eo tty, NO! FOK DIST RIBUIION IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ) ) ) ) No. ACT G 97 of 1985 ) ) ) BETWEEN : REX DEVELOPMENTS PTY. LTD. Applicant AND: INTERVAL FINANCE, LTD. First Respondent INTERNATIONAL LEISURE TIME COUNSELLORS (AUST.) PTY. LTD. Second Respondent FIRST INDEMNITY LIMITED Third Respondent JOHN WILLIAM LLOYD GIBBS Fourth Respondent . ot M1987 1 | DAVID ANTHONY BAIRD MASTERTON ' '"DSRAL COURT OF AYSTRALIA ~ RINGIPAL AUSTRY Fifth Respondent SPEDLEY SECURITIES LIMITED Sixth Respondent MINUTE OF ORDER JUDGE MAKING ORDER : Neaves Jd. DATE OF ORDER 12 June 1987 WHERE MADE : Canberra THE COURT ORDERS THAT: 1. The motion of the sixth respondent in so far as it seeks an order pursuant to Order 20, rule 2 of the Federal Court Rules that the proceeding herein be stayed or dismissed as against the sixth respondent be dismissed. 2. Paragraphs 2, 2h and 25 of the applicant's statement of claim be struck out. 3. The applicant be at i1perty to file and serve on the respondents within 21 days from the date of this order an amended statement ot claim and for that purpose the applicant have leave to amend the statement of claim generally. 4. The applicant pay the costs or the sixth respondent of the motion. 5. The motion of tne applicant seeking an order pursuant to Order 20, rule 1 of the Federal Court Rules for summary judgment aqainst the first, second and third respondents be dismissed. 7. There be no order as to the costs of the applicant's motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G 97 of 1985 DISTRICT REGISTRY ee eee GENERAL DIVISION BETWEEN : REX DEVELOPMENTS PTY. LTD. Applicant AND: INTERVAL FINANCE LTD. First Respondent INTERNATIONAL LEISURE TIME COUNSELLORS (AUST.) PTY. LTD. Second Respondent FIRST INDEMNITY LIMITED Third Respondent JOON WILLIAM LLOYD GIBBS Fourth Respondent DAVID ANTHONY BAIRD MASTERTON Fifth Respondent SPEDLEY SECURITIES LIMITED Sixth Respondent Neaves J. 12 June 1987 | REASONS FOR JUDGMENT I have before me two motions on notice in proceedings pending in the Court between Rex Developments Pty. Ltd. ("the applicant") and Interval Finance Ltd. ("the first respondent"), International Leisure Time Counsellors (Aust.) Pty. Ltd. formerly Reanon Pty. Ltd. ("the second respondent"), First Indemnity Limited formerly Gratewill Limited ("the third respondent"), John William Lloyd Gibbs ("the fourth respondent"), David Anthony Baird Masterton ("the f1fth respondent") and Spedley Securities Limited ("the sixth respondent"). The proceeding arises from efforts made by the applicant to arrange finance 1n connection with the purchase py ix oof the Canberra kex Hote. and to enable extensions and renovations to the hotel to be carried out. The applicant seeks damages against all the respondents pursuant to the Trade Practices Act 1974 (Cth) ("the Act") by reason of conduct which 1s alleged to have been engaged in in contravention of s.52(1) of that Act, damages against the first, second, third and sixth respondents for breach of contract, a declaration that certain moneys alleged to have been received by the fifth, or alternatively the second, respondent were held on trust for the applicant and an order that the moneys so received be re-paid to the applicant. One of the motions before me 15 a motion by the sixth respondent. That motion seeks an order pursuant to Order 20, rule 2 of the Federal Court Rules that the pending proceeding be stayed or dismissed so far as it relates to the sixth respondent or, alternatively, an order pursuant to Order ll, rule 16 of those rules that the applicant's statement of claim, so far as 1t relates to the sixth respondent, be struck out. The grounds upon which the order that the proceeding be stayed or dismissed is sought are that no reasonable cause of action is disclosed against the sixth respondent, that the application 3. is frivolous or vexatious as against the sixth respondent and that the application 1s an abuse of the process of the Court. The grounds of the motion under Order 11, rule 16 are that the statement of claim discloses no reasonable cause of action against the sixth respondent, that 1t has a tendency to cause prejudice, embarrassment or delay in the proceeding and that 1t amounts to an abuse of the process of the Court. The orders are sought notwithstanding that the sixth respondent has delivered a defence to the statement ot claim. The other motion, consideration of which I propose to defer until I have considered the motion by the sixth respondent, 18 a motion by the applicant pursuant to Order 20, sub-rule 1(1) of the Federal Court Rules for summary judgment against the first, second and third respondents, those respondents not having entered an appearance or delivered a defence to the statement of claim. The statement of claim alleges (par.8) that at ail Material times the first, second, third and fourth respondents carried on business as finance brokers or consultants and held themselves out as experienced and specialist financiers in property development. The reference to the fourth respondent 1s clearly an error: a reference to the sixth respondent is intended. Paragraph 9 alleges: "9. At all material times the first, second, third and fourthnamed respondents acted as servants and/or agents of the sixthnamed respondent in arranging and procuring customers for finance provided by the sixthnamed respondent." Paragraphs 10, 11, and 12 of the statement of claim should also be set out in full. They allege: "10. At all materi:ai times the applicant made known to the respondents - fa) ats financial position and future requirements; 'b) that 156 required finance for extensions and renovations to the Canberra Rex Hotel; (c) that 1t required a take-out facility in respect of 1ts purchase and/or refinance of its purchase of the Canberra Rex Hotel and in respect of the extensions and renovations referred to. ll. In or about January 1985, the first, second, fourth and sixthnamed respondents conducted negotiations and discussions with the applicant concerning the applicant's requirements of the provision of finance for extensions and renovations to the Canberra Rex Hotel and the refinancing of the said Hotel as referred to above. Particulars The negotiations and discussions were oral between Mr Phillip Carver on behalf of the applicant and the fourthnamed respondent on behalf of the first, second and sixthnamed respondents. 12. In the course of the said negotiations and discussions and in order to induce the applicant to make and enter into an agreement, the fourthnamed respondent on behalf of the first, second and sixthnamed respondents represented ('the representations') to the applicant - (a) that the respondents were able to procure loan funds in the sum of FOUR MILLION NINE HUNDRED AND EIGHTY THOUSAND DOLLARS ($4,980,000.00) ('the loan funds'); (b) that the loan funds would be made avallable by the provision of a take-out facility obtained by the first and/or fourthnamed respondents from the sixthnamed respondent ('the take-out facility'); (c) the sixthnamed respondent would endorse the take-out facility to enable the applicant to borrow the loan funds from other financial institutions; (d) that upon payment of the amount of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) the take-out facility was immediately available to the applicant." Sub-paragraph (d) also contains an error. The words "would be" were intended in place of the word "was". Paragraph 13 alleges that, in or about January 1985, an agreement was made between the applicant and the first, second, fourth and sixth respondents that in consideration of the payment of the sum of $25,000.00 the first, second, fourth and sixth respondents would provide the take-out facility immediately. Particulars of the agreement are given but it is unnecessary for present purposes to refer to them. The particulars given in relation to par.13 refer to pars 9 and 10 of the statement of claim. It is probable that references to pars 11 and 12 were intended. It is alleged (par.14) that certain terms, the substance of which is set out, are to be implied into the agreement. Paragraphs 15 and 18 allege that, in reliance upon the above representations, the agreement referred to and the endorsement of the take-out facility by the sixth respondent, the applicant paid, by cheque, sums of 6. $25,000.00 and $100,000.00 to the first respondent on or about 21 January and 28 February 1985 respectively. Those cheques were said to have been endorsed by the fifth respondent 30 as to authorise payment of the proceeds to the second respondent 'pars 16 and 19). Additional representations are alleqed to have been made by the fourth respondent on behalf of the first, second, third and sixth respondents on or about 5 June 1985 (par.21). Those representations are to the following effect - "(a) the firstnamed respondent had gone into voluntary liquidation and as a consequence its obligations would be assumed by the thirdnamed respondent; (b) the thirdnamed respondent had an association with the sixthnamed respondent; (c) the take-out facility could be varied by increasing the facility to $5.5M ($5,500,000.00) ('the variation')." The applicant says that on or about 19 June 1985, in reliance upon the additional representations, it accepted and consented to the variation (par.22). It is further alleged (par.23) that on or about 1 July 1985 the fourth respondent on behalf of the first, second, third and sixth respondents acknowledged the variation to the agreement, acknowledged the payment of $125,000.00 by the applicant and demanded the payment of an additional sum of $40,000.00. Paragraph 24 alleges that on or about 4 October 1985 the sixth respondent, wrongfully and in breach of the agreement, repudiated the agreement. Paragraph 25 reads: "25. In the premises the applicant has discovered and the fact 1s that each of the said representations and additionai representations were Csicl] false and untrue - (a) the respondents were not able to procure the said loan funds nor any loan funds; (b) the first, second, third and fourthnamed respondents were not able to procure and the sixthnamed respondent did not provide a take-out facility." Paragraph 28 sets out the respects in which the first, second, third and sixth respondents are said to be in breach of their contractual obligations. It may be noted that there is some disconformity between par.28 and par.14. The fourth respondent (Mr Gibbs) is alleged to be, and at all material times to have been, a director of, employed by, or acting as a servant or agent of, the first, second and third respondents (par.5). It is not alleged that he 1s, or was, aduirector or employee of the sixth respondent but it 1s alleged that, ain making the representations alleged in par.12, he was acting "on behalf of" the first, second and sixth respondents (pars 9 and 12). The fifth respondent (Mr Masterton) is alleged to be, and at all material times to have been, a director of, employed by, 8. or acting as a servant or agent of, the second and third respondents (par.6). For the sixth respondent it 1s submitted that the statement of claim discloses against 1t no cause of action based on a contravention of s.52 of the Act. That submission 1S supported by the following propositions. It is said that each of the representations relied on as against the sixth respondent is properly characterised as a representation relating to future conduct. Each is said to amount to a promise to be fulfilled in the future and none is expressed as a statement of an existing or past fact. [It 1s submitted that, ona fair reading of par.12, what is alleged is that the loan funds would be procured in the future, that the funds would then be available by the provision of a take-out facility from the sixth respondent, that the sixth respondent would endorse the facility and that the facility would be available immediately upon the payment by the applicant of the amount of $25,000.00. It is submitted that the additional representations in par.2l include a representation that the obligations of the first respondent would be taken over by the third respondent and that the take-out facility would be varied by increasing the facility to $5.5m. Reference is then made to par.25 which alleges that each of the representations was "false and untrue" and sets out the circumstances which are relied upon to support that assertion. Those circumstances are that the respondents "were not able" to procure the loan funds or any loan funds, that the first, second, third and fourth respondents "were not able" to procure a take-out facility and that the sixth respondent "did not provide" that facility. It is submitted, adopting what was said by Fitzgerald J. ain Stack v. Coast Securities No.9 Pty. Ltd. (1983) 45 A.L.R. 451 at 9.456 and by the Full Court of this Court in Global Sportsman Pty. Ltd. v. Mirror Newspapers Ltd. (1984) 55 A.L.R. 25 at pp.30-1, that the making of the representations, being promises to be fulfilled in the future, couid not amount to conduct in contravention of s.52(1) of the Act unless it were also alleged - (a) that at the time the representations were made, the sixth respondent had no belief that the promises would be fulfilled; or (b) that, although at the time the representations were made the sixth respondent believed that the promises would be fulfilled, there was no, or no adequate, foundation for such belief; or (c) that the sixth respondent was, at the time the representations were made, recklessly indifferent whether the promises would be fulfilled. Absent any such allegation, the statement of claim was said to be defective as against the sixth respondent. It is to be noted that, if the argument presented on behalf of the sixth respondent in this regard 1s correct, the statement of claim 1s equally defective as against the other respondents. 10. It ais further submitted on behalf of the sixth respondent that, as the Court has no jurisdiction to entertain the claim aqainst the sixth respondent for damages for breach of contract except as part of the Court's accrued jurisdiction, that claim may not proceed in the absence of a properly pleaded claim for relief under s.52(1) of the Act. For the applicant 1t is submitted that the first of the representations alleged in par.12 of the statement of claim, namely the representation "that the respondents were able to procure loan funds" of the specified amount, 15 properly to be understood as a representation that, at the date the representation was made, the respondents had the means available to them to procure loan funds of that magnitude. So understood, the representation 1s said to amount to a statement of an existing fact and not a promise to be fulfilled in the future. The allegations in par.25 concerning the respondents' inability to procure the loan funds or the take-out facility are, so it is submitted, to be read ina similar sense. It is, however, conceded that there 1s an element of futurity in each of the other representations alleged in par.12. The second and third representations, namely that "the loan funds would be made available by the provision of a take-out facility obtained by the first and/or fourthnamed respondents from the sixthnamed respondent" and that "the sixthnamed respondent would endorse the take-out facility to enable the applicant to borrow the loan funds from other ll. financial institutions" are clearly so expressed. It would seem that the words "to be" were intended to precede the word "obtained" in the second representation. The fourth representation, which, in terms, states that upon payment of the amount of $25,000.00 the fake-out facility "was" lmmediateiy available to the applicant, 18 intended to read "would be immediately available to the applicant". Thus, 1t also has an element of futurity. But, 1t 1s said, to concede that the representations have elements of futurity 1s not determinitive of the question whether a cause of action has been sufficiently alleged. It is submitted that the allegation in par.25 that the representations were "false and untrue" 1s, so far as the second, third and fourth representations in par.12 are concerned, intended to mean, and means, that, when the fourth respondent (Mr Gibbs) made the statements relied upon, he knew that the loan funds would not be made available and the sixth respondent would not provide a take-out facility or, alternatively, that he had no belief in the truth of the statements he made. It is further said that, if the allegation concerning Mr Gibbs' knowledge or, alternatively, lack of belief are made out at the hearing, the sixth respondent will be liable for any damage resulting from Mr Gibbs' conduct because Mr Gibbs, though not a director or officer or employee of the sixth respondent, was, in making the representations, acting on its behalf. 12. In my opinion, the statement of claim is defective in a number of respects and unsatisfactory in others. It 1s sufficient to refer to pars 12, 21 and 25. As I understand 1t, 1t 2s an essential element in the applicant's cause of action under s.52(1} of the Act against the sixth respondent that the sixtn respondent made certain representations in the course of negotiations between the parties. However, par.12 does not, in terms, allege that the sixth respondent made such representations. What 1s alleged 1s that the fourth respondent made the representations and that he made them "on behalf of" the sixth respondent. Paragraph 12 should, I think, have specifically alleged that the sixth respondent (and, also, the first and second respondents) made the representations relied upon. The statement in par.12 of the representations upon which the applicant relies also attracts criticism. I accept that the first of the representations there alleged is intended to be understood as meaning that, at the time the representation was made, the respondents had the means available to them to procure loan funds of the specified amount. In the interests of precisely defining the issues between the parties, the paragraph should, I think, make clearer than it presently does that that 1s what the sixth respondent is alleged to have represented. Paragraph 25 should, 1n consequence, allege that at the relevant time the respondents did not have the means available to them to procure the loan funds. To state, as the paragraph does that the respondents "were not able" to procure those funds is, to say the least, lacking in precision. 13. The other representations set out in par.12 clearly have an eiement of futurity. When read with the allegation in oar.25 that those representations were "false and untrue', a more fundamental difficulty arises. I agree with the submission made on behalf of the sixth respondent that the statement of claim does not make explicit what is the statement of present fact which 1s to be implied from the words allegedly used by the fourth respondent nor the respects in which such statement of present fact is said to have been "false and untrue". I should add that, 1f the applicant proposes to conduct its case against the sixth respondent on the basis foreshadowed in the submissions put on its behalf by counsel, namely that the representations that the loan funds and the take-out facility would be provided were made with knowledge that the funds and the take-out facility would not be so provided, the allegation should be that the sixth respondent, rather than Mr Gibbs, had that knowledge. Similarly, if the applicant's case 1s that the representations were made with no, or no adequate, foundation for a belief in their truth, or recklessly, that allegation should be made explicitly in relation to the sixth respondent. The relationship between pars 21 and 25 also requires attention. Although par.25 states in general terms that the additional representations in par.21 were "false 14. and untrue", the remainder of the paragraph makes no reference to those additional representations. It follows from what has been said that, in my opinion, the statement of claim 1s defective in that it does not comprehend every element necessary to constitute a cause of action based on s.52(1) of the Act against the s1xth respondent or, indeed, against any of the other respondents. So to conclude, however, does not require that the power to stay or dismiss the proceeding should be exercised. It 1s well extablished that the jurisdiction summarily to terminate a proceeding 1s to be sparingly employed and will only be exercised in very clear cases: see Dey v. Victorian Railway Commissioners (1949) 78 C.L.R. 62 per Dixon J. (as he then was) at p.91 and General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) (1964) 112 C.L.R. 125 per Barwick C.J. at pp.128-130. I am not convinced that this is such a case. While the statement of claim is in a number of respects defective, the essence of what the applicant wishes to claim and the basis of that claim is tolerably clear. The motion to stay or dismiss the proceeding as against the sixth respondent is, therefore, dismissed. However, pars 12, 21 and 25 of the statement of claim should be struck out and the applicant given an opportunity to re-plead. There are other respects in which the statement of claim requires amendment. I have referred to the errors in pars 8, 12(d) and 13 and to the disconformity between pars 14 and 28. The convenient course 1s to give the 15. applicant leave to amend the statement of claim generally. The applicant must cay the costs of the sixth respondent cf the motion. I turn now to the second motion before the Court. That is a motion by the applicant for summary 7udgment pursuant to Order 20, sub-rule 1(1) of the Federal Court Rules against the first, second and third respondents. Although argument upon this motion was heard prior to the hearing of the motion by the sixth respondent which is referred to earlier in these reasons, 1t has been convenient to defer consideration of the applicant's motion until the motion by the sixth respondent was determined. Sub-rule 1(1) of Order 20 provides: "(1) Where, 1n relation to the whole or any part of the applicant's claim for relief, there is evidence of the facts on which the claim or part is based, and - (a) there is evidence given by the applicant or by some responsible person that, in the belief of the person giving the evidence, the respondent has no defence to the claim or part; (b) the respondent's defence discloses no answer to the applicant's claim or part; or (c) the respondent is in default of appearance, the applicant may move on notice for such judgment for the applicant on that claim or part and the Court may pronounce such judgment and make such orders as the nature of the case requires." 16. The applicant's motion 1s supported by an affidavit sworn by Phillip Kingston Carver, a director of the applicant. For the purposes of considering the motion, I accept the facts as deposed to in that affidavit. Mr Carver states that during January i985 he had discussions on behalf of the applicant with the fourth respondent, Mr Gibbs. Paragraphs 3 and 4 of the affidavit set out what was said in the course of those discussions. The paragraphs read as follows: "3. In the course of those discussions I said to Mr Gibbs words to the effect of 'TIT ama Director of Rex Developments Pty. Limited which owns the Canberra Rex Hotel in Canberra. The company is in the market to borrow about $5 million'. Mr Gibbs said to me words to the effect of 'Yes I think I can help you we have a close contact with Spedley Securities and we can arrange that sort of finance for you. We have done similar deals in the past through Interval Finance Limited and Spedleys in fact they underwrite all our deals'. 4. There followed further discussions with the said Mr Gibbs during which he said to me words to the effect of 'There will be an establishment fee of $125,000 to be paid on a take-out facility of $4,980,000. Of that 2.5% fee, 1.5% will go to Spedley Securities Limited and the balance to Interval Finance Limited'. Mr Gibbs also said to me words to the effect of 'Spedileys approval is really only a formality. We share premises and directors with Spedley and Ken Hawkins has his office on this floor. The money will be available within two weeks once we have Spedley's rubber stamp'." On or about 21 January 1985 the applicant received from the first respondent a letter signed by Mr Gibbs reading as follows: 17. "The commitment letter approving your take-out facility is enclosed in accordance with our agreement. We wish to confirm that a copy of your Finance Application together with a Certified Memorandum of Take-Out endorsed by Spedley Securities Limited will be forwarded to the Bridging Financier with our request to provide your finance requirement. We may require your assistance to provide further documentation should the Financier request additionai information." The commitment letter, also dated 21 January 1985, is also in evidence. It, too, was signed by Mr Gibbs as a director of the first respondent. The letter stated that the first respondent was pleased to place at the applicant's disposal a take-out facility of $4,980,000 on the terms and conditions set out in the letter. It also stated, inter alia, that the facility was to be available (subject to the terms and conditions set out) for drawdown any time after receipt by the first respondent by registered mail from the bridging financier of written notice of not less than ninety days of their intention to withdraw their funding arrangements. The applicant was to pay to the first respondent a guarantee fee totalling $25,000 "in consideration of this Letter of Takeout" anda further amount equal to 2.5% of the bridging finance facilitated by the letter on the day the bridging funds were drawn down (par.5). Paragraph 16 provided that a cheque for $25,000 was to be received by the first respondent on the acceptance of the offer and the balance of $100,000 on drawdown of the bridging finance. It is not clear how these provisions are to be reconciled. 18. On 21 January 1985 the applicant accepted the offer contained in the above letter and agreed to be bound by the terms and conditions thereof. On the same day a cheque in the sum of $25,000 was drawn in favour of the first respondent and paid to that company. That payment 1s said to have been made on account of the establishment fee of $125,000 referred to in par.4 of Mr Carver's affidavit. On the following day the cheque was endorsed by the fifth respondent (Mr Masterton) in favour of the second respondent. It does not appear by what authority Mr Masterton made that endorsement. On 28 February 1985 Natwest Leasing Australia Pty. Limited, acting as agent for the applicant, drew a cheque in the sum of $100,000 in favour of the first respondent. On the same day the cheque was endorsed by the fifth respondent in favour of the second respondent. Again, his authority to do so does not appear. On 5 June 1985 Mr Carver received a telex message which was expressed to be from "Bill Gibbs, First Indemnity Limited". It read: "Interval Finance Limited previously supplied to you a take-out facility for $4.9m in favour of Natwest in which there was no facility for a change in the bridging financier. Because of a dispute between directors of the board, Interval Finance Limited 1s now in voluntary liquidation. 19. First Indemnity which has a different board of directors and which has association with Spedley Securities Limited as underwriters 1s prepared to recommend to such underwriters a further take-out facility of 36 months to an increased value of $5.5m. Such take-out will be made in favour of your successful bridging financier. In support of this offer we require:- l. The documentation of the new valuation. 2. Name of the successful bridging financier. 3. Payment of our standard fees less your previous payments made to Interval Finance Limited. We are sending you under separate cover a copy of First Indemnity Limited take-out documentation for your perusal and use in negotiation with bridging financiers." By letter dated 12 June 1985 the third respondent forwarded to the applicant a sample of the proposed take-out facility and stated the writer's expectation to be that the executed "take-out" would be forwarded to the applicant in the ensuing few days. It ais unnecessary for present purposes to refer to the details set out in the sample. On 19 June 1985 Mr Carver sent a telex message addressed to Mr Bill Gibbs, First Indemnity Limited, reading as follows: "Refer your earlier telex and your letter 12th June 1985. Documentation satisfactory subject to clause 6 schedule 1 changing interest rate from 5% to 4% per annum as agreed with Interval Finance Original documents. 20. Please as a matter of priority arrange for original documentation so as execution can be carried out between the various parties. Valuation being sent under separate cover." On 1 July 1985 the applicant received a telex message from Mr Gibbs, First Indemnity Limited, follows: "Further to your telex of 1st July 1985 advise that our standard fees apply to reading as , we this transaction which are §25,000 establishment fee plus 2.5% per $1 million facility. For $5.6m the following fee 1s payable: Establishment $25,000 plus $140,000 to $165,000. total As you have already paid $125,000 the balance of $40,000 becomes payable at settlement. Expected documentation avallable Wednesday including Spedley endorsement." On the same day Mr Carver replied by follows: "Further your telex June 5th We accept additional fee of $12,000.00 for out facility increase to $5.6m. telex as take Please as a matter of urgency finalise documentation in favour of Trans City Holdings Ltd. Fee will be paid at settlement. Contact our acting agent Mr Frank Allchin on Melbourne 639222 when documents completed in accordance with our telex of June 19. Settlement being effected 5th July. If any difficulty in providing executed documentation by July 3 please advise urgently." 21. By letter dated 4 July 1985 the sixth respondent wrote to Mr Carver in the following terms: "We vreter to recent discussions regarding the bridging finance now conditionally offered to your company by Trans City Hoidings Limited, Sydney. Since our last discussion in _ these offices, 1t has been agreed with First Indemnity Limited that Spedley Securities will in this case and in future cases offer in its own right take-out facilities on approved projects. For this reason the take-out offer attached 15 on Spedley letterhead and excludes First Indemnity as a party to the deal. We note that among the conditions precedent from Trans City is the need for their legal advisors to be satisfied with the take-out letter and we would expect this to be established without delay. As you are aware, we have had this commitment on our books for some months (albeit for the figure of $4.98 Million) and we are anx1lous to get early resolution to our position in this project." Mr Carver also states that the applicant has received no loan funds nor take-out facilities from the respondents or any of them and that the applicant has made demand of all the respondents for the return of the total sum of $125,000 but neither the whole nor any part of that sum has been repaid to the applicant. The affidavit concludes by stating Mr Carver's belief to be that the first to fifth respondents do not, and none of them, have any defence to the applicant's claim. In my opinion the evidence placed before the Court on behalf of the applicant does not establish that 1t has a good cause of action under s.52(1) of the Act against the 22. first, second or third respondent. Counsel for the applicant conceded that no case under s.52(1) had been made out against the second respondent. The only evidence of a representation relied upon by the applicant is the evidence set out ir pars 3 and 4 of Mr Carver's affidavit of the discussions he had with Mr Gibbs. What Mr Gibbs said in those discussions 1s relied upon as establishing the representation alleged in par.12(b) of the statement of claim that the loan funds would be made available by the provision of a take-out facility obtained by the first or fourth respondent from the sixth respondent. The only basis on which i1t 1s said that the making of that representation amounted to misleading or deceptive conduct or conduct likely to mislead or deceive is the statement in par.23 of Mr Carver's affidavit that the applicant received no loan funds or take-out facilities from the respondents. The material put before the Court does not establish that the first and third respondents had no belief in the truth of what Mr Gibbs said or that any belief which they held was based on no, or no adequate, foundation or that they were recklessly indifferent as to the truth of what Mr Gibbs was saying. An essential element in the cause of action is, therefore, lacking. There is a further difficulty in relation to the third respondent. The available material does not satisfy me that, 1n making the statements set out in pars 3 and 4 of Mr Carver's affidavit, Mr Gibbs was acting on behalf of that respondent. While the evidence shows that Mr Gibbs was at 23. the relevant time a director of the third respondent that fact, of itself, 1s not sufficient to establish that the representation was made by that company. It 15 also suggested that a cause of action under $.52(1) of the Act 1s made out against the third respondent by reason of the statement in the telex message dated 5 June 1985 that "Interval Finance Limited 1s now in voluntary liquidation", a statement alleged to be false. There 1s, however, no material before the Court to establish the falsity of that statement. Nor is it shown that the applicant suffered loss or damage by relying upon that statement. It is also submitted on behalf of the applicant that summary judgment should be entered against the second respondent on the basis that the sum of $125,000 is held by it on trust for the applicant. The evidence shows that the sum of $125,000 was paid to the first respondent pursuant to the contract made between the applicant and the first respondent on 21 January 1985. I can find nothing in the evidence to support the conclusion, which the applicant seeks to establish, that the money was to be held by the first respondent in trust for the applicant pending the provision of the take-out facility. The evidence also falls short of establishing that the applicant entered into an agreement with the second respondent and I can see no basis for concluding that, simply because the cheques were endorsed in favour of that company, 1t became a trustee of the proceeds for the applicant. 24. I should add that counsel for the applicant did not suggest that the applicant was entitled to summary judgment against the first respondent or the third respondent on the basis that there had been a breach by those respondents of any contract with the applicant. But, even if such an assertion were to be made, the evidence before the Court is not sufficient to establish any such breach. For the above reasons, the motion of the applicant for summary judgment against the first, second and third respondents 1s dismissed. I make no order as to the costs of that motion. I certify that this and the preceding 23 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. Vuk "Ryo Associate Dated: 12 June 1987