£ eo pad . Wel etetemne nba Wee a Bat mine nn q qs IN THE FEDERAL COURT OF AUSTRALIA f No. VG 170 of 1982 VICTORIA DISTRICT REGISTRY i wee we GENERAL DIVISION BETWEEN: LEASON Pry. LTD. : ApplicantAND: DALGETY FAPMERS LIMITED (formerly DALGETY AUSTRALIA LIMITED) and GRAHAM CAMPBELL Respondents AND BETWEEN : DALGETY FARMERS LIMITED (formerly DALGETY AUSTRSLIA LIMITED) Cross-Claimant AND JOHN BRAITHWAITE SANDERS and LEASON Pry. LTD. Cross-Respondents COURT: BEAUMONT, J. DATE: 26 MARCH 1986 PLACE: CANBERRA MINUTE OF ORDER THE COURT ORDERS THAT the respondent bring in short minutes to give effect to these reasons. Settlement and entry of Orders is dealt with Rules of Court). a a or inn eieereannes al IN THE FEDERAL COURT OF AUSTRALTA VICTORIA DISTRICT REGISTRY No. VG 170 of 1983 GENERAL DIVISION _ BETWEEN : LEASON Pry. LTD. : Applicant AND: DALGETY FARMERS LIMITED (formerly DALGETY AUSTRALIA LIMITED') and GRAHAM CAMPBELL Respondents AND BETWEEN: DALGETY FARMERS LIMITED (formerly DALGETY AUSTRALIA LIMITED) Cross-Claimant AND JOHN BRATTHWAITE SANDERS and LEASON Pry. LTD. Cross-Respondents CORAM: Beaumont, J. DATED: 26 March 1986 REASONS FOR JUDGMENT INTRODUCTION Leason Pty. Ltd. ("Leason"), a Victorian company, claims damages and other relief against Dalgety Farmers Limited ("Dalgety") and one of its former employees, Mr. Graham Campbell. The claim 1s based on the alleged acquisition in January 1982 by wee pore -y git Leagon of the stallion "Irish Playboy". The horse was then purchased in the United States for the price of $US550,000.00. There 1s a dispute between the parties as to the identity of the buyer: Leason claims that it was the -purchaser whilst Dalgety contends that Mr. J.B. Sanders, a director of Leason and its _— controller, was the party to the agreement to purchase. Shortly stated, Leason's claim 1s that it was induced to acquire the horse by certain misleading statements alleged to have been made by Mr. Campbell, the general manager of Daligety's Bloodstock Division at the time. The statements principally relied on are alleqed to be to the effect that, by way of "syndication" of the horse. Mr. campbell nad already sold 12 shares inthe syndicate and that Dalgety's staff would sell another eight shares expeditiously. Leason claims that Dalgety represented to it that prices in the range of $18,000.00 to $25,000.00 per share would be achieved. The making of any of such representations 1s denied by the respondents although 1t 15 common ground that Dalgety was appointed to act as agent on the sale of shares in the horse. It is also common aground that Mr. Campbell and Dalgety's staff were unable to sell any such shares, although they say there were good reasons for this, including the serious downturn in the Australian economy 1n 1982 and the fact that "Trish Playboy" became seriously ill whilst in quarantine in North America and did not arrive in Australia until Audqust 1982. Leason alleqdes that, thereby. Dalgety engaged in an . a C rerenan ae we en ee oe re - ne) alts ry ay err ae ee ee ee ee eRe are. re soe 24% "sy yp a7 tee eee wry tt H . wo By Py Bre try ee ee moos . > Misleading or deceptive conduct or conduct likely to mislead or deceive within the meaning of 5.52 of the Trade Practices Act 1974. Similar claims are made under s.53 of the Trade Practices Act. Leason also alleges that the circumstances of the case give rise to claims by it against Dalgety and Mr. Campbell under the general law for negligent misstatement. Related claims under the general law are made including claims in deceit and for breach of alleged collateral warranty. - Por ats part, Dalgety has cross-claimed against Mr. Sanders or, alternatively, Leason, for monies advanced by it in connection with the acquisition of "Irish Playboy". It 15 not disputed by the cross-respondents that Dalgety advanced to some party the sum of $399,368.95 on that account: Nor is it disputed that. thereafter, Dalgety advanced further funds in connection with the costs of importation of the stallion. Again, there is a dispute _as to the party liable: on behalf of the cross-respondents., 1t 1s submitted that Leason rather than Mr. Sanders is liable. A separate issue has arisen on the cross-claim as to the method of calculation of interest payable on the debt owed to Dalgety. Specifically, the question arises whether Dalgety is... entitled to compound interest on its debt or whether. as the cross-respondents araque, Daigety is entitled to simple interest only. THE CASE PLEADED BY THE APPLICANT ' '. te ' ey gE ERE "ve vee ayy we ee LET TTF wep vr + we, sor .e 4. By its amended statement of claim. lLeason alleges that Dalgety conducted the business of a bloodstock agency; that by its servants and agents including Mr. Campbell, it held itself out and Mr. Campbell held himself out, as having particular expertise in the selection, valuation and acquisition of stallions, the financing of the acquisition of stallions and the sale of shares in stallions by way of "syndication" (para.2B); that Mr. Campbell held himself and Dalgety out to Leason as "having surficient influence in the bloodstock industry to be able to facilitate the sale of shares in stallions selected, acquired and financed in accordance with the advice and approval of Campbell and Dalgety (para. 3A); that in about June 1980, Mr. Sanders, on behalf of Leason. informea Mr. Campbell that a further stallion was required for Leason's stud (known as "Napier Park Stud") (para. 3Bla)); that between June 1980 and December 1981 Mr. Campbell advised Mr. Sanders in respect of "what transpired to be unsuccessful proposals or opportunities to purchase various stallions" (para. 3B(b). It 1s alleged that in each such instance, Mr. Campbell Imew that Leason could not acquire any such stallion unless assured by Mr. Campbell and Dalgety that "syndication" of the stallion could be effected expeditiously by them (para. 2B(c)(i)); and consequently, that Leason relied upon the advice and assurances of Dalgety and Mr. Campbell that they could and would expeditiously "syndicate" any stallion purchased by Leason (para. 3B(c)(ii). 17 3, mp e ee ee Rees ae : rd ' . 5. — The amended Statement of claim then alleges that in the last week of December 1982 (sc.1981), Mr. Sanders, on behalf of Leason, arranged and attended a meeting at Dalaety's premises with, inter alia, Mr. Campbell, and that prior to the meeting, Mr. Campbell was unformed by Mr. Sanders that the purpose of the meeting was "to advise CLeasonJ on the future operations of its stud" (para. 3B(d)(i) and (ii)). At the meeting, Dalgety and Campbell allegedly advised Leason first, to "syndicate" two stallions "Galway Bay" and "Royal Biscay" with a view to selling 20 shares in each, secondly, that Dalgety could sell such shares and thirdly, that "Dalgety could syndicate and sell shares in what was described as a Group 1 winner from England being a brother to a successful sire for a sum of $18,000~-$25,000" fpara.3B(d)(21ii): at a late stage of the trial, Leason amended this allegation by deleting the reference to "Group 1 winner" to "Group winner" - the significance of this amendment to a central part of Leason's case will be dealt with later. _Geason claims that Mr. Campbell and Dalgety knew that Leason relied on their expertise in this connection (para. 3B(d) (iv). As aresult, it 1s alleged that in January 1982, Leason entered into negotations with Mr. Campbell and Dalgety for the purchase of "Irish Playboy", the financing of its purchase price by Dalgety and its "syndication" by Dalgety (para. 4). Leason claims that in January 1982, during the course of the negotiations, Mr. Campbell represented to an agent of Leason, Mr. John Harrington, that the horse would be "easy to syndicate" and ohm Topp ee pene mm ep ene that "he CCampbellJ could seil 10 shares of the proposed 42 shares in the horse straight away"; and that Mr. Campbell subsequently represented to Mr. Sanders that '"he CCampbellid had sold 12 shares in the horse and that his CCampbell'sJ staff would sell eight shares in the horse"and "that the purchase syndication and sale of shares 1n the horse could and would be expeditiously effected by Dalgety." (para.5). Leason then alleges that, relying on this holding out, these advices, assurances, representations and statements, Leason, by its servants and agents, travelled to the United States and inspected the horse, paid the sum of $100,000.00 to Dalgety and on 20 January 1982 entered into an agreement (herein called "the agreement") to sell and purchase with Dalgety (para. 6). Further, at is claimed that it was then agreed between GLeason and Dalgety that the price of a share in the syndicate was to be $19,500.00 per share (para.7). . Leason next says that these representations. statements and assurances were false and misleading and deceptive in that neither Mr. Campbell nor Dalgety had any reasonable grounds for the assertion that 10 shares could be sold straight away; in that Mr. Campbell had not sold 12 shares: in that neither Mr. Campbell nor Dalgety had any reasonable grounds for the assertion that the staff of Dalgety would sell eight shares in the horse; and in that neither Mr. Campbell nor Dalgety had any reasonable grounds for assuring Leason that the syndication and sale of Ie ee ay pene ee eee pore eee rcs mee ape tee peer eam oe las toa ee 2 [tate taats ttn nendin NA he alnn t ' , «sl . ? A ta.de. ro shares in the horse could and would be expeditiously effected by Dalgety (para.8). Then Leason claims that, as at 20 January 1982, Mr. we eee Pe Campbell and Dalgety knew that the belief of Leason as to the ease of "syndication" of "Irish Playboy", a belief induced by Mr. Campbell and Dalgety, was wrong. Specifically, Leason claims that, as at 20 January 1982 Dalgety and Mr. Campbell were not wr mere oe wet able to effect a successful "syndication" and sale of shares in iy the horse by reason of the competing claims of other stallions then being syndicated and sold by Dalgety and the priority given ' to such other stallions by Mr. Campbell and other employees of Dalgety; and that Dalgety could not apply such expertise, r- facilities and staff as 1t had to the sale of shares in the horse by reason of the amount of its resources then applied to the sale of other syndicated stallions it was selling at the time, and further by reason of the amount of its resources being applied to the opening of 1ts premises at Oaklands Junction, near Melbourne, and the impending sale to be conducted at those premises by ait (para. 8A). Sede arel Boe fe Leason further alleges that the conduct of Mr. Campbell | ! j and Dalgety in failing to inform Leason of these matters and of ; permatting Mr. Sanders and Leason's stud manager, Mr. Todd, to Tem mney ee travel to the United States to inspect the horse, to pay the sum of $100,000.00 to Dalgety and to enter into the agreement already re mentioned, misled and deceived Leason (para.93). A contravention owe Pavan 3. . of 33.52 and 53(c), (d), (e) and (f) of the Trade Practices Act by Dalgety 1s claimed and Mr. Campbell is said to be a person involved in the contravention. The amended statement of claim also seeks to raise a number of causes of action at common law. Furst, it pleads that that in order to induce Leason to enter into the agreement and to pay Dalgety the sum of $3100.,000.00, Mr. Campbell warranted, or alternatively represented, to Leason each of the matters alleaed an para. 5 of the amended statement of claim (para.13); that the Warranties were breached and the "representations Pleaded were false ain that Dalgety and Mr. Campbell "did not intend to be bound by the Agreement" (para.14); that Dalgety by its servant and agent, Mr. Campbell, or alternatively, Mr. Campbell personally made the said representations knowing them to be false and untrue or made them recklessly, not caring whether they were true or false (para.15); that acting on the faith of the said warranties and the said representations, Leason committed itself to the agreement and paid to Daigety the sum of 53100-000.00 (para.16). . Secondly, Leason alleges that in consideration of Leason entering into the agreement. the parties made an agreement collateral to the agreement "to the intent that CLeasonJ should rely thereon as to each of the matters enumerated in paragraph 5 herein." {para.17). Then it is claimed that, contrary to the representations pleaded in para. 5S and in breach of the ~ owe ee a te Wer = Be pe en er ee ee en et thea ee ante, . ~ Ty allt . me pers Te, tee er ep er woah ta Te -3. collateral agreement and warranty referred to in para.17, Dalgety and Mr. Campbell did not "honour" the terms and conditions of the agreement. -- Thirdly, Leason alleges that Dalgety and Mr. Campbell well knew that Leason "was minded" to acquire the horse and syndicate it into 42 equal shares of $19,500.00 (para.20); that Dalgety by its servant and agent, Mr. Campbell, or alternatively Mr. Campbell pesonally, made the representations to Leason alleged in para. 5 (para. 21) intending to induce GLeason to enter unto the agreement and to pay Dalgety the sum of $100,000.00 (para.22); that in the premises Dalgety and Mr. Campbell were under a duty to take care in the making of the said representations to Geason (para.23); that, acting on the faith of the representations and induced thereby, Leason entered into the agreement and paid to Dalgety the sum of $100,000.00 (para.24); and that in breach of this duty, Dalgety and Mr. Campbell were guilty of negligence in making the said representations tpara. 25). Particulars of negligence include failing to make any or any reasonable or proper assessment or inquiry to determine whether 20, or any other number, of prospective purchasers were willing and able to acquire a share in the syndication of the horse. It is then alleged that the representations were "false, untrue, inaccurate and misleading" (para. 26). The particulars given in para. 8 are relied upon. Alternatively, 1t 15 alleged ! € Vs THe i a eect + t % AS ray pyre, mye emer are ye + rapes wn eee Pou. Me bps, io. that by an agreement made in January 1982, Dalgety agreed that if Leason paid to it the sum of $100,000 and entered into the agreement, Dalgety would effect the sale of 20 shares in the "syndication" of the horse (para.27); and that in breach of that collateral agreement, Dalgety neglected to sell any shares in the syndication of the horse (para.28). A question arises at the outset as to the nature of the case thus pleaded by Leason. The matter was debated at some length during the course of the trial but the parties remained at issue as to the case sought to be made. The several causes of action alleged in the. amended statement' of Claim may he summarised as follows: Firstly, claims under ss.52 and 53 cf the Trade Practices Act that Mr. Campbell and Dalgety engaged in conduct likely to mislead Leason by representing to it in the course of the negotiations for the acquisition of "Irish Playboy", in particular - (a) that they had the influence, expertise and facilities to achieve an expeditious sale of shares in the horse: (b) that the horse would be "easy to syndicate" and that Mr. Campbell could sell 10 shares "straight away" (alleged to be made to Mr. Harrington) ; il. (c) that Mr. Campbell had sold 12 shares, that his staff would sell eight shares and that the sale of shares could and would be expeditiously effected by Dalgety (alleged to be made to Mr. Sanders) (para.5). — Secondly, claims under ss.52 and 53 of the Trade Practices Act that Mr. Campbell and Dalgety engaged in conduct likely to mislead Leason by failing to inform it that, because of other commitments. Mr. Campbell and Dalgety were, to their knowledge, unable to achieve a successful "syndication" of the horse {para.8A). Thirdly, a claim for breach of collateral warranty in terms of the representations alleged in para.5 of the amended statement of claim (i.e. the claims firstly summarised above) (paras.13 and 17). Pourthly, a claim in deceit based upon these representations (paras.13, 14, 15 and 26). Fifthly, a claim for negligent Misstatement based upon these representations (paras. 19, 20, 21, 22, 23, 24 and 25). Sixthly, a claim in contract that, in consideration that Leason pay to Dalgety the sum of $100,000.00 and enter into the agreement, Dalgety promised that it would effect the sale of 20 shares (para.27). SOME BACKGROUND FACTS Before reference 15 made to the evidence of the conversations said to constitute the misleading statements and representations_now relied on, 1t 1s necessary to mention some backaYfound matters about which there can be no dispute. It is convenient to commence in 1981. Dalaety was then and now is in the business of selling and promoting bloodstock in Victoria. For this purpose, 1t held annual and other sales. It acted as the agent for the sale of ploodstock and shares in bloodstock. (It will be necessary later to analyse the legal character of such a share.) Dalgety then employed Mr. Campbell, an experienced and knowledgeable bloodstock consultant, as general manager of its Bloodstock Division. based in Melbourne. Mr. Sanders knew Mr. Campbell well, having been a client of Dalgety for some years. Mr. Sander's earlier background had been in the field of real estate but. some years previously, 'Mr. Sanders, through family interests (both corporate and trust), — had established a horse stud, Napier Park Stud. at Euroa, in { Victoria. Standing at Napier Park Stud were the two stallions i already mentioned, "Galway Bay" and "Royal Biscay". There is little else inthe whole dispute which is common ground. The parties are at issue on virtually every aspect of the case, both in its general "or1entation and in aaron vr see wer saree ve a as . Dae, a 13. specific details, including the statements or representations now relied on. In order to understand the evidence of the many witnesses called, it is necessary to describe, in outline, the different cases.cpened by the parties. LEASON'S CASE AS OPENED Towards the middle of 1981, Mr. Campbell advised Mr. Sanders, acting on behalf of Leason. that he should "upgrade" Napier Park Stud by acquiring a good quality stallion from overseas. Mr. Sanders then made it clear to Dalaety that he could not command sufficient resources to finance such an acquisition. assuming a purchase price ranging upwards from $500,000.00. Thus it was made clear to Dalgety that Leason could only proceed with a transaction of that order 1f shares in the horse were taken up by other parties by way of a syndicate arrangement. At about this time a United Kingdom stallion, "Hard Green" was brought to Mr. Sander's attention by Mr. Campbell ata price about $500,000.00. Mr. Sanders, having told Mr. Campbell that he could. only proceed 1f the horse were "syndicated", proceeded to England to inspect it. However, an inspection disclosed a genetic fault with the stallion's jaw and the matter was dropped. Mr. Campbell next recommended to Mr. Sanders a French stallion, "Adraan", ata price of $1,400,000.00. Mr. Sanders informed Mr. Campbell that, although he was interested, ' ' a Seaaemet tad wo ee Wom were oe wy ogtt . an he ne a Ot . sere ee 14. he could only afford three or four shares in such a horse. Again, the matter did not proceed. In October or November 1981, Mr. Harrington, a director of one of Europe's largest bloodstock agencies, the Irish-based Curragh Bloodstock Agency, spoke to Mr. Sanders about another overseas stallion, "Centurius". (Mr. Harrington had previously met Mr. Sanders in Australia.) The asking price was 275,000.00 pounds sterling. Mr. Sanders also discussed the proposal with Mr. Campbell. According to Mr. Sanders. a significant discussion about ""Centurius" took place with Mr. Campbell and his staff between Christmas 1981 and the New Year. Mr. Sanders arranged for the meeting to be held at Mr. Campbell' s office. There were also present at the meeting Mr. Peter Cornell, manager of the Victorian branch 'of Dalgety's Bloodstock Division, Mr. Daryl Sherer. a bloodstock consultant, Mr. Frank Mitchell. chief auctioneer, Mr. Peter Heagney, auctioneer and Mr. Tan Baird, salesman. At the meeting. Mr. Sanders raised the prospect of Leason's "syndicating" the two stallions then standing at Napier Park Stud. Having adverted to his own lack of experience at "syndication", he sought the advice of Mr. Campbell and his staff whether his proposal was feasible and, if so, what price per share should be sought. Mr. Sanders also raised the proposed purchase of a third stallion, and although he had "Centurius" in mind, he did not mention him by name. He was designated "Mr. X". ' 15. In his opening, senior counsel for Leason said that Mr. Sanders then believed that "Centurlus" was a "Group 1" winner. (As has been noted, this point was the subject of an application, made during the trial, further to amend the amended statement of claim). A price per share in the range of $18,000.00 to $25,000.00 was estimated to be capable of achievement" and the staff members advised Mr. Sanders that the acquisition and "syndication" of "Centurius" would be a feasible proposition. But the advice could not be put into effect because difficulties arose in the neqotiations with the owner of "Centurius" and, in the result, Leason was unable to buy the stallion. However, 1n early January 1982, Mr. Harrington spoke by telephone to Mr. Sanders about the availability of "Irish Playboy". Mr. Sanders had previously heard that "Irish Playboy" was on the market at $2,000,000.00 but Mr. Harrington said that the asking price was then in the order of 30US500,000.00 plus commission. Mr. Sanders telephoned Mr. Campbell, sought and obtained, his advice as to the horse's prospects and as to the possibility of ""syndication". Having decided that the proposition appeared viable, Mr. Sanders then flew to California to inspect the stallion, arriving in Los Angeles on 14 January. He inspected "Irish Playboy" on that day in the company of Mr. Todd, who is now deceased and Mr. Harrington who had come from Europe. Having sought the advice of Messrs. Todd and Harrington, ap Wo ete een —s een ae ean 16. Mr. Sanders formed the view that "Irish Playboy" "looked a pretty good proposition at that price". Mr. Sanders then telephoned Mr. Campbell. "Syndication" was discussed. According to Mr. Sanders, Mr. Campbell then said words to the effect that Mr. Sanders should not worry about "syndication", "Irish Playboy" would be another "Lord Seymour". (This was a reference to another stallion imported into Australia as a consequence of the joint efforts of Mr. Harrington and Dalgety which had been quickly and successfully "syndicated"). Mr. Campbell then spoke to Mr. Harrington on the telephone. Mr. Campbell told him that he was then able to sell 10 shares. Mr. Harrinaton told Mr. Campbell that he would be able to sell five shares to European interests. This information was later relayed by Mr. Harrington to Mr. Sanders who then decided that the proposition was feasible. Mr. Sanders returned to Melbourne on 18 Januarv. on that day, he met with Mr. Campbell and discussed "syndication". Mr. Campbell said that he had sold 12 shares and that the other sales staff would be able to sell eiaht shares. Mr. Sanders said that he or his family interests would subscribe for 12 shares. Two shares were to be qiven to Mr. Campbell as a reward for his efforts in the transaction. The cost of acquisition of "Irish Playboy" and other incidental expenses including import duties and insurance were discussed. An asking figure of $19,500.00 per share was proposed, together with a fee of $6,500.00 — eee eres as the price for a nomination of a mare to the stallion. The discussion ended with Mr. Campbell's informing Mr. Sanders that the transaction would have to be placed before Dalgety's board of directors for approval. Mr. Sanders was invited to return the next day to be told the outcome. On 19 January, Mr. Sanders was told that the purchase could proceed provided that he paid a deposit of $100,000.00. Mr. Sanders protested at being asked to provide a deposit at such a late stage, but on 20 January, he executed a document evidencing the purchase of "Trish Playboy". Some days later, the deposit of $100,000.00 was paid. The horse was acquired but, as has been said, Dalgety was unable to achieve the sale of any shares and Leason claims to have suffered financial loss accordingly. DALGETY'S_ CASE AS OPENED Dalgety puts an entirely different complexion upon the Eransaction. It says that in the years 1979, 1980 and 1981. the bloodstock industry in Victoria had enjoyed buoyant conditions. In that period, Dalgety had participated in many successful syndications. As well as "Lord Seymour", Dalgety succeeded in negotiating the sale of shares in the stallions "Voodoo Rhythm", "Sovereign Red" and "Full On Aces". Unfortunately for Leason, in early 1982 the condition of the general economy declined sharply, Me IF a re re ae aes ee oy Sroctan Wee NE ae — meee ee SP .o 18. 7a interest rates were raised to record levels and the Australian market for bloodstock, aincludina shares offered by way of ""syndication".,_suffered badly. Although Mr. Campbell did discuss both "Hard Green" and "Adraan" with Mr. Sanders in 1981, neither transaction was able to proceed. Mr. Sherer sought to obtain an option on "Adraan" for Mr. Sanders but soon found himself in competition with Mr. Brian Maher for the stallion. Mr. Campbell arranged for the preparation by Dalgety of a cash flow chart dealing with a proposed "syndication" of "Adraan", providing, inter alia, for payment by Mr. Sanders of a deposit of $120,000.00. A point was reached where Mr. Maher intended to purchase within 24 hours. Mr. Campbell then informed Mr. Sanders that 1t would not be possible to obtain the approval of finance from his superiors within that period. The proposal lapsed. Late in 1981, Mr. Sanders, through Dalgety, sought to negotiate for the purchase of "Centurius". The horse was inspected by Mr. Mitchell in Europe in about October 1981 and was quoted by Mr. Harrington to Mr. Sanders. Dalgety supplied Mr. Sanders with a pedigree of "Centurius". Again, the proposition did not proceed as the stallion was purchased by an Irish breeder, Captain Tim Rogers, at the beginning of December 1981. In early 1982, Mr. Sanders telephoned Mr. Campbell and informed him that Mr. Harrinaton had referred a horse to Mr. se Shs wt apron tee ~ et TT are Sn ay een ter oe eee ee, Fs ec ee a potest, porsat yes ee wee By cote Dee cate ope Nr ren age eee ree et) LA 7 . ae - . tour emet rd t ore ae oo@ 1 ) i H a dee is. Sanders in which he was very interested. Mr. Sanders would not mention the name of the horse on the telephone but arranged an immediate meeting with Mr. Campbell. At the meeting, Mr. Sanders told Mr. Campbell that Mr. Harrington had quoted him a Group 1 winner, "Irish Playboy", which Mr. Harrington said was a very good horse. Mr. Sanders asked Mr. Campbell to obtain a pedigree for -him and to cali a meeting with Dalgety's sales staff to discuss the "syndication" of "Galway Bay" and "Royal Biscay". He asked Mr. Campbell not to mention to the staff his interest in "Irish Playboy". To achieve confidentiality, he proposed that the stallion be referred to at the meeting as "Mr. X". The meeting took place on 7 or 8 January. Mr. Sherer had prepared a pedigree for "Irish Playboy" and Mr. Campbell had given the pedigree to Mr. Sanders before the meeting. The sale of 20 shares in each of "Galway Bay" and "Royal Biscay" was discussed. Dalgety's staff accepted Dalgety's appointment as agent for sale. Mr. Campbell then introduced the subject of "Mr. <<". He asked the members of his staff present to express their views on the prospects of their negotiating the sale of shares in "Nr. X" described as _@ "Group 1" winner with one_of the best sire lines in the world and a qood individual horse. After some discussion, Mr. Campbell said that he "can usually move about 12 CsharesJ". Several members of the staff said that they could sell one or two shares each. Mr. Campbell then said that "it looks as though the boys might be able to sell about eight". ~ ae ht BIASES ed tit Shee Ce peak Nl et i ta van eee mete wee or oo 20. At the conclusion of the meeting, Mr. Sanders asked Mr. Campbell whether Dalgety _would be prepared to finance the transaction. Mr. Campbell replied that this question was beyond his authority to respond but offered to arrange a meeting with Mr.- Brian Hawkes, a director of Dalgety. At the meeting, held on 12 or 13 January, Mr. Hawkes, Mr. Campbell and Mr. Sanders were present. They were later joined by Mr. William Crookshanks, an administration manager responsible for the accounting functions of Dalgety's Bloodstock Division. At the meeting, Mr. Campbell said that he believed that "Irish Playboy" could be successfully "syndicated" at a figure of $15,000.00 to $20,000.00 per share. On the question of finance, Mr. Hawkes said that, assuming a price of $500,000.00, the matter would have to be referred to the board of directors of Dalgety but, 1f approval were to be given, a number of conditions would be imposed: Mr. Sanders would have to contribute $100,000.00 towards the purchase price; Mr. Sanders would have to up-date his statement of affairs: and in the event that the "syndication" was not successful, Mr. Sanders would be "required to fund the debt owed to Dalgety from another source by 30 June 1982. On Friday 15 January 1982, Mr. Sanders, in California, telephoned Mr. Campbell in Melbourne. Mr. Campbell spoke once only to both Mr. Sanders and Mr. Harrington about "Irish Playboy" but its "syndication" was not discussed. On Mr. Sander's return to Australia, he met Mr. Campbell sali -oal ad ambial tanaelerslanatemiieah ine tot aiitd = anaes AIRS Reo so fs ae Oe at elie taal naan bel nee i a wpe '22. in his office on Monday 18 January. Mr. Campbell denies that he told Mr. Sanders then, or ever, that he had sold 12 shares in the stallion. However, Mr. Campbell did then inform Mr. Sanders that the board of directors of Dalgety had approved finance for the transaction and that Mr. Sanders would have to sign some documents and pay his contribution towards the purchase price. - On 20 January, Mr. Sanders attended on Mr. Crookshanks at Dalgety's office and there executed the documentation necessary to give effect to the transaction. On 27 January, Mr. Sanders paid his contribution of $100,000.00. FINDINGS OF FACT It is convenient to deal with the matter chronologically. The following findings of fact are made. (Findings are net made on the issue of damage, argument having been confined. by agreement, to the issue of liability at this stage. In any event, in the result, the 1ssue of damage does not arise.) (a) The state of the market in the Victorian bloodstock industry in 1981 It is common ground that at this :time khe bloodstock market was strong and that good prices were being obtained for stallions and for shares in stallions. (It should he noted that no arqument was addressed by either side as to the legal character of a share sold by way of "syndication". ee See. yey . te oe repre = mo pooe ae os Mele wertan aad Saaad oo t - . {b) (c) ° wae It will suffice for present purposes to say that, depending upon the terms of the arrangement, the relationship could be one of partnership. of joint venture or of bare co-ownership. ) The attempt to acguire "Centurius" Having failed to acquire "Hard Green" and, later, "Adraan", efforts were made by Mr. Sanders in late 1981 to purchase "Centurius". Mr. Mitchell inspected the stallion in Europe in October 1981 but Captain Tim Rogers bought the horse in early December 1981. The first meeting between Mr. Sanders and Dalaety's sales staff (i) Mr. Sander's version According to Mr. Sanders, this meeting took place between Christmas 1981 and the New Year and concerned, inter alia. "Centurius". On the other hand, Mr. Campbell and other members of Dalgety's sales staff say that the meeting took place at the end of the first week of January 1982 and concerned, inter alia, "Irish Playboy". There is also a dispute about what ea was said at the meeting. Before referring to the detail of the respective oe ~y re rn an _ a ner a7 we TIT Tt nerpasaeeth To a ai UE oteting st a le tae . ESR NE A SD RE oa ha EO OE OO eat le 23. Tuin, versions of this event, some general observations | ' i should be made. First, Mr. Sander's version of this bar meeting suffers from the fundamental difficulty that. ___ rea according to Mr. Harrington; whose evidence on the point was not challenged, Captain Tim Rogers had we ee \ already purchased ""Centurius" before Christmas. This stallion was thus of academic interest only even uf the meeting took place between Christmas and the New Year. Secondly, Mr. Sander's evidence further suffers no enter eer ' from his change in position on the reference to "Group = winner" rather than "Group 1 winner". This involved iad the late amendment to the amended statement of claim anos already mentioned. On the other hand. the credit of any Mr. Campbell was attacked by reference to a number of transactions in which he received benefits from clients of Dalgety without disclosing those matters to I. Dalgety. The detail of these transactions will be mentioned later. It will suffice for present purposes t to say that Mr. Campbell's participation in these affairs reflects poorly upon his creditworthiness and will be taken into account when assessing the weicht oe to be attributed to his evidence. ates ¥ Mr. Sander's version was as follows: Present at the meeting were Messrs. Campbell. Heagney, Baird, Speign, io Mitchell. Sherer and perhaps Mr. Cornell. "Galway Bay" and "Royal Biscay" were discussed. Mr. Campbell (il) 24. advised Mr. Sanders to up-grade his mares and stallions. The syndication of "Mr. X", that is. "Centurius", was then considered. At first. Mr. Sanders said in evidence that at the meetina he described "Mr. X" as a "Group 1 winner" and a brother to a successful sire. A" pYice in the range of $18,000.00 to $25,000.00 per share was discussed. It was put to Mr. Sanders in cross-examination that "Centurius"" was only a group winner and not a "Group 1" winner. Mr. Sanders agreed and then claimed, wrongly, that his previous evidence was that he had said that the horse was merely a group winner. Mr. Sherer's version Mr. Sherer was also called by lLeason. His recollection was that the meeting was held in February 1981. He said that. prior to the meeting, he had been asked to prepare a pedigree for "Centurius". He also said, in chief, that "Mr. X" was referred to at the meeting as a group winner with a good pedigree. He then said that he assumed that it was "Centurius". However, in cross-examination. Mr. Sherer conceded first, that. at about this time, he was also asked to prepare a pedigree for "Irish Playboy"; secondly, that after the meeting, he said to some other members (iii) 25. of the staff that "Mr. X" might be "Irish Playboy". Mr. Campbell's version Mr. Campbell said that the meeting was held early in the New Year, some days after Mr. Sanders had informed him by telephone that Mr. Harrington had quoted "Irish Playboy" to him. On the day of this telephone call, Mr. Sanders met with Mr. Campbell in Dalgety's office and asked for a pedigree for the stallion and requested a meeting of Dalgety's staff to consider the prospects of "syndication" but suggested, with a view to confidentiality, that "Irish Playboy" be described as "Mr. X". Mr. Campbell asked Mr. Sherer to prepare a pedigree of "Irish Playboy" for the meeting. This was done. According to Mr. Campbell, in addition to Mr. Sherer and himself, the meeting was attended by Messrs. Mitchell, Heagney, Baird, Sherer and Cornell. "Royal Biscay" and "Galway Bay" were discussed. Mr. Sherer then asked the opinion of the sales staff on 'Me. X" which Mr. Campbell described as a "Group 1 winner" anda threerquarter brother to a successful stallion, from one of the world's best sire lines and a good individual. The sales staff were reluctant to be committed to a specific price per share on what was LM mn r ~~ e fi aim Me ah . ---ccoOooor- (iv) 26. described as sketchy information but a range of prices from $15,000.00 to $20,000.00 was mentioned. Mr. Campbell said that he could -"usually move about 12 shares" and summarised the comments made by the other staff members by saying that they could sell about eight shares. The evidence of the staff members Mr. Mitchell said that. at the meeting, "Mr. KX" was referred to as a "Group 1 winner in France" from a sire line by "Bold Ruler" and a three-quarter brother toa successful stallion. He also said that. after the meeting, Mr. Sherer told him that "Mr. X" was "Irish Playboy". According to Mr. Baird, "Mr. X" was described at the meeting as a "Group 1 winner in Europe" with a fashionable sire line and closely rélated to a successful stallion. He was informed later, in late January or early February, that "Mr. X" was "Trish Playboy". Mr. Heagney said that his recollection of the meeting was that "Mr. X" was a top-class racehorse from a successful sire line. Mr. Cornell's recollection was that the stallion was an imported horse. He was later pomp tres rt err err e toe oy le TL tee ty we Pa ai ate a. prea a we it terest na rete eee ype eres eran . woe eM wees Ws caer ty Veet ae : tae Malad AE alae Ep Wetman (v) a7. informed that it was "Irish Playboy". ' Findings Subject to one possible qualification, the evidence of Mr. Campbell on this aspect of the case should be accepted. The evidence of Mr. Sanders is fundamentally flawed by the confusion in his evidence between a "Group 1 winner" on the one hand and "Group winner" on the other. Mr. Sherer's evidence is equally unconvincing. By contrast, Mr. Campbell's evidence on the point was not seriously challenged in cross-examination and did not suffer from the internal inconsistencies 1n Mr. Sander's evadence. Purther, on the identity of "Mr. X", Mr. Campbell is supported by the evidence of the other staff and by the objective fact that "Centurius" had been acquired by Captain Tim Rogers before Christmas 1981. On the whole, Mr. Campbell's version of the meeting should be accepted as more consistent with the known facts. even if weight is given to the attack on his credit already mentioned. The one qualification about Mr. Campbell's evidence is his claim that he said he could "usually move about 12 shares". One would not ordinarily expect such a ze ot pares an = mrwene epee See e (c) 28. careful qualification in the expression of an opinion in the circumstances.. However, it is unnecessary to pursue the point because Leason does not seek to make a case-on that statement. To summarise, Mr. Sander's version of the "Mr. X" meeting should be rejected. Subject to the qualification mentioned, Mr. Campbell's evidence should be accepted. The meeting held on 12 or 13 January Mr. Campbell said that, after the "Mr. X" meeting, Mr. Sanders asked him whether Dalgety could finance the acquisition and "syndication"" of "Irish Playboy". Mr. Campbell said that this was beyond his authority and a meeting was arranged with Mr. Hawkes for this purpose. The meeting was attended, in the first instance, by Messrs Hawkes, Campbell and Sanders. Mr. Crookshanks later joined them. Mr, Campbell and Mr. Hawkes gave a similar version of the meeting as follows: Mr. Hawkes informed Mr. Sanders that he would have to contribute $100.000.00 towards _ the purchase price. After some protest, Mr. Sanders agreed to do this. Mr. Hawkes also required an up-to-date statement of assets and liabilities of Mr. Sanders. Mr. Hawkes also informed rp ye we Foe te ee oe ee Se 29. Mr. Sanders that if the syndication failed, Mr. Sanders would have to find funds from another source to repay the debt owed to Dalgety. Mr. Hawkes said that he was informed by Mr. Campbell at the meeting that something in excess of 30 shares should be capable of being sold. Again, nothing turns on this statement as it forms no part of Leason's case. Neither Mr. Campbell nor Mr. Hawkes wers seriously challenged in cross-examination on their versions of this meeting. Mr. Sanders did not mention it as it was no part of Leason''s case. However, Mr. Sanders did claim that the request by Dalgety to contribute the sum of $100,000.00 came at a later stage. It is quite improbable that Mr. Sanders did not raise the question of finance with Dalgety before he left for the United States. Upon the assumption that the topic was raised before his departure on 14 January, it is likely that, as in the case of ""Adraan", Mr. Sanders would be expected by Dalgety to make a significant contribution to the purchase price. Moreover, Mr. Harrington said in evidence that he recalled being told by Mr. Sanders when in the United States that Dalgety had required that Mr. Sanders contribute $100,000.00. Mr. Sander's version should accordingly be rejected and the evidence of Mr. Campbell and of Mr. Hawkes as to the meeting held on12 or 13 January should be accepted. Iw 5 tN pad 30. (d) The telephone conversations from the United States in January 1982 (1) Mr. Sanders' version ; Mr. Sanders said that he telephoned Mr. Campbell on the day of his arrival in California and told him that he liked "Irish Playboy" and that it had "inspected well": and that the only thing that-concerned him was whether Dalgety could syndicate the stallion. Mr. Sanders claimed that Mr. Campbell's response was that Mr. Sanders was not to worry, "Irish Playboy" would be "another 'Lord Seymour'". Mr. Sanders said that he then handed the telephone to Mr. Harrington, whose evidence will be mentioned shortly. Mr. Sanders said that after Mr. Harrington concluded the call, he said to Mr. Sanders that Mr. Campbell "could or would place 2, 10 Csicd shares." Mr. Sanders also said that he telephoned Mr. Campbell on the following day. Mr. Campbell denies receiving a second call but even on Mr. Sander's version of the second conversation, there ' was no mention of | "syndication". (ii) Mr. Harrington's version Mr. Harrington gave 'a confused version of the telephone call. He said that Mr. Campbell first 31. informed him that "money was tight" in Australia. This was contradicted by Mr. Campbell and, indeed, it is common ground that at this time, the Australian ' economy appeared buoyant. Mr. Harrington claims that Mr. Campbell then said that "syndication" was not "that easy" but that in the case of "Irish Playboy", as Mr. Sanders was going to sell 10 shares himself, re Mr. Campbell's clients "would be able to take 10 shares-and Chis] office staff would be able to place i one or two shares...1t was not that easy but CheJ would be able to do that." In cross-examination, Mr. Harrington conceded that he was not sure whether Mr. Campbell had said that he had placed the 10 shares or that he was confident that he could do so. (iii) Mr. Campbell's version On the other hand, Mr. Campbell says that in the telephone conversation he merely asked both Messrs -Sanders and Harrington their opinions of "Irish © Playboy". 'According to Mr. Campbell, there was no mention of "syndication". ra (iv) Findings Soe Sonal One would have expected that in this conversation, Mr. as Sanders would have made some mention of syndication. Rees tet | be:! i 32. . At the same time. the evidence of both Messrs. Sanders and Harrington showed imperfections of recollection which, at this distance. is understandable. _At the best,from the standpoint of Leason, the evidence does no more than establish that Mr. Campbell said that he was then confident that he could sell 10 shares at that time. The evidence also establishes and, indeed, it should be common ground that, qiven the prevailing favourable marketing conditions. confidence was justified. In other words, even if. as seems possible, Mr. Campbell did say that he could then place 10 shares. the statement would not have been misleading, deceptive or false. But. in any event, given the unsatisfactory nature of the evidence of both Messrs Sanders and Harrington on the point, Leason has failed to establish. on the balance of probabilities. that Mr. Campbell made a statement to either of them to the effect that "syndication" would be "easy" or that Mr. Campbell had Placed or could then place 10 shares or that the "syndication" of "Irish Playboy" would be as "easy" as that of "Lord Seymour". To sum up, although it 1s quite possible that "syndication" was discussed in the conversation, Leason has failed to establish, on the balance of et Fey ms Sia einer Dahan aboneamiennatetnatan tar eatointe _ eA pe ren eee vot a a 3 Slelaahten Senedenhneeicane "air tot vail mnem wea ra en ys, soe aly "me pene 33. ' probabilities, that Mr. Campbell made any specific reference to the subject. (e) Meeting between Mr. Sanders and Mr. Campbell on 18 January (i) Mr. Sanders' version Mr. Sanders said that, on his return to Australia on Monday 18 January, he arranged a meeting with Mr. Campbell on that day. His evidence in chief was as follows: "I would like you to again try and tell his Honour as best as you cam recollect in the actual words that were used what was said at the converstion that ensued at those offices?---I arrived at the company's offices and went into Graham's office. He was the only person there. He asked me whether I had had a good trip and [I said I had but it was pretty quick. I told him I wanted to get down to specific details in relation to the costs associated with importing a stallion and he went through the various costs associated with such an exercise, that being insurance, import duty, and the costs of those factors and I said to him, "Well, I am more interested in syndicating, in the syndicating process of ' the horse having regard to what you have already told John Harrington, that you can place 12, 10 shares in the horse" and he said, "Yes, we will go through it all and we will find out what the cost is going to' be" and I said, "Well, you have to add up all the figures" so he had the pencil and paper and he added up the cost of the horse and added all the additional costs to it. He suggested to me that we should, that I should add 12 months interest on the outlay of the horse to cover unknowns and to enable him to sell shares in the horse by virtue of giving purchasers time. That did not seem to me to be an unreasonable proposition. (emphasis added) — we 34. ' We are only- interested in what was said. Was anything else said by himin relation to this?---Mr. Campbell told me that the syndicate figure arrived at $19,500. That allowed for Dalgety's commission on the shares and the insurance cast which Mr. Campbell told me they being Dalgety Bloodstock insisted on and I felt that was okay. He added up the _ figure and 1t came to $783,000 approximately. I said to him, "Are there any other costs or any unknowns?" He said, "You had better add on $30,000 or $40,000 in case there are", He ~ called in the insurance manager of Dalgety Bloodstock, Miss Robyn Brown, to check on the insurance costs. When she left I askedhim specifically, "Graham, I am concerned to know that this horse is qoing to receive the full support of your staff". He said, "You have got nothing to worry about, I have already sold 12 shares and the rest of the staff can sell eight" and he Csic} relied on that completely." (emphasis added) (ii) Mr. Campbeli's version Mr. Campbell said that this discussion was principally devoted ta the calculation af an Appropriate asking price for shares in "Irish Playboy". They discussed the several items of expense involved in, and incidental to, the acquisition of the stallion and arrived at a price per share of $19,500.00. Mr. Campbell denied the statement then attributed to him by Mr. Sanders that he had already sold 12 shares. He -did, however. acknowledge that he informed Mr. Sanders on this occasion that, in his view, the horse could be syndicated at $19,500.00 per share. Such an acknowledament does not give rise to any relevant cause of action in Leason: it cannot establish that the i Ln L. — oe we BT nee rete = ane (iii) 35. statement was false. misleading or deceptive having regard to the apparent strength of the market at the time. Findinas The question remains whether Leason has established. on the 'balance of probabilities, that Mr. Campbell said that, as at 18 January 1982, he had placed 12 shares. Although the credit of Mr. Campbell has been attacked on other grounds, it ais highly improbable that Mr. Campbell would have made a statement of the kind now sought to be attributed to hin. It 15 merely to state the obvious to say that any such statement by Mr. Campbell would inevitably have provoked a query by Mr. Sanders as to the identity of the purchasers of the shares and,-of course, it is common ground that no such sales ever took place. It is unlikely in the extreme that a person of Mr. Campbell's experience would have exposed himself to such a vulnerable situation. The more likely position is, as Mr. Campbell acknowledged. that he expressed to Mr. Sanders his confidence in his ability to sell the shares in the future. Given the aimprobabilities of Mr. Sander's version, together with his difficulties of recollection of the events, Leason has failed to establish. on the balance ve We wee comes sapere SI ST I er ere ne te a a Serpe roe te oe (f£) 36. of probabilities, that Mr. Campbell made the statements sought to be attributed to him by Mr. Sanders. The execution of the agreement to. purchase on 20 January As has been noted, Mr. Sanders claimed in his evidence that he was only made aware of Dalgety's requirement that he contribute $100,000.00 when he attended upon Mr. Crookshanks on 20 January for the purpose of executing the agreement for sale. As has been said, this vyersion of events 1s at odds. inter alia, with the evidence of Mr. Harrington and should be rejected. This apart. Mr. Sanders said that when he attended upon Mr. Crookshanks he asked that name of: the purchaser shown in the contract document as "Napier Park Stud" be altered to "Napier Park Stud Syndicate". Mr. Crookshanks aqreed to this alteration and the agreement, including the annexure thereto and a letter of understanding, was executed by Mr. Sanders as purchaser in the following form: ogress Sree ae eee oe bad PPL RIT es 4 ne rok ats ' AGREEMENT TO SELL AND PURCHASE Through Dalgety Bloodstock International {hereinafter called 'the Agent') as commission agent for ... occ cncccceee sccecees ence ear eeeerereease (o) ri eee e cece eee e tere eenees S eee enc ee esac neseceenece ooeeeeeeese (hereinafter called 'the Vendor') hereby agrees to sell and NAR'ER, . PORE. STyP. SUSMCATE of AS.....Gtelrere... A. Howe, ee cceccenee sees . cence cece enees .. «s+... (hereinafter éalled 'the Purchaser') hereby agrees ; to purchase the following: . | Name of Horse ... LAISY.. PLAYBOY... ooo hs Se) ee | colour. .OAY, / BROWN. — Foaling Date .24/ 3/28.. mS.B. YES/NO | Site. PERISH, COSTLE .eccecceeee Dam. FLOBETROT.TER cee. Foal at Foot a. wea Teeeeeee Colour... ccc cece ewe eee SOX ace ce ccc cccccccseece Foaling Date......- Tee cece cee cere e eens SHE Lecce cece ce cen em ene eee eees ~ Served oS Date of last service ... 2... eee cece eee Result of service ...... cece ee eee cee eeeecenes Nomination to, . bcc c ewe c eee renee eeeseeanees payable on 42 day positive test Existing Lease YES/NO Date Cancelled ............00. Se er see ee een eee Is Horse a Bleeder Sor, 42 sul, to Dt — Wobbler, Ned ve ex, Westie weeees Windsucker scenes seen Piccceeee tees ees Under any Ban ¢.. 2... Loeceeeeeeeees Stud Book Returns Lodged. .... eee "ee eeeeees roe Foaling Slip forwarded to Keeper of Stud Book... ie CHACELLICS 1 Bits' BULL mounes PanD . ae as Re} "yee ene Pres Special Conditions: OS akinie Te Wealitcaranes" So tue REESBSE? MO Conn rsveea ze 8 KE crsd PGND raat TOR HSA Eee "OR Sree BU Fe EE i wel eee ne eee oe wane see 5 & bite i itions: PER MET as inspected bya wea 1 ass on the following conditions: eran The purchase price payable by the Purchaser is SUS RSS 0 <1: Rate of commission. SYS $9630. .Mepybas, yl Pukcasd PRice TERMS OF PAYMENT -— CASH ON DELIVERY. The Purchaser agrees to pay interest at the current rate charged by the Agent if the account is not settled at the time of delivery, DEPOS TASI09 ang a ey Purchaser Witness - TO THE VENDOR AND HIS AGENT | | acknowledge having received delivery of the horse within described en lovee Purchaser or his Agent Le - .37. eo | 6) Dalgety Bleodsieck International ' é \ A Division of Dalgety Australia Limited {Inc in Vietorial ee 15 ASCOT VALE ROAD, FLEMINGTON 3031 _—« TEL. (03) 376 2666 Ss 41-47 CURRIE STREET, ADELAIDE 5000 TEL. (08)51 0251 -~ 38 BRIDGE STREET. SYDNEY 2000 TEL. (02) 238 2000 SBME CuSTO— mem UK OF Ow cee ee mote ep rrrir _ ve ne ee yo Utley * ae toe a roe — pe te a ""RPPENDIX A" 38. "I hereby acknowledge that proceeds from the sale of the horse "Irish Playboy" or proceeds from the sale of shares in his syndication or in the event of his death or infertility insurance monies accruing shall be applied as a matter of first priority to the settlement of any remaining debt in my name in the books of Dalgety Bloodstock International." - /. Nn FEDERAL COURT OF AUSTRALIA coram Occitan ered 2 | File No. in Date aL ey... Exhibit No. £6 franc Pye... MFI. No. yess. oe wrt ae . ann @ Dalgety Bloodstock International Date Coram: Benccensee TF | Y 39. (GN HEAD OFFICE: P.O. Box 77, Flemington, Vic. 3031. 20th January 1982 Letter of Understanding Advances (Unsecured) In consideration of certain unsecured advances made to Napier Park Stud Syndicate of 795 Glenferie Road, Hawthorn, Victoria. It is agreed that such advances will bear interest at that rate charged from time to time by Dalgety Australia Limited. It is understood that the advances are repayable uvon demand and during the time such advances are outstanding the Bloodstock Services of Dalgety Australia Limited will be utilized. Formal Security over assets will be executed if requested by Dalgety Australia Limited. Dated the ~O day of ~T | FEDERAL COURT OF AUSTRALIA File No. YQ (2/73 Exhibit No. e dy ft hex M.F 1 No. - . " i (Aen o—~, ASSOCIATE bady Car! bel x. 19 OX. A DIVISION OF DALGETY AUSTRALIA LIMITED (INC. IN VICTORIA) 15 Ascot Vale Road, Flemington, Vic. Telephone: (03) 376 2666 , Telex: AA 33120 Telesrams: DALGETY re Saale nnenaeerrerseneinr ete ae ee eee ere wae: "To, ager ae a res 7 mop ems es meen ee ee ey Se re ree he te Dalaety has pleaded by. way of an alternative defence to the claims now made against 21t that only Mr. Sanders and not Leason has any title to sue. The defence 1s based upon the terms and manner of execution of the aareement for purchase and related documents. Daigety7 contends that Mr. Sanders personally, and not Leason. agreed to purchase "Irish Playboy". A similar Question arises on the cross-claim as to the party liable to Dalgety. The point will be further discussed in dealing with the cross-claim, The attack on Mr. Campbell's credit On a number of occasions. a client who had dealt with Mr. Campbell offered him benefits of substantial value which were received without the knowledge or approval of his employer. In fairness to those involved, details of these transactions are contained in an appendix to these reasons. Until further order, the publication of the material in the appendix will he restricted to the parties and their representatives. The benefits in question were received by Mr. Campbell in the course of his employment. Legal questions apart, Mr. Campbell was morally obliged to disclose to his employer his receipt of benefits of that character. As has been said. Mr. Campbell's credibility must be assessed in the Light of his failure to bring these matters to the attention of his employer. PN ee re es 7 F i ee wt " Te oe mae pe - 2 cover reer vo Ty Ta merce 7 : tw = ae AF a hin od Ot ote em cet BLT el 41. [: Conclusions on Leason's Claim (a) The representations alleged to have been made at the "Mr. <x" meeting (amended > statement of clain, para.3B(d)(iii)) Leason's case, contrary to the finding of fact already made, as that this meeting was concerned with I "Centurius" and not "Irish Playboy". It follows that this part of Leason's claim is rejected. 'b) The representations alleqed to have been made on the telephone from California (amended statement of claim, para.5/3)) Tt follows from the finding that no specific 4 representation was made on this occasion by Mr. Campbell 2 that this part of Leason's claim is rejected. . \ {c) The representation alleqed to have been made by Mr. weer oe Campbell on 18 January 1982 to the effect that he had already sold 12 shares (amended statement of claim para.5(b)} In accordance with the finding that lLeason has not established that Mr. Campbell made a statement to the effect that he had already sold 12 shares, this part of Leason's claim is rejected. The alleged representation by Mr. Campbell on 18 January 1982 that the staff would sell e1rght shares (amended statement of claim para.5(b)) Mr. Campbell's evidence is that at the "Mr. X" meeting, he said that it was believed that the staff could sell eight shares. As has been said, the statement was neither misleading nor deceptive at the time 1t was made. As a prediction, it was not fulfilled. but the settled course of authority in this Court demonstrates that the mere non-fulfillment of a prophecy aces not establish a contravention of 5.52 of the Trade Practices Act. A contravention will only occur if the maker of the statement does not ain fact hold 'the opinion expressed or if there is no reasonable basis for holding such an opinion. It is common ground that, as at January 1982, market conditions in the Victorian bloodstock industry were good, Dalgety led evadence that the market did not deteriorate until the 1982 Easter sales in Sydney. This evidence was not challenged, although Leason did attempt to attribute Dalgety's failure to achieve a successful "syndication" of "Irish Playboy" to other commitments of Dalgety. First, Leason pointed to the fact that, at <p get iis oes poe ae _ ~ geo and al eee adel oras oF wn _ Saeieeeene kinetei 43. - this time, Dalgety was undertaking the construction of a large complex at Oaklands Junction. It may be assumed " that this project absorbed much executive time. But 1t could hardiy he seriously suggested that such an undertaking would distract Mr. Campbell or other members — of Dalgety's sales staff to the point where they were unable to devote proper time and attention to the marketing of the shares in "Irish Playboy". Leason also complained that Dalgety's sales staff were preoccupied in the sales of shares in other stallions. The complaint 1s rejected. Many of the sales in other horses were erfected earlier in more promising market conditions: the timing of the marketing of the shares in "Irish Playboy" was unfortunate to coincide with the serious downturn in the Australian economy which began to be felt in March 1982. Moreover, the known 1llness of "Irish Playboy" which occurred in March 1982 and delayed his arrival at Naprer Park Stud until August 1982, must have had a disastrous effect on the attempts to "syndicate" the stallion. It follows that Mr. Campbeli's statement in January 1982 that the staff could sell eight shares was not misleading or deceptive or likely to be so. This part of Leason's claim is rejected. , "Tene wrsteees a aan pee eee ere oe vey few 7 Sea ree eee me Ye + fe) (f£) The representation alleged to have been made by Mr. Campbell that the sale of shares in "Irish Playboy" could and would be expeditiously effected by Dalgety (amended statement of claim, para.5(c)) This allegation raises a consideration of the same matters as are raised by the allegation made in -para.S(b) of the amended statement of claim. In short, Mr. Campbell acknowledges that, at the "Mr. X" meeting, he expressed the belief that Dalgety could achieve the sale of a total of 20 shares. No doubt 1t would be proper to anfer from such lanquage an implication that it was Mr. Campbell's belief that the sales would be effected within a reasonable time. Leason has not shown that the prediction was misleading or deceptive or likely to be so in the sense aiready discussed. This part of Leason's claim is rejected. General _ The principal claims made by Leason have already been dealt with. It follows from what has been said that the consequential claim under the Trade Practices Act made in para.8A of the amended statement of claim must also - be rejected. -- Sn ry pe a ee ee oere on oe on i 7 Soa v7 fe pe gD Sonne pen op THe cen ore "ae ~ . e 2 rome aan + . gy _ mee a soe tk so 45. (g) Claims made by Leason under the qeneral law ~ ~ It follows from the findings made adverse to Leason that the general law claims must fail also. [It should be noted that, in the course of addresses, senior counsel for Leason indicated that the claims for breach of contract made in paras.27 and 728 of the amended statement of claim were not pressed. THE CROSS-CLAIM Two questions arise on the cross-claim. First, there is a dispute as to whether the party liable to Dalgety is Leason or Mr. Sanders personally. As has been noted, Mr. Sanders personally executed the agreement for purchase and related documents. Although the adreement described the purchaser as "Napier Park Stud Syndicate". no attempt was made by Mr. Sanders in the drawing or execution of the documentation to suggest that his signature was intended to be placed there asa representative of Leason. On the contrary, his signature appeared above the word "purchaser" in each case. Prima facie, Mr. Sanders 1s liable as a party to the transaction. Senior counsel for Mr. Sanders invited a consideration of the t I ' i i | be ee ee weet epee ae eee . ~ a Are eee aereena tel ar anneal ° 46. surrounding circumstances as negating any intention on his part to assume a personal liability. He pointed to the fact that in the statement of his affairs previously furnished to Dalgety, Leason was shown as the repository of his horse stud interests. He also relied onan admission made by Mr. Crookshanks in the course of his evidence that he believed that Leason was intended to be the party. This admission was reflected in Dalgety's initial accounting treatment of the transaction - the account was raised in the name of Leason, although later changed upon receipt of legal advice that Mr. Sanders was personally liable. ~Mr. Crookshanks' views of the legal question which has arisén are not. of course, decisive of the point. The surrounding circumstances and the subsequent conduct of the parties, including the solicitors' letter of demand, written on behalf of Mr. Sanders and not Leason., are equivocal on the issue. They are not sufficient to displace the prima facie liability of Mr. Sanders indicated by his execution of the transaction documents. The second question on the cross-claim is whether Dalgety is entitled to charge interest at compound rates. The letter of understanding provided that it was agreed that the advances made "will bear interest at that rate charged from time to time by CDalgetyi." eee oy aero oe Petey An fovea ener ot eee Se ee a es re . _ , 4 hey IF See ee eee . oto No dispute arises as to the percentage at which interest was charged by Dalgety. Evidence was given that in the period now in question, it was the practice of Dalgety to compound its interest charges. Dalgety puts its case on this aspect of the cross-claim in a number of ways but itis only necessary to consider its primary contention that the reference in the letter of understanding, to the "rate charged from time to time by CDalgetyJ" picks up not only the percentage but also the compound rate. As a matter of construction of the letter, to divorce the compound nature of the interest charged from 1ts percentage is an artificial process and unlikely to have been intended by the parties. The preferable interpretation is to hold that the letter intended to pick up Dalgety's practice with respect to the rate of interest in all its aspects, including 2 compound as distinct from simple rate of interest. ORDERS In the result, the application should be dismissed. On the cross-claim, judgment should be entered in favour of Dalgety against Mr. Sanders for the amount claimed, including interest at the compound rate claimed. The representatives of Mr. Sanders should have an opportunity to consider Dalgety's calculation of compound interest up to the date of judgment. This can be eye cen | rote pene aoe ree = Ce Mw prs erin te eaedan re achieved by directing that Daglety bring of orders. The minutes should include an order receive reserved provision to the effect that, until further 48. its costs of the claim and cross-claim. in draft other short minutes that Dalgety costs, if any. The minutes. should also include a order, the publication of the confidential appendix to these reasons he restricted to the parties and their representatives. Direct that the respondent bring in short minutes The following order is made at this stage: effect to these reasons. . SS acemenns I certify that thas ond the preceding pases are a true copy or the Reasons for Judgment herein of his donour "T - cr ee 2 ie Cant Mr. Justice )ure~ MCN u » to give than we ~ ie CONS Perens eee rt rte ae ot enn et te VICTORIA DISTRICT REGISTRY { GENERAL DIVISION AND BETWEEN: CORRIGENDA. dated 26 March 1986 - instead of "respondent". "Dalgety" "respondents". IN THE FEDERAL COURT OF AUSTRALIA } q No. VG 170 of 1983 LEASON PITY. LTD. Applicant DALGETY FARMERS LIMITED (formerly DALGETY AUSTRALIA LIMITED) and GRAHAM CAMPBELL Pespondents DALGETY FARMERS LIMITED (fonnrerly DALGETY AUSTRALIA LIMITED) Cross-Claimant JOHN BRAITHWAITE SANDERS and LEASON PTY. LID. Cross-Respondents Amendment to the judgment of his Honour Mr. Justice Beaumont First line of "Minute of Order" should read "respondents" Page 48 of Judgment - first line "Daglety" should read Page 48 of Judgment - line 9 "respondent" should read reeean of ve, : " * sete erp ye gore oe oe ne oe meee on Le