. Expectations Pty Limited PRD have advised that Expectations [sic] is an Australian registered company under the control of an extremely high net worth individual, who is involved in global financial market dealing. He resides in Europe. The principal is currently visiting the Gold Coast and last Friday inspected the property at 5.30pm in the evening in the company of John Langford, Gordon Douglas and Ken Cooney. The inspection went extremely well and certainly resulted in confirmation by Expectations that they wish to purchase the property. We have an unusual situation with this purchaser in so far as he is represented in Australia by John Langford and John has recommended that Expectations proceed to purchase Benowa. Both John and Gordon have actively courted this contact in Europe and in recent times he has purchased two rural development properties in Australia, through PRD. The first property is Canterbury Downs, which is an acreage on the Gold Coast bought for between $4m and $5m. It is an immediate subdivision prospect with a 5 year development programme. The second property is Sipi Downs, a huge tract of land on the Sunshine Coast, again a development prospect with a 10 year development period. Both those properties will be settled this year. PRD advise that Expectations is intending to purchase up to $50m of property in Australia. The principal of the company is apparently currently constructing a major residence at Mermaid Beach on the Gold Coast. This morning Expectations and PRD met with a National Bank of Australia officer from Melbourne to review Benowa and other purchases and PRD's report from the meeting is that it went very positively. Expectations apparently intend to put some debt around Benowa but this is not expected to be a condition of purchase. Summary Expectations Pty Limited is expected to be a serious bidder in the mini-tender and have today had Mr. Tony Hickey, a Gold Coast solicitor, with a support staff member conducting a review of the tenancy schedule and leases for the centre at David Phipps' office. They have so far (at the time this letter was written) spent 3 hours on their review and expect to complete in 2 further hours. 3. Keith George Mr. Keith George is part of a well known Brisbane Greek family, with he and his brothers being key players in the Brisbane Market scene for many years. Keith George has owned a number of properties over many years and in recent times sold unconditionally a 3/4 acre property in Alice Street, Brisbane. This property is currently the subject of a development proposal by Mirvac (a publicly listed Sydney developer) for a 134 unit apartment hotel. The development has been marketed by PRD and they claim that all units have been pre-sold with back-up agreements in place. Keith George visited our office at 2.00pm on Monday and is clearly interested in purchasing Benowa. He has an apartment at Imperial Surf and regularly stays on the Gold Coast. Both he and his wife have watched the centre being built and now shop there. He is very complimentary about the property and clearly would like to own it. By the nature of his responses during our discussion, both he and his wife could be described as emotional purchasers. He has already established the necessary funding for his acquisition with National Australia Bank. From his comments it would appear that a valuation is not a pre-requisite for drawing down from National Australia Bank, although an Engineer's Report may well be. Summary Keith George is clearly capable of purchasing the centre and certainly requires a quick response once he has tabled a contract. We have not determined the pricing that Keith George will bid for the centre. PRD are of the opinion that it will be in excess of $14m. His bid is likely to be conditional on a reasonably short period of due diligence (two weeks?) and will require settlement in February of 1994, which would back-to-back settlement of the Mirvac deal in Alice Street. Mr. George has advised that his bid would not be conditional on Mirvac settling Alice Street. Both Keith George and Expectations Pty Limited have requested a quick final bid position and this Friday has been preferred by both parties. Both parties will be looking for an early response from the vendor as to the acceptability or otherwise of their offer as they are both perusing various alternative opportunities and are "buyers". We believe the mini-tender will only yield two offers, but as a distillation of the Expressions of Interest campaign we believe that both bidders will be serious, qualified and capable of doing the job. Only time will tell. I will liaise with David Phipps tomorrow as the Expectations legal review is sure to raise various issues to be addressed.' (emphasis added) 230 On 30 November 1993 Messrs Douglas, Langford and Hill met at the office of Mr Hickey, as a result of which an Expression of Interest on behalf of Expectation was signed by Mr Hickey as attorney at a price of $14.1 million, which was the amount recommended by PRD. The report by Mr Fraser to Mr Laurence was obviously written before that Expression of Interest was received. At that stage Mr Johnston knew that George had mentioned $14 million. Mr Bird also knew that. Mr Langford said that Mr Johnston had told him that Benoco had rejected an offer of $14 million from Mr George. 231 On 2 December 1993 Mr Johnston wrote to Mr Hickey as follows: 'BENOWA GARDENS SHOPPING CENTRE I write to confirm the closing time and address of all Contracts for the purchase of the above property are to be lodged no later than 4pm on 3 December 1993 at the premises of: O'Shea Corser and Wadley 5th Level 307 Queen Street BRISBANE QLD 4000 Attention: Mr David Phipps' 232 Mr Johnston told Mr Langford that in his opinion an unconditional contract for $15 million would buy the property, and certainly told him that after he had his meeting with Mr Fraser on 30 November. Messrs Fraser and Johnston both say that Mr Fraser never told Mr Johnston the figure Benoco would accept. 233 The primary judge accepted that Mr Douglas recommended to Mr Hill that Expectation make an unconditional offer to purchase the Benowa Centre for $15 million. 234 On 3 December 1993 Mr Hickey executed the contract for purchase at $15 million as attorney and provided it, plus the required deposit, to O'Shea Corser and Wadley. That offer was accepted on 8 December 1993. 235 Mr Johnston gave interesting evidence as follows: 'From the time that Mr Hill made the inspection and signified an interest in the property, is it not the case that that was it; he was the buyer? --- Well, we certainly wanted him to be the buyer. He was the only one, wasn't he? --- Well – well, no, he wasn't the only one. All parties were given, from I believe the Tuesday after the close, to come back with an unconditional contract, or a – or in-contract form; in-contract form. So until the actual close of them, as per the vendor's instruction, being the Friday, I didn't really know who was going to be the buyer, although I can say to you that we wanted Mr Hill to be the buyer because he was a valued client of PRD, and Mr Douglas's, and we felt that it was a good, long-term investment for Mrs Hill. Yes. And it would be good business for PRD if that particular person got the property, because he was close to Mr Douglas? --- He was a friend of Mr Douglas's. Close to Mr Douglas, not just a friend? --- Close to Mr Douglas, yes. And Mr Douglas's best client, in your estimation? --- That's correct. Yes. And, contrary to what you had said to Mr George about keeping him informed, you didn't? --- That's correct.' 236 No finding was made by the primary judge as to the shortening of the post Expression of Interest period. There is no suggestion that it emanated from Expectation. It is clear that it was the result of the discussions between Messrs Johnston and Mr Fraser. To say the least, it was a curious decision. The only Expression of Interest that had been received at the end of the advertised period was that by Mr Simpson. It was not taken seriously. There were only two others on the horizon. Mr George did not express any interest over $14 million. He was a client of PRD. Neither he nor Mr Bird, the relevant employee of PRD, was called to give evidence to establish his bona fides. His appearance on the scene was timely for PRD as it gave the appearance of competition and appeared to put a floor under the market. He was well known to Mr Douglas. Most relevantly for present purposes, it was expected that any offer he made would be conditional upon a period of due diligence. There is no evidence that he requested urgency, and it would seem to be contrary to his desire for time for investigation. 237 To the knowledge of Mr Johnston, advancing the final date for submission of contracts made it virtually certain that there would be a sale to Expectation if Mr Hill were to take the advice from Mr Douglas to make an unconditional bid of $15 million. If Mr Hill had not accepted PRD's advice, it was quite possible, on the evidence, that there would have been no sale at all. There was no evidence that either Messrs George or Simpson was a genuine buyer. If Mr Hill had not been on the scene the marketing campaign would have been a failure, and PRD and its employees would have been the poorer, both in pocket and reputation. 238 On the findings of the primary judge, it is quite clear that Messrs Douglas and Mr Langford did more than simply introduce Mr Hill to the property, leaving Expectation to deal with Mr Johnston at arm's length, making its own inquiries and its own decisions. PRD assumed the role of agent for Expectation in relation to the property, albeit that Expectation would not directly pay commission on that transaction. 239 The role of an agent of that kind is one of the established categories of fiduciaries, although the precise content of the fiduciary duty may vary with the agency and may be affected by contract. It is open to conclude that PRD accepted the obligation to act in the interests of Expectation in carrying out the role which it assumed (Breen v Williams (1995–1996) 186 CLR 71 per Brennan CJ at 82; Gaudron and McHugh JJ at 107; Gummow J at 135–136; Pilmer v Duke Group Ltd (in Liq) (2001) 207 CLR 165 per McHugh, Gummow, Hayne and Callinan JJ at [74] and Kirby J at [121]; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 per Mason J at 97; Maguire v Makaronis (1996-1997) 188 CLR 449 per Brennan CJ, Gaudron, McHugh and Gummow JJ at 464–465; Daly v Sydney Stock Exchange Ltd (1985–1986) 160 CLR 371 per Gibbs CJ at 377, Brennan J at 384–386). If so, PRD simply was not in a position to act solely in the interests of Expectation from 22 November 1993 onwards. 240 PRD, and the relevant employees of PRD, stood to benefit greatly if Expectation were to purchase at all, and even more if the price paid led to the incentive or bonus commission, as it did. Thus, there was an apparent conflict between duty and interest. 241 Further, PRD could not act solely in the interests of Expectation without breaching its duty to Benoco and (possibly) to Mr George. The position vis-a-vis Benoco can be simply illustrated. Mr Johnston knew that an offer at the price of $14.1 million indicated by the Expression of Interest by Expectation would require serious consideration from Benoco, as it would be the only unconditional offer and was above the only other indication that was taken seriously. Messrs Johnston and Langford were exchanging relevant information, for example, that Mr George's 'offer' of $14 million had been rejected. Mr George was a client of PRD and well known to Mr Douglas. If Mr Hill had known what any of Messrs Johnston, Langford, Douglas or Bird had known about the sale process, his relevant knowledge would have been greater. If that knowledge had been aggregated his information would have been vastly improved. Further, the whole of the circumstances of the operation of the Benowa Centre was known to Cooney and Allison. Disclosure of all of those circumstances would have greatly improved Mr Hill's knowledge as to the inherent value of the Centre. Disclosure of that information would be a breach of duty by PRD to Benoco and Mr George. 242 PRD was not obliged to do more than introduce Mr Hill to the opportunity, making it clear that it was not acting for him on that transaction. On the findings of the primary judge it chose to go much further. In doing so, it could be concluded that it assumed a fiduciary role that could not be carried out, without fully informed consent. Without such consent there would be a breach of both what have been called the no conflict (or loyalty) rule and the no profit rule (Proscriptive fiduciary duties in Australia – Dempsey and Greinke (2004) 25 Aus Bar Review 1). Mr Hill undoubtedly knew that PRD was sole agent for the vendor for reward, and that it was the Centre manager but, as he said in evidence, PRD was his agent too. It is plainly arguable that he was not in possession of all material facts so as to give informed consent to waiver of all fiduciary duties. The undisclosed 'incentive' commission arrangement was one example. 243 The case does not require a detailed examination of the authorities at this stage. The principles are made clear enough in the High Court decisions already cited. However, the following decisions are relevant: McKenzie v McDonald [1927] VLR 134 at 144–145; Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 at 361–362; Commonwealth Bank of Australia v Smith (1991) 42 FCR 390; Blackwell v Barroile Pty Ltd (1994) 51 FCR 347 per Davies and Lee JJ at 359–360; Layton v Stewart [1994] ANZ Conv R 283; Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488 per Wilcox and Lindgren JJ at 512–517; Clark Boyce v Mouat [1994] 1 AC 428 at 435G–436E; Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 at 90; Bristol and West Building Society v Mothew (C.A.)[1998] Ch 1 at 16–22; Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484 at [18], [40]–[42]; and the discussion by Brooking JA in Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501 at 513–524. 244 If a breach of fiduciary duty is established in circumstances such as the present, the fiduciary cannot be heard to maintain that the transaction would have gone ahead even if there had been no recommendation or if there had been full disclosure (Commonwealth Bank of Australia v Smith at 394 applying the decision of the Privy Council in Brickenden v London Loan & Savings Co [1934] 3 DLR 465; cf Maguire v Makaronis per Brennan CJ, Gaudron, McHugh and Gummow JJ at 470–474). It is arguable that the recommendation to purchase was at the core of the breach of the fiduciary duties and was undoubtedly acted upon according to the findings of the primary judge. 245 His Honour, however, simply did not deal with these matters. It was erroneous not to make finding on the breaches of fiduciary duty alleged. The appeal should be upheld in so far as it is based on grounds of failing to deal with the alleged breach of fiduciary duty. DAMAGES 246 The case for damages at trial was along conventional lines – the difference between the price paid for the property and the true value at the time of acquisition. That case was wrongly rejected by the primary judge and will need to be decided. It is not appropriate to be decided on appeal absent necessary factual findings. Two other issues arose on the appeal. 247 Equitable damages or compensation for breach of fiduciary duty are by no means limited to the difference between price and value, as the party to whom the duty is owed is entitled to a full indemnity. Expectation sought on the appeal to argue an alternative basis for compensation that, it is submitted, can be determined by the Court, namely that it should be recompensed for its loss on capital account calculated by comparing the purchase price plus the amount expended on capital improvements less the amount received on sale. Counsel for PRD objects to that change of tack and submits that in any event it is misconceived as it does not take into consideration what occurred on revenue account. It is submitted that if that is considered, the net income earned would have been at least as great as the capital loss. That argument may be answered by an argument that in the circumstances of this case it is not necessary to take what occurred on income account into consideration. Normally, interest would be allowed at a commercial rate upon the amount of the verdict from the date of the transaction to the date of judgment. In the present case Expectation had the benefit of the asset from the date of acquisition to the date of sale. It would be entitled to retain the net income from the asset on any view. It had expended the capital. Correspondingly, if the income is retained, it would not be entitled to any interest on the amount of the verdict up to the time of sale. If Expectation had successfully sought to show that the amount of income received was less than a commercial return, then it would have been entitled to claim the difference in addition to the loss on capital. It did not seek to do so. 248 As counsel for Expectation ultimately did not seek a verdict on the fiduciary duty issue, whether that approach to the assessment of damages should be permitted does not need to be determined. As a retrial is inevitable, that issue is best left to the trial judge. 249 The other point turns upon an issue raised by PRD's notice of contention which was permitted to be filed during the course of the hearing, namely: 'even if, contrary to the learned Trial Judge's finding [Reasons, paragraph 80], the value of Benowa Gardens as at December 1993 was less than approximately $15 million, the appellant nevertheless suffered no loss by reason of its purchase of Benowa Gardens given: (a) the net income the appellant derived from Benowa Gardens during the period of its ownership; (b) the net proceeds retained by the appellant after it sold Benowa Gardens in December 1997.' 250 That leave was given because the contention was a live issue at the trial, was relevant to issues open on appeal and there was no prejudice to Expectation. It was, in part, responsive to the attempt by Expectation to raise the alternative case on equitable damages. 251 The argument depends upon unravelling the entire financial consequences for Expectation of all that occurred from and including the acquisition to the resale. It meets the immediate difficulty that there are no relevant findings of fact. It is quite unsatisfactory to pick through pieces of voluminous evidence to reconstruct a complex picture. It is certainly not open on appeal to find on that basis that Expectation suffered no loss. The question is whether that issue can be pursued at the new trial. There is a substantial barrier to it properly being available. It depends upon the proposition that a party induced by a misleading representation to purchase commercial real estate for investment at a price above real value cannot recover the difference as at the date of purchase. That is contrary to an unbroken line of High Court authority. 252 The position at common law is clear enough. A good starting point is Holmes v Jones (1907) 4 CLR 1692 per Griffith CJ at 1703, O'Connor J at 1709 and Isaacs J at 1715 and 1717. Then there were the well-known statements by Dixon J in Potts v Miller (1940) 64 CLR 282 at 297–300 and Toteff v Antonas (1952) 87 CLR 647 at 650–651. The latter repays repetition: 'In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant. When what he has been induced to do is to make a purchase from the defendant and part with his money to him in payment of the price, then, if the transaction stands and is not disaffirmed or rescinded, what is recoverable is "the difference between the real value of the property, and the sum which the plaintiff was induced to give for it" per Abbott L.C.J. Pearson v. Wheeler [(1825) Ry. & Mood. 303, at p. 304 [171 E.R. 1028, at p.1029]]. As Sir James Hannen P. in Peek v. Derry[(1887) 37 Ch. D. 541, at p. 594; cf. (1889) 14 App. Cas. 337] pointed out, the question is how much worse off is the plaintiff than if he had not entered into the transaction. If he had not done so he would have had the purchase money in his pocket. To ascertain his loss you must deduct from the amount he paid the real value of the thing he got. It may be objected that the point of the application of this doctrine lies in identifying "the transaction" and that what Mayo J. has done is to identify it as the purchase of the goodwill and that only. But what is meant is the transaction into which the representation induced the plaintiff to enter. The measure of damages in an action of deceit consists in the loss or expenditure incurred by the plaintiff in consequence of the inducement on which he relied diminished by the corresponding advantage in money or moneys worth obtained by him on the other side: Potts v. Miller [(1940) 64 C.L.R. 282, at p. 297]. You look to what he has been induced to part with as the initial step. He is entitled to say that but for the fraud he would never have parted with his money: per Coleridge L.C.J., Twycross v. Grant [(1877) 2 C.P.D. 469, at p. 491]. But he cannot recover the entire price he has paid unless the thing prove wholly worthless. If the thing has any appreciable value the damages must be reduced pro tanto: per Cockburn L.C.J., Twycross v. Grant [(1877) 2 C.P.D., at p. 543]. It must not be forgotten that after all deceit is an action on the case for special damage incurred in consequence of the defendant's fraudulent inducement.' 253 By the time of Gould v Vaggelas (1983–1985) 157 CLR 215, Gibbs CJ said (at 220): 'It is well established that in an action of deceit where the plaintiff has been induced by the fraudulent misrepresentation of the defendant to enter into a contract of purchase, the measure of damages usually applicable is the difference between the real value of the property at the time of the purchase and what the plaintiff paid for it: Holmes v. Jones [(1907) 4 C.L.R. 1692, at pp. 1702–1703]; Potts v. Miller[(1940) 64 C.L.R. 282, at pp. 289, 297]; Toteff v. Antonas[(1952) 87 C.L.R. 647, at pp. 650–651]; Foster v. Public Trustee [[1975] 1 N.Z.L.R. 26, at p. 28]; Ted Brown Quarries Pty. Ltd. v. General Quarries (Gilston) Pty Ltd. [(1977) 16 A.L.R. 23, at p. 31]. Events that happen after the time of the purchase may throw light on the real value of the property at that time: Potts v. Miller [(1940) 64 C.L.R., at pp. 289–290, 299].' That decision settled for Australia that in appropriate circumstances a purchaser can also recover consequential losses, so relieving the excessive rigidity to which reference had been made in earlier decisions. 254 Whilst the remedies available under the Consumer Legislation are not to be constrained by reference to the common law (Marks v GIO Australia Holdings (1998) 196 CLR 494), it is accepted that in the usual case of the purchase of property induced by a misleading or deceptive representation the tort measure of damage will be applied (Gates v City Mutual Life Assurance Society Ltd (1985–1986) 160 CLR 1 per Gibbs CJ at 6–7, Mason, Wilson and Dawson JJ at 12–13; Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 290–292; Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 per Mason CJ, Dawson, Gaudron and McHugh JJ at 526–527; Henville v Walker (2001) 206 CLR 459 per Gleeson CJ at [18]–[31], McHugh J at [130]–[136]). 255 A word should be added about the recent decision of the High Court in Murphy v Overton Investments Pty Ltd (2004) 204 ALR 26. In that case the applicants, although induced to pay a capital sum to enter into a lease of a unit in a retirement village, did not seek damages based upon the difference between that sum and the real capital value of the leasehold. The point of the decision is that they were not bound to do so, as the particular circumstances, including the nature of the misrepresentation and the nature of the transaction entered into, meant that damages could be assessed upon another basis altogether. 256 Counsel for the respondents referred to the decision of the Queensland Court of Appeal in Manwelland Pty Ltd v Dames & Moore Pty Ltd (2001) ATPR 41-845 and submitted that it supports the respondent's contention. It is distinguishable on its facts. There, it was found that the land was acquired for development and resale and as the resale was to be seen as part of the original transaction the proceeds of resale were taken into account in assessing damages. There is a substantial question as to whether that is correct in principle where the purchaser does not elect to claim consequential loss but, even if correct, it would have no relevance in the case of commercial property purchased to hold as an investment. 257 Reference was also made by counsel for the respondents to the single judge decision in Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271. The purchaser of real estate sued a valuer. It was found that there was no breach of contract or of duty and no misleading or deceptive conduct by the valuer and it was held that the valuer was thus entitled to judgment. The judge went on to discuss other issues including whether loss had been occasioned and expressed the opinion that none had been suffered because, five years after purchase, the sale of portion and the value of the balance of the land showed the purchase to have been profitable. That opinion is surprising in the light of established High Court authority. There may have been something about the precise negligence alleged against the valuer in that case which could justify that obiter dicta. It is not persuasive in the present case. 258 In our opinion, this contention should not be entertained as an answer to a claim by Expectation for the difference between price and value. That is a well-recognised conventional measure of damages available to a purchaser in these circumstances. The proposed exercise would raise a false collateral issue of considerable proportions. The task of reconstructing the whole financial ramifications of purchasing, financing, running for nearly four years and then selling a shopping centre would be complex and time consuming. It would necessarily reflect the result of world, Australian and local economic and market forces and factors over the period, together with the effects of management of the Centre, all of which are remote from the situation at the time of acquisition. However, if and to the extent that Expectation is permitted to put an alternative case for damages which takes account of later events, then PRD should be permitted to answer in kind. In saying that, we do not wish to indicate that the method of doing so which has been put forward so far is appropriate. We do not wish to make such a hypothetical ruling in advance of the new trial. MR DOUGLAS 259 The separate position of Mr Douglas needs to be considered. All causes of action are pleaded against Mr Douglas as well as Expectation. He has not been separately represented. His separate position was not considered by the primary judge. Neither the grounds of appeal nor the submissions of the parties have singled out his position for close examination. In those circumstances his position can be considered on the new trial in relation to Benowa Centre. We do not express any view as to whether there is an arguable case against Mr Douglas on all or any of the causes of action. CONCLUSION AS TO BENOWA CENTRE 260 There must be a full new trial of the pleaded issues relating to Benowa Centre. Save as indicated, there is no sensible way in which that trial can be limited. That is an unpalatable conclusion in relation to events that occurred more than 10 years ago but cannot be avoided. Because of the nature of the credit findings made by the primary judge it would not be appropriate for him to conduct the new trial. ISSUES CONCERNING THE BROADWAY CENTRE 261 Expectation relied on three causes of action in relation to the Broadway Centre. They all arise out of the same factual circumstances. Each depends upon whether: · Mr Douglas told Mr Hill that the net income of the Broadway Centre was in the order of $2.45 million and that PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million; and · by giving Expectation the Schedules without the Covering Letter, PRD, through Mr Douglas, impliedly represented that the Schedules constituted an accurate statement of the net income of the Broadway Centre, that the figures in the Schedules had been verified and that the Schedules contained the Receiver's verified figures for the net income of the Broadway Centre. 262 In essence, that factual matrix involves an examination of what Mr Douglas said to Mr Hill and whether the Schedules, without the Covering Letter, were likely to create a misleading impression as to the accuracy of, and the reliance that might reasonably be placed on, the Schedules. 263 Expectation contended that the evidence leads to the conclusion that one of the primary motivating factors in making the offer to buy the Broadway Centre was PRD's assessment that the actual income of the Broadway Centre was $2.45 million. A covering letter from PRD to the Receiver, which enclosed Expectation's first offer to buy the Broadway Centre, said so in terms. Between the sending of that letter and the time when a counter offer from the Receiver was accepted, no further analysis was done in respect of actual income or price or yield. Nothing had changed in terms of motivation. 264 Expectation contended that it terminated the Broadway Contract once the true picture was revealed concerning the actual levels of sustainable income from the Broadway Centre. While Expectation accepts that it was at all times interested in acquiring a property with capital growth, it claims that the revelation of the actual income figures meant that the purchase as an investment proposition was far less attractive. THE FINDINGS OF THE PRIMARY JUDGE 265 The primary judge found that the Broadway Centre represented a 'distressed sale' opportunity if its trading profitability could be turned around. The price of $31.5m payable under the Broadway Contract was less than half of the cost of the construction of the Broadway Centre, which was more than $100 million. 266 The Schedules, which were provided to Mr Hill on 9 January 1994, were sent to PRD under cover of the Covering Letter. Mr Peet sent a copy of the Schedules by facsimile to Mr Langford, an employee of PRD, but did not send the Covering Letter. On the same day, Mr Langford forwarded the Schedules to Mr Hickey. Mr Langford had not received a copy of the Covering Letter and made no mention of any disclaimer as to accuracy of the Schedules. 267 On 9 January 1994, Mr Hill inspected the Broadway Centre in the company of Messrs Douglas, Cooney, Langford and Peet. On that day, there were discussions between Mr Hill and Mr Dennis Lee, the manager of the Broadway Centre, concerning the Schedules. On the following day, 10 January 1994, Mr Hickey wrote to the Receiver, making an offer on behalf of Expectation to purchase the Broadway Centre for $30.5 million on terms that included the payment of a deposit of $100,000 and the conduct of 'due diligence'. 268 On 11 January 1994, the Receiver wrote to Mr Douglas rejecting Expectation's offer but making a counter offer in the sum of $31.5 million, subject to a 'due diligence period' of 21 days and a non refundable deposit of $100,000. Mr Langford forwarded a copy of that letter to Mr Hickey, who wrote to the Receiver agreeing, on behalf of Expectation, to purchase the Broadway Centre on those terms. The Broadway Contract was executed by Expectation on 18 January 1994 and, on the following day, Mr Hickey retained KPMG to carry out a due diligence investigation in respect of the Broadway Centre. 269 On 1 February 1994, Mr Hickey met Messrs Peet, Douglas and Langford to discuss the Schedules. After allegations of misleading conduct against Price Waterhouse, which were subsequently withdrawn by Mr Hickey, Mr Hickey terminated the Broadway Contract on behalf of Expectation on the basis that due diligence inquiries demonstrated that the acquisition of the Broadway Centre was not suitable. However, under the terms of the Broadway Contract, the deposit of $100,000 was forfeited. 270 The primary judge found that any representation as to the income of the Broadway Centre was made by Mr Lee. His Honour found that neither prior to, nor at the time of the inspection, did Mr Douglas tell Mr Hill that PRD had checked out the net income with the centre management and verified it at $2.45 million. His Honour found that PRD had not in fact checked the regular income prior to the inspection and that Mr Douglas knew that and that there was no reason for Mr Douglas to represent that PRD had done something that it had not done. His Honour considered that it 'beggars belief' that, given that a due diligence investigation was going to happen, Mr Douglas would make the representation, since any discrepancy would soon be ascertained. 271 In any event, his Honour found that Expectation did not enter into the Broadway Contract to buy the Broadway Centre in reliance on the conduct alleged. His Honour found that Expectation entered into the Broadway Contract because of the potential for significant capital growth and the depreciation benefits available in respect of the Broadway Centre, as a 'distressed property'. His Honour found that Expectation knew of the problems with arrears of rental and other problems with tenancies but was nevertheless prepared to enter into the Broadway Contract, which included a clause acknowledging that Expectation did not rely upon any representations made by the Broadway Vendor or its representatives. 272 His Honour considered that it was relevant that, even after the extent of the disparity (between the actual income and the figures shown in the Schedules) became apparent, Expectation and Mr Hill were still interested in proceeding with the purchase of the Broadway Centre. Thus, on 4 February 1994, Mr Hill summoned a Mr Woollard from Monaco to assist in the evaluation of the Broadway Centre and the due diligence process continued after Mr Hill and Expectation had become aware of the actual income of the Broadway Centre. 273 His Honour found that Expectation terminated the Broadway Contract on 11 February 1994 after it received a memorandum from Mr Woollard concerning the risk involved in managing the Broadway Centre. Mr Woollard's memorandum indicated that the then actual income generated by the Broadway Centre was an immaterial consideration. His Honour concluded, therefore, that the claim in respect of the Broadway Centre failed, both on the question of the making of representations and on the question of reliance and causation. THE EVIDENCE 274 The Covering Letter, which was dated 6 January 1994, was addressed to Mr Peet. It was signed by the Receiver, as receiver and manager of the Broadway Vendor. The name 'Dennis Lee' is handwritten on the copy of the Covering Letter that is in evidence. Dennis Lee was the manager of the Broadway Centre at the relevant time. 275 The Covering Letter said: 'Further to contact from the Commonwealth Bank of Australia I attach the following- (a) Tenancy schedule at 1 January 1994 (b) Income and expenditure – budget summary for the year ended 30 June 1994. None of these particulars or statements have been audited and neither myself, the firm Price Waterhouse of which I am a member or the Commonwealth Bank undertakes responsibility in any way whatsoever for any information contained therein, including any errors or omissions however caused. Accordingly, I express no opinion on the schedules and no warranty of accuracy or reliability is given. The information is also given to you on the grounds of confidentiality and you will not disclose the information to any person or company other than your client. Your client also must observe the confidentiality of the information.' 276 The Schedules enclosed with the Covering Letter were entitled as follows: · Income and Expenditure – Cash Flow Summary FY93/94. · Rent Collections – Forecast FY93/94. · Outgoing Collections – Forecast FY93/94. · Car Parking Rent Collection – Forecast FY93/94. · Storeroom Rent Collection – Forecast FY93/94. · Recoverable Operating Expenses – Budget FY93/94. · Non-Recoverable Operating Expenses – Budget FY93/94. 277 The first page of the Schedules, consisting of a summary of the other 9 pages, showed a surplus of $2,467,612 for the year ending 30 June 1994. That summary was stated to have been compiled as at 18 November 1993. The summary also contains the notation 'Amending the Budget of 29.07.03'. The other Schedules were stated to have been compiled as at 6 January 1994. 278 By letter of the following day, the Receiver sent to Mr Peet a schedule of depreciable assets, which he described as 'provided to us in July 1993'. That letter contained similar disclaimers to those in the Covering Letter, of the day before. 279 On 7 January 1994 at 11.52 am, Mr Peet forwarded a facsimile to Mr Langford in the following terms: 'Herewith Cash Flow summary 93/94 (10 pages) and depreciation schedules (six pages). Richard Barber is well advanced with the replanning of the Lower Ground food court at a cost of +$900000. He hopes to have two international food operators tied up within the next 14 days resulting in a further net cash flow of approximately $300000.' The attachments to that facsimile were copies of the Schedules and the enclosures with the letter of the following day. However, neither of the two covering letters was attached. The facsimile indicates that Mr Peet had had substantive discussions with the Receiver about the matter by then. On 7 January 1994, Mr Langford forwarded to Mr Hickey the copies of the documents that had been received by Mr Peet from the Receiver. 280 On 7 January, Mr Langford wrote to the Receiver as follows: 'I refer to the above property and your discussions with Mr Colin Peet of our Brisbane office. I confirm that we are retained by a major off shore based purchaser to seek suitable investments on his behalf. He is based on Europe, but has Australian residency and has made the decision to shift his asset base to Australia. We have a long standing relationship with this client and have concluded business on his behalf. We further confirm that we are acting for the purchaser and we will therefore not be seeking commission from you, the vendor. To prevent any conflicts in our agency practice, this matter will be handled on a highly confidential basis. Transactions concluded on behalf of this purchaser include a neighbourhood shopping centre anchored by a supermarket with 34 specialty shops. This property has been acquired on a cash basis and will be put into a trust vehicle for the client's family. He has also purchased two major residential sub-divisions in Queensland. The first is known as Sippy Downs on the Sunshine Coast, and consists of a 280 ha parcel which will ultimately be sub-divided into 4,000 residential allotments. He has also purchased a 330 ha sub-division on the Gold Coast, which is currently being sub-divided. These purchases were on a cash basis, but the balance of the land development will be funded by an Australian bank. Our client wishes to retain his low profile and all matters must be strictly confidential. His name is Mr D M Hill, based in Monaco. He will be returning to Europe on Monday 10 January 1994. Please find attached a copy of a letter from one of the major Swiss banking groups confirming capability. The decision to shift the major portion of his asset base has been taken subsequent to this letter being written. Our client has confirmed his interest in the above property and it is his intention to submit an offer on Monday. In order for our client to commit time and resources we urgently request a letter from you confirming exclusivity. You will appreciate that time is of the essence and we look forward to your reply.' (emphasis added) 281 On 7 January 1994 Mr Peet had a meeting with Dennis Lee concerning the cash flow of the Broadway Centre. Mr Peet assumed that the July to November figures were actuals but he did not rely on that. He was interested in the cash flow from then on. 282 Thus, by 7 January 1994 (which was a Friday), a number of persons acting for Expectation had received information from the Broadway Vendor – at least Messrs Peet, Langford and Hickey. Mr Peet had been in touch with the Receiver, who in turn had put him in touch with Mr Lee, the manager of the Broadway Centre. At trial, Expectation contended (and is likely to be correct) that there had been inquiries made by Mr Peet of Mr Lee concerning the reliability of the budget figures on that day. Mr Langford had written to the Receiver stating that Mr Hill would submit an offer on Monday and making an urgent request for exclusivity. The level of any offer would clearly be influenced by the level of income to be earned from the Broadway Centre as it stood. That would be the starting point for valuation, although other factors would come into play, as this was seen as a distress sale. The Receiver had already indicated that he had plans to refurbish and relet. 283 It was in this context that the Receiver had made access to Mr Lee available to the representatives of Expectation. The visit to the Broadway Centre on Sunday 9 January 1994 was plainly to enable Expectation to make its own enquiries. Messrs Peet and Langford were obvious inclusions as commercial property was their field. Mr Douglas was the principal contact with Mr Hill. Mr Cooney was brought along for his expertise in management of shopping centres. 284 Mr Hill's written evidence was that on 9 January 1994 he visited the Broadway Centre with Mr Cooney and Mr Douglas. He said that 'for the visit, they had documents relating to the net income of the Centre'. Mr Hill said that he went through the Broadway Centre with Messrs Cooney and Douglas and was told by Mr Douglas that PRD 'had checked out' the net turnover with the management of the Broadway Centre and verified it at $2.45 million. He said that he had been shown the Schedules and had been assured by Mr Douglas and other 'members of PRD' that the net income 'had been checked out' with the management of the Broadway Centre personnel and found to be accurate. 285 In his oral evidence Mr Hill said that Mr Douglas told him that the Broadway Centre was 'a [sic] excellent situation for an investment and you could spend money on it and substantially improve the income, which he stated as he had been told it was about 2. – around 2.5 million, 2.45'. Mr Hill said that Mr Douglas told him that 'That's what he believed that the income was'. 286 Mr Hill also gave oral evidence to the effect that, at the meeting on 9 January 1994, Messrs Douglas, Cooney and Langford of PRD, together with Mr Lee, the manager of the Broadway Centre, were present. Mr Hill said that they were at the Broadway Centre for about an hour and a half. Mr Hill could not recall that he was given any documents while he was there. He said that they walked around the Broadway Centre. He said that, in the course of describing the Broadway Centre: '…we focussed on – I was told that the – then I asked the question a number of times, the actual income. They said the income was 2.45… That was said by the PRD representative which was – I think it was Mr Peet… and he may have been supported by the Centre Manager, right… I asked Mr Douglas and he said he believed that the income was 2.45 as stated, real income. That's all we were interested in, real income… I asked if this is the real – I questioned them. "Is this the real income of the Centre, 2.45?" That was the fundamental building block of the transaction, if there was going to be a transaction.' 287 In answer to a question as to whether Mr Douglas said 'anything about any activity that PRD had taken in relation to that income or that income figure', Mr Hill said: 'They had ascertained from their own efforts that – and from what they were given from the receiver that the income was 2.45 and that they'd conferred with the Centre Manager on that and that was the real income… that was told by the PRD representative and [Douglas].' 288 In his affidavit, Mr Langford said that a meeting occurred in January 1994 involving Messrs Hill, Douglas, Cooney, Peet and himself and Mr Dennis Lee, the manager of the Broadway Centre. He said that, in the course of the meeting, they discussed how there were discrepancies as to what the income was in the Schedules, which the Receiver had supplied, and what they had seen on their walk around 'because it was clear from the vacancies and the lack of people that it was trading extremely badly'. He said that they were not 100 per cent convinced that the figures in the Schedules were correct in view of the obvious problems they saw at the Broadway Centre. He said that, for that reason, they were asking Dennis Lee a lot of questions and looking closely at his answers in relation to potential income of the Broadway Centre. 289 Mr Langford said that Dennis Lee told them about problems with the restaurants and tenancies at the top of the Broadway Centre on the second level. He said that they could see with their own eyes that the top floor was not performing at all and that there were problems on the bottom floor. He said that they were looking from a purchaser's point of view and were asking many questions of Dennis Lee. He said that Dennis Lee had his own summary, which he had with him at the time of the meeting. 290 Mr Langford agreed in cross-examination that, at the end of the inspection, he stayed behind in order to talk with Mr Lee further about the figures. He continued the discussion about the figures and the tenants over trading. He said that he was trying to work out 'a true bottom line' and trying to work out 'what the real income was'. He said that, while a full audit was required to work out the real income and many, many hours of work going through detailed cash receipts were required, it was impractical but he wanted to know as best he could what he thought the real income was in the time available. 291 At some stage around that time, Mr Langford made a handwritten note, although he had no recollection as to when he made the note. The note was made on a copy of a facsimile bearing the date 7 January 1994 addressed to the Receiver. However, it was not suggested to Mr Langford that he had written it on that day. After referring to '30 day due diligence', a 'deposit $1.5 million' and 'not subject to finance' the note said: 'Warrant nett income $2.45 million year ending June 94.' 292 Mr Langford agreed that the note represented his wondering whether they would get a warranty from the Receiver as to the net income for the year ending 30 June 1994. He agreed that the note was made in the course of formulating the offer to be made by Expectation in conjunction with Mr Hill and Mr Douglas and probably Mr Peet. He agreed that it was possible that it was written after the inspection, but could not recall when it was written. 293 In his oral evidence, Mr Langford said PRD was assisting Mr Hill to make an offer to the Receiver but did not agree that an income of $2.45 million was the only basis for an offer. He agreed that, in looking at retail investments, 'the first thing you look at' is the yield and that that was certainly part of the way in which the offer was formulated but he did not 'believe that was the motivation'. He agreed that net income of $2.45 million was 'part of the equation' but it was not the reason that Mr Hill 'was interested in buying the Centre'. 294 The evidence of the witnesses described above indicates that the discussions that took place included searching questioning of Mr Lee, both as to the current situation and as to changes that might be made to the advantage of the operation of the Broadway Centre. That is precisely what it would be expected would occur if advice were to be given to Mr Hill about the level of offer to be made. It is significant that Mr Hill was present for much of the discussion. He certainly went around the Broadway Centre with the group and was an active participant in the questioning. Mr Hill's evidence corroborated the presence and questioning of Mr Lee. When Mr Hill left with Mr Douglas for the Gold Coast, the questioning continued, with the results to be conveyed by Mr Langford to Messrs Douglas and Hill. 295 Mr Peet telephoned the Receiver on the Sunday evening confirming the offer that would be made. He then wrote to the Receiver on Monday 10 January 1994, attaching an offer to buy the Broadway Centre and saying, inter alia: 'The motivation for the offer in this amount is as follows: Net cash flow for the year ending 30/06/94, as provided by you (copy attached) $2,467,612 Cash offer $30,500,000 Stamp duty and legal costs $1,100,000 $31,600,000 Net return on investment 7.8% We have consulted with Mr Dennis Lees [sic], Centre Manager, in regard to the cash flow summary and are reasonably satisfied that the first year income will not be less than $2.467 million. The purchaser's interest in the property is based on its potential up-side over the next five years, providing that the theme and tenancy structures could be changed to effect tenant stability and improved cash flow.' The letter then went on to set out estimated capital improvements and marketing costs and estimated net income, after the improvements, of $2,767,000, showing a yield of 7.997 per cent. 296 The offer enclosed with the letter was a letter from Mr Hickey dated 10 January 1994 addressed to the Receiver, in the following terms: 'We have instructions from our client to make the following offer for acquisition of the property referred to above:- 1. Purchase price $30,500,000; 2. The Contract to be subject to our client concluding a satisfactory due diligence investigation of the subject property within 30 days from the date of the Contract; 3. Settlement to proceed within 60 days from the date of the Contract; 4. Upon signing of the Contract our client will pay to the agents trust account a part deposit of $100,000.00. Upon confirmation that the due diligence is satisfactory our client will bring the deposit in the agent's trust account up to 10% of the purchase price …' 297 On 13 January 1994, before the Broadway Contract was entered into, Mr Hickey met with the Receiver and Mr Lee at Mr Lee's office at the Broadway Centre. Mr Hickey told them that he wanted to inspect the following documents: * Leases; * Correspondence with tenants; * Arrears summary; * Maintenance reports for the Broadway Centre. 298 Mr Hickey said that he then set about organising a 'due diligence team' to investigate the Broadway Centre. The team consisted of: * Mr Hickey's firm to inspect the leases and other documentation associated with the Broadway Centre; * KPMG Gold Coast to investigate the accounts of the Broadway Centre; * Napier & Blakeley Pty Ltd, quantity surveyors and engineers, to: + inspect the premises; + work with Brisbane City Council to investigate easements; and + analyse the minimum and maximum allowable depreciation; * Richard Ellis, Brisbane, to undertake a valuation of the Broadway Centre. 299 Thereafter, Mr Hickey negotiated with Feez Ruthning, the solicitors for the Broadway Vendor, concerning the terms of the Broadway Contract, which he executed on behalf of Expectation on 18 January 1994 at the offices of Feez Ruthning. On 19 January 1994, Mr Hickey wrote to KPMG and Richard Ellis giving them formal instructions to commence their work in connection with the due diligence. 300 On 25 January 1994, KPMG wrote to Mr Hickey reporting on their review of various financial aspects of the proposed purchase of the Broadway Centre. On the same day, Mr Hickey spoke to Mr Jones of KPMG and asked for clarification of the reports. Mr Jones told Mr Hickey that the actual annual income for the Broadway Centre was not $2.4 million per annum but around $1.8 million. 301 On 28 January 1994, Mr Hickey was informed orally by Mr Weir of Richard Ellis that the Broadway Centre was worth $28 million. He wrote to Mr Hill on the same day informing him of that valuation. 302 On 31 January 1994, Mr Hickey received a further letter from KPMG addressing the questions that he had raised with Mr Jones following receipt of their report of 25 January 1994. That letter confirmed that the 'amended budgeted cash surplus for the year ended 30 June 1994' was $1,790,024. On the same day, Mr Hickey wrote to Mr McLernon, with a copy to Mr Hill, drawing attention to the difference between the figure shown in the Schedules and the figure reported by KPMG. Mr Hill also drew attention to the report from Richard Ellis giving a value for the Broadway Centre of $28 million. 303 In his written evidence Mr Hickey said that on 1 February 1994 he spoke to Mr Hill on the telephone. Mr Hickey said that they discussed the discrepancy between the 'representation' that the Broadway Centre was earning $2.4 million and what it was actually earning. He said that Mr Hill confirmed 'that he had been told by PRD' that the Receiver had told them that the actual income from the Broadway Centre was $2.4 million. Mr Hickey said that Mr Hill then instructed him to sue the Receiver for misrepresentation. Mr Hickey told Mr Hill that he would first investigate the facts and would then advise him who was responsible. 304 Mr Hickey made a file note of the conversation which relevantly contains the following: 'Current income $2.4M. It was represented to him on Sunday that was actual. … Left Langford to verify this with Dennis Lee and noted actuals as well as Consider they could not have said what actuals is to 94 but could never be 2.4M.' 305 Mr Hickey also made a note of a telephone conversation with Mr McLernon on 1 February 1994 as follows: '- G. Douglas putting balls on line. - Valuation. - Discuss matter.' Mr Hickey said that that note records a statement by Mr McLernon in the following terms: 'If there was a misrepresentation, Douglas had "put his balls on the line."' 306 Mr Hickey said that he met Mr Peet on 1 February 1994 in order 'to determine precisely what representations had been made by the Receiver'. Mr Hickey said that Mr Peet told him words to the following effect: * Mr Peet had been very sceptical about $2.4 million being the actual income; * Mr Peet claimed he could not remember Mr Hill asking whether the figure of $2.4 million was actual income; * Mr Peet clearly understood that the discussions at the Broadway Centre on 9 January 1994 were to identify the actual cash flow, not accrued income; * Mr Lee had accepted the figure of $2.4 million as actual income; * Mr Peet had received the Schedules from the Receiver on Friday, 7 January 1994; * Mr Peet acknowledged that he knew the due diligence investigation had been designed to verify that $2.4 million was the actual income. 307 Mr Hickey's handwritten diary note of his meeting with Mr Peet records the following: 'Spoke to Jim Eldridge at CTB early Jan.1994.: Week before, 9/1/94. Receiver was instructed to provide tenancy schedules details of outgoings. Got some info. When he looked info. Had meeting 7/1/94. With Dennis Lee. Told him what is current cash flow. Not interested what has gone before. Knew there has been problems. Said what is each tenant paying. So that we would know what cash flow we could rely on. But he would assume that July to Nov were actuals but he didn't rely on this. Wanted calculation of that > date. But now he is annoyed that he can justify. Historically very sceptical of actual rent or cause of s'fall. 9/1/93. Meeting. Sheets were presented and discussed. Went thru floor by floor. Can't recall Danny asking if 2.4M. was actual. It is clear that discussion was to identify real cash flow not income 2.4M. D. Lee confirmed this would be case. Document was relied on + figures he worked on, prior Friday. The whole exercise to establish what real cash flow was. He (Lee) accepted figures as they were.' 308 Mr Hickey said in his written evidence that Mr Peet went on to tell him that, during November 1993, Phil Evenden of the Commonwealth Bank, who was in charge of the Broadway Centre, had sought from him an opinion on what could be done with the Broadway Centre. He said that thereafter: * he and Mr Cooney met with Wemberley Anderson Nash, who had leased up to 70 per cent of the Broadway Centre for its opening in 1991; * he ascertained that when the Broadway Centre opened in 1991 it came on at the bottom of the market and had a poor tenancy mix; * he and Mr Cooney met with Mr Evenden at the end of December 1993; * he spoke with Mr Jim Eldridge of the Commonwealth Bank during the week preceding the meeting at the Broadway Centre, on 9 January 1994, from which the Receiver had been instructed to provide him with: + tenancy schedule; and + details of outgoings; * he had met with Mr Lee on 7 January 1994, when he was told $2.4 million was 'current cash flow'; * Mr Peet told him that, in undertaking his preliminary investigation before the 9 January 1994 meeting, he had not been interested in what had occurred before but wanted to know what each tenant was paying so that he could be certain of and rely upon the present cash flow. 309 Mr Hickey said in his written statement that between 1 and 2 February 1994 he 'investigated the accuracy of the cash flow statement and determined that the information was budgetted instead of actual'. His statement does not actually say what he did by way of investigation. On the face of his statement he simply looked at the Schedules and deduced from their terms that they represented a budget rather than a historical record. 310 Mr Hickey also said that Mr Peet told him that he, Mr Peet, had been given the Schedules by Mr Lee and in turn had then given them to Mr Langford. Mr Peet told Mr Hickey that he, Mr Peet, assumed that they contained actual income as opposed to accrued income, up to 30 November 1993. 311 Later on 1 February 1994, Mr Hickey met Messrs Douglas and Langford. He said that Messrs Douglas and Langford said words to the effect: * they thought the documents faxed to Mr Hickey on 7 January 1994 by Mr Langford had been given to Mr Peet by the Receiver; * they had not differentiated actual cash flows from budgets but would have expected them as a matter of course to have been differentiated between budgets and actuals and for the months passed to have been recorded as actual income; * the 9 January 1994 meeting had been organised by Mr Peet with Mr Lee; * Mr Lee had confirmed that the net income could be $2.4 million; * they remembered that Mr Hill had instructed that existing and projected rents should be verified and distinguished. 312 Mr Hickey made a contemporaneous diary note of the meeting with Mr Douglas and Mr Langford. The note records the following: 'PRD docs given to Colin Peet think by Receiver - ? He understood. Budget for financial year. Cash flow. He didn't differentiate cash flow for months that had passed. Would have expected show actual cash flow. Sun.meeting D.G. J.L. and C.D. K. Cooney and Dennis Lee, Gordon Anderson was there from original leasing. Wemberley Anderson Nash. Meeting organised by Colin with CM. Time around midday. Met at coffee shop talked for one hour. Walked around Centre. Think referred to the sheets. Think $2.4M was discussed. Confirmed by Lee net income would be 2.4M. Danny said go thru. Centre existing rent & projected rent. Lee referred to his files and JL'ford wrote down figures. eg. food on Q, he didn't point out how far in arrears.' 313 Mr Hickey then spoke to Mr Hill and Mr Douglas. Mr Hickey said that Mr Douglas said to him words to the effect: * the purchase of Broadway was a 'property play'; * we were not buying on yield but on the potential result which would flow from the reorganisation of the tenancies; * if we can lift the income to $4 million then the Broadway Centre would be worth $50 million. 314 Mr Hickey's contemporaneous diary note of the discussion records the following: 'It is a property play. Wouldn't buy it at yield. Got to take risks on tenancy reshuffle. If get income to $4M (food) then at 8% value $50M. When built aiming for $7M rent. * Not buying at yield * * Valuer has shown his opinion what they can achieve. NB If we want to proceed do we raise problem now and risk getting no extension. Depends if we want it or not. * Must have regard to V/n. Same basis as Benowa i.e. "sustainable net income". But here twist is valuer says Centre now below potential. This is reason why buying it.' 315 On 2 February 1994, Mr Hickey was instructed by Mr Hill to speak to the Commonwealth Bank with a view to negotiating a favourable interest rate because of the perceived misrepresentations by the Receiver. Mr Hill also told Mr Hickey that he was sending out his team from Monaco to investigate the Broadway Centre and double check the information. He said that if Expectation did not proceed with the purchase he wanted the non-refundable deposit of $100,000 returned. 316 After further discussions, Mr Hickey wrote to Feez Ruthning on 3 February 1994, complaining about alleged misrepresentation on the part of the Receiver and asserting that Expectation had suffered substantial loss as a result of the alleged 'false and misleading representations and conduct'. The letter said in part: 'We refer to the Agreement dated 18th January, 1994. We advise that prior to our client entering into that Agreement our client was provided with certain documentation and certain representations were made to our client by your clients agents or employees.' 317 On 3 February 1994, Mr Hickey attended a meeting with the Receiver at his offices in Brisbane. In the course of that meeting, the Receiver told Mr Hickey that the Schedules, which had been given to Mr Peet and, thereafter, to Mr Hickey, were 'budgets only which had not been verified by him and that this fact had been disclosed to Peet'. Subsequently, Mr Hickey met with Messrs Dan Young and Alan Millhouse of Feez Ruthning at their offices 'to undertake due diligence'. They informed Mr Hickey that they would speak with the Receiver 'and get instructions'. 318 On 3 February 1994, Mr Hickey wrote a further letter to Feez Ruthning putting forward a proposal that the due diligence period be extended for a further fourteen days from 8 February 1993, that the settlement date be confirmed as being forty days from the date of expiration of that extended due diligence period and that, if Expectation were not satisfied during the extended due diligence period, it would receive a refund of the deposit of $100,000 but would meet all of its own costs in respect of the due diligence enquiries. On 4 February 1994, Feez Ruthning replied to Mr Hickey's letter rejecting the allegations of misrepresentation. Feez Ruthning drew attention to the Covering Letter, indicating that no warranty of accuracy or liability was being given by the Receiver. 319 On 7 February 1994, Mr Cooney wrote to Mr Hickey with comments concerning the Broadway Centre. Amongst other things, Mr Cooney said: 'We now feel comfortable that the complex can achieve a net figure of $2.4 million and that under professional management the bottom line can be improved to the degree mentioned by John Langford to your client via telephone on Tuesday 1/2/94.' 320 On 6 February 1994, Mr Woollard arrived in Brisbane. On 7 February 1994, Mr Hickey wrote to Feez Ruthning telling them that Mr Woollard had just arrived from Monte Carlo and that he needed time to review the due diligence investigation. Mr Hickey requested an extension of the satisfaction date under the due diligence period to 5 pm on 11 February 1994. The letter confirmed that settlement date would then be 40 days from 11 February 1994. The letter said: 'In the circumstances our client has shown that he is committed to this project. We believe that it would be a very important gesture from the vendor to agree to the small extension of time requested for completion of the due diligence process.' 321 On 8 February 1994, Mr Hickey spoke to Mr Peet. Mr Hickey told Mr Peet that he had received a letter from the Receiver's lawyers saying that PRD were given a copy of the Covering Letter. Mr Peet replied that he received only a copy of the Schedules and was given nothing else by the centre manager. Later in the day, Mr Hickey received from Mr Peet a copy of the Covering Letter. 322 On 8 February 1994, Mr Hickey received a telephone call from Mr Millhouse saying that the Receiver had agreed to an extension of the due diligence period. Subsequently, Mr Hickey spoke to Mr Millhouse and said that Expectation needed an extension until midnight that day in order to make a decision whether they would accept the offer to extend the due diligence period until Friday, 11 February 1994. Later still, Mr Millhouse sent a facsimile to Mr Hickey indicating that the Receiver had instructed him that Expectation had until midnight 8 February 1994 to notify him whether it waives the benefit of clause 30 of the Purchase Contract, terminates the agreement or gives notice that it has satisfactorily completed its due diligence enquiries. Arrangements were finally put in place for an extension of the due diligence period until 12 noon, 11 February 1994. 323 Feez Ruthning then confirmed to Mr Hickey that they were instructed that the Receiver agreed to an extension of the due diligence period to 12 noon on Friday, 11 February 1994 subject to certain conditions, including: * the completion date was to be 21 March 1994; * the deposit of $100,000 was not to be refundable in any circumstances; * Expectation unconditionally and irrevocably withdraw all of its allegations of misrepresentation, negligence and misleading and deceptive conduct. 324 On 9 February 1994, Mr Hickey wrote to Feez Ruthning saying that the Covering Letter had only been brought to his attention on 8 February 1994 and that, based on its existence, the allegations made on 3 February 1994 were withdrawn. 325 On 10 February 1994, Mr Woollard sent a memorandum to Mr Hill dealing with the Broadway Centre. The memorandum contained the following: 'The more you look at [the Broadway Centre] the more complex it becomes. It is a speculative asset, and is far from simple to run. If you buy it, you need to be sure that you have the right person to manage it. … … My estimated minimum net income in the next year is $1,825,000. The problem with that is that a substantial proposition [sic] of the centre's tenants are on leases that are well above sustainable current rents … I think the odds are that the Centre can be turned around, in the hands of a good manager. Such a manager may be hard to find, but I am told by several people that they do exist. If this can be done, the PRD's projections are achievable, and the Centre will prove to have been as good a buy as [Douglas] says it is. … Provided you are happy to wear the risks, and knowing that [the Broadway centre] is going to require 'active' management, I think it is a good punt. The questions are: 'Do you want to punt on something this size?' and 'Do you (or we) have the capacity to oversee such a centre?' …' 326 Following further conversations with Mr Hill and Mr Woollard, Mr Hickey wrote to Feez Ruthning at 10.58 am on 11 February 1994 saying that: '…our client's due diligence enquiries have disclosed that the acquisition of the sale property is not satisfactory to our client. Accordingly, our client hereby terminates the Contract.' WAS THERE MISLEADING CONDUCT? 327 The first of the ten pages of the Schedule is, to a substantial extent, a summary of the following nine pages. It is expressed to be a 'cash flow summary' for the year ending 30 June 1994. Since it was compiled on 18 November 1993, it is clear that anything after October could not have reflected actual receipts. Further, there was a notation 'amending the budget of 29.07.93'. 328 The detailed schedules that follow the first page summary are expressed to be a 'forecast' of 'collections' as well as being a 'budget' of recoverable and non-recoverable operating expenses. It has not been suggested that the Schedules are other than an accurate reflection of the rent payable under the leases in respect of premises in the Broadway Centre. It is perfectly clear upon the face of the Schedules that they were a budget. On their face, they are not summaries of actual receipts. The heading itself showed that they related to the period 93/94, which had not then expired. It did not need Price Waterhouse to make that obvious point, nor the obvious point that a budget would not be audited. 329 In any event, Mr Hill did not say that he relied upon the Schedules in any way. Further, the assertion that Mr Hill relied upon a statement by Mr Douglas that PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million also indicates that no reliance was placed upon the Schedules themselves. Thus, the failure to attach the Covering Letter did not operate to create a misleading impression of the accuracy of, and the reliance that might reasonably be placed on, the Schedules. 330 The discussions prior to Expectation entering into the Broadway Contract indicate that Mr Hill did not rely on a representation by Mr Douglas that the figures in the Schedules had been verified by PRD. All of the references indicate that Mr Langford and Mr Peet said that they had relied on Mr Lee for verification. That is the way in which the complaint was put to the Receiver in Mr Hickey's letter alleging misrepresentation by the Receiver. 331 Expectation's claim was that Mr Douglas informed Mr Hill at the meeting on 9 January 1994 that PRD had checked out the net income with the management of the Broadway Centre and verified it as $2.45 million. That claim was first made when it was introduced by way of an amendment to the then form of the Statement of Claim in December 1999, some three years after the proceeding was commenced. 332 It is significant that in Mr Hickey's letter of complaint to Feez Ruthning of 3 February 1994 he said, inter alia: 'We advise that prior to our client entering into that agreement our client was provided with certain documentation and certain representations were made to our client by your client's agents or employees.' The letter referred to two documents: a 'Cashflow Summary FY93/94', and a 'Rent Collection Forecast FY 93/94'. The letter continued: 'These documents were forwarded to our clients agent Mr Colin Peet of PRD Realty Pty Ltd under cover of a letter from the Receiver and Manager dated the 6th January, 1994. Mr Peet met with your client Centre Manager, Mr Dennis Lee, on the 9th January, 1994 and tabled the enclosed documents. At that meeting a study was done of the tenancies and it was represented by Mr Lee to Mr Peet the actual net income which would be received in respect of the Centre for the financial year ending 30 June, 1994 would be in the order of $2,400,000.00 that is in accordance with the "Cashflow Summary" provided to Mr Peet by the Receiver and Manager. On Sunday the 9th January, 1994 our clients [sic] representative Mr Danny Hill and his agent, Mr Gordon Douglas, Mr Colin Peet, Mr John Langford and Mr Ken Cooney met with the Centre Manager Mr Lee at the Centre and the enclosed documents were once again tabled and discussed. It has been confirmed that it was clearly represented again by Mr Lee that the actual cash net income which would be received in respect of the Centre for the year ending 30th June, 1994 would be the sum of $2,400,000.00. Mr Langford remained after that meeting and had a further detailed discussion with Mr Lee in which each tenancy was considered and again it was represented by Mr Lee that the actual cash net income which would be received for the period was the sum of $2,400,000.00. Our client relied on the enclosed documentation and on the representations that were made to our client and its agents that the actual net income which would be received in respect of the Centre for the financial year ending 30 June 1994 would be the sum of $2,400,000.00 on the basis of that reliance our client entered into the agreement dated the 18th of January, 1994 an [sic] paid the sum of $100,000.00 for the due diligence period provided under the Contract. …' (emphasis added) 333 Mr Hill's evidence was that Mr Douglas told him, in the course of the inspection on 9 January 1994, that PRD had checked out the turnover with centre management and had verified it at $2.45 million. While it was not correct to say that any verification had taken place at the time of inspection, the evidence of Mr Langford is that he stayed back after the inspection to speak with Mr Lee about the income and verified the income as being $2.45 million. In so far as there was a representation by PRD that it had checked out the net income with the centre management and verified it, that representation appears to have been true. 334 There is no basis for finding an implied representation by PRD or Mr Douglas that the Schedules were an accurate statement of the net income of the Broadway Centre and that they contained the Receiver's verified figures for the net income. There was no suggestion that there was any verification by the Receiver. The most that could be said is that there was a statement that the figures had been checked with the centre management. Mr Lee was the centre manager and the figures were checked with him. 335 Mr Hickey's complaint to Feez Ruthning is consistent with that position. Mr Hickey referred expressly to meeting with 'your Centre Manager, Mr Dennis Lee' and to representations by Mr Lee to Mr Peet that the actual net income that would be received in respect of the Broadway Centre would be in the order of $2,400,000 in accordance with the Schedules. 336 There is little question but that PRD advised Mr Hill that it was reasonably satisfied that the first year net income of operation after purchase would not be less than $2.467 million. The letter of 10 January 1994 from Mr Peet to the receiver says as much in terms. Further, the calculations that are recorded in that letter are consistent with notes made at the time, in which the estimated net income was the basis for calculating the yield on the investment. 337 A term of the offer of 10 January 1994 from Mr Hickey to the Receiver was that the contract was subject to satisfactory due diligence investigation within 30 days from the date of the contract with a part deposit of $100,000 (non-refundable). Upon confirmation that the due diligence was satisfactory the deposit was to be brought up to the normal 10 per cent of the purchase price. An undertaking was sought that there was exclusivity for that period of 30 days. 338 It is clear enough that the exercise that had been done up to the time of the submission of the offer was regarded by Mr Hill as inadequate to found a decision to invest approximately $30 million, but was deemed sufficient, in effect, to acquire an option to purchase for 30 days with the opportunity to do a proper due diligence exercise in the meantime. That effectively prevented the Broadway Vendor from placing the Broadway Centre on the market. Payment of an option fee of $100,000 in relation to a transaction of this size, to be counted as part of the deposit if the transaction went ahead, was hardly out of the ordinary. 339 Two things are clear from the sequence of events described above. The first is that much of the reasoning of the primary judge cannot be supported. Contrary to his Honour's finding, by the time PRD gave advice to Mr Hill after the meeting at the Broadway Centre on Sunday 9 July 1994, it had done quite a bit of investigation as to the likely level of net income in the first year of operation after purchase. Also, there is no doubting that the advice tendered by PRD materially contributed to the decision by Mr Hill to cause Expectation to make the offer that it did on the terms that it did contrary to the (hypothetical) finding on reliance by the primary judge (Bristol & West Building Society v Mothew (C.A.) [1998] Ch 1 per Millett LJ at 10–13; Henville v Walker (2001) 206 CLR 459 per Gleeson CJ at 469 and McHugh J at 480–481; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 per Gleeson CJ at [33], Gaudron, Gummow and Hayne JJ at [57], McHugh J at [89]–[93], [102]–[104] and Callinan J at [210]). The second is that it cannot seriously be contended that PRD made any representation as to the net income of the Broadway Centre or of anything else in the sense used in the relevant pleading. 340 In this transaction PRD was unequivocally acting for Expectation alone. It was to receive commission from Expectation and not from the Broadway Vendor. The initial contact was by Mr Peet of the Brisbane office of PRD with the Commonwealth Bank of Australia, which was the real vendor. The Broadway Centre was not on the market and the Broadway Vendor had not arrived at the position where it could be put on the market with, for example, an information memorandum or the like. No agent for sale had been engaged. It was persuaded to allow PRD to introduce Mr Hill. 341 PRD was acting for Expectation and it was investigating figures that had been supplied to it by the Receiver without any warranty but with access to the manager of the Broadway Centre. The gist of what PRD did was to advise that the estimated net income for the first year was reasonable. On no view is that a representation as to a fact as pleaded. There is a significant difference between an agent expressing an opinion on the one hand and stating a fact on the other (Heydon v NRMA Ltd (2000) 51 NSWLR 1 per Malcolm A-JA at [307], McPherson A-JA at [431]–[432]). The pleaded case in relation to the Consumer Legislation has no chance of success. Although the reasons of the primary judge for rejecting the cause of action are not satisfactory, his Honour did come to the essence of the matter when he found that the evidence established that any representation as to the income for the Broadway Centre was made, if at all, by Mr Lee. NEGLIGENCE AND BREACH OF THE CONTRACT TERMS 342 There is no material difference between the obligations of care and skill in contract and in tort. The letter from the receiver would have added nothing of significance to the information relevant to Expectation. The figures supplied were obviously a budget and it was never suggested that the figures were warranted. There is no evidence to suggest what further steps could reasonably have been taken by PRD to check the figures in the time available. The point of the arrangement made was to obtain a further period when adequate due diligence could take place. 343 As indicated above, the evidence does not support a finding that the representations alleged were made by PRD or by Mr Douglas. Since the claims in negligence and for breach of the Contract Terms depend in part upon establishing that PRD and Mr Douglas made representations as alleged, there would be no utility in any further consideration of those questions. There was no reasonable chance of success upon any case mounted in relation to the Broadway Centre. Accordingly, there is no utility in any further consideration of any of the causes of action with which his Honour failed to deal. CONCLUSION AS TO BROADWAY CENTRE 344 The appeal should be dismissed in so far as it is based upon complaints as to the dismissal of the claims arising out of the Broadway Contract and the Broadway Centre. DISPOSITION OF THE APPEAL 345 It follows from the conclusions expressed above that the appeal by Expectation should be upheld in part. The orders dismissing the proceeding as against PRD and Mr Douglas in relation to the Benowa Centre should be set aside and there should be a new trial of those issues before another judge. The orders for costs should also be set aside. Expectation should pay the trial costs of PRD and Mr Douglas of the claims in relation to the Broadway Centre. An order as to the balance of the costs of the trial should await the outcome of the new trial. 346 The primary judge, in dismissing the application, ordered the appellant to pay the first and second respondents' costs on an indemnity basis. The order was that they 'be completely indemnified by the applicant for their costs', although at paragraph [33] of his Honour's second set of reasons he foreshadowed the usual qualification excepting costs of an unreasonable amount or costs which were unreasonably incurred. It would appear that his Honour made the indemnity costs order because he accepted the submissions of PRD and Mr Douglas that this was an appropriate case for such an award. 347 The essence of those submissions was that: · Expectation had brought and persisted in a claim which was based on assertions that Mr Hill knew to be false; · the Court had found that Mr Hill had 'manufactured evidence' in the case of matters that he knew did not happen, for the purpose of advancing the Expectation's prospects of success in the litigation; · the Court had found that Mr Hill had given an unreliable and dishonest account of alleged representations and had deliberately reconstructed events to give verisimilitude to his allegations and had engaged in 'deliberate falsehood calculated to create a climate of reliance where there was none'; and · Expectation had refused offers of settlement of $100,000 plus costs in an offer to settle dated 16 September 1999 and an offer of settlement of $200,000 plus interest at 10% per annum from 17 January 1994, plus costs in a letter dated 19 November 1999. 348 The basis for such an order depends upon findings which have been set aside. There is no order for costs in relation to the Benowa Centre, and our reasoning in relation to Broadway Centre would not justify an order for the payment of indemnity costs. 349 Expectation has been only partially successful on the appeal. In principle, Expectation should bear the costs of the appeal in so far as it related to the Broadway Centre and PRD and Mr Douglas should bear the costs of the appeal in so far as they relate to the Benowa Centre. Issues in relation to the Benowa Centre were considerably more complex and have occupied much more time than those relating to the Broadway Centre. The issues in relation to the Broadway Centre have been finally determined in favour of PRD and Mr Douglas. On the other hand those in relation to Benowa Centre remain to be determined. However, PRD and Mr Douglas chose to defend comprehensively the judgment below in relation to the Benowa Centre. On balance, the appropriate order is for PRD and Mr Douglas to pay 60 per cent of Expectation's costs of the appeal. I certify that the preceding three hundred and forty-nine (349) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate: Dated: 28 July 2004 Counsel for the Applicant: Mr W S Martin QC (with him Mr M J Burns) Solicitors for the Applicant: Messrs Clewett Corser & Drummond Counsel for the First and Respondents: Mr P A Keane QC (with him Mr P A T Applegarth SC and Mr A Pomerenke) Solicitors for the Respondent: Messrs Thynne & Macartney Date of Hearing: 27 February 2004 Date of Judgment: 28 July 2004