FEDERAL COURT OF AUSTRALIA CONTRACT - breach of - agreement to lease - whether concluded agreement - whether enforceable without essential term - statute of frauds - "authenticated signature fiction" - ESTOPPEL - promissory estoppel - whether reliance - whether detriment - remedy - minimum equity. EQUITY - fiduciary relationships - director - breach of duties - relief - equitable compensation - loss of opportunity to operate a business - whether diversion of business opportunity - quantum of equitable compensation - causal connection between loss and breach. TRADE PRACTICES - misleading or deceptive conduct - action for damages - whether representations relied upon - omissions - identification of loss or damage - interest. CORPORATIONS LAW - winding up - oppressive or unfairly prejudicial conduct - just and equitable ground. Federal Court of Australia Act 1976 (Cth) s 51A Trade Practices Act 1974 (Cth) s 51A, s 52, s 53, s 82 Corporations Law s 260, s 461 Property Law Act 1974 (Qld) s 59 Re Rossfield Group Operations and Morton Holdings (ACT) Pty Limited [1981] Qd R 372 - Appl El Ajou v Dollar Land Holdings Plc [1994] 2 All ER 685 - Appl Cummings v Lewis (1993) 41 FCR 559 - Appl Masters v Cameron (1954) 91 CLR 353 - Appl South Coast Oils (Qld and NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680 - Cited Riches v Hogben [1986] 1 Qd R 315 - Cited Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 - Cited Harvey v Pratt [1965] 1 WLR 1025 - Appl Godecke v Kirwan (1973) 129 CLR 629 - Appl Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 - Cons Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950 - Cons Pirie v Saunders (1960) 104 CLR 149 - Cons Leeman v Stocks [1951] Ch 941 - Cons Farrelly v Hircock (No 1) [1971] Qd R 341 - Cons Sturt v McInnes [1974] 1 NZLR 729 - Cons Neill v Hewens (1953) 89 CLR 1 - Cons Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 - Appl The Commonwealth v Verwayen (1990) 170 CLR 394 - Appl Austotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582 - Appl Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 - Appl Warman International Ltd v Dwyer (1995) 182 CLR 544 -Appl Bell v Lever Brothers Ltd [1932] 1 AC 161 - Cited Re Broadcasting Station 2GB Pty Ltd [1964-5] NSWR 1648 - Cited Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 - Cited Chan v Zacharia (1984) 154 CLR 178 - Cited Industrial Development Consultants v Cooley [1972] 1 WLR 443 - Cons Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371 - Cons Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 - Cons Peso Silver Mines Ltd (NPL) v Cropper (1966) 58 DLR (2d) 1 - Cited Phipps v Boardman [1967] 2 AC 46 - Cited Hospital Products Ltd v United States Surgical Corporation (1984) 150 CLR 41 - Cited In re Goldcorp Exchange Ltd [1995] 1 AC 74 - Cited Maguire v Makaronis (1997) 71 ALJR 781 - Cons Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 - Cons Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461 - Cited Kendall v Masters (1860) 2 De GF & J 20; 45 ER 598 - Cited In re Jarvis [1958] 2 All ER 336; [1958] 1 WLR 815 - Cited Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 - Cited Commonwealth Bank v Smith (1991) 42 FCR 390 - Cited Wan v McDonald (1992) 33 FCR 491 - Cited Target Holdings Ltd v Redferns [1996] 1 AC 421 - Appl Canson Enterprises Ltd v Boughton & Company (1991) 85 DLR (4th) 129 - Cons Permanent Building Society v Wheeler (1994) 11 WAR 187 - Cited Malec v J C Hutton (1990) 169 CLR 638 - App The Commonwealth v Aman Aviation Pty Ltd (1991) 174 CLR 64 - Appl Hughes v Western Australia Cricket Association (Inc) (1986) 19 FCR 10 - Appl Bevanere Pty Ltd v Lubidineuse (1984) 7 FCR 325 - Appl Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 - Cited Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 - Cited Rhone-Poulenc Agrochime SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 - Cited Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 - Cited Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 - Appl Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 - Appl Gates v City Mutual Life Assurance Society Ltd (1968) 160 CLR 1 - Appl Gould v Vaggelas (1985) 157 CLR 215 - Appl Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 - Cited Yorke v Lucas (1985) 158 CLR 661 - Appl Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 - Cited Thomas v H W Thomas Ltd [1984] 1 NZLR 686 - Cited Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 - Cons Warwick Howard (Aust) Pty Ltd (1982) 7 ACLR 441 - Cited Re London School of Electronics Ltd [1986] 1 Ch 211 - Cited Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 - Cons Thomas v Mackay Investments Pty Ltd (1997) 22 ACSR 294 - Cited S.E.A. FOOD INTERNATIONAL PTY LTD v THENG PEW LAM, HUXHAM PTY LTD (BY ORIGINAL ACTION) and THENG PEW LAM AND MEGAMIX PTY LTD v S.E.A. FOOD INTERNATIONAL PTY LTD, LAKE YALE PTY LTD AND TEH YEW CHOONG (BY CROSS-CLAIM) QG 193 OF 1994 MEGAMIX PTY LTD PTY LTD v SEA FOOD INTERNATIONAL PTY LTD QG 3014 OF 1995 COOPER J BRISBANE 27 FEBRUARY 1998 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 193 of 1994 BETWEEN: S.E.A. FOOD INTERNATIONAL PTY LTD Applicant AND: THENG PEW LAM bY ORIGINAL ACTION First Respondent BY CROSS-CLAIM HUXHAM PTY LTD Second Respondent THENG PEW LAM FIRST CROSS-CLAIMANT MEGAMIX PTY LTD SECOND CROSS-CLAIMANT S.E.A. FOOD INTERNATIONAL PTY LTD FIRST CROSS-RESPONDENT LAKE YALE PTY LTD SECOND CROSS-RESPONDENT TEH YEW CHOONG THIRD CROSS-RESPONDENT IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 3014 of 1995 BETWEEN: megamix pty ltd Applicant AND: sea food international pty ltd respondent JUDGE: COOPER J DATE OF ORDER: 27 February 1998 WHERE MADE: BRISBANE MINUTES OF ORDER IN PROCEEDINGS QG 193 OF 1994 THE COURT ORDERS THAT: 1. There be judgment on the application for the respondents. 2. The application be dismissed. 3. The applicant pay the respondents' costs of and incidental to the application, including reserved costs, if any, to be taxed if not agreed. 4. There be judgment on the cross-claim for the cross-claimants against the first and third cross-respondents. 5. The first and third cross-respondents pay to the first cross-claimant the sum of $478,493.14. 6. The cross-claim be dismissed against the second cross-respondent. 7. Upon the solicitor for the second cross-claimant filing an affidavit attesting to the principal sum and interest payable and unpaid to the second cross-claimant by the first cross-respondent pursuant to the agreement that the second cross-claimant advance to the first cross-respondent the sum of $300,000 on the terms recorded in the Deed of Settlement executed on 11 October 1994 and in the minutes of the extraordinary meeting of the shareholders of the first cross-respondent held on 11 October 1994, there be judgment for the second cross-claimant against the first cross-respondent for such sum. 8. The first and third cross-respondents pay the cross-claimants' costs of and incidental to the cross-claim, including reserved costs, if any, to be taxed if not agreed. IN PROCEEDINGS QG 3014 OF 1995 THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the respondent's costs of and incidental to the application, including reserved costs, if any, to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 193 of 1994 BETWEEN: S.E.A. FOOD INTERNATIONAL PTY LTD Applicant AND: THENG PEW LAM BY ORIGINAL ACTION First Respondent BY CROSS-CLAIM HUXHAM PTY LTD Second Respondent THENG PEW LAM FIRST CROSS-CLAIMANT MEGAMIX PTY LTD SECOND CROSS-CLAIMANT S.E.A. FOOD INTERNATIONAL PTY LTD FIRST CROSS-RESPONDENT LAKE YALE PTY LTD SECOND CROSS-RESPONDENT TEH YEW CHOONG THIRD CROSS-RESPONDENT IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 3014 of 1995 BETWEEN: megamix pty ltd Applicant AND: sea food international pty ltd respondent JUDGE: COOPER J DATE: 27 February 1998 PLACE: BRISBANE REASONS FOR JUDGMENT INTRODUCTION The applicant, S.E.A. Food International Pty Ltd, formerly Tealmist Pty Ltd ("SEA"), seeks against Theng Pew Lam ("Mr Lam") and two companies controlled by him, Huxham Pty Ltd ("Huxham") and Megamix Pty Ltd ("Megamix"), damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) ("the TPA") for contravention by Huxham and Megamix of s 52 of the TPA (for which Mr Lam is said to be responsible by operation of s 75B of the TPA), a declaration that Huxham is estopped from denying the existence of a lease of certain property situated at Thurecht Parade, Scarborough ("Thurecht Parade"), damages against Huxham for breach of contract and damages against Mr Lam for breach of fiduciary duties owed by him to SEA as a director of that company. A claim by SEA against Mr Lam for damages for negligence was abandoned. Mr Lam and Megamix cross-claim against SEA, Lake Yale Pty Ltd ("Lake Yale") and Teh Yew Choong, also referred to as Ray Teh ("Mr Teh"), seeking various relief against them said to flow from contraventions of s 52 and s 53 of the TPA, relying in part upon s 51A, the operation of s 75B of the TPA and breach of contract. There is also an application brought by Megamix which seeks that SEA be wound up pursuant to s 260 or, alternatively, s 461 of the Corporations Law ("the Law"). That application was filed in the Supreme Court of Queensland and was cross-vested to this Court by order of Mackenzie J made on 17 August 1995. An order was made by Drummond J on 15 December 1995 that the trial of the winding-up application be heard together with the trial of the proceedings commenced in this Court. As will be seen, much ultimately turns in these proceedings on issues of fact and the proper inferences to be drawn from the facts as found. It has been necessary to have close regard to the context in which the parties have conducted themselves at the relevant times and to the chronology of certain critical events and conduct. BACKGROUND AND FACTS As at May 1994, the beginning of the relevant period in these proceedings, SEA operated a seafood export and processing business from premises at 19 Tubbs Street, Clontarf ("Tubbs Street"). SEA's activities involved the purchase of fresh seafood from commercial fishermen in Queensland or New South Wales for export as live product to Taiwan, Singapore, Malaysia and Japan, for processing and export as frozen product and for sale to domestic wholesalers. SEA also sold and distributed, domestically and overseas, live lobster and live fish from premises in Tasmania and sub-contracted packing operations in Sydney to Coral Live Products Pty Ltd. The directors of SEA were Mr Teh and his wife, Jillian. The shares in SEA were owned by Lake Yale, a company owned and controlled by Mr Teh and his wife. The day to day operation and management of SEA were undertaken by Mr Teh and SEA's operations manager, Kevin Bostock ("Mr Bostock"), who had been with the company since April 1991. Mr Lam is a retired stockbroker and was, at the relevant times a citizen of, and resident in, Malaysia. He had, in May 1994 at least, considerable financial resources. In May 1994, Mr Lam came to Australia looking for what he called "passive investment opportunities". Mr Lam arrived in Brisbane on or about 30 May 1994 and was contacted by Mr Teh shortly thereafter at the hotel at which he was staying. One of Mr Lam's daughters is married to one of Mr Teh's brothers. Mr Teh knew or was told by Mr Lam that he was looking for investment opportunities. Mr Teh told Mr Lam about his business, SEA, and it was arranged that Mr Lam would visit SEA at Tubbs Street the following day. On 31 May 1994, Mr Teh collected Mr Lam and his wife at their hotel and drove them to Tubbs Street. During the journey to Tubbs Street, Mr Teh made and received a number of telephone calls on his mobile telephone. He told Mr Lam that he was doing business with people in Taiwan. During a tour of Tubbs Street, Mr Teh told Mr Lam that SEA purchased seafood and processed it for local and overseas consumption. After the tour, Mr Lam and his wife and Mr Teh had lunch at Morgan's, a nearby seafood restaurant. Mr Lam's evidence, given by way of statement, was that during lunch, Mr Teh said to him words to the effect of :- "The existing factory at Clontarf [Tubbs Street] is too small and he needed to expand it. Are you interested in investing in SEA? The Port Authority and the local council are prepared to lease a two acre piece of land at Redcliffe for a twenty year period at $800 per acre per year. I'll take you out and show you the Redcliffe site once we've finished lunch". Mr Teh's evidence, also given by way of statement, was that he "mentioned" to Mr Lam at lunch that the Brisbane Port Authority and the local council were interested in having a development and that he may have mentioned how long a proposed lease would have to be and the cost per acre of such a lease. It is not disputed that after lunch Mr Teh drove Mr Lam and his wife to a block of vacant land at the Redcliffe breakwater, which land Mr Teh proposed to be the site for the expansion and development of SEA's business. I will refer to this land as "the Redcliffe site" to distinguish it from Thurecht Parade. It is clear from the evidence given by Mr Lam in cross-examination that, whatever words were used by Mr Teh to describe the proposed development at Redcliffe, Mr Lam did not understand Mr Teh to have said that SEA had received approval from the Port Authority and the local council for a lease in the terms described above. However, I am satisfied that Mr Teh did convey to Mr Lam that an application for such a lease would be looked upon favourably and stood a "good chance" of being approved or "was likely" to be approved and that this was conveyed to Mr Lam in the context of an exposition by Mr Teh of his plans for the expansion and development of the SEA seafood business. There was tendered into evidence a document, prepared by Mr Teh, entitled "SEA Food International Pty Ltd - Company Profile". The document is an important one to the issues in these proceedings, particularly with respect to SEA's damages claims, and I will set out the contents of it in full, save for the final two pages which contain personal profiles of Mr Teh, his wife and Mr Bostock :- "S.E.A. FOOD INTERNATIONAL PTY LTD - COMPANY PROFILE The company was formed over 4 years ago with the view to long term export markets from Australia as well as from external (overseas) countries to other countries, but controlled and functioned from Australia. We recognised that there was an apparent lack of interest in exploration of niche markets both in this country as well as overseas and set out to explore this. LIVE-FROZEN EELS FROM ASIA TO EUROPE From Asia to the European market. Considerable market research had revealed product quality was never as good as it should have been due to the lack of understanding and communication barriers. We provided the technical expertise and the communication bridge and within 2 years, had export orders of 260,000 kgs from mainland China/Taiwan to Europe. All letters of credit were directed to Australia and negotiated locally. Depending on seasonal factors and supply of 'Glass' & 'Elver' eels (baby eels) to Taiwan, we see this segment of the market as an ongoing business mainly because of our contacts in Asia as well as in Europe. FROZEN SPANNER CRABS At the same time in Australia, we noticed that the once lucrative market in frozen spanner crab exports had slowly but surely been declining for a number of years. Investigations revealed that overseas buyers were terribly disenchanted with the quality, price and nonchalant attitude of Australian exporters re the product they represented. The crabs sold had an inherent problem of turning black on the underbelly when thawed as well as meat quality suffered when being processed. We took on the task of finding out why these problems were occurring, and with help from the Food Research Institute of the DPI in Queensland, it was discovered that a natural phenomena in body metabolism happens when spanner crabs die - thus causing blackness to appear only after freezing and thawing. Armed with this information, we approached a new factory in Bundaberg and after a couple of trial shipments, perfected the art of freezing spanner crabs correctly. The rest is now history as we contracted yet another factory in Bundaberg to cope with demand and now have the top 2 brands of crabs in Taiwan. We are the only exporters in season to regularly ship an average of one sea container a week overseas. The closest competitor in this field would at the utmost ship out one sea container every 2 - 3 weeks. 'S.E.A.' is by far the largest exporter of spanner crabs in Australia. Using our acquired technology in Tasmania, we can also now export 'live' crabs overseas with higher margins than the frozen crabs. MULLET ROE/GIZZARDS/MILTS The 'S.E.A. Food International' brand is one of the most recognisable and approved brands of this expensive item in the Taiwanese marketplace. Every year we fetch among the top prices for frozen mullet roe and by-products. This factor was not achieved overnight but by years of development and clever packaging & marketing. This year 1994 will prove to be one of the most lucrative yet as there is a shortage from the North & South American countries in the supply of roe to Asia. Also the relatively new by-products of mullet gizzards & fresh (air flown) milts will show a remarkable increase in acceptance as well as price. We see this line as one of our most important growth sectors. FROZEN REEF FISH - CORAL TROUT & OTHER SPECIES (COD, ETC) S.E.A. Food International pioneered this newly introduced fish item into Taiwan and within months, the fish had taken the Taiwanese market by storm. At one stage, we could not keep up with the demand for over 18 months. Demand has now levelled off due to an overpricing situation, but we envisage that by the end of 1994, the market will boom again. LIVE EELS FROM AUSTRALIA This species of eels is completely different from the Asian eels sold to Europe. Our Australian freshwater eels are caught in N.S.W. and Queensland. We have tanking systems which are capable of holding over 2 tonnes of live eels and in season, we supply buyers in Hong Kong, Taiwan and mainland China with this high demand item. We see an increasing market in mainland China which has just only begun earlier this year, but is already buying 50% of all our exports. DAVIDS HOLDINGS Is the largest privately owned grocery distributor in Australia and we have completed negotiations to start supplying 'Austrimi' Seafood Products (a value-added fish based product, eg seafood sticks), into their stores in Victoria. Within 12 months, we hope to have the contract to supply Davids Holdings' major wholesale outlets throughout Australia. This is another huge potential market where independent supermarkets, corner stores, pizza parlours, restaurants (which depend on wholesale distributors for their supplies) will see our product being introduced to replace imported substitutes. Of course, the current takeover and merger plans of David Holdings with interstate grocery companies can offer us a foothold into other outlets with our other seafood lines. CROCODILE - P.N.G. After 2 visits to P.N.G. (one visit with the overseas buyer), we were successful in obtaining a contract to purchase and sell 50,000 kgs of dressed crocodile carcasses to Taiwan. Taiwan currently purchases alligator meat from Florida in the U.S.A., but due to the fact that we are able to obtain commercial quantities and that our crocodile meat actually tastes better (being fed chicken instead of fish), the Taiwanese market easily changed to this new delicacy. With an enlarged & new factory operation, we could also be importing the carcasses from P.N.G., processing them into smaller cuts, repacking the cuts and exporting these to places like Singapore and Hong Kong which currently does not recognise P.N.G. health regulations for crocodile meat. We are now negotiating with Canberra in regard to reprocessing this item in Australia. By-products will be sold on the domestic market. This is a new product line which will prove to be very lucrative, both overseas as well as within Australia. 'S.E.A. Food' is already the largest exporter of crocodile meat in the world. QUAILS We exported our 1st large quantity of dressed frozen quails a few months ago and the results are very positive. We expect demand to increase dramatically when it is winter in Asia (our summer months) and anticipate orders of more than 10,000 birds per week representing over $15,000 in revenue per week. This is a first for Australia as no on [sic] else is exporting this item of any commercial quantity. Concentration will have to be made on clever packaging and presentation of the product. There is only 1 farm in Australia currently capable of producing such large amounts, and we have an exclusive agreement to sell their quails overseas. TASMANIAN OPERATIONS This factory was purchased from an owner/operator in November 1992. The factory is approximately 16 klms from Hobart and has tanking capacity up to 10,000 kgs of live lobsters, king crabs, molluscs and live fish. The previous owner, Tony, still works at the factory. Tony is very well known in the seafood [sic], especially the lobster industry in Tasmania and the company now enjoys a large following of loyal fishing vessels. In a matter of under 18 months - from an almost 100% domestic market, we have turned the factory into a 70% live export oriented facility with plans to go 90% export by the end of next season. We have also contracted a Sydney based live seafood factory to handle our product to be sent overseas from Sydney. This is because Hobart lacks direct international airline connections to countries like Taiwan and Japan. We have improved and increased the capacity of the tanking systems since taking over with the introduction of high tech bacteria formulations to stabilise water filtration and waste cycles. Our mortality in export markets is down to lower than 2% per air shipment and now have firm standing orders booked every week for overseas. By-products like frozen cooked lobsters, lobster tails, are sold off in Tasmania or sent to Brisbane for resale through our normal wholesale operations. Another big seller for us recently has been the live deep sea 'king crab'. We have managed to control the mortality in these very sensitve [sic] creatures by flying them from Tasmania to Sydney (for on freighting) by private charter plane. We would now be one of the largest exporters of this item in Australia - and this was achieved only within the past 6 months. The last 18 months saw a considerable amount of expenditure into the Tasmanian operation in order to bring it up to a high export standard. Of course, we suffered from a lack of experience in packing methods and sustaining higher than normal mortalities during our overseas export push. We also initially had to sacrifice margins in order to obtain our current level of overseas clients. But we are now reaping the benefits of that hard work and development program as we currently have an excellent list of overseas customers as well as being able to maintain a very high level of quality export live seafood. We see the Tasmanian operation as one of our top income spinners within a matter of two years. We are already now one of the largest lobster buyers in Tasmanian and have a reputation of being price leaders & looked up to as price setters in the industry (alongside 'Safcol'). OTHER TRADING - WHOLESALE/DISTRIBUTION/IMPORTS We have a unique opportunity of a natural expansion into restricted wholesale activities in Queensland (as well as Tasmania) where our main operations are based. In Queensland, we have mullet, tailor, fresh reef fish, and other fish products in season; in Tasmania we have crustacean and much in demand fish fillets (orange roughy, couta). Employment of the appropriate personnel to handle the seafood retailers, restaurants, take-away food bars, etc, could see increased turnovers and much higher margins of by-products we currently sell off to other distributors & wholesalers. In imports, we have the Coles Supermarket chains of which we are already "preferred suppliers" - but unable to progress as a major supplier due to restricted cash input. We have outstanding overseas processors from which we are able to purchase incredibly cheap items like :- flake, barramundi fillets, snapper species and other 'Australian oriented' skinless, boneless, white fish fillets. For example, we supplied Coles Supermarkets in just 2 states during the months of February & March 1993 with over 7 m/tonnes of fish fillets which we purchased from other importers with profit margins of over 40% on cost. We see this as another huge potential money spinner for the simple fact that major supermarket chains do not import seafood items on a direct basis. EXPANSION INTO NEW PREMISES 'S.E.A. Food International' has outgrown its present factory site at Clontarf in Queensland. It currently suffers from a lack of efficiency, duplicated labours [sic] costs, unnecessary additional freezing costs and inadequate working space for processing and distribution. We find that we have to employ more labour to handle raw material because we cannot utilise machinery (eg conveyor belts) due to lack of space. Staff is [sic] less efficient due to cramped working conditions, insufficient flow through handline procedures, etc. We have to plate freeze (contact freezing) our mullet roe externally as we do not have the space to install our own plate freezer. We have to also blast freeze our fish fillets and whole fish externally for the same reasons. These additional freezing costs add up to around $80,000 per year. On top of this, we have to store bulk frozen products like bait & expert whole fish in external cold stores costing another $15,000 per year (again due to lack of space). Savings of $100,000 per annum can be made in reducing our C.O.S. by conducting our own freezing and it is estimated we will save around another $40,000 per year in unnecessary labour costs if we had the space to make our workers more efficient. ADDITIONAL PRODUCT LINES IN NEW FACTORY As per sales budget & forecast, we will begin production of scallops and frozen spanner crabs in Brisbane. The scallop season fits in nicely just outside the mullet roe season and this is another area in making the factory much more cost efficient. Spanner crabs which are already a major part of our turnover, will contribute a higher profit margin when we process them in our own factory. The net profit margin will be about 300% better than contract processing. We will, however still maintain our excellent relationships with our outside processors and continue to dominate the overseas market with our brands. With a new factory, we can also process crocodile carcasses for re-export and local sales. With the increased activities, the wholesale revenue will also automatically pick up. SCARBOROUGH SPIT - BOAT HARBOUR Scarborough Harbour is the most important fishing boat harbour in the vicinity of Brisbane and the adjoining Moreton Bay area is of course a major fishing waterway. Negotiations are already underway for the lease of harbourside land in this stunning waterview area of Brisbane. The land is owned by the Port Authority of Brisbane which will lease this waterfront land for the purposes of a marine/seafood related project only. We fall nicely into this category. The development will be carried out in 3 to 4 stages. STAGE ONE Will see the building of a seafood processing factory which will have all necessary freezing equipment and storage. Included will be live seafood tanks to enhance the export of live seafood like spanner crabs, eels, fish, Moreton Bay bugs, and in transit - our Tasmanian factory lines of live lobsters, king crabs, abalone, etc to take advantage of international airline routes. Jetties will be built alongside the factory to encourage fishing vessels to unload their seafood, and we should see a dramatic increase in turnover from this alone. There will also be a large retail shop based on the Sydney Pyrmont 'fish markets' style of 'open retailing'. We will be building live seafood tanks surrounding the retail area and offer an impressive visual display of fresh and live seafood. There is nothing in Queensland which even goes close to this concept. We expect people from all over Brisbane to come to us. A cooked food (fish & chips, takeaway) shop will be built on the premises to allow customers to purchase their cooked seafood and enjoy the fantastic views and amenities of the spit area. The retail shop and cooked food outlet will add at least $50,000 per week turnover to the company. It is anticipated that this figure will be more like $70,000 per week within 12 months. STAGE TWO Of the development will see a Bistro type restaurant which will offer fresh seafood displays with live tanks (& live seafood) for customers to pick and choose their own selections. We will offer probably 4 types of cooking (Western, Mediterranean, Chinese, Japanese) for customers to decide the way they wish to have their meals presented. We will have catering facilities to handle large numbers of overseas tourists whom we will be encouraging to visit our site - refer next stage (three). STAGE THREE Will see tourist attractions built nearby. We will have the normal tourist shops with souvenirs, etc, but we will also have a most unique 'tourist supermarket' where the visitors can purchase their seafood for taking back home. Some of the biggest sales in so called duty-free stores at the international airports in Australia consist of frozen cooked lobsters, canned & frozen abalone and value-added dried mullet roe. The margins are extremely high, but is well justified as the Japanese or Taiwanese tourist still pays at least 100% to 200% more for the same product in their home land. We have the huge advantage of being able to process our own products at a much lesser cost and spend more time and effort in better and superior packaging than our airport counterparts. We can offer these tourists the added incentive of dropping off their food purchases, all neatly & nicely packaged in insulated cartons/eskies, on the morning of their departure. The duty-free stores at the new Brisbane International Airport have been tipped to have a turnover of over $40,000,000 per year. We intend to 'poach' some of that business before the tourist even gets to the airport. We hope to obtain $1 to $2 million revenue per annum from these tourist shops. We aim to promote our site as an overseas tourist destination for the beautiful location, unique shopping facilities, unbeatable eating experience and perhaps even short tours of the factory (particularly the live seafood facilities). We can achieve this by approaching the tourist operators to include our site as one of their stopover points. Brisbane lacks interesting tourist attractions unlike Sydney and the Gold Coast - this is an opportunity to 'cash' in on what the newspapers say that Brisbane & Queensland is [sic] poised to be the fastest growing tourist destination in Australia. STAGE FOUR Will with approval see the development of some commercial offices & buildings on the site. Government departments' occupation is the most ideal, with some professional offices making up the balance. This development stage will add extra security and income to the total project. We also intend to see an open air market aptly named 'Scarborough Fair' conducted on weekends on the spit, earmarking our large carpark grounds for this function. This market will serve to increase the patronage of the retail and food ships as well as provide easy income on the rental of 'shop sites' in the open market. ....." In cross-examination, Mr Teh acknowledged that the document was prepared by him in 1994. So much is clear, in any event, from the reference on page two of the document under the heading "Mullet Roe/Gizzards/Milts" to "This year 1994". Mr Teh also acknowledged that the document (and another document setting out the projected sales, margins and profit of the expanded enterprise, to which I will return (exhibit 3)) was prepared to show to potential investors in SEA. Mr Teh was not asked when in 1994 the document was prepared. It is possible however to identify the date of preparation of the document by reference to the contents of it. On page 2, under the heading "Mullet Roe/Gizzards/Milts" there appears a sentence commencing "This year will prove to be one of the most lucrative yet ..." (emphasis added). It is more probable than not that the document was prepared prior to the commencement of the 1994 mullet season. Were it otherwise, one would expect that the sentence quoted above would use the present or past tense, ie "is proving" or "has proved". A mullet "season" runs from March to August. I am satisfied that the document (hereinafter referred to as "the company profile"), or at least that part of it up to the heading on page 9, "The Company", was prepared by Mr Teh at some time prior to the commencement of the 1994 mullet season, and certainly prior to 30 May 1994. On 5 or 6 June 1994 Mr Lam and Mr Teh met by chance at a Brisbane restaurant. Mr Teh invited Mr Lam and his wife to dine at Mr Teh's home that evening. The conversation between Mr Lam and Mr Teh on the evening of 5 or 6 June 1994 is not particularised in the cross-claim as an occasion upon which any actionable representations were made by Mr Teh. Nonetheless, anything said or done, or not said or not done, by Mr Teh on 5 or 6 June forms part of the background to and context of relevant conduct by the parties. According to Mr Lam, Mr Teh said to him, on 5 or 6 June 1994, words to the effect of :- "(a) We (SEA) will achieve a turnover of $10 million (Australian) for the year ended 30 June 1994. Our company (SEA) is a very profitable one and you will get a good return for your money if you want to invest in it. You won't regret it. (b) The profit margin is really good as we are purchasing the whole Sea Mullet at $4-5 a kilo. The female mullet roe alone is exported at $30 plus a kilo; the gizzard, also at $18 plus a kilo. (c) The price that we put in the shipping documents is understated to help the Taiwanese importers as they have to pay import duty in Taiwan on the basis of the purchase price. The balance between the actual price and the understated price is paid offshore." Mr Lam gave further evidence to the effect that he could not recall whether the difference between the actual price and the understated price was paid from offshore (Taiwan) or to an offshore account. In his evidence, Mr Teh acknowledged that he "would have mentioned at some stage in response to an inquiry from Lam that the company's turnover is ten million dollars" and denied saying the words in the second sentence of (a) above but allowed that he did say something like, "if you are interested in investing in the company you would not regret it". Mr Teh's evidence in relation to (b) was that prices would have been discussed but the figures quoted by Mr Lam are "totally incorrect" and would not have been used by him (Mr Teh). In relation to (c), Mr Teh's evidence was that he said "that the balance between the actual price and the stated price is remitted from offshore to Australia" so that all funds whether derived in Australia or overseas were remitted to the company's account in Australia. In cross-examination Mr Teh conceded that he could have said the words set out in (a) and that he said the words set out in (c), although what he said was an oversimplification. It is unnecessary to resolve the remaining conflict in the evidence in relation to (b). I am satisfied that on 5 or 6 June 1994 at his home Mr Teh said to Mr Lam the words attributed to him in (a) and (c) above. The statement contained in (a) accords with Mr Teh's expressed views as they then appeared in the company profile. Mr Lam and Mr Teh again met by chance at a Brisbane restaurant on 14 June 1994. Mr Lam was having lunch with his son, James Lam and James' wife and children. It was resolved, either on 14 June 1994 or in a telephone conversation between Mr Lam and Mr Teh on 16 June 1994, that Mr Lam and James Lam would visit Tubbs Street. On 16 June 1994 Mr Teh collected Mr Lam and James Lam from their accommodation and drove them to Tubbs Street. The men also visited the Redcliffe site. There is a conflict in the evidence between Mr Lam and Mr Teh as to what was said during the course of 16 June 1994. James Lam was present on 16 June 1994. He gave evidence by way of statement, and was not cross-examined :- "12. On the way there Ray Teh and at the proposed expansion site explained the activities of SEA and the expansion plans he had for it. He kept stressing the expansion project and the 'value-added' and downstream activities SEA would be able to undertake and the profit/money that would be obtained from those operations. ..... 17. On reaching the 'proposed site' in Redcliffe, LTP [Mr Lam] asked Ray Teh, in my presence, specifically what the progress was of Ray's discussion with the Council regarding their offer on the site. 18. LTP stressed the feasibility of the project subject to the Council extending the lease to a 20 year term. LTP also stressed the development of the access road to the 'site' by the Council. 19. Ray Teh replied to the effect 'They are happy to have this investment here. We will be providing a lot of jobs for the locals with all our downstream projects. Extending the lease will not be a problem.' 20. While walking towards the site, I said 'It's a long walk to the site and the access road will be expensive.' Ray Teh said to the effect that 'We are choosing the piece of land towards the end as it is the widest and best piece. We are working to get the Council to build the access road.' 21. At the site, Ray Teh briefed me on the downstream projects comprising the expansion of the SEA factory with bigger freezing capacity, the retail outlet similar to those in the Sydney fish market and the seafood restaurant all next door to each other. 22. He stressed that we could do about AUD$10,000,000.00 to AUD$15,000,000.00 turnover and that the profit would be very high as there would be no wastage, doing the value added products and downstream activities - such as filleting the fish and a [sic] upmarket packing for retailing and export, and opening a retail outlet to the restaurant if the fish are not sold. 23. I said 'There are not many people here to patronise the retail outlet and seafood restaurant.' Ray Teh replied 'Why, you should see them on a Friday and weekend - this place is crowded. People from all over nearby and even from Brisbane come out to eat here'. If we have the restaurant here and the fish retail outlet next to it, the customers will buy the fresh fish to take home as well - they can't get it any fresher. People have no place to buy their fresh seafood here. If we can pack and price our product correctly, people will buy.'" According to Mr Lam, while at the Redcliffe site, Mr Teh said words to the effect of :- "I have great plans for expansion in this area. The council and Port Authority are going to give us a 20 year lease as they are really pleased with SEA which will employ 50 - 60 more local Redcliffe residents." Mr Lam also gave evidence that after visiting the Redcliffe site, the men returned to Tubbs Street where Mr Teh told Mr Lam, in response to a question about the progress in relation to the site, that the council and the Port Authority were very happy because more locals would be employed in the enlarged plant, that he (Mr Teh) would have an offer in writing within the next few weeks and that once the rent was paid and plans were submitted for approval, SEA would be able to move in and that this should happen by the end of the year. Mr Lam's evidence was that Mr Teh then said that SEA was achieving a turnover of $10,000,000 in 1994 and that "we will then go ahead in leaps and bounds and achieve an annual turnover of $15,000,000." When cross-examined on this issue, Mr Lam did not resile from his evidence as to what was said by Mr Teh in the relevant conversations. Mr Teh denied the substance of Mr Lam's evidence. Mr Teh's evidence-in-chief was that he understood that the local council and the Port Authority would consider giving SEA a twenty year lease because SEA was a local employer and the "relevant authorities" wanted a marine related industry on that site and that he said words to the effect that they (the Port Authority) would consider giving the lease. Mr Teh was not specifically cross-examined in relation to his conversation with Mr Lam on 16 June 1994. The relevant alleged representation for the purposes of the cross-claim arising out of the conversations on 16 June 1994 is that pleaded in paragraph 11(e) of the further amended defence and cross-claim, namely that SEA had received approval from the Port Authority and the Redcliffe Council to lease two acres of land at Redcliffe for a term of twenty years at a rental of $800 per acre per annum for development of new premises. It is interesting to note that the pleading substantially repeats the words attributed to Mr Teh by Mr Lam at the 31 May 1994 meeting. I am satisfied that, on 16 June 1994, Mr Teh said words to Mr Lam, the effect of which was that an application by SEA to the Port Authority for a lease of the Redcliffe site and an application to the local council for approval for the proposed development would be looked upon favourably and would be very likely to succeed. That this was Mr Teh's view, or at least the view he was willing to express to potential investors, is apparent from the company profile which refers to negotiations for such a lease being "already underway" and from the unchallenged evidence of James Lam set out above. Mr Teh's evidence, when cross-examined generally on this point and the evidence referred to below relating to Mr Teh's later statements on this issue also support a finding in those terms. However, it is equally apparent from the evidence given by Mr Lam in cross-examination that he did not understand Mr Teh to have said that the relevant approvals had been obtained, merely that they would very likely be obtained should application be made and that Mr Teh was confident in this respect. I am not persuaded that Mr Teh made a representation as pleaded in paragraph 11(e) of the further amended defence and cross-claim on 16 June 1994 or at any other time relevant to these proceedings. The next meeting of consequence between Mr Lam and Mr Teh took place at Mr Teh's home on 18 June 1994. There was, ultimately, little conflict between Mr Lam and Mr Teh as to what occurred on that day. Mr Lam's evidence was that, after dinner, he and Mr Teh retired to Mr Teh's study whereupon Mr Teh asked him if he was interested in investing $1,000,000 in return for forty percent of the shares in SEA. Mr Teh told Mr Lam that he needed the money for the expansion of SEA and to :- (a) negotiate the lease of the Redcliffe site to build a larger processing plant for the "very lucrative" mullet roe business; (b) expand the existing premises as they were not suitable for handling spanner crabs; (c) go into "down stream" projects such as retail sales of fresh and cooked seafood; (d) go into value added products such as advance packing of seafood for the tourist industry and the sale of such products at the new Brisbane airport terminal; (e) purchase additional plant and equipment at an auction in Tasmania; and (f) purchase a larger freezer truck for SEA's holding station in Hobart. According to Mr Lam he told Mr Teh that, because of the family relationship, he would advance the money to Mr Teh and his wife as "an advance for the immediate future". Mr Teh told Mr Lam that the money should be advanced to Lake Yale because it was close to the end of the financial year and Mr Teh did not want to "confuse the accounts". Mr Lam and Mr Teh then discussed Mr Teh's offer that Mr Lam purchase forty percent of the shares in SEA and Mr Lam's evidence was that, in the course of that discussion, Mr Teh said :- "I'll be able to give you complete accounts for the years ended 30 June 1991, 1992 and 1993. I will expedite the closing of the accounts for the year ended 30 June 1994. You will be pleased to note that we expect to have a turnover of $10 million by the end of the financial year." After his discussion with Mr Teh, Mr Lam asked James Lam to arrange for the telegraphic transfer of $1,000,000 to Lake Yale, as soon as James and his family returned home. Mr Lam's evidence was that he was prepared to make the money available as a loan initially. Mr Lam's evidence in cross-examination about the events of 18 June 1994 was somewhat confused. The tenor of his evidence was that he told Mr Teh that he had $1,000,000 to invest and Mr Teh, after setting out the uses to which that sum would be put ((a) to (f) above) indicated that he was prepared to give Mr Lam forty percent of the shares in SEA in return for an investment of that amount. Mr Lam also gave evidence to the effect that Mr Teh's offer in those terms was not immediately accepted by him but was, in effect, subject to provision by Mr Teh of the accounts of SEA for the previous three years or so. Mr Teh's initial statement of evidence is unhelpful in resolving the conflicts in the evidence. Mr Teh, in that statement, does not descend into particularity as to what was said and by whom on the relevant dates. However, Mr Teh's statement in reply responds directly to the evidence-in-chief of Mr Lam. Relevantly, Mr Teh's evidence was as follows :- "21. In relation to paragraph 36 I say that the impetus for the discussion of investment came from Lam rather than me. He had indicated his interest in investing on a number of occasions and the original discussions in relation to investment had involved Lam developing the site and SEA leasing the developed site from him. However, during the social chit-chat over the previous days the idea had been introduced by him that he may be interested in investing in the company as well. He thought that it made sense for the development of the land and the investment in the company to be tied together. Lam Senior did not invite his son into the office. 22. In relation to the comments in sub-paragraph (a), (b), (c), (d), (e) and (f) of paragraph 36 I say that the conversation started with Lam Senior asking if I was interested in him investing in the company and how much money would I want and what sort of percentage would he be looking at if he invested in the company. The figure of one million dollars ($1,000,000.00) arose during the discussion as a result of the business migration requirements. Even though Lam Senior had no intention of migrating he indicated his son James did. I understood $500,000.00 per party for business migration was the relevant figure. I think Lam thought it was a good idea to have the option available to him to emigrate. This means one million ($1,000,000.00) had to be invested. In return for this I offered one third of the company. Lam then negotiated upwards by saying 'well how about forty per cent (40%)' and the agreement was struck at that time. The comments in sub-paragraphs (a), (b), (c), (d), (e) and (f) were not made specifically to me at that time or in that context but the substance of these comments would have been made during our many conversations. He did not make the comment that the money was an 'advance'. The family relationship was mentioned and I may have mentioned Lake Yale Pty Ltd which is a holding company. 23. In relation to paragraph 37 Lam did not make those comments at any time. He did ask for accounts at some stage and I said that we were trying to get the accounts up to date but I did not make any other comments. Specifically, I did not say I would give him completed accounts as he had never requested them. I did not say I would expedite the closing of the accounts. However, I had told him previously that the company's turnover was $10,000,000.00. The statement at the top of page 9 were made by me at a much later date as a result of Lam's accountants Saccasan Bailey Roy advising him in relation to director's duties and responsibilities. One strange thing is that all the accounting is done at the office and at no time has it been done at home. The final year accounts have always been done by a firm of external accountants. 24. In relation to paragraph 38 I deny that the money was made available as a loan at any time. As I said, the money was to purchase a percentage of the company which was the agreement struck. No reference was made by anyone at any time to a 'loan' or 'advance'". Mr Teh also said that on 18 or 19 June 1994 he gave Mr Lam the 1991, 1992 and 1993 financial records of SEA to "keep over the weekend and to copy" and that Mr Lam gave those records back to Mr Teh on 20 June 1994. In cross-examination, Mr Teh's evidence was that on 18 June 1994 Mr Lam asked him how much he required to be invested in SEA and Mr Teh suggested that $1,000,000 "would be a good figure". Mr Teh's evidence in relation to (a) to (f) above went further than his evidence-in-chief. Mr Teh agreed that those were things that he had said to Mr Lam at some point on or prior to 18 June. Ultimately, Mr Teh agreed that he may have said those things on 18 June, but could not recall. Mr Teh confirmed his evidence that he did not recall Mr Lam indicating that the $1,000.00 was to be a temporary loan to Mr Teh and his wife, nor did he understand that the money was to be advanced on that basis. I am satisfied that the matters set out in (a) to (f) above were said by Mr Teh to Mr Lam on 18 June 1994 or "cumulatively" on the relevant dates up to and including 18 June 1994. I am also satisfied, for the reasons set out below, that Mr Teh said he would provide the 1991, 1992 and 1993 financial records of SEA to Mr Lam and that he would provide the 1994 financial records as soon as they became available after the end of the financial year. On 20 June 1994, Mr Lam and Mr Teh had further conversations at Mr Teh's home, where Mr Lam was now staying, having checked out of his hotel. Mr Lam's evidence in relation to those conversations was as follows :- "He [Mr Teh] said: 'The financial accounts for the year ended 30 June 1994 will show that the company has achieved a $10,000,000 turnover. I am in dire need of another $1,000,000 (meaning a second $1M) to expand the processing plant in Redcliffe. Presently it's too small in capability to handle Spanner Crab business and the Sea Mullet season ends in June. I need additional capital and space to process Spanner Crab and this will increase the turnover to $15,000,000 in 94/95'. He also said : 'The company also owns a large lobster factory in Tasmania and an export distribution facility at St Peters in Sydney.' 'The Redcliffe Council and Port Authority are very keen and anxious to offer my company the two acres at the tip of Redcliffe for a 20 year lease at a very low and favourable rental. The Council have assured me that there will be no problem for me to get the land as I employ 50 - 60 employees all from Redcliffe. With this downstream project I am in dire need of assistance from your son James and his wife, Jean.' 'I have a big competitive edge against my Australian exporters as I am Australian, Chinese and a Malaysian. The Taiwanese prefer to deal with a Malaysian who is receptive to doing business under the table.' I [Mr Lam] said: 'With your enormous turnover surely your company is showing big profits? What is the profit before tax?' He said: 'There are many ways to get around this as I have a company with tax losses to offset the SEA profits and thus pay no tax at all.' ..... I said: 'Can you please give me your accounting records for the last three years. I need to see your profit and loss accounts, balance sheets, the paid up capital, price earnings per share ratio.' He said: I have the three years profit and loss accounts and can give you a photocopy any time. Don't worry the profits are very good and you will never regret taking an equity in my company.'" Mr Lam agreed that he could not recall that Mr Teh told him that SEA owned the facility in Sydney and that he assumed that this was the case. I am satisfied that Mr Teh did not make the representation, pleaded in paragraph 11(b) of the further amended defence and cross-claim, that SEA owned a packing plant in Sydney. Relevantly, Mr Teh denied that he made the comment about doing business under the table, that Mr Lam had requested SEA's financial records and that he made the reply attributed to him by Mr Lam. Mr Teh's evidence was that he made general comments of the nature recalled by Mr Lam at various times, but not necessarily on or only on 20 June 1994. Mr Teh acknowledged that he did mention that "the holding company had tax losses to offset against SEA." Mr Teh's evidence in cross-examination did not take the matter substantially beyond the position recorded above other than to acknowledge that the tenor of what he told Mr Lam about SEA was positive :- "All right. And that you certainly would not have wanted him to go away thinking that an investment in your company was not a good investment?---Yes. And you certainly would not want him to go away thinking that your company had not been trading at a profit?---That's correct." Mr Teh also said that he did not at any stage tell Mr Lam that SEA had traded at a loss in the period from the 1991 financial year, because he "wasn't asked". Mr Teh's evidence was that he told Mr Lam that SEA in Queensland was trading at a profit but that Tasmania was in a situation of loss or had problems or difficulties. It is tolerably clear that, whether on 20 June 1994 or at some other relevant time, Mr Teh said to Mr Lam words to the effect that the 1994 accounts of SEA would show a turnover of $10,000,000, that SEA needed $1,000,000 to expand Tubbs Street to handle spanner crabs to increase the turnover to $15,000,000, that the Redcliffe Council and the Port Authority were "very keen and anxious" to offer SEA a twenty year lease of the Redcliffe/Scarborough site at "a very low and favourable rental" and that SEA's holding company had tax losses to offset against SEA's profits. Similarly, the evidence is that during the period up to and including 20 June 1994, Mr Teh sought to impress upon Mr Lam that an investment by him in SEA would be a sound one and that SEA was a company performing well and earning profits. Although Mr Teh's evidence does not go so far as to say that he told Mr Lam that SEA was profitable, I am satisfied that, even if Mr Teh did not say so expressly, he sought to convey and did convey to Mr Lam that that was the case. There is, for example, no warrant to speak about offsetting tax losses if there are no profits to offset. Equally, discussion about turnover of $10,000,000 per annum and an investment being one that would not be regretted suggests that the subject company is a successful and profitable one. Further, for reasons which will become apparent, I am satisfied that Mr Teh did not provide any financial records to Mr Lam, at least prior to 23 June 1994, and that on 18 June 1994 and/or on 20 June 1994, Mr Teh told Mr Lam that SEA's accounts for the 1991, 1992 and 1993 financial years were available and could be provided and that the 1994 accounts would be provided as soon as they became available. On 22 June 1994, Mr Lam wrote to James Lam via facsimile requesting that he, as a matter of urgency, remit two lots of $500,000 ($500,000 in Mr Lam's name and $500,000 in James Lam's name) to Lake Yale's account at the Commonwealth Bank at Mt Ommaney. Mr Lam enclosed two "specimen forms" directed to the Standard Chartered Bank at Ipoh for the remittance. Although one form expressed the applicant to be Mr Lam and the other, James Lam, the account to be debited was the same in each case. On 23 June 1994, James Lam wrote to Mr Teh, also via facsimile, advising that $1,000,000 had been remitted by telegraphic transfer and asking Mr Teh to confirm by facsimile as soon as the funds had been received. Mr Teh provided the requested confirmation on 28 June 1994, Lake Yale having received the funds on 27 June 1994. The whole of the $1,000,000 was not transferred or made available to SEA immediately. Rather, the money was transferred to SEA's current account by payments of $300,000 on 30 June 1994, of $100,000 on 13 July, 18 July, 12 September, 11 and 26 October 1994 and a payment of $200,000 on 17 October 1994. Mr Lam, Mrs Teh and her children had travelled to Noosa Heads on 22 June 1994 to stay at the Teh's unit there. Mr Teh joined them on 24 June 1994. On 26 June 1994, Mr Lam wrote a note to Mr Teh, which relevantly contained the following :- "... 4. Please let me have 2 receipts for the 2 x AU$500,000 remitted to your A/c with Commonwealth Bank of Aust, one in my name & one in L.S. Hon's name [James Lam] - as temporary loan to your self & Jill (Lake Yale Pty Ltd). 5. Can you please put in paper your offer to James & myself (Att Jean) as participating directors of SEA Food Int Pty Ltd) - Salary, perks etc so that I can hand it over to James on my return. 6. When your A/c for 1994 are ready & audited [sic] pl. Give us a copy soonest, so that we can look into it closely - & off [sic] course your impending restructing [sic] SEA Food Int in which we intend to take equity. 7. Your future proposal for expansion and any other related points for our mutual benefit." According to Mr Lam he handed the letter to Mr Teh on 27 June 1994, before Mr Teh left for Brisbane, and said to Mr Teh :- "Please give me the financial information that I have requested so that I can come to a decision to participate in your company. Would you also please give me two receipts of funds for the money, which you have confirmed is in your Lake Yale bank account." Mr Teh said he would attend to those matters upon his return to Brisbane. Mr Teh's evidence was that he was given the letter on 26 or 27 June 1994 and that Mr Lam asked him for receipts, but not in the formal manner recalled by Mr Lam. Mr Teh denied that Mr Lam made a request for financial information. On 27 June 1994, Mr Lam was again at Mr Teh's home. Mr Teh handed to Mr Lam receipts dated 27 June 1994, which had been signed by Mr Teh, and asked him to sign them. The receipts, on Lake Yale letterhead and headed "Receipts of Funds", acknowledged that Lake Yale had received $500,000 from each of Mr Lam and James Lam "[f]or the purpose of advances of funds re part purchase of 40% (percent) of shares in 'SEA Food International Pty Ltd'". Each receipt was amended by handwriting to change the reference to forty percent to "39.9% (thirty-nine point nine percent)" and recorded that the $500,000, in conjunction with the other $500,000 contribution, represented "AUD700,000.00 for payment of 40% (forty percent) of the shares in 'SEA Food International Pty Ltd' and AUD300,000.00 towards working capital." Each receipt was signed by Mr Teh as a director of Lake Yale. Mr Lam signed one receipt on his own behalf and the other on behalf of James Lam. It is sufficient for present purposes to record that the contents of the receipts and the basis upon which the $1,000,000 was paid was the cause of significant conflict between Mr Teh and Mr Lam at the time and in the evidence they gave in these proceedings. Having regard to what subsequently occurred in relation to this dispute, the conflict in the evidence does not require resolution. I will note at this point that Mr Lam's evidence was that $500,000 was contributed by him and $500,000 by his son James, as recorded in the receipts. On 28 June 1994, Mr Teh and Mr Lam went to Sydney and met a Mr Chu of Coral Live Products Pty Ltd and on 29 June 1994 the men went to Hobart, where they met Mr Bostock and his wife. Nothing of consequence to these proceedings occurred on those days, except that, for reasons which are not apparent to me, Mr Lam became concerned about the $1,000,000 investment or advance. Mr Lam left Hobart for Sydney on 2 July 1994. Shortly after returning to Sydney, Mr Lam met with Mr Bruce Bailey and Mr Peter Saccasan of Saccasan Bailey Roy, Accountants ("Saccasan Bailey"), and appointed that firm as his accountants in Australia to "examine [Mr Lam's] intended investment in Ray Teh's group of companies particularly SEA." On 5 July 1994, Mr Lam wrote to Mr Teh advising him of the appointment of Saccasan Bailey and the reason for it. Mr Lam's letter foreshadowed a request by Saccasan Bailey for information about "the trading history of the group as well as the proposed structure of the new company to take into account my recent investment ..." and asked that Mr Teh provide the information when it was requested. Mr Lam's letter to Mr Teh was sent to Mr Teh under cover of a letter to Mr Teh from Saccasan Bailey dated 5 July 1994 in which a request was made for the financial records of SEA for the previous three years (including profit and loss statements and balance sheets), for the 1994 financial records once completed and for a "pro forma" balance sheet as at 1 July 1994 showing Mr Lam's investment and all relevant liabilities. Mr Lam returned to Malaysia on 7 July 1994 without further communicating with Mr Teh. On 21 July 1994 Saccasan Bailey wrote to Mr Lam by facsimile to report on the results of their searches with the Australian Securities Commission in relation to SEA and Lake Yale. Saccasan Bailey noted that SEA had reported operating losses in 1991 and 1992 of $38,000 and $75,000 respectively and an operating profit in 1993 of $46,858 (a result which did not "add up") and that Lake Yale had reported losses in 1991, 1992 and 1993 of $50,000, $38,600 and $10,000 respectively. The letter stated :- "In looking at the value of your investment on an earnings basis it can only be said that the investment is not supported by the past earnings history of the company, however as we are not in possession of any detailed information on the profitability of the company, we are unable to shed any further light on its past performance, and reasons for the results obtained." Mr Lam wrote to Mr Teh by facsimile on 22 July 1994, relevantly as follows :- "... As stated in my letter [of 5 July 1994], I have appointed Mr Bruce Bailey and Mr Peter Saccasan of Saccasan as my representative Accountants in Australia to seek financial information concerning my proposal to invest in SEA Food Int Pty Ltd, at your kind invitation. To date of writing my Australian accountants informed me that you have not had the courtesy to respond to their written and oral requests. At your request and in good faith, I have very kindly on 23rd June 1994, remitted to your company, Lake Yale Pty Ltd, the large sum of one million Aust dollars so as to assist you to be in a very good position to bid at the 3 auctions in Tasmania for your necessary additional equipments in Horbat [sic], Redcliff [sic] and the expansion of SEA Food, the leasing of the land in Redcliff [sic], and to build your own factory and down stream projects. As you are not prepared to provide my appointed Accountants with your track records for the past 3/4 years despite repeated written and oral requests, I have decided not to accept your offer for equity participation in SEA Food. Under the above circumstances I shall be obliged if you would now refund me the one million Aust dollars, to be paid into my company's account in Sydney. ..." Mr Teh responded by a facsimile transmission dated 23 July 1994 [TPL 109] :- "... After speaking to you yesterday and reading the contents of your fax, it appears to me that I have let you down badly in communications over the past 2 weeks. If I have done this, please accept my humble apologies - I can assure you that this was due to circumstances and not out of intention. ..... At this stage, I can advise that I had already instructed our external accountant in Tasmania to conduct our annual audit and preparation of year end accounts (as at 30 June 1994) during the last week of July. Our Tasmanian accountant could not have done this any earlier due to his schedule of other clients and it is normal to wait about 3 weks [sic] for all invoices & paperwork to flow through the office. I had also requested our Brisbane accountants to conduct the preparation of our year end accounts at the same time and finalisation of the total company accounts was due to take place in the 2nd (second) or 3rd (third) week of August. Please also note that I had not received any telephone calls from the offices of 'Saccasan Bailet [sic] Roy' at all to date - although you mentioned in your fax that they have made repeated written and oral requests. This is simply not true. I have had only that one letter from them. This is not an excuse - as I said I do apologise for not communicating with you earlier - but I could not have responded with our 1994 accounts as they were not due for another few weeks. Mr Saccasan in his letter appreciated the fact that this finalisation of accounts would take some time as well. This past week, I have had 2 meetings with the local council, port authority (who owns the spit of land at Scarborough), inspected 4 properties for temporary expansion sites (will elaborate later on), try to finalise our year-end accounts as Jill could not go into the factory this past week due to Stephanie injuring her hip in a fall & is still immobile in bed, prepare 2 export containers, met with our Queensland & Canberra quarantine officials re the import & export of crocodiles from P.N.G., met with Canberra fisheries research officers, got called to Bundaberg by our processors & fishermen up there on Thursday afternoon and returning on Friday morning (22 July) re price increases of spanner crabs, plus my normal day activities. Frankly speaking, it has been a pretty busy week for activity. The very good thing about this past week are the achievements and progress that I managed to make in regard to the business. Mind you, this was only possible beacuse [sic] of your investment in 'S.E.A. Food International' - allowing us the increase in working capital, etc in order to expand our activities. ..... Other properties As I mentioned, I had a look at some properties (warehouses, buildings) in the Redcliffe area with the view of moving 'S.E.A. Food' temporarily as we have now embarked on our expansion program very quickly. The 'Scarborough' project will take another 18 to 24 months, but we need extra space to accomodate [sic] our new items like our local spanner crabs, scallops, live seafood, etc. The properties were looked at as well with the idea of having a retail shop included. We have come up with some interesting ideas and would like your opinion on a couple of alternatives. It will take me another 5 - 7 days to sort out the figures and proposals, but I shall fax you once I have everything together. One of the alternatives is the opportunity to purchase an excellent commercial factory/warehouse for a good price and even after 'S.E.A. Food' moves into Scarborough Spit, the complex can be turned into an income producing source. Scarborough Spit We had very beneficial talks with the port authority where the authority now is happy to have us as tenants for a majority of the area. The second meeting yesterday on Friday morning was with the Redcliffe Council Development Committee with the port authority present as an observer. The development committee has promised to consider funding part if not all, of the beautification (greening, trees, plants) of the spit. The committee has also undertaken to do a quick study re the costings of sewerage and roadworks for the area and advise us accordingly. We all agreed that as part of the proposal, the Redcliffe member of State Parliament will be approached to request our State Government to looking at funding the infrastructure of the spit (for economic, employment, local interest reasons). Most importantly the meetings resulted in the authority & the council both agreeing that 'S.E.A Food' has the best potential for acceptance as the main tenant for the spit area. Also at the meetings, it was revealed that the yacht club (beside Morgan's takeaway shop) has asked for around 2 acres of land for parking of their cars, trailers, boats. This will be at the start of the spit area near the convenience shop. This is great as this means the State Government will be pressured to help in roadworks. As you can see, I have not been idle the past couple of weeks. I must admit that I am at fault for not communicating with you earlier, although my intention was to write to you via fax this weekend to report on the above happenings. Again, I am sorry if I have neglected my communications - but I am sure you will consider the fact that I am still very much a one man band in regard to exports, administration and further expansion of the company. This is why I have repeatedly stated that it would be marvellous to have help in the above areas with James and Jean. I will get in touch with Mr Bruce Bailey on Monday morning and have a talk to him in regard to my timetable for our accounts. As I said, if I had known it was so urgent and if Mr Bailey had just bothered to telephone, I certainly would have cancelled my past week's work commitments (which were made the week before when I was up north) and concentrated on completing our June 30 year end accounts (although finalisation would have had to depend on our external accountants work schedules). Please accept this letter as an explanation of my breakdown in communications. I am completely in error of judgement and I can see that your priority should have come first." Saccasan Bailey wrote to Teh on 25 July 1994 on Mr Lam's behalf requesting that the 1992 and 1993 financial accounts and tax returns of SEA be couriered to them. The letter continued :- "In our initial letter to you we requested this information before you had the current years figures finalised as we appreciated these would not at this stage be ready. We have been given a copy of your fax dated 23 July, 1994 to Mr Lam wherein you talk about the timing of completing of these accounts and the fact that we had not telephoned you since our first letter. We did not ask for the current years figures with the prior years figures, but said we would like them forwarded as soon as they become available. We did ask if you had any interim figures for the 1994 year that we could have a look at to see how the company was travelling. If you do not have any current figures for the 1994 year we will wait until your accountants finalise the annual balance sheet and profit and loss but please send prior yeas [sic] in advance. ..... Mr Lam has also asked us to advise him how you have disbursed the funds he advanced to the company. Can you send to us a breakdown of how the funds $1,000,000 have been spent and how much is still on hand. When sending the Balance Sheets of the company we will also want the depreciation schedule and details of any amounts owing to associated parties." Mr Teh wrote to Mr Lam by facsimile transmission dated 27 July 1994 :- "..... I read with interest the summary on duties of a director of a company in Australia. I take it that 'Saccasan Bailey Roy' only meant this letter to be more of an information brief rather than to be specifically directed at our company. If you recall, I was to give you indemnity for all past actions and doings of 'S.E.A. Food International', and if requested, I shall also do the same for all new trading and actions where if you as a director is [sic] not directly involved in the decision making. Mind you, all major decisions should be made by all directors of the company anyway - so, consultation will be sought beforehand. I have responded to a second letter from Bruce Bailey and sent him the financial results for the past 3 years of the company and I will forward the 1993-94 results as soon as it comes to hand. I shall also be faxing Mr Bailey a projected sales budget for a 12 months [sic] period after establishment of new premises in order to take advantage of the newly acquired plate freezer. etc. I will also be sending a company profile with an explanation as to what we have been doing, achieving and will be doing in the future. At least, can you please wait until Mr Bailey gives you an opinion as to our company? Thank you. I will try my very best to give Mr Bailey all information that he requires to make a good assessment, but forgive me if I take just a little bit longer in answering all questions as we have an urgent family problem which has stressed us all during the past 2 - 3 days. ...." Mr Teh had not in fact sent the financial records to Saccasan Bailey at that time. It is plain from the correspondence set out above that Mr Teh's evidence that he gave the 1991, 1992 and 1993 financial records of SEA to Mr Lam on 19 June 1994 and that Mr Lam returned them on 20 June 1994 is incorrect. The events subsequent to that date, particularly Mr Lam's engagement of Saccasan Bailey and their requests for those financial records, and the contents of Mr Teh's facsimile transmission of 27 July 1994, lead inevitably to that conclusion. I do not accept Mr Teh's evidence that he took the requests made by Saccasan Bailey as requests for printed copies of the accounts he had earlier given to Mr Lam. The contemporaneous correspondence simply does not support Mr Teh's evidence in this respect. As I have said, I am satisfied that Mr Teh told Mr Lam, prior to 23 June 1994, that the 1991, 1992 and 1993 financial records of SEA were available and would be provided and that the 1994 financial records would be provided as soon as they were available. The course of correspondence after that date provides ample support for my acceptance of Mr Lam's evidence on this issue and for a finding in those terms. If Mr Teh had earlier provided the 1991, 1992 and 1993 records to Mr Lam, it is not unreasonable to expect that, in the face of the repeated requests for those records made subsequently and the obviously escalating dispute with Mr Lam over this issue, Mr Teh would have made some mention of that earlier provision of the records or would have simply sent copies of them to Saccasan Bailey or Mr Lam. Instead, Mr Teh apologised for his communication failures, asked Mr Lam to delay his decision to withdraw his investment until Saccasan Bailey had provided their report and, on 27 July 1994, told Mr Lam (falsely) that he had sent the 1991, 1992 and 1993 records to Saccasan Bailey and that he would forward the 1994 results to them as soon as they were to hand. At some time after receipt of Mr Teh's facsimile of 27 July 1994, Mr Lam engaged a firm of solicitors, Long & Company, to act on his behalf in relation to his dealings with SEA. Long & Company wrote to Lake Yale on 18 August 1994 demanding repayment of $700,000 paid for the purchase of shares and, on 19 August 1994, to SEA demanding repayment of the $300,00 loan. Mr Teh engaged HC Fong and Associates, solicitors, to act on behalf of SEA and Lake Yale. Correspondence passed between HC Fong and Associates and Long & Company in relation to the disputed dealings through August and early September 1994. Little progress, it seems, was made towards resolution. It is important to record at this point that Mr Bostock had had an interest, independent of his involvement with SEA, in developing the premises at Thurecht Parade from where Scarborough Fish Markets Pty Ltd ("SFM") operated, as early as in or about November 1993. Indeed, in or about October 1993, Mr Bostock prepared a proposal document for the purchase and development of SFM's business at Thurecht Parade. The document envisaged an investor providing the funds and Mr Bostock being responsible for the running of the business and receiving a proportion of the after tax profits of the new enterprise. Mr Bostock did not show the document to Mr Teh nor did he discuss the proposal with him, although Mr Bostock knew Mr Teh was also interested in Thurecht Parade at the same time. Apparently, Mr Teh thought Thurecht Parade was "too dear". Mr Bostock had also had an independent interest in the development of the Redcliffe site prior to Mr Teh becoming interested in it. Mr Bostock wrote to the Port of Brisbane Authority on 4 May 1994, on behalf of his company, Namville Pty Ltd ("Namville"), inquiring as to the availability of land for a seafood processing and export business for lease at the Scarborough Boat Harbour. Mr Bostock received a reply dated 7 June 1994 advising that land was only available in the north-eastern side of the harbour. Apparently Mr Teh became interested in the Redcliffe site after Mr Bostock showed him the reply, making it unlikely, in my view, that the reference in the letter of 4 May 1994 to the proposed relocation of a seafood processing and export business was a reference to SEA. In or about early September 1994, Mr Lam contacted Mr Bostock. Mr Bostock told him that SFM was for sale, that Mr Teh was interested in it and that it was a very good investment. Mr Lam told Mr Bostock that he was coming to Brisbane in the near future and Mr Bostock invited Mr Lam to visit Thurecht Parade and to meet Lee Bryan, the "owner" of SFM. There is no evidence other than that contained in Mr Lam's statement of evidence (the effect of which is set out above) as to what Mr Lam and Mr Bostock discussed on these occasions. Nonetheless, it is clear that there was some contemplation or discussion of Mr Lam providing the funds for something along the lines of Mr Bostock's proposal to develop Thurecht Parade, independently of or without the involvement of Mr Teh and SEA. So much is apparent from a letter from Mr Lam to Mr Bostock dated 6 September 1994 :- "I have much pleasure to send you photostat copies of the following correspondence which, I hope, will be of revalent [sic] & mutual benefit to you in our dealings with Ray Teh. Please keep all these correspondences strickly [sic] confidential, before we take drastic action, either individually or jointly against Ray Teh. ..... I shall be very much obliged if you could telephone me in Ipoh - 05/548689, preferably at night - (you are 2 hrs ahead) in [sic] your receipt of this parcel of papers sent by courier to your home address in Redcliff [sic]. For your absolute royalty [sic] to Ray Teh over the past weeks, how have [sic] he treated you? Or is he also playing you out, just like he did to his own brother-in-law, Ms Teh Yew Lam husband (Decd). Any information will be kept in strick [sic] confidence ..." Mr Lam and his son Boyd arrived in Australia on 18 September 1994 and were in Sydney for six days. On 21 September 1994, Mr Lam had a telephone conversation with Mr Bostock. Mr Lam did not recall what was said but gave evidence that it concerned "the possible purchase of Scarborough Fish Markets and a possible arrangement between me and SEA concerning that business." Mr Bostock did not give any evidence about the telephone conversation. However, diary notes made by Mr Lam relating to the telephone conversation and other events on 21 September 1994 were tendered into evidence :- "21.9.94 - Studied Ken Long's [Mr Lam's solicitor] LTP report put into legal wordings fax copy to James # 34 Rd for him and Jeya to study - This was faxed to Ipoh before we left for St Mary's. Studied my report. Very worried whether I can answer in Court when I am in the box under cross examination. Jeya and Hon rang at 12.30 AM - I could not sleep & kept pondering whether I should proceed with legal action or drop proceeding for legal suit. By morning I have made a firm decision to call it off & go down to Brisbane to see Kevin [Bostock] & Ray Tay [sic] & resolve the problem & misunderstanding. Kevin was at meeting but returned my call at 11.00am. I told Kevin to ring Ken Long at 11.00am in the morning & tell Ken Long exactly what he told me & about the Scarborough Sea front site with building on a 10 + 10 years lease. Port Authority review lease in 2 years time. SEA Food to lease at $700,000 + $600,000 for renovation - $1,300,000 over 20 years - rental will be $3,000 per week a small sum to pay for SEA Food. By this way, SEA Food can move into this property by end of month & go ahead with the spanna [sic] crab season & bring in income soonest. PONDED [sic] THROUGHT [sic] THE NIGHT: 1 Effecting my health - when the matter is not resolved and prolong. 2 To Court - can I really say what I put on paper when questioned by Ray's solicitors. 3 At Best if I win - Ray will be in trouble with I/TAX & he could go bankrupt - BUT I will not get anything (MONEY) back. 4 Supreme Court/Barrister at law legal fees etc & If I loose [sic], I will also have to pay Ray's legal fees - "AT COST" or with cost. 5 Kevin would also be effected [sic] with his interest in SEA Food. I will be throwing away good money for bad money. The satisfaction to put Ray with trouble should not be worth to take proceedings. Discussed also with Boyd he agrees - so did Ken Long. Anyway its [sic] up to me as it is my money." (Original emphasis) Mr Lam and Boyd Lam arrived in Brisbane on 25 September 1994 where they were met by Mr Bostock and taken to Thurecht Parade and, according to Mr Bostock, to various other sites. On 26 September 1994, Mr Lam and Boyd Lam were taken to Tubbs Street by Mr Bostock, where they met with Mr Teh. Mr Lam and Mr Teh subsequently went to Mr Teh's home where they discussed, amongst other things, director's fees, executive salaries, the issue of shares to Mr Lam, Mr Teh (Lake Yale) and Mr Bostock to reflect Mr Lam's investment in SEA and the proposed expansion of SEA's operations to Thurecht Parade. The meeting concluded on the basis that the arrangements were to be formalised by the drawing of relevant documentation. As will be seen, Mr Lam and Mr Teh had reached substantial agreement on the issues previously the subject of acrimony between them. That Mr Lam had resolved to do so is apparent from the contents of his notes of 21 September 1994, from the result of the meeting on 26 September 1994 and from the terms of a Deed of Settlement between Lake Yale, Megamix, Mr Lam and James Lam executed on 11 October 1994 and to which I will return below. On 27 September 1994 Mr Bostock took Mr Lam to see Trilby Misso Solicitors. Mr Lam instructed Trilby Misso in relation to the purchase of SFM and Thurecht Parade and the proposed lease of Thurecht Parade to SEA. According to Mr Bostock, Mr Lam told him that he (Mr Lam) allowed $1,300,000 for the purchase and expansion of SFM and Thurecht Parade, being $700,000 for purchase price and $600,000 to upgrade and extend the existing buildings at Thurecht Parade. Mr Bostock's evidence in this respect accords with Mr Lam's notes of 21 September 1994. Mr Lam wanted to use a company to purchase Thurecht Parade. Mr Bostock referred him to an accountant for that purpose. The accountant arranged for a shelf company, Huxham, to come under Mr Lam's control. On 3 October 1994, Mr Lam and Mr Teh met with Mr Teh's solicitor in pursuance of the agreement reached on 26 September 1994. Mr Lam wrote to his son on 4 October 1994 recording what was discussed on and around 3 October 1994 :- "... We are trying to finish our work here in Redcliffe & Brisbane, with the Solicitor (Ray Teh's) and our own solicitors & accountant in Huxham Pty Ltd over the purchase of the Lease/Building & Equipment of Scarborough Fish Market. The lease of this property to SEA Food Int etc etc ..." At some point in or shortly after 27 September 1994, negotiations commenced for the purchase by Mr Lam, through Huxham, of SFM and Thurecht Parade. I should note at this point that Thurecht Parade was not freehold property but was the subject of a lease between the Port of Brisbane Authority and A Raptis & Sons (Qld) Pty Ltd as lessee for a term commencing on 8 March 1983 and expiring on 13 June 2008 and a sub-lease in favour of SFM. The pleadings, the evidence and the argument before me referred to the proposal that SEA obtain from Huxham a sub-lease of Thurecht Parade as a proposal for a lease. I will do the same. Mr Bostock assisted Mr Lam in relation to the purchase of SFM and Thurecht Parade and with the plans for the alterations to Thurecht Parade. According to Mr Lam, he believed that Mr Bostock was acting on behalf of SEA and Mr Teh in this regard to facilitate the use of Thurecht Parade by SEA. Mr Bostock's evidence as to how he viewed his role was to similar effect. On 10 October 1994, Mr Lam, on behalf of Huxham, signed the purchase contract for SFM's business and a contract for the purchase of the sub-lease of Thurecht Parade. The terms of the contracts, ultimately executed on 12 October 1994, bear some examination. The first, between SFM as vendor and Huxham as purchaser, dated 12 October 1994, provided for the purchase by Huxham of the "retail operation business" carried on by SFM at Thurecht Parade for a consideration of $302,000, being $250,000 for goodwill and $52,000 for plant and equipment plus an amount for SFM's inventory to be calculated in accordance with the formula in clause 3.1c (ultimately calculated to be $23,405.57). Completion of the contract was, by clause 4.1, conditional upon, inter alia :- "d. Simultaneous completion of (a) the sale and purchase of the lease of the leased premises by Scarborough Fish Markets Pty Ltd to the Purchaser [Huxham]; (b) the agreement to enter into the lease of premises situated at 19 Tubbs Street, Clontarf, on or before 21-10-94." It is important to note that the contract provided for the purchase by Huxham of SFM's business, being substantially the goodwill of that business as well as the plant and equipment, inventory, equipment leases, property leases, statutory licences and contracts. Clause 9.1 required SFM to carry on business pending completion of the contract in a manner which preserved the value of that being purchased by Huxham. Clause 22.1 purported to restrain SFM and each of Ashley Bryan, Margaret Bryan, Stephen Bassett and Sandra Bassett from carrying on, directly or indirectly, the business of retail seafood trading within a three kilometre radius of Thurecht Parade for two years after the completion date of the contract. The second contract, between Ashley Bryan, Margaret Bryan, Stephen Bassett and Sandra Bassett as vendors and Huxham as purchaser, also dated 12 October 1994, provided for the assignment to Huxham of the vendors' right, title and interest in the lease between the Port of Brisbane Authority and A Raptis & Sons (Qld) Pty Ltd of Thurecht Parade, for a consideration of $322,200. The nominated settlement date was 31 October 1994. The contract was expressed to be conditional upon the vendors making application for, and the authorities (as defined) granting their consent in writing to, the transfer of the lease to Huxham without conditions or with conditions requiring expenditure by Huxham not exceeding $500 (clause 25.1). The contract was also conditional upon the contemporaneous :- "(i) settlement of the Agreement to Purchase a Business dated the same date as this Contract and made between Scarborough Fish Markets and Huxham Pty Ltd; (ii) completion of the agreement to enter into a lease between the vendor and the owner of premises situated at 19 Tubbs [St] Clontarf on or before 21 10-94." (Clause 26.1) The contracts were signed by the respective vendors on 12 October 1994. On 11 October 1994, an extraordinary meeting of the shareholders of SEA was held at the offices of Mr Teh's accountant, Mr McCoy. Mr Teh and his wife attended the meeting, presumably as representatives of Lake Yale of which they were directors, the then sole shareholder in SEA. Also present "by invitation" were Mr Lam, his son Boyd and Mr Bostock. After the meeting, a set of minutes was prepared by Mr McCoy. The minutes were shown to Mr Lam on 12 October 1994 at Tubbs Street. Mr Lam did not accept the minutes as accurate as there was no reference to proposed security for an advance to SEA by Megamix. The minutes were subsequently amended by Mr McCoy to include a reference to that security and were accepted by Mr Lam and, it is fair to say, by all relevant parties as an accurate record of the meeting. The minutes relevantly recorded :- " APPOINTMENT IT WAS RESOLVED by separate resolution the following people be appointed directors of the company, consent to so act being tabled at the meeting:- OF DIRECTORS: Lam, Theng Pew Bostock, Kevin James ..... ALLOTMENT OF The Chairman informed the meeting that Lake Yale Pty Ltd is the only shareholder in S.E.A. Food International Pty Ltd and on its behalf waives its pre-emptive right on a further allotment of shares. SHARES: IT WAS UNANIMOUSLY RESOLVED to allot the following $1.00 ordinary shares in accordance with the Memorandum and Articles of Association of the Company. The certificates are to issue with the common seal of the company appearing on each certificate as follow [sic] :- Lake Yale Pty Ltd 777 ordinary shares Certificate No 9 Amona Pty Ltd 173 ordinary shares Certificate No 10 Megamix Pty Ltd 700 ordinary shares Certificate No 11 The Chairman advised the meeting that the issue of shares to Megamix Pty Ltd includes a premium of $999 per ordinary share. WORKING The Chairman tabled a Deed of Settlement between Lake Yale Pty Ltd, Megamix Pty Ltd, Mr Theng Pew Lam and Mrs James Siewnhon Lam in relation to an advance of $300,000 working capital by Megamix Pty Ltd to S.E.A. Food International Pty Ltd. CAPITAL: The amount of $300,000 has been offered on the basis that $150,000 is repayable on 30 June 1996 to which an interest rate of 7.5% per annum applies and secondly $150,000 is to be repaid on 30 June 1997 on which an interest rate of 8.5% applies. Interest is to be paid to Megamix Pty Ltd on a monthly in arrears basis commencing on 01 July 1994. However in view of the cashflow and planning circumstances of S.E.A. Food International Pty Ltd Megamix Pty Ltd has agreed to defer interest for the first nine months and the sum of $18,000 is to be paid on 31 March 1995 or earlier depending on availability of cash resources. Mr Lam put to the meeting that Megamix Pty Ltd should have some form of security such as a second charge over the assets. IT WAS RESOLVED to accept the offer of working capital from Megamix Pty Ltd and to have a second charge registered over the assets of S.E.A. Food International Pty Ltd. OVERSEAS IT WAS RESOLVED UNANIMOUSLY that any non-resident Director attending Directors Meeting or any non-resident party representing shareholders will be reimbursed for business class airfares, accommodation and reasonable out of pocket expenses while in Australia on S.E.A. Food International Pty Ltd business. TRAVEL: IT WAS RESOLVED UNANIMOUSLY that Mr Theng Lam receive $5,000 Australian as a fee for his attendance at the first Directors Meeting. BUSINESS The Chairman advised the meeting that the company has agreed to lease premises at Thurecht Parade Scarborough that previously traded as the Scarborough Fish Market on a 5x5x5 lease and that the rental will be equivalent to 13% per annum on the purchase price of the premises together with any further cost of improvements required by the company as a tenant. The first year rent will be increased by the capital C.P.I. until the first option period and then negotiated to a market rent applying at that time." EXPANSION: It is uncontroversial that on or about 18 November 1994 Mr Bostock informed SEA in writing that the issue of shares to his company, Amona Pty Ltd, would not be taken up by the company or by Mr Bostock. The terms of the Deed of Settlement ("the deed") referred to in the minutes of the meeting on 11 October 1994 ("the minutes") are important. The deed is expressed to be between Lake Yale and Megamix, Mr Lam and James Lam, and provides :- "WHEREAS A. An agreement was entered into on 27 June 1994 between Lake Yale Pty Ltd ('Lake Yale') and Messrs James Lam Sew Hon and Lam Theng Pew ('the Lams') whereby Lake Yale agreed to sell 40% of its shareholding in a seafood company called S.E.A. Food International Pty Ltd ('SEA') to the Lams for the consideration of $700,000.00 plus an advance of $300,000.00 towards working capital of SEA; B. A dispute has arisen between Lake Yale and the Lams with respect to the said purchase; C. The parties have met and have reached agreement and desire to record its terms in this Deed. NOW THIS DEED RECORDS: 1. Lake Yale and the Lams (hereinafter referred to as the 'parties') now agree that the following Agreement is now to take effect on the signing hereof of this Deed :- (a) The Lams through Megamix Pty Ltd ('Megamix') will purchase 40% of SEA, such purchase to be a direct allocation of new shares from SEA at a consideration of $700,000.00 by purchasing 700 ordinary $1.00 shares at a premium of $999.00 per share. (b) Lake Yale will purchase an additional 950 ordinary $1.00 shares without premium by way of allocation of new shares from SEA; (c) The funds referred to in (a) and (b) above are to constitute shareholders equity in the company SEA save that the premium paid by Megamix shall be paid into 'a share premium account' of SEA; (d) Megamix will advance the sum of $300,000.00 by way of loan towards the working capital of SEA, such loan to be repaid in the following manner :- (i) $150,000.00 is to be repaid on or before 30 June 1996; (ii) $150.000.00 is to be repaid on or before 30 June 1997; Additionally the parties agree that a second charge shall be placed on the plant and equipment of SEA and that all Directors are to ratify such second charge at an extraordinary Directors Meeting to be held immediately after the execution of this Deed. (e) Mr Lam Theng Pew shall be appointed a Director of SEA and in his absence from Directors Meetings, shall be entitled to appoint an alternate Director at his direction; (f) In view of the fact that Mr Lam Theng Pew is a non-resident Director, his reasonable travelling and hotel expenses shall be reimbursed to him by SEA, and additionally, he shall be paid an initial Directors Meeting fee of $5,000.00 (AUD), with further meeting fees to be discussed at the first meeting of Directors to take place in the ordinary course of business which will be called at a date pre-determined by the Directors of SEA after 11 October 1994; (g) Mr Kevin Bostock will also be appointed a Director of SEA; (h) SEA's accounts shall be subject to a yearly audit with further provision for its Directors to organise further regular audits on a quarterly or half yearly basis; (i) The parties agree that this agreement shall be effective as from 1 July 1994 and that all funds previously paid by the Lams to Lake Yale and to SEA shall be considered for the purposes of this agreement as monies advanced in anticipation of this Deed by Megamix. 2. The said 40% shareholding referred to in paragraph 1(a) above shall be held in the name of Megamix. 3. Upon the execution of this Agreement by the parties, all previous agreements shall come to an end. ....." The newly resolved acrimony between Mr Lam and Mr Teh flared again on 12 October 1994. On that day, Mr Lam attended at Tubbs Street expecting to be handed a cheque for $5,000 on account of director's fees for attending the meeting on 11 October 1994 and to be provided with a business class air ticket or reimbursed for the cost of his travel to and from Australia. Mr Teh was of the opinion, which he expressed to Mr Lam, that Mr Lam was not entitled to be paid fees for attending a directors' meeting on 11 October 1994 because the meeting on that day was a shareholders' meeting. Nor, said Mr Teh, was Mr Lam entitled to be reimbursed for the cost of his travel to and from Australia as he had not travelled for a "company [SEA] purpose". There was also an argument between Mr Teh and Mr Lam as to which of SEA or Lake Yale was to pay to Megamix interest due on the advance of $300,000. On 12 or 13 October 1994, after his meeting with Mr Teh at Tubbs Street, Mr Lam, in company with Mr Bostock, attended the offices of a Mr Anderson (an accountant). Mr Greg Litster, a solicitor, also attended the meeting. It is appropriate to note at this point that Mr Lam's position in these proceedings, reflected in the pleadings and in his evidence-in-chief, given by statement, was that the agreement reached at the meeting on 11 October 1994 that Huxham would grant to SEA a lease of Thurecht Parade was conditional upon Huxham being provided with the financial records of SEA to 30 June 1994 and being satisfied with same and upon the preparation and execution of a written lease on the terms agreed. During the course of Mr Lam's evidence in cross-examination, it quickly became apparent that Mr Lam's position as set out above did not accord with what in fact transpired on 11 October 1994. A consideration of that evidence and the evidence of Mr Bostock, as well as the other evidence, including the terms of the purchase contracts signed by Mr Lam, for Huxham, on 10 October 1994, containing, as they did, terms making the contracts conditional upon a "swap" of premises by SEA and SFM, leads to the following conclusions :- (i) on 11 October 1994, Mr Lam, on behalf of Huxham, agreed to grant a lease of Thurecht Parade to SEA on the terms as recorded in the minutes; (ii) that agreement was not conditional upon the provision by SEA of financial records nor upon the execution of a lease in writing; but it was contemplated by both parties to the agreement that a written lease would be prepared to reflect what had been agreed and would be executed; (iii) after the disagreement with Mr Teh on 12 October 1994, Mr Lam decided that he no longer wished to do business with Mr Teh. Mr Lam went to see his solicitor, on 12 or 13 October 1994, with a view to "getting out" of the agreement to lease. It was suggested to Mr Lam that one way of doing so was to demand from SEA financial records, ostensibly so that Mr Lam and the advisers, on behalf of Huxham, could satisfy themselves that SEA could meet the rental obligations under the lease as agreed; (iv) Mr Lam had been in possession of the 1992 and 1993 financial records of SEA since in or about September 1994 and knew, at least through his accountants in Sydney, that SEA had not been trading profitably. The financial records were requested, with this knowledge, in order that Huxham could refuse to grant the agreed lease on that basis; (v) at or shortly after the meeting on 12 or 13 October 1994, Mr Lam told Mr Bostock that he did not wish to be involved in any venture with Mr Teh and asked Mr Bostock whether it was possible for he (Mr Lam) and Mr Bostock to proceed with the purchase of SFM and Thurecht Parade without SEA and Mr Teh. Mr Bostock told Mr Lam that it was possible, but that Mr Teh still had all the contacts and was very good with respect to sales in the export markets; Mr Bostock gave the following evidence about what occurred after the meeting on 12 or 13 October :- "After the meeting and in the car on the way back Mr Lam said to me that on no account would he enter into any venture with Mr Teh. Mr Lam was aware that I was financially committed to SEA insofar as SEA was financing the refit of my vessel. He said to me 'if it is money you need to break away from Ray Teh, I will finance it'. The matter was not taken any further at that stage." According to Mr Lam, there was no mention in the conversation referred to of refinancing Mr Bostock's trawler. Mr Lam gave some evidence in cross-examination which might be thought to support a finding that he resolved, as early as 6 September 1994, to "destroy the business of SEA", to deprive Mr Teh and SEA of the opportunity to conduct business at and develop Thurecht Parade and to entice Mr Bostock to leave SEA and make available skill and knowledge obtained by Mr Bostock for and on behalf of SEA and that he had no intention at any time of granting a lease of Thurecht Parade to SEA and that his apparent agreement to do so on 11 October 1994 was "just a game". I do not accept that to be the case. The weight of the other evidence strongly suggests that whilst Mr Lam had uncharitable intentions towards Mr Teh in early September 1994, he decided on or about 21 September 1994 to give Mr Teh another chance and to proceed, bona fide, with his participation in the expansion of SEA. The evidence shows that Mr Lam took steps in furtherance of that resolution, not least by agreeing to grant SEA a lease of Thurecht Parade. It was not until after the disagreement with Mr Teh on 12 October 1994 that, in the circumstances set out above, Mr Lam's attitude towards Mr Teh reverted to one of hostility. Robert John Black was at the relevant times the managing director of Plangara Pty Ltd ("Plangara"), the mortgagee in possession of Tubbs Street. In 1993, SEA entered into a lease of Tubbs Street for a period of twelve months. At the expiration of the twelve month period, SEA continued to rent Tubbs Street on a monthly basis. Mr Black's evidence, in respect of which he was not cross-examined, and which I accept, was that Mr Teh knew from the commencement of SEA's tenancy at Tubbs Street, that Mr Black wanted to sell the premises and, in fact, Mr Teh had spoken of purchasing them. Mr Teh contacted Mr Black approximately one month before he left to go overseas (14 October 1994) and told Mr Black of a "possible change of tenant" at Tubbs Street. In the week or fortnight before Mr Teh left Australia, Mr Black had conversations with Mr Bostock and with Mr Bryan of SFM in which the proposal that SEA would move from Tubbs Street to Thurecht Parade and SFM would move from Thurecht Parade to Tubbs Street was discussed. Mr Teh rang Mr Black shortly before he left to go overseas and told him that SEA would be leaving Tubbs Street to go to Thurecht Parade. After speaking to Mr Teh, Mr Black understood that the proposed swap of premises was to take place. He was happy to have SFM as a tenant. It is also apparent that Mr Teh knew from about 11 October 1994 that Huxham's contracts with respect to Thurecht Parade were conditional upon SFM obtaining a lease of Tubbs Street and that the consent of the lessor of Thurecht Parade (the Port Authority) was required in order to allow Huxham to obtain possession of Thurecht Parade. On 13 October 1994, Mr Anderson, the accountant, wrote to SEA on behalf of Huxham requesting the financial records of SEA for the previous three financial years to enable a report to be prepared on SEA's financial position "to be considered for the purposes of entering into [the] lease". Mr Teh left Australia for Singapore, Hong Kong, Taiwan and Japan on 14 October 1997. He remained overseas until 4 November 1994. On or before 17 October 1994, Mr Bostock rang Mr Teh in Hong Kong and told him of the contents of the letter from Mr Anderson of 13 October 1994. Mr Bostock did not tell Mr Teh about the events of 12 or 13 October 1994 involving Mr Lam, apparently because he was "still hoping for a reconciliation [between Mr Teh and Mr Lam] at that time". I am satisfied that a copy of the letter of 13 October 1994 from Mr Anderson was sent by Mr Bostock to Mr Teh by facsimile transmission on 17 October 1994. Mr Teh gave the following evidence about his reaction to receipt of the letter :- "MR DOYLE: When you were told by Mr Bostock about the terms of that letter you knew that there was something that needed to be, that you needed to satisfy Mr Lam about, or his accountants needed to satisfy him about before SEA was assured of the lease?---It didn't cross my mind at all because the lease, the agreement was done, and the agreement was to lease the premises of Thurecht Parade to SEA Food International. I did not have a worry. I trusted everybody, in so far as their [sic] was concern. And when I got this letter I look at it and said they must be after the 1994, of which I explained that we had a problem with the computer, of which Mr Lam was aware of as well. And I have already presented the previous three years' accounts two months prior to that. And, you know, the question of the lease did not come up overnight either, you know, on 13 October. You know, they must have been aware of it for probably the week or two weeks before, because I understood that the intention was to purchase the premises to lease it to SEA Food. ..... And when you were told about the terms of this letter, you knew that his accountants, Clarke and Associates, were to look at the information he had - Mr Lam had - to report upon whether or not your company was financially secure enough to be permitted to take a lease. That is the substance of it?---Yes, if you can take it from there, yes. And that is what you knew - - -?---But I took it that there was no mention of any financials prior to - not granting us - but prior to the arrangement or the consent of SEA Food accepting the lease. All right. Well, let us assume you are right about that?---Yes. When you got this letter on the 13th, you knew that this was something that Mr Lam was imposing - or seeking to impose, anyway - as something as to which he needed to be satisfied before SEA was assured of its lease?---I - I imagine, yes. Okay. You knew that. All right. Well, that is obvious, really, is it not? Now - you have not answered me, but it is obvious, is not it?---Oh, yes. I did say 'yes'. Okay. Now, you did not ring up Mr Black and say, 'Look, there might be hiccup about my moving out,' did you, from Singapore or Hong Kong?---Not from Singapore, Hong Kong, according to the chronological order, no. Okay. Nor did you say that to Mr Bostock. You did not say, 'Look you'd better get on to Mr Black and put a hold on all these things'?---No, not at that time, but later on, I did." On 17 October 1994, Mr Bostock decided to accept what he described in his evidence to be "Mr Lam's offer". It is apparent that Mr Bostock perceived himself to be, or at least in his evidence-in-chief sought to convey that he had been, the recipient of an offer from Mr Lam to participate in the operation of a seafood processing, export and retail business from Thurecht Parade, independently of SEA and Mr Teh. In cross-examination, it emerged that the offer referred to by Mr Bostock was that said by Mr Bostock to have been made by Mr Lam on 12 or 13 October 1994, after the meeting with the accountant and the solicitor. Mr Bostock's evidence as to the reasons for his acceptance of "Mr Lam's offer" was as follows :- "On 17 October 1994 I discussed Mr Lam's offer with my wife. I knew that SEA had to leave the Tubbs Street premises but did not have alternative premises if a lease was not to be granted over the Scarborough Fish Markets. Licensed processing premises are very difficult to obtain and there were none available of which I was aware to which SEA could relocate. It would have taken SEA at least 3 - 6 months to locate new premises, fit them out and apply for the appropriate licenses during which time it would not be able to operate. I therefore considered I did not have a choice but to accept Mr Lam's offer." Mr Bostock wrote to Mr Lam by facsimile transmission on 20 October 1994 :- "After speaking to several people who are or have been associated with Ray Teh, I and my wife Jan have come to the conclusion that we do not wish to be involved with Ray or S.E.A. Food any longer. I have had preliminary discussions with Lee [Bryan of SFM] at Scarborough and I am quite sure we can come to an arrangement whereas he will move to a different premises instead of Tubbs Street. If you still want to go ahead with Scarborough I think we should talk fairly quickly as there are a lot of preparations to be made. I will avoid telling Ray for 1 week which will enable me to gather as much information as we will need to carry on the export side of the business by ourselves. I enclose a copy of the plans for Scarborough for your perusal. Let me know by fax or phone of your decision." It is relevant to note that neither Mr Bostock's communication to Mr Lam nor Mr Lam's response set out below make any reference to an offer by Mr Lam to Mr Bostock in the terms alleged by Mr Bostock or at all. Mr Lam replied by facsimile transmission on the same day :- "I have great pleasure to acknowledge receipt of your facsimile of 20.10.94 and I am glad that after you have spoken to several people who are and have been associated with Ray Teh/SEA Food, you and your wife Jan have come to the conclusion that you both do not wish to be involved with Ray or SEA Food, any longer. With your preliminary discussions with Mr Lee at Scarborough, you are quite sure we can come to an arrangement whereby he can move to a different premises instead of Tubbs Street. Then we can move into Scarborugh [sic] as soon as possible. Yes, we are prepared to go ahead wiyh [sic] Scarborough as you rightly said that there are a lot of preparations to be made. Please gather as much information as we will need to carry on the export side of the business by ourselves. James Lam's wife, Jean will be of assistance to speak the many dilacts [sic] of Taiwan and Hongkong. I also have friends and connections in Hongkong and Taiwan and check on the credentials of would be purchases [sic] of sea food [sic]. If necessary, when the time is correct, we can also get the assistance of Mr Ray Chui [sic]. He personally know [sic] of the very side of Ray Teh expenditure for diamond rings and expensive gifts for his many young girls in Horbat [sic], Melbourne, Taiwan etc. If only Ray's wife knows [sic] ! As I told you that the decision to pull the pin on Ray rests with you and not on me because of the interest of the Lam Family. We welcome your decision to finally break with Ray Teh/SEA Food. Boyd Lam and myself have studied the plans to renovate Scarborough, and with your experience with other similar projects, you have my decision and approval to proceed, bearing in mind, first thing comes first. We are confident that you will do your best endeavour with the Scarborough property, the retail business, the ice business, the diesel fuel oil agency income, the local sales and export business to the best joint venture between the Bostock and Lam Families. In my life, my word is my bond. I have already fax [sic] to Mr Hilton AR Misso to stop the preparation of the sublease of Scarborough Fish Market to Sea Food [sic]. Pleas [sic] now reconfirm with him. As per telephone conversation with you of yesterday's date, Kindly immediately request Mr Mike McFillin to prepare the necessary papers for my son, Mr James Lam to be a director and shareholder of Huxham Pty Ltd and his wife, Jean Gloria French as his alternate. ..." On 25 October 1994, Mr Bostock wrote to Mr Teh, who was in Japan, a handwritten letter of resignation :- "It is with much regret that I resign my position as factory manager and also as a director of S.E.A. Food International. Due to unforeseen circumstances which have arisen in the last 24 hours I feel that I cannot continue in my present role. There is a fair amount of movement with the trawler so I hope to have a sale fairly soon and if that doesn't happen I will be going back to sea." The letter was sent to Mr Teh by an employee of SEA on 25 October 1994. After receiving Mr Bostock's letter, Mr Teh telephoned him from Japan in an attempt to dissuade him from resigning. Diary notes made by Mr Teh at the time record that :- "... It was very apparent that Kevin [Bostock] had been influenced by Lam's solicitor that SEA will not get the lease & be sued. Kevin had legal advice from - his own solicitor this afternoon that as an employee of SEA Food he was not going to be in a conflict of interest re his consulting work for Lam & working for SEA as I would have directed him to keep proceeding working on the project ..." Mr Teh's diary notes record that he telephoned Mr Lam in the evening (Japan time) before again telephoning Mr Bostock :- " ... Lam said that he had not instructed his solicitor not to proceed with the lease - (adding) YET! Lam said the building was going - ahead as planned & then complained of his $5000 [indecipherable] he wasn't paid in Brisbane for attending the shareholders' meeting. I then asked him 'Is SEA Food going to get the lease or not' to which Lam replied 'wait til you get back & see your Acct' and then hung up on me. I telephoned Kevin back for the 3rd time then & told him that Lam denied Kevin's allegations. Kevin said 'I would not believe that Lam would lie like that'. I then told Kevin to reconsider his resignation from SEA Food as Production Mngr & come back to me on Wed." On 27 October 1994, Mr Teh left Japan and travelled to Taiwan. Mr Teh's diary notes record the following :- " ... Lori [an employee of SEA] told me that Steve (Scarborough) came in and asked if everything was ok to move in next Tuesday as Kevin & Ray had a tiff. I called Kevin & asked him what was all this about? (I have had nothing to do with leases or relet of Tubbs St at all). Kevin said settlement would be at least 2 weeks away & will speak to Steve. I told Kevin that if SEA did not have anywhere to move I will transfer our equipt to Pine St & wind down the company. Kevin said that 'Seafood Traders' was available & I said it was no good without him. Lori spoke to Rob Black (landlord) & then I called Rob who told me that he had advice he needed to give 'SEA Food' 30 days notice anyhow & a lease for Scarborough was in the pipeline. I then asked Rob not to do anything until I got back after the 5th of November & he could get in touch with me via here. Rob gave me an undertaking that he would not proceed with the lease until he first spoke to me ..." Mr Black's evidence, which I accept, was that Mr Teh contacted him from Taipei in late October 1994 and told him that SEA was having problems with the possible change over to Thurecht Parade and may be left without premises "because of a deterioration in his relationship with his investors." Mr Teh asked Mr Black not to enter into any formal lease with SFM until he returned to Australia. Mr Black told Mr Teh that he had already verbally agreed to lease Tubbs Street to SFM and had entered into a "gentleman's agreement" to that effect, but he gave the undertaking sought. On 28 October 1994, Mr Lam deposited (or caused to be deposited) $50,000 into Mr Bostock's account. According to Mr Bostock he had told Mr Lam that he needed that sum to complete the refit of his trawler. Mr Black for Plangara, wrote to SEA a letter dated 31 October 1994 giving SEA notice to vacate Tubbs Street on or before 30 November 1994. Mr Black said that the notice was sent to place Plangara in a position to quickly enter into a lease with SFM if negotiations with SEA were not fruitful. According to Mr Black, the issue of SEA entering into a formal lease of Tubbs Street, after the expiration of the initial twelve month lease, had been the subject of a "friendly personal struggle" between he and Mr Teh, with Mr Teh's position being that SEA was not interested in a formal agreement. After Mr Teh's return to Australia on 4 November 1994, Mr Teh and Mr Black discussed Tubbs Street. Mr Teh indicated that SEA was prepared to enter into a formal lease of the premises. In the event, Mr Black for Plangara decided to enter into a lease with SFM primarily because "Plangara had already made a gentleman's commitment to leasing the premises to [SFM]" and, to a minor degree, because SEA had not been prepared to sign a lease "until the very last minute". Interestingly, Mr Black also gave evidence that the arrangements between Plangara and SFM "firmed up" in the week and a half to two weeks after Mr Teh's telephone call to Mr Black prior to departing overseas. Mr Black said that had Mr Teh contacted him during that period he "would not have felt so bound to proceed with [SFM]" and had Mr Teh asked for a lease of Tubbs Street in the week or so following that telephone call, Mr Black would have given him a lease. On 4 November 1994, SEA's solicitors wrote to Trilby Misso, who then acted on behalf of Huxham in relation to Thurecht Parade, asking that the draft lease, in accordance with the agreement reached on 11 October 1994, be forwarded to them. Trilby Misso responded by letter dated 7 November 1994 stating :- "... Our client is not aware of any agreement reached. In any event, our client advises that it is not proceeding with any lease proposed by you in your letter under reference." SEA was forced to vacate Tubbs Street and its operations were moved to premises at 6 Pine Street, Clontarf ("Pine Street"), which were, according to Mr Teh, not entirely suitable for SEA's operations. These proceedings were commenced by application and statement of claim filed on 22 December 1994. Renovations at Thurecht Parade, the nature and extent of which will be discussed later in these reasons, were commenced on or about 13 October 1994 and were completed on 30 November 1994. Mr Bostock was given 100,000 shares in Huxham, a ten percent shareholding, and was made a director. He became the General Manager of Huxham trading as Scarborough Seafoods. He operated the business along the same lines as he was operating SEA, and he said, did everything including the export side of the business and retail to the public. Mr Bostock resigned as an employee and as a director of Huxham on 7 March 1995. THE APPLICANT'S CLAIM Introduction There is no dispute that, at all times relevant to the applicant's claim and the cross-claim, Mr Lam was the "directing mind and will" of Huxham and Megamix and that Mr Teh was similarly so with respect to SEA and Lake Yale (Re Rossfield Group Operations and Morton Holdings (ACT) Pty Limited [1981] Qd R 372 at 377; El Ajou v Dollar Land Holdings Plc [1994] 2 All ER 685 at 695 - 696, 705 - 706). Contract The first element of SEA's case against Lam, Huxham and Megamix (collectively, the respondents) is a claim for damages against them for breach of the agreement said to have been concluded on 11 October 1994 to grant a lease of Thurecht Parade to SEA on the terms set out in the minutes. I should record that, apart from a prayer for damages against Huxham for breach of contract appearing in paragraph 3 of the application, there is no reference in SEA's pleading to a breach of any contract by Lam, Huxham or Megamix being causative of any loss or damage to SEA. Rather, the amended statement of claim pleads :- (a) that Huxham and/or Megamix agreed to lease Thurecht Parade to SEA on 11 October 1994 (paragraph 2); (b) in reliance upon the agreement, SEA terminated its "lease" of Tubbs Street (paragraph 4); (c) Huxham or Megamix entered into the agreement with the knowledge and intention that SEA would, in consequence, terminate its "lease" of Tubbs Street (paragraph 5); (d) subsequent to 11 October 1994, Huxham and/or Megamix refused to grant the lease to SEA (paragraph 6); (e) as a consequence of SEA terminating its lease of Tubbs Street, Plangara has removed SEA from Tubbs Street and re-let the premises (paragraph 7); and (f) "[i]n the premises [Huxham and/or Megamix] is estopped from denying the existence of a binding lease over [Thurecht Parade] in the terms pleaded in paragraph 3 herein." (paragraph 8). The amended statement of claim then goes on to plead the other causes of action relied upon without reference to breach of contract. A claim in damages for breach of contract was not opened by Mr Morris QC for SEA, as I understood the opening. However, no point was taken by Mr Doyle SC for the respondents, evidence was adduced going to issues of contract and, indeed, Mr Doyle's written submissions refer to SEA's case as being pleaded on four bases, including breach of contract. The respondents' further amended defence and cross-claim, and the earlier versions of it, purports to respond to a pleaded case of breach of contract. The parties have deliberately chosen a basis "different from that disclosed in the [amended statement of claim] as the basis for the determination of their respective rights and liabilities" and I ought give effect to that deliberate choice (Cummings v Lewis (1993) 41 FCR 559 at 578 - 579). The respondents advanced three reasons why SEA's case in contract was not sustainable :- (i) there was no concluded agreement reached on 11 October 1994. The parties intended that the arrangement be reduced to writing and signed before any binding agreement came into effect (ie a case falling within the third category identified in Masters v Cameron (1954) 91 CLR 353 at 360); (ii) the agreement identified by SEA is unenforceable as not being a concluded bargain as to essential terms or as uncertain; and (iii) the agreement is unenforceable by operation of s 59 of the Property Law Act 1974 (Qld) ("the PLA"). Masters v Cameron The Masters v Cameron point may be dealt with shortly. The findings I have made as to what occurred on 11 October 1994, and subsequently, lead inevitably to the conclusion that Huxham and SEA, on 11 October 1994, "[had] reached finality in arranging all the terms of their bargain and intend[ed] to be immediately bound to the performance of those terms, but at the same time propose[d] to have the terms restated in a form which [would] be fuller or more precise but not different in effect." (Masters v Cameron at 360; see also South Coast Oils (Qld and NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680 at 699). The matters raised by Mr Doyle for the respondents as pointing to a lack of intention on 11 October 1994 to be bound to a lease in the terms alleged, including that SFM had not yet signed the contracts, that Huxham, in order to obtain a lease of Thurecht Parade, required the consent of the head lessor (which had not been obtained) and that subsequent conduct of the parties negatived any such intention, do not, in my view, require any different conclusion. That Huxham did not have a present entitlement to or a contract for a lease of Thurecht Parade on 11 October 1994 is not something which would prevent it entering into a binding agreement to lease those premises to SEA on that day, albeit one which might require the intervention of equity to enforce (see Riches v Hogben [1986] 1 Qd R 315 at 342 per Williams J) or the implication of further terms (Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347). Nor can one, in light of the evidence as to what occurred on 12 or 13 October 1994, look to the subsequent conduct of the parties as providing any evidence of their respective intentions on 11 October 1994. Incomplete Agreement The respondents contended (paragraph 6(d) of the further amended defence and cross-claim) that the alleged agreement of 11 October 1994 was "incomplete, uncertain and unenforceable" because no commencement date for the lease was agreed or ascertainable and there was no agreement as to the amount to be spent on improvements and therefore, no means by which the rent payable could be ascertained. It will be recalled that the minutes recorded that the rental was to be "equivalent to 13% per annum on the purchase price of the premises together with any further cost of improvements required by the company as tenant." It is not in dispute that, for a valid agreement for lease :- "... it is essential that it should appear, either in express terms or by reference to some writing which would make it certain or by reasonable inference from the language used, on what day the term is to commence." (Harvey v Pratt [1965] 1 WLR 1025 at 1026 per Lord Denning MR). Mr Morris for SEA contended that there was a reasonable inference from the language used and from what he called the "matrix of facts in which the parties were negotiating" that the lease was to commence once vacant possession of Thurecht Parade was obtained by Huxham. Mr Morris submitted that the present case was analogous to South Coast Oils v Look. The minutes are neutral as to when the lease referred to would commence. Mr Lam was asked about the commencement date of the lease in cross-examination :- "MR MORRIS QC: Yes. Let us talk about the meeting for the moment. We will come to what happened after the meeting. All right. At the meeting, you have told me you agreed to give a lease, it was going to be for five years plus options, it was going to be for a rent which was 13 per cent of the cost plus the cost of improvements, and it was going to start, was not it, from the time when you became the owner of the Thurecht Street premises?---I can't remember that one. You cannot remember that one? All right. Well, you knew that there was already someone in the Thurecht Street premises carrying on a business there, did not you?---Yes, sir. All right. And they were going to move to take over the Tubbs Street premises?---That was all - I left everything in the hands of Kevin Bostock. But you were aware of that, were not you, that the people who were in Thurecht Street were going to move to Tubbs Street?---From what Kevin have told me. Yes. All right. Well, from what Kevin told you you were aware of that?---Yes. All right. And so on the day when you became owner of Thurecht Street you would have an empty shop and an empty business?---Yes. All right. And when you were discussing these matters with Mr Teh - discussing giving him a lease for five years with extensions and so on - you saw it that the five years would start from the date you became the owner of that building?---As I say, subject to his ability to pay as a tenant." When the above passage is read in the context of the terms of the contracts signed by Mr Lam for Huxham on 10 October 1994 and the parties' knowledge of those terms, it is inconceivable that it was agreed on 11 October 1994 that the lease would commence on any date earlier than that upon which Huxham obtained vacant possession of Thurecht Parade. I am also prepared to accept that it was intended by the parties and agreed that SEA would move into Thurecht Parade as soon as Huxham obtained vacant possession. Indeed, the terms of the contracts signed by Mr Lam for Huxham, of which, as I have said, all relevant persons were aware on 11 October 1994 compel agreement in those terms unless it was contemplated that SEA would cease to trade or would trade from some other premises while the planned renovations and/or improvements were completed. There is no evidence to that effect. I am satisfied that the inference ought to be drawn that the parties intended and agreed that the lease would commence on the date upon which Huxham obtained vacant possession of Thurecht Parade. I reject the submission made by counsel for the respondents that to draw such an inference, in the absence of direct evidence as to what was said, is to decide the case other than on the pleadings. The question of the improvements, and therefore the rent, is problematic from SEA's point of view. The resolution of it requires some further reference to the evidence. It is common ground that it was intended that improvements would be carried out at Thurecht Parade and it will be recalled that the rent to be paid by SEA was to be thirteen percent per annum "on the purchase price of the premises together with any further cost of improvements required by the company as tenant." SEA's case was run on that basis. It would not have been possible for SEA to conduct processing operations from Thurecht Parade without improvements or renovations being undertaken. As Mr Bostock conceded in his evidence, the premises at Thurecht Parade at the time of acquisition by Huxham had almost no processing area and were too small for SEA to run its processing business. However, the nature, extent and likely cost of the improvements had not been determined as at 11 October 1994. The first set of plans, drawn by an architect, for the improvements to Thurecht Parade were not received by Mr Bostock until on or after 25 October 1994. Those plans envisaged a premises similar to those at Morgan's (the next door business, to which I will return in more detail later in these reasons) and were never costed. Mr Bostock estimated that the cost would have been considerably more than $500,000. Mr Bostock himself drew some plans in or around mid-November 1994 which were substantially more modest than those drawn by the architect. Mr Bostock's plans were never costed, but he estimated the cost of implementing them to be about $500,000. The improvements actually carried out at Thurecht Parade, which were more modest again, cost approximately $300,000. I should mention that the plans for Thurecht Parade apparently sent by Mr Bostock to Mr Lam with the facsimile transmission of 20 October 1994 and referred to by Mr Lam in his response, were not directly referred to in the evidence of Mr Lam or Mr Bostock. There is some suggestion, on a close reading of Mr Bostock's evidence in cross-examination and re-examination that the plans forwarded to Mr Lam under cover of the facsimile of 20 October 1994 were earlier or preliminary versions of the plans finally completed by the architect on 25 October 1994. However, the issue was not further pursued in evidence or in argument. Whilst it may be true to say that the nature and extent of the proposed improvements had been discussed prior to 11 October 1994, and it may even be true that preliminary plans had been done, there were no plans or costings in existence on 11 October 1994 from which it was possible to determine the nature, extent and cost of the improvements with any degree of certainty. The reference in Mr Bostock's evidence to an amount of $600,000 being referred to by Mr Lam on 21 September 1994 and the reference to that amount in Mr Lam's diary note of 21 September 1994 are not sufficient. There is no evidence that Mr Teh was ever aware of the amount of $600,000 being contemplated as the cost of possible improvements to Thurecht Parade. More importantly, SEA did not plead or argue that Huxham was obliged to spend $600,000 on improving the premises at Thurecht Parade. I find that on 11 October 1994 it was not possible to determine with any certainty or at all, the nature, extent and, most importantly, the cost of the proposed improvements to Thurecht Parade by reference to any agreement reached in respect of those matters by the parties or otherwise. The obligation of Huxham to have improvements carried out at its expense was contained in the minutes. The improvements and their cost were, in accordance with the agreement as recorded in the minutes, to be determined by reference to what was "required by [SEA] as a tenant". The nature and extent of the works to be undertaken by Huxham and at their cost were limited only by the requirements of SEA. An agreement in those terms, leaving as it does an essential term to be determined by one of the parties to it, without reference to some external standard or criteria making it capable of objective determination is not a binding agreement and will not be enforced by the Court. (Godecke v Kirwan (1973) 129 CLR 629 at 646 - 647; Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 359 - 361; Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950 at 50,380 - 50,381). It was submitted by counsel for SEA that a concluded agreement could be reached and was reached without the extent and cost of the improvements being determined or determinable. Counsel's submission was put on the basis that the extent and cost of the improvements were to be agreed between SEA and Huxham and that, if the parties were unable to reach agreement, there would be a complete and valid agreement with respect to the unimproved premises. The difficulty with counsel's submission is that the agreement as pleaded and as recorded in the minutes left the nature and extent of the improvements to be determined by SEA. The proceedings were not run on the basis, nor was there any evidence to the effect, that the improvements were to be as agreed between Huxham and SEA. Further, and perhaps more importantly, SEA's case with respect to the damages said to flow from the wrongful conduct of the respondents was predicated on SEA being entitled to a lease of improved premises at Thurecht Parade. The evidence advanced by SEA on this issue proceeded on that basis. As I have said, SEA could not have carried on its processing business at Thurecht Parade without improvements of a not insubstantial nature. SEA's case is not advanced by a finding that there was a concluded agreement with respect to unimproved premises. Nor do the pleadings (and the way the case was run) or the evidence permit such a finding. Counsel's submission must be rejected. The obligation of Huxham to carry out improvements at its cost, in the form in which it was agreed, is important for two reasons. Firstly, in the terms of the agreement, it was not a severable term; it was an essential term because without the improvements to be carried out, SEA could not conduct its processing operations at Thurecht Parade. Further, SEA was relying upon Huxham to pay for the improvements in return for a commensurate increase in rent at thirteen percent per annum of the cost of the improvements. Secondly, without the cost of the improvements being ascertained, no amount for rent can be calculated. I find, therefore, that the agreement made on 11 October 1994 between SEA and Huxham for a lease of Thurecht Parade was not a concluded bargain and is unenforceable. Statute of Frauds Having regard to the finding made above, it is strictly unnecessary to decide the Statute of Frauds issue. However, the issue was fully ventilated by the parties and I will express my view upon it. The respondents' case was that if an otherwise enforceable agreement was reached on 11 October 1994, it was unenforceable by the operation of s 59 of the PLA, which provides :- "No action may be brought upon any contract for the sale or other disposition of land or any interest in land unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised." It was submitted by counsel for the respondents, correctly in my view, that s 59 of the PLA applied notwithstanding that Huxham did not have an interest in the relevant land at the time of the agreement (Riches v Hogben at 318 - 319). Counsel for SEA relied upon the minutes as the relevant "memorandum or note" for the purposes of s 59. The minutes, it was submitted, recorded all the essential terms of the agreement and were prepared with Mr Lam's actual authority. Counsel further submitted that the inclusion of Mr Lam's name in the minutes (as revised) constituted a sufficient "signature" for the purposes of s 59. In this respect, counsel relied upon the so-called "authenticated signature fiction" considered by the High Court in Pirie v Saunders (1960) 104 CLR 149. The "authenticated signature fiction" does not, in my view, assist SEA in the circumstances of the instant case. The authorities from which the principle is derived, make it clear that the principle will only have an application where it is intended by each party to the contract that the memorandum or note relied upon "should be the final written record of the contract" (Leeman v Stocks [1951] Ch 941 at 949. See also Farrelly v Hircock (No 1) [1971] Qd R 341 at 356 - 357; Sturt v McInnes [1974] 1 NZLR 729 at 732 - 734; Neill v Hewens (1953) 89 CLR 1 at 13 - 14; Pirie v Saunders at 155 - 156). It is not disputed that Mr Teh for SEA and Mr Lam for Huxham, on 11 October 1994, intended that the agreement reached by them on that day was to be later embodied in a formal document to be signed by each of them on behalf of their respective companies. Mr Lam had engaged solicitors to act on behalf of Huxham with respect to the preparation of a lease of Thurecht Parade and, in his facsimile of 20 October 1994, Mr Lam asked Mr Bostock to instruct those solicitors to stop preparation of the lease to SEA. The letter from SEA's solicitors to Huxham's solicitors on 4 November 1994 requesting that the draft lease, in accordance with the agreement reached on 11 October 1994, be forwarded to them, confirms to my mind what is clear in any event from the undisputed evidence, namely, that the minutes were not intended by the parties to be the final written record of the agreement reached on that day. In those circumstances, I am unable to conclude that the requirements of s 59 of the PLA have been satisfied. The "authenticated signature fiction" has no work to do. The agreement reached between SEA and Huxham on 11 October 1994, if otherwise enforceable, is rendered unenforceable by operation of s 59. SEA's claim in contract therefore fails. I do not propose to deal with the question of what damages SEA would have been entitled to for breach of contract. SEA, in its claim for equitable compensation, formulated its loss in terms of damages recoverable for breach of the agreement to lease. Consequently, to state here the criticism I have of the damages claim as formulated would be repetitive of the views I express later in these reasons in respect of the claim for equitable compensation. Promissory estoppel SEA's alternative claim is based upon promissory estoppel of the nature considered by the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. The principal attack on SEA's estoppel case focused upon "reliance" and "detriment" as those words are understood in the authorities. As to reliance, it was submitted that Mr Teh, for SEA, acted prematurely in anticipation of the promise of a lease, to bring SEA's tenancy at Tubbs Street to an end when he contacted Mr Black approximately one month before he (Mr Teh) went overseas on 14 October 1994 and told him of a possible change of tenant at Tubbs Street and, it was submitted, Mr Teh acted hastily before the lease had been confirmed in a written agreement when he told Mr Black in the period between 11 and 14 October 1994 that SEA would be leaving Tubbs Street. Finally, as to reliance, it was submitted that SEA had a chance to take steps to remain at Tubbs Street when on or about 17 October 1994, and thereafter, it became or was aware that Huxham did not intend to grant the agreed lease and did not take up that chance with the consequence that the detriment suffered by SEA, it was submitted, was not suffered in reliance upon any conduct of Huxham. As to detriment, it was submitted that the detriment pleaded (the termination of SEA's tenancy at Tubbs Street) was not a financial detriment having regard to the trading results obtained by SEA in 1994 compared with those obtained by SEA in 1995 and 1996 from Pine Street. The relevant detriment, it was submitted, was not the loss of a chance to carry on business at Thurecht Parade but was the "loss of the insignificant value of a business which has certainty of tenure of only 30 days." Further, it was submitted by the respondents that no estoppel would arise where the "agreement" relied upon is void for uncertainty. Counsel for SEA submitted that the essential elements of the plea of equitable estoppel are found in the judgment of Brennan J in Waltons Stores where his Honour said (at 428 - 429) :- "In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise." Argument proceeded before me on that basis. Of significance in the instant case is the relief to which SEA would be entitled should its plea succeed, and, the relationship between that relief and the detriment suffered in reliance on the assumption or expectation. In Waltons Stores, Brennan J said (at 423) :- "The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon." In The Commonwealth v Verwayen (1990) 170 CLR 394, Mason CJ said (at 412) :- "It follows that, as a matter of principle and authority, equitable estoppel will permit a court to do what is required in order to avoid detriment to the party who has relied on the assumption induced by the party estopped, but no more. In appropriate cases, that will require that the party estopped be held to the assumption created, even if that means the effective enforcement of a voluntary promise." Mason CJ, in the context of advocating the acceptance of "one overarching doctrine of estoppel", continued (at 413) :- "... The result is that it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption." In my view, the "minimum equity" concept introduced by Scarman LJ in Crabb v Arun District Council [1976] Ch 179 at 192 - 193, 198 - 199 and adopted by Brennan J and Mason CJ in the passages quoted, is to be accepted as accurately stating the law in this country. That is, the court, in granting relief based on equitable estoppel, will grant such relief as will satisfy the equity raised against the party estopped (or as will avoid the detriment to the party who relied on the relevant assumption or expectation) and no more, the object of the remedy being to prevent unconscionable conduct on the part of the party estopped. A representor will not be held to the assumption or expectation created unless the "minimum equity" requires it (see generally on the "minimum equity" principle: Waltons Stores at 404 - 405 per Mason CJ and Wilson J; 419, 423, 427 per Brennan J; Verwayen at 412 - 413 per Mason CJ; 429 per Brennan J; 441 - 442 per Deane J; 454 per Dawson J; 475 - 476 per Toohey J; 487 per Gaudron J; 500 - 501 per McHugh J). There can be no doubt on the facts as I have found them and the inferences I have drawn from those facts, that on 11 October 1994 Huxham, by Mr Lam, induced or encouraged in SEA, by Mr Teh, an expectation that Huxham would, as agreed, grant a lease of Thurecht Parade to SEA on the terms as recorded in the minutes. It is clear on the evidence that on 11 October 1994 and for a period thereafter, SEA, by Mr Teh, expected that such a lease would be granted because an agreement for that lease had been reached. A conclusion that that expectation was induced in SEA by Huxham is inescapable in the circumstances. The difficulty in this case relates to reliance and detriment as those words are to be understood in the context of the equitable estoppel. I should say that, in my view, the evidence supports no other conclusion than that Mr Lam, for Huxham, intended that SEA should rely upon the expectation engendered by the agreement reached on 11 October 1994. Having decided, on 12 or 13 October 1994 not to proceed with the agreement, Mr Lam took no steps until 4 November 1994 to disabuse SEA of the notion that a lease had been agreed and would be granted. Mr Lam did not on 25 October 1994, when Mr Teh asked him directly whether SEA was to be granted the lease, disclose the true situation. Mr Lam's conduct during the period after 11 October 1994 must be viewed in the context of his knowledge that Huxham's contracts with respect to Thurecht Parade were conditional upon SFM obtaining a lease of Tubbs Street and his conduct in causing those contracts to be completed. At the very least, Mr Lam, knowing that reliance by SEA on the 11 October 1994 could cause detriment to SEA, failed to deny to SEA the correctness of the expectation upon which SEA was proceeding (Waltons Stores at 429). The question then to be determined is whether SEA acted or abstained from acting in reliance on the expectation that the agreed lease would be granted. The respondents' submissions on this issue, as I understand them, direct attention to the time at which it could properly be said that Mr Teh had notice that Huxham was denying the correctness of the expectation that a lease would be granted so that thereafter Mr Teh could not be said to be acting or refraining from taking action in reliance on the expectation. The respondents, in part, place reliance on the position of Mr Bostock as a director of SEA and the knowledge he acquired on 12 or 13 October 1994 as to Mr Lam's intentions. I reject the submission that Mr Teh's conduct in contacting Mr Black in September 1994 and telling him of a possible change of premises for SEA had any part to play in causing the detriment complained of. The evidence goes no further than that Mr Teh told Mr Black about a "possible" change. There is no evidence that Mr Black acted upon this conversation. Indeed, the evidence is that Mr Black would have granted a lease of Tubbs Street to SEA up until about 21 October 1994. I do not accept that Mr Teh's conduct on this occasion had any part to play in the detriment complained of. Similarly, I do not accept that SEA should be fixed with the knowledge of Mr Bostock, acquired on 12 or 13 October 1994, that Mr Lam did not intend to cause Huxham to grant the lease to SEA. The evidence strongly suggests that from 12 or 13 October 1994, Mr Bostock had abandoned the interests of SEA and was acting from that time in the interests of Huxham and Mr Lam or at the very least, in his own interests. It is inconceivable that, if he was still acting for SEA on 12 or 13 October 1994, Mr Bostock would not have immediately informed Mr Teh of Mr Lam's position or taken some other step consistent with SEA's interests. Mr Bostock said and did nothing. His explanation in cross-examination that he was still hoping for a "reconciliation" between Mr Lam and Mr Teh at this point is disingenuous. Mr Bostock's letter of resignation did not make mention of his involvement with Huxham, nor of Mr Lam's position with respect to the lease. Mr Bostock did not tell Mr Teh the true position, it seems, until 25 October 1994. In those circumstances, it is not appropriate to treat Mr Bostock's knowledge on or after 12 or 13 October 1994 as knowledge of SEA. Nor is it appropriate to ascribe to SEA, via Mr Bostock, an opportunity to take steps to secure SEA's position at Tubbs Street and avoid the detriment complained of. Finally on the issue of reliance, I reject the submission that any detriment suffered by SEA was caused by Mr Teh's failure to take action to preserve SEA's position at Tubbs Street upon becoming aware of the contents of Mr Anderson's letter of 13 October 1994 (ie on 17 October 1994). It will be recalled that Mr Black's evidence, which I accepted, was that he would have given SEA a formal lease of Tubbs Street had Mr Teh asked for one on or prior to 21 October 1994. It was submitted therefore that as Huxham's denial of the correctness of the expectation that a lease would be granted was communicated to Mr Teh on 17 October 1994, Mr Teh's failure to secure SEA's position at Tubbs Street (which he could have done up to 21 October 1994) was not a failure to act in reliance upon an expectation induced in him by Huxham and could not found an equitable estoppel in the terms alleged. I am not satisfied that Mr Anderson's letter of 13 October 1994 was sufficient to operate as a denial by Huxham of the correctness of the expectation it had induced in Mr Teh that the agreed lease would be granted. The letter was, on its face, and having regard to what had been agreed merely two days earlier, ambiguous. Although Mr Teh on receipt of the letter may have appreciated that Huxham required the 1994 financial records of SEA and to be satisfied as to the contents of them before the formal lease agreement was executed, there was nothing in the letter, or the context in which it was sent, which would have caused, or did cause, Mr Teh to believe other than that, as agreed, a lease would be granted. Mr Teh's diary notes indicate that as late as 25 October 1994, Mr Lam had not told Mr Teh, in terms, that his expectation that a lease would be granted was incorrect. It was not until Mr Teh's conversation with Mr Bostock on 25 October 1994, at the earliest, that Mr Teh realised or should have realised that his expectation was unfounded. By that time, it was too late for Mr Teh to take any action to protect SEA's position at Tubbs Street. Mr Black had already made the "gentleman's" commitment to SFM, which he subsequently felt bound to honour. The detriment complained of could not have been avoided. For an equity created by estoppel to arise against Huxham, it is necessary for SEA to point to some detriment occasioned to it by its reliance upon the expectation induced in it by Huxham such that the jurisdiction of the Court to frame appropriate relief to avoid that detriment is invoked. The detriment relied upon by SEA was the termination of its tenancy at Tubbs Street which, I have found, was brought about by SEA's reliance on the expectation induced in it by Huxham that a lease as agreed on 11 October 1994 would be granted. The question is whether the termination of SEA's monthly tenancy at Tubbs Street is a relevant or sufficient detriment to create an equitable estoppel. I have concluded that it is not. I have done so by reference to the evidence that there was little, if any, actual financial detriment occasioned to SEA by its ceasing to operate from Tubbs Street. In 1994 SEA had a trading loss of $297,510 compared with a loss of $299,483 in 1995, the substantial part of which year was spent operating from Pine Street, and a profit of $25,107 for the seven months to 31 January 1996. There is no evidence before me as to what SEA would have achieved had it remained at Tubbs Street. Counsel for SEA conceded that, in relation to SEA's case based on s 52 of the TPA, SEA did not suffer any significant loss calculated by reference to a comparison between SEA's actual position and the position it would have been in had it not lost the opportunity to continue to trade from Tubbs Street. So much is clear in any event from a comparison between SEA's trading results from Tubbs Street and its trading results from Pine Street and Murrarie, where it traded after leaving Tubbs Street. Similarly, there is no evidence that SEA suffered any financial detriment referrable directly to the relocation of its premises to Pine Street. Nor is there any evidence that SEA suffered detriment of a non-financial nature of the kind considered by the High Court in Verwayen by the non-fulfilment of the expectation that a lease would be granted. There being no detriment suffered by SEA caused by (in the relevant sense) the non-fulfilment of the expectation, there can be no occasion for an equity to arise against Huxham. If I am wrong in concluding that there was no detriment suffered by SEA, any detriment would, at the most, be the financial detriment occasioned by depriving SEA of the opportunity to continue to operate from Tubbs Street, which has been correctly conceded to be insignificant. It would, bearing in mind the "minimum equity" concept discussed earlier, be wholly inequitable to hold Huxham to the expectation and to award to SEA damages for breach of the agreement of 11 October 1994 (if that course be possible in any event in light of my conclusion that the agreement was uncertain and unenforceable). In the circumstances of this case, the relief required to satisfy the minimum equity would be, assuming detriment to be proved, an award of compensation equal to the amount of the proved detriment. There is a further reason why SEA's estoppel case fails. SEA submitted in its written submission "that the respondents were estopped from denying an enforceable agreement to grant a lease of the Thurecht Parade property to SEA in accordance with the oral agreement made at the meeting on 11 October 1994." Where the "agreement" in respect of which it is sought to raise the estoppel is illusory because it is unenforceable for want of a vital term, no estoppel will arise because there is no utility flowing from such an estoppel (Austotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582 at 584, 602). To obtain any relief by the application of the equitable doctrine of estoppel, SEA was required to establish the creation of an equity in its favour for the Court to intervene to make the "agreement" a certain agreement by providing any necessary additional term and to estop Huxham from denying that it was bound by such an agreement (Austotel Pty Ltd v Franklins Self Service Pty Lt at 584 - 585, 615 - 616, 619). SEA did not seek to advance a case whereby an equity was created in its favour such that the extent of the improvements, their cost and their consequences to the calculation of the rent payable were matters to be fixed by the Court to define an agreement certain to which Huxham was estopped from denying it as bound. SEA's case based on equitable estoppel fails. Misleading or deceptive conduct As I have indicated, counsel for SEA conceded that the loss or damage suffered by SEA by reason of the alleged contravention of s 52 of the TPA would not be significant. However, SEA did not abandon its claim under the TPA and it is necessary to deal with it. The case sought to be made out by SEA was that, on 11 October 1994, Huxham represented to SEA that Huxham would grant to SEA a lease of Thurecht Parade on the terms recorded in the minutes (and particularised in paragraph 3 of the amended statement of claim). The making of that representation, it was said, contravened s 52 of the TPA because at the time of making it, Huxham did not intend to grant a lease of Thurecht Parade to SEA. SEA suffered loss and damage by reason of that contravention and was entitled to an order for damages pursuant to s 82 of the TPA. Counsel for SEA relied on a passage in the evidence given by Mr Lam in cross-examination to which I have earlier referred. I have found that that evidence ought not be accepted. I have also found that, on 11 October 1994, Mr Lam intended that Huxham would grant and agreed on behalf of Huxham to grant, a lease of Thurecht Parade to SEA but that he changed his mind on 12 or 13 October 1994 after the disagreement with Mr Teh. SEA's case as pleaded and argued, whether relying upon a positive finding of no intention, or upon s 51A, fails at the outset. The representation, at the time it was made, was not misleading or deceptive within the meaning of s 52 of the TPA. I will note lest it be suggested otherwise, that it was never part of SEA's case, as pleaded and argued, that Huxham contravened s 52 of the TPA by remaining silent after 12 October 1994 when it was resolved by Huxham not to grant the lease to SEA, in circumstances where it was misleading or deceptive or likely to mislead or deceive to do so. I will also note that the approach adopted by counsel for SEA in relation to the likely damages to which SEA would have been entitled had its TPA claim been made out was not, in my view, the only approach to that question. It was open to SEA to seek to show that the loss and damage suffered by it "by" conduct which contravened s 52 of the TPA, was the loss of an opportunity to operate the proposed business from Thurecht Parade (see Sellars v Adelaide Petroleum NL (1994) 179 CLR 332). The criticisms I have in relation to the formulation of SEA's claim for equitable compensation would apply equally if that was what had been pleaded and argued. Breach of Fiduciary Duty It was pleaded that Mr Lam, as a director of SEA, owed fiduciary duties to SEA to act in its best interest and not to use his position as a director to gain an advantage for himself, whether directly or indirectly, or to cause detriment to SEA (amended statement of claim paragraphs 15(a), 15(e)). Breach of those duties was pleaded as follows :- "16. Subsequent to 11 October 1994 the first respondent procured and conspired with Kevin Bostock for Mr Bostock to cease acting as operation/production manager of the applicant and to act as a manager of the second respondent in competition with the applicant. ..... 18. Further, in refusing to cause the second respondent to enter into a lease of the Scarborough premises in favour of the applicant, the first respondent acted in breach of the duty pleaded in paragraph 15 herein." The relief sought in consequence of the alleged breaches of fiduciary duty was equitable compensation for the loss of the opportunity to operate a business from Thurecht Parade, relying upon Warman International Ltd v Dwyer (1995) 182 CLR 544, rather than an account of profits. SEA expressly eschewed reliance upon the statutory duties provided for in the Law and the remedies provided for breach thereof. The alleged breach of duty in Mr Lam enticing Mr Bostock to leave SEA and join Huxham trading in competition with SEA may be dealt with shortly. I am not persuaded that Mr Lam played any real part in Mr Bostock resigning from SEA and taking up with Huxham. That Mr Bostock's decision was motivated by self-interest appears sufficiently from his evidence as to why he accepted "Mr Lam's offer", set out earlier in these reasons. It is also plain that Mr Bostock had long held aspirations to develop Thurecht Parade and to operate a seafood business independently of SEA and Mr Teh. I am satisfied that, when it became apparent to Mr Bostock that it was likely that SEA was not going to be granted a lease of Thurecht Parade and would be forced to vacate Tubbs Street, he decided to join Mr Lam at Huxham who, he knew, had no experience in the seafood business and would require the services of a person with the knowledge and experience of Mr Bostock to operate from Thurecht Parade independently of SEA. I do not accept that anything said by Mr Lam to Mr Bostock played any part in Mr Bostock's decision. There was no procuring or enticing necessary. As Mr Bostock himself said, he considered that he had no choice and he acted accordingly. Mr Bostock's facsimile transmission to Mr Lam of 20 October 1994 makes no reference to any offer and states that the decision to leave SEA and join Mr Lam was taken because Mr Bostock and his wife did not wish to be involved with Mr Teh or SEA any longer. In reaching that conclusion I have not had regard to the contents of Mr Lam's facsimile transmission to Mr Bostock of 6 September 1994, sent prior to Mr Lam becoming a director of SEA and overtaken in any event by Mr Lam's decision of 21 September to give Mr Teh another chance. I have also not had regard to the passage in the cross-examination of Mr Lam, referred to earlier, in which Mr Lam spoke of his intention to "destroy the business of SEA" and similar sentiments and intentions. I have not done so for the reasons expressed earlier. Counsel for SEA sought to rely upon Mr Lam's facsimile transmission to Mr Bostock of 20 October 1994 and, in particular, the sentence, "Please gather as much information as we will need to carry on the export side of the business ourselves" as supporting a finding that Mr Lam enticed Mr Bostock to make available to Huxham confidential information of SEA. A case in those terms was not pleaded by SEA, but no objection was taken to this point being raised in submissions. In any event, the sentence in Mr Lam's facsimile transmission is to be read in light of what was contained in Mr Bostock's facsimile transmission under reply, "I will avoid telling Ray for 1 week which will enable me to gather as much information as we will need to carry on the export side of the business ourselves." Further, there was no attempt made to particularise that information which was made available to Huxham by Mr Bostock, nor the circumstances in which that information was or became confidential to SEA. There was no evidence that particular information confidential to SEA was made available to Huxham by Mr Bostock, and was utilised by Huxham to SEA's detriment or at all. There was no evidence apart from vague and general allegations, for example, that any customer of SEA was taken by or followed Mr Bostock to Huxham. The part of SEA's case on breach of fiduciary duty relating to the enticement of Mr Bostock to leave SEA fails at the outset. I should add that had I been satisfied that a breach of duty had been made out, I would still have concluded that SEA's case on this point failed. As I have said, there was no evidence of any loss to SEA or profit by Huxham from customers leaving one for the other to follow Mr Bostock. Furthermore, I accept the evidence of Carsten Elkjaer, a former business partner of Mr Teh, that SEA, or for that matter Huxham, could have engaged persons with similar qualifications to Mr Bostock. The importance of Mr Bostock to SEA was, in my view, grossly overstated by Mr Teh in his evidence and in SEA's case on this point. Mr Teh acknowledged in cross-examination that he (SEA) only needed Mr Bostock or "someone similar". Ultimately, no profit to Huxham, or loss to SEA, has been shown to flow from Mr Bostock leaving SEA and working with Huxham. Indeed, SEA's case on equitable compensation, to which I will come, proceeds on the basis that SEA, without Mr Bostock and relying on Mr Teh, lost the opportunity to operate a business from Thurecht Parade more successfully than did Huxham. Were it otherwise, one would have expected SEA to elect for an account of Mr Lam's, profits. The main thrust of SEA's case on breach of fiduciary duty was that Mr Lam, owing fiduciary obligations to SEA as a director thereof, preferred his own interests and those of Huxham (which he controlled) to the interests of SEA by reneging on the agreement to grant a lease, and by causing Huxham to carry on business at Thurecht Parade in competition with SEA. As a result of breach of those fiduciary obligations by Mr Lam, it was submitted, SEA lost the opportunity to operate a business from Thurecht Parade (and to do so more successfully than Huxham in fact did) and was entitled to equitable compensation for that lost opportunity, rather than being confined to an account of profits (Warman International Ltd v Dwyer at 559). Counsel for the respondents submitted that it could not be said to be a breach of any fiduciary duty owed by Mr Lam to SEA not to have caused Huxham to grant to SEA a lease of Thurecht Parade because either Huxham was obliged to grant the lease or it was not. Counsel further submitted that the opportunity to carry on business at Thurecht Parade was not one which Mr Lam and/or Huxham obtained or discovered by reason of Mr Lam being a director of SEA, but was one which arose prior to Mr Lam becoming a director on 11 October 1994. The resolution of this aspect of SEA's case requires a determination, on the difficult facts of this case, of the dividing line between opportunities which may be taken up by a director personally without occasioning a breach of his or her fiduciary obligations to the company and those which may not. It is a determination which is not, as a matter of principle, an easy one to make. I was referred to no authority by either counsel for SEA or by counsel for the respondents on this issue, or on any of the other issues raised by SEA's case of breach of fiduciary duty, save for a reference by counsel for SEA to Warman International Ltd v Dwyer in support of SEA's right to elect for equitable compensation over an account of profits. It is not, in my view, impermissible per se for a director of a company to be, at the same time, a director of a competitor, or to personally carry on a competing business (Bell v Lever Brothers Ltd [1932] 1 AC 161 at 195; Re Broadcasting Station 2GB Pty Ltd [1964-5] NSWR 1648 at 1663; Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 at 782 - 783). Equally, a director must account to a company of which he or she is a director for any benefit or gain which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his or her fiduciary duty to the company and his or her personal interest in the present or possible receipt of such a benefit or gain, or which was obtained or received by use of or by reason of his or her position or of opportunity or knowledge resulting from it (Chan v Zacharia (1984) 154 CLR 178 at 199 per Deane J). A director cannot escape liability to account by resigning his or her office to take up the opportunity or to obtain or receive the benefit or gain if, had he or she not resigned, to do so would have amounted to a breach of duty (Industrial Development Consultants v Cooley [1972] 1 WLR 443; Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371 at 391). What of an opportunity for benefit or gain which arises prior to the commencement of any fiduciary relationship but which is pursued whilst such a relationship subsists? The answer lies, I think, in the principled delineation of the dividing line between those opportunities which may be taken up by a fiduciary (and by a director in particular) without occasioning a breach of duty and those which may not. There are various expressions of the delineation in the authorities in Australia and elsewhere and in the texts and other writings in this area. In Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 Lord Russell of Killowen (at 149) expressed the opinion that the relevant benefit was to be accounted for to the company because it was obtained by the directors "by reason and only by reason of the fact that they were directors [of the company] and in the course of the execution of that office." (see also Peso Silver Mines Ltd (NPL) v Cropper (1966) 58 DLR (2d) 1 at 8; Phipps v Boardman [1967] 2 AC 46 at 105). His Lordship's test has been criticised by learned commentators as too narrow and as permitting of injustice and the opportunity for manipulation (see R P Austin, Fiduciary Accountability for Business Opportunities in Finn (ed); Equity and Commercial Relationships (1987) p 149 - 150; Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (1992), 3rd edition, p 142). Similarly, in Canadian Aero Service v O'Malley, Laskin J, speaking for the Supreme Court of Canada (Martland, Judson, Ritchie, Spence and Laskin JJ), thought the principle as stated by Lord Russell was "too narrowly conceived" (at 387). His Lordship put the following formulation (at 391) :- "... The general standards of loyalty, good faith and avoidance of a conflict of duty and self-interest to which the conduct of a director or senior officer must conform, must be tested in each case by many factors which it would be reckless to attempt to enumerate exhaustively. Among them are the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director's or managerial officer's relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or, indeed, even private, the factor of time in the continuation of fiduciary duty where the alleged breach occurs after termination of the relationship with the company, and the circumstances under which the relationship was terminated, that is whether by retirement or resignation or discharge." That formulation has, in turn, attracted criticism as providing no clear principle to guide courts in futures cases (Meagher, Gummow and Lehane, p 142). Roskill J in Industrial Development Consultants v Cooley held the managing director of the plaintiff company liable to account because he failed to pass to the company information which came to him while he was managing director "and which was of concern to the plaintiff and which was relevant for the plaintiff to know" (at 457). Roskill J's "relevance" and "concern" formulation is said by Professor Austin to be too broad and onerous to be justly applied to all fiduciaries and is said to provide insufficient guidance to the content of the "full-time commercial" fiduciary's duty (Austin, pp 150 - 151; see also Meagher, Gummow and Lehane, p 142). Professor Austin propounds the adoption of what he calls an "expanded line of business test", along the lines of that favoured in the United States, whereby a director (or officer) will breach his or her fiduciary duty to a company if he or she takes up an opportunity for profit which is within the "line of business" of the company as carried on or as planned to be carried on. Professor Austin's test is unclear as to the temporal limitation of a director's liability (Austin, pp 180 - 182; see also Meagher, Gummow and Lehane, p 142, where it is stated that Professor Austin's test has much to commend it). It is not instructive, in my view, to focus close attention upon the language used in the authorities and other writings to which I have referred to seek to draw from them an exact formulation of the relevant test. What is to be drawn from the authorities is that a director will act in breach of his fiduciary obligations to a company (the scope of which will vary in the circumstances of each particular case) if he or she takes up an opportunity for profit where there is a sufficient temporal and causal connection between the obligations and the opportunity. What is a sufficient connection will depend, in any particular case, upon a number of factors, including the circumstances in which the opportunity arises and the nature of it and the nature and extent of the company's operations and anticipated future operations. Whatever is the precise expression or formulation of the test which will provide reasoned guidance in drawing the line between those opportunities for profit it is permissible for a director (or officer) to take up and those which it is not, it is necessary at the outset to determine the scope of the fiduciary obligations owed by the director to the company in the circumstances of the particular case and to identify the conduct or failure to act, which is said to amount to a failure to discharge those obligations. (Hospital Products Ltd v United States Surgical Corporation (1984) 150 CLR 41 at 73, 102; In re Goldcorp Exchange Ltd [1995] 1 AC 74 at 98; Maguire v Makaronis (1997) 71 ALJR 781 at 788). Having done so, the question becomes whether there is a sufficient temporal and causal connection in the sense variously expressed in the authorities to which I have referred, between the fiduciary obligation or obligations and the opportunity for profit which has been or is sought to be taken up by the director. In the instant case, neither counsel for SEA, nor counsel for the respondents sought to identify with any precision the scope of Mr Lam's fiduciary obligations to SEA upon his appointment as a director thereof on 11 October 1994 and thereafter, or his conduct, or failure to act, which amounted to a breach of those obligations. Counsel for SEA put the case as follows :- "[Mr Lam] cannot cause a company which he effectively controls to compete with a company of which he is a director, in the premises which that company was intending to go into, using staff which he has lured away from that company, and attempting, whether successfully or otherwise, to obtain the company's information for the purpose of competing." Therefore, SEA's case was not put on the basis of the first of the two "themes" said by Deane J in Chan v Zacharia at 198 to be embodied in the "fundamental rule", namely "that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict". It was not SEA's case that Mr Lam was liable to account to it for any benefit or gain obtained or received by him in circumstances where his duty to SEA conflicted, or there was a significant possibility that it would conflict, with his personal interest, through Huxham, in utilising Thurecht Parade (see Consul Developments Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 393; Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461 at 471). Had SEA's case been put on that basis the appropriate remedy would have been an account of the profits made by Mr Lam from the position of conflict, rather than an order, such as is sought here, that the company be compensated for losing the chance to take up an opportunity for profit taken by Mr Lam. Rather, SEA's case was put on the basis of the second "theme" referred to by Deane J. That is, that Mr Lam was liable to account to SEA because he had diverted to himself and/or to his company the opportunity to operate a seafood processing and retail business from Thurecht Parade in circumstances where the opportunity and/or knowledge to do so arose out of his fiduciary position. It is also important to note that no relief was sought against Huxham arising out of Mr Lam's alleged breach of duty on the basis that Huxham, with Mr Lam as its controlling mind, knowingly took part in Mr Lam's breach of duty (Consul Developments v DPC Estates at 397 per Gibbs J). I have concluded that the relevant opportunity to profit in this case does not have a sufficient temporal or causal connection with Mr Lam's fiduciary obligations to SEA to hold Mr Lam liable to account to SEA by paying equitable compensation. I have so concluded for the following reasons. The opportunity to operate from Thurecht Parade taken up by Mr Lam and Huxham did not, on any view of the evidence, arise out of or become available to Mr Lam by reason of his position as a director of SEA. It is uncontestable that the opportunity at Thurecht Parade arose prior to Mr Lam's appointment as a director of SEA on 11 October 1994. Mr Lam, for Huxham, signed purchase contracts relating to Thurecht Parade on 10 October 1994. Importantly, one of those contracts provided for the purchase by Huxham of the business operated from Thurecht Parade by SFM, namely, a seafood processing and retail business. Similarly, it cannot fairly be said that the Thurecht Parade opportunity was one which SEA had been actively pursuing or was one which was maturing in the hands of SEA. Up until Mr Teh's facsimile transmission to Mr Lam of 23 July 1994, SEA's plans were to develop the Redcliffe site in accordance with the company profile, with that development to occur on the grand scale there set out, in eighteen months or two years time. Mr Teh's facsimile transmission does not refer to Thurecht Parade but refers to "some properties ... in the Redcliffe area with the view of moving 'S.E.A. Food' temporarily ...". The evidence was that Mr Teh considered Thurecht Parade was "too dear" and that if the Redcliffe site was developed as planned, SEA would have remained at Tubbs Street until it could have moved to the Redcliffe site. The evidence as to SEA's attitude to Thurecht Parade is not recounted as showing that SEA could not or would not have taken up the opportunity. That is irrelevant to the issue of breach of duty (Industrial Developments v Cooley at 451; Regal (Hastings) v Gulliver). Rather, it is sought to demonstrate that the opportunity was one which did not in any sense "belong" to SEA. It was one which was available to Mr Lam and his company to take up and which was, for all practical purposes, taken up prior to him becoming a director of SEA. Indeed, the contents of Mr Lam's note of 21 September 1994 show, to my satisfaction, that the opportunity arose and was taken up by Mr Lam in his capacity as an investor in or lender to SEA and not in any other capacity. I am satisfied that at the shareholder's meeting on 11 October 1994 each director of and shareholder in SEA knew that Mr Lam was a director of Huxham and that Huxham had signed the two contracts with respect to Thurecht Parade. At the time that the agreement to lease was made, Mr Lam was, to the knowledge of all present, acting for Huxham. Any obligation to grant the lease was, necessarily, an obligation of Huxham and one which was to be founded in contract (or, subsequently, in equity by estoppel). Mr Lam's appointment as a director of SEA was in pursuance of the deed executed on 11 October 1994. It is nowhere expressed in the evidence, nor can it be reasonably inferred having regard to the foregoing, that it was within the scope of Mr Lam's appointment to secure for SEA the lease of Thurecht Parade on the terms agreed. Interestingly, it is not recorded in the minutes, nor was it explored in the evidence that Mr Lam had any role to play for SEA with respect to the lease. SEA's case based on breach of fiduciary duty also fails. I should add for completeness, that it was not part of SEA's case that Mr Lam was liable to account to SEA in the circumstances by reason of him being in a position of conflict between his duty to SEA and his duty to Huxham (see Ford v Andrews (1916) 21 CLR 317). Nor was it SEA's case that, prior to his formal appointment as a director of SEA, Mr Lam acted as such and therefore stood in a fiduciary position to SEA or that Mr Lam and/or Huxham were co-venturers with SEA with respect to Thurecht Parade and therefore owed a duty not to take the whole of the benefit of the subject of the co-venture. Having concluded that Mr Lam did not breach any fiduciary duty owed by him to SEA by causing his company to take up the opportunity at Thurecht Parade, it is unnecessary to consider the relief to which SEA would have been entitled had its case in this respect succeeded. Nor is it necessary to consider the quantum of any equitable compensation to which SEA would have been entitled. Nonetheless, I will, as briefly as possible, express my views on those issues. Upon making out its case on breach of fiduciary duty, SEA would have been entitled to, at its election, an account of the profits made by Mr Lam, the defaulting fiduciary, or a compensatory remedy against Mr Lam, for the loss suffered by it (Warman International Ltd v Dwyer at 559). SEA elected for a compensatory remedy, an election to which SEA is bound (Kendall v Masters (1860) 2 De GF & J 20; 45 ER 598), and sought to establish the quantum of that compensation by reference to the value of the opportunity lost by SEA to successfully operate a seafood processing and retail business from Thurecht Parade. In Warman International Ltd v Dwyer, the High Court (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) said (at 557 - 558) :- "... The stringent rule that the fiduciary cannot profit from his trust is said to have two purposes: (1) that the fiduciary must account for what has been acquired at the expense of the trust, and (2) to ensure that fiduciaries generally conduct themselves 'at a level higher than that trodden by the crowd' (Meinhard v Salmon (1928), 164 N.E. 545, at p 546, per Chief Justice Cardozo). The objectives which the rule seeks to achieve are to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage (Chan v Zacharia (1984), 154 C.L.R., at pp 198 - 199). Thus, it is no defence that the plaintiff was unwilling, unlikely or unable to make the profits for which an account is taken or that the fiduciary acted honestly and reasonably (Birtchnell v Equity Trustees, Executors & Agency Co Ltd (1929), 42 C.L.R. 384, at p 409; Furs Ltd v Tomkies (1936), 54 C.L.R. 583, at p 592; Consul Development (1975), 132 C.L.R., at p 394; Industrial Development Consultants Ltd v Cooley, [1972] 1 W.L.R. 443; [1972] 2 All E.R. 162; Canadian Aero Service Ltd v O'Malley, [1974] S.C.R. 592; (1973) 40 D.L.R. (3d) 371). So, in Regal (Hastings) Ltd v Gulliver [1967] 2 A.C. 134n, although the directors acted in good faith and in the interests of the company of which they were directors in taking up shares in a subsidiary which the company could not afford to take up, they were held accountable for the profit made on the sale of the shares. And, in Phipps v Boardman [1967] 2 A.C. 46, the solicitor was held accountable for the profit he made, notwithstanding that he acted bona fide and in the interests of the trust and that the opportunity would not have been availed of but for his skill and knowledge. The assessment of the profit will often be extremely difficult in practice; accordingly it has been said that '[w]hat will be required on the inquiry ... will not be mathematical exactness but only a reasonable approximation' My Kinda Town Ltd v Soll, [1982] F.S.R. 147, at p 159, per Slade J. What is necessary however is to determine as accurately as possible the true measure of the profit or benefit obtained by the fiduciary in breach of his duty (Hospital Products (1984), 156 C.L.R., at p 110)." (see also In re Jarvis [1958] 2 All ER 336 at 340; [1958] 1 WLR 815 at 820; Maguire v Makavonis at 790). However, where an applicant seeks a compensatory remedy, different considerations apply. It is necessary for the applicant to establish a causal connection between the loss claimed and the breach of duty, although it is not necessary for the applicant to prove causation along common law principles by reference to notions of foreseeability and remoteness (Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 at 93; Commonwealth Bank v Smith (1991) 42 FCR 390 at 393 - 394; Wan v McDonald (1992) 33 FCR 491 at 520 - 521). In Target Holdings Ltd v Redferns [1996] 1 AC 421, Lord Browne-Wilkinson, with whom the other members of the House of Lords agreed, said (at 434) :- "The equitable rules of compensation for breach of trust have been largely developed in relation to such traditional trusts, where the only way in which all the beneficiaries' rights can be protected is to restore to the trust fund what ought to be there. In such a case the basic rule is that a trustee in breach of trust must restore or pay to the trust estate either the assets which have been lost to the estate by reason of the breach or compensation for such loss. Courts of Equity did not award damages but, acting in personam, ordered the defaulting trustee to restore the trust estate: see Nocton v Lord Ashburton [1914] A.C. 932, 952, 958, per Viscount Haldane L.C. If specific restitution of the trust property is not possible, then the liability of the trustee is to pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed: Caffrey v Darby (1801) 6 Ves. 488; Clough v Bond (1838) 3 M & C 490. Even if the immediate cause of the loss is the dishonesty or failure of a third party, the trustee is liable to make good that loss to the trust estate if, but for the breach, such loss would not have occurred: see Underhill and Hayton, Law of Trusts & Trustees 14th ed (1987), pp 734 - 736; In re Dawson, decd; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 N.S.W.R. 211; Bartlett v Barclays Bank Trust Co Ltd (Nos. 1 and 2) [1980] Ch 515. Thus the common law rules of remoteness of damage and causation do not apply. However there does have to be some causal connection between the breach of trust and the loss to the trust estate for which compensation is recoverable, viz the fact that the loss would not have occurred but for the breach: see also In re Miller's Deed Trusts (1978) 75 L.S.G. 454; Nestle v National Westminster Bank Plc [1993] 1 WLR 1260." That passage from his Lordship's speech was cited with approval by the High Court in Maguire v Makaronis at 790 - 791. There is no doubt that, if Mr Lam owed a fiduciary duty to SEA to preserve for it the opportunity to carry on business from Thurecht Parade, and if he breached that duty by not doing so, SEA, applying the principles set out above, lost the opportunity to carry on from Thurecht Parade its seafood processing and retail business by reason of that breach of duty. It was contended for SEA that, but for the breach of fiduciary duty on the part of Mr Lam discussed above, SEA would have entered into the lease and operated a seafood processing and retail business from Thurecht Parade. SEA's claim in damages was framed on the basis of calculation of the present value of the projected profits, over the five year period of the lease, of the "new" enterprise SEA would have conducted from Thurecht Parade had it been given the opportunity. Counsel for the respondents submitted, inter alia, that, as the evidence disclosed that suitable premises other than Thurecht Parade would have been available to SEA within three to six months, any compensation payable to SEA is payable only in respect of loss suffered by SEA in that period. There is in my view, considerable force in the submission that, on the evidence as to the other opportunities available to SEA within three to six months of the breach of duty complained of, it could not properly be said that any loss suffered by SEA after that period was caused by, in the relevant sense, the breach of duty. The evidence of Mr Bostock and Mr Teh is unequivocal on this issue. Other suitable premises could have been found for SEA but it would have taken between three and six months to locate such premises, complete an appropriate fit out at a cost of $250,000 and to obtain the necessary licenses and permits. In the event, SEA moved its operation to Pine Street and carried on business from that location with no noticeable effect upon trading results, despite those premises not being "entirely suitable". Further, the evidence was that SEA could not have carried on its processing business from Thurecht Parade until substantial improvements had been carried out to those premises. The improvements were to be carried out prior to the commencement of the 1995 mullet season (March or April 1995) and, it will be recalled, were to be funded by Huxham. Absent the improvements, SEA would have been limited to a retail business. There is no evidence as to what SEA would have lost in that respect for the six months or so up to the start of the mullet season. Therefore, if it is correct to limit SEA's losses to the three to six month period, there is no evidence before me going to the quantum of that loss. I would, had this issue fallen for decision, so limited the recoverability of compensation by SEA to a period of three to six months. To do so is not to import into the realm of equity notions of common law causation, involving concepts of foreseeability, remoteness and mitigation. In Canson Enterprises Ltd v Boughton & Company (1991) 85 DLR (4th) 129, McLachlin J, with whom Lamer CJC and L'Heureux-Dubé J agreed, said (at 163) :- "... Foreseeability is not a concern in assessing compensation, but it is essential that the losses made good are only those which, on a common sense view of causation, were caused by the breach. The plaintiff will not be required to mitigate, as the term used in law, but losses resulting from clearly unreasonable behaviour on the part of the plaintiff will be adjudged to flow from that behaviour, and not from the breach." (see also Permanent Building Society v Wheeler (1994) 11 WAR 187 at 245; Sir Anthony Mason, The Place of Equity and Equitable Remedies in the Contemporary Common Law World (1994) 110 LQR 238 at 244). Once it became apparent to SEA that it was not to have a lease of Thurecht Parade, it was unreasonable for SEA to take no steps to procure for itself other suitable premises. Any loss which it suffered beyond the period in which it could have secured and prepared alternative premises was not loss which was caused by any breach of duty on the part of Mr Lam. The conclusion may be tested by reference to what would have been the case had SEA expended time, effort and money in setting up such alternative premises. Such expenditure would have rightly been said to have been caused by the relevant breach and would have been compensable, if the election for a compensatory remedy had been persisted in. There are in my view, insurmountable difficulties with respect to the quantum of compensation claimed by SEA. Reliance was placed on the evidence of an accountant, Gregory Wanchap, to establish the amount of loss said to have been suffered by SEA. The loss was calculated on the basis that what was to be compensated was the opportunity lost by SEA to carry on business from Thurecht Parade. Mr Wanchap, relying predominantly upon what he was told by Mr Teh and Mr Bostock was achievable, purported to calculate the present value of the profits SEA would have made had it carried on business from Thurecht Parade for five years (the principal term of the lease agreed on 11 October 1994). Mr Wanchap, in performing his calculations, did not have regard to what SEA had achieved historically from Tubbs Street. Nor did he have regard to what Huxham in fact achieved carrying on business from Thurecht Parade during the period in which it did so. Mr Wanchap's calculation of lost profits was predicated upon SEA carrying on what was characterised as a "new business" from Thurecht Parade, having regard to the fact that, amongst other things, SEA would be conducting retail operations which it had not previously done, would expand its operations to encompass new product lines, such as the processing of scallops and spanner crabs and would achieve certain economics of scale by reason of the expansion into retail sale of seafood complementing the processing operations. On Mr Wanchap's calculations, the present value of the annualised net profit which SEA would have achieved during the five year period, taking into account what it has achieved and will achieve at its present location, was $4,330,086. SEA's claim for compensation was for that amount, less any discount to be applied on the court's assessment of the likelihood or otherwise of the opportunity being realised. It was accepted by the parties that I should approach the assessment of this aspect of SEA's case in accordance with the principles expressed in Malec v J C Hutton (1990) 169 CLR 638 as to future or hypothetical events. To Malec v Hutton, I would add Sellars v Adelaide Petroleum and The Commonwealth v Aman Aviation Pty Ltd (1991) 174 CLR 64 as directing the approach to be taken. There is, in my view, a fundamental difficulty with the approach adopted by Mr Wanchap and therefore, with the resultant calculations. There is not, on the evidence, a credible factual foundation for the approach adopted or for the calculations. Historically, SEA recorded, for the most part, significant trading losses. In the 1991, 1992 and 1994 financial years, SEA recorded trading losses of $39,138, $114, 341 and $297,510 respectively. An operating profit of $85,479 was recorded in the 1993 financial year. Interestingly, SEA's Tasmanian operations, said to have been a significant contributing factor to the losses, were acquired in November 1992, during the 1993 financial year (the Tasmanian operations did record a significant loss in the 1994 year, $327,804, but were profitable in 1995 and 1996). On Mr Wanchap's approach, the historical results were not relevant because SEA was going to carry on an entirely new business from Thurecht Parade. On this basis, and relying upon what he was told by Mr Teh and Mr Bostock, the projections which were prepared in conjunction with the company profile and "[w]here specific market information required collaboration ... information from recognised authorities in the seafood industry", Mr Wanchap purported to project the sales, cost of sales and other expenses of the new business by reference to product line and activity. It is important that I record that I do not accept the projections which were prepared in conjunction with the company profile as in any way relevant to what was planned for or achieved from Thurecht Parade. The projections relate to the proposed development of the Redcliffe site which, as can be seen from the company profile set out at great length at the beginning of these reasons, was prepared for stage one of the development at the Redcliffe site which was eighteen months to two years away. That development, as proposed, was for a business far more extensive than that proposed for Thurecht Parade. There is no evidence that a business on that scale could have been run from Thurecht Parade. It is instructive to compare Mr Wanchap's projections with the results actually achieved by SEA in the 1994 year, operating from Tubbs Street :- Mr Wanchap's Projections Actual 1994 Results Mullet Sales 2,000,000 1,423,854 Cost of sales 1,300,000 1,095,552 Gross profit 700,000 328,307 Gross margin % 35.00 23.06 Other Exports Sales -- 557,547 Cost of sales -- 378,756 Gross profit -- 178,781 Gross margin % -- 32.00 Spanner Crabs Sales 1,660,000 1,974,382 Cost of sales 1,460,000 1,875,985 Gross profit 200,000 98,397 Gross margin % 12.00 5.00 Scallops Sales 1,400,000 -- Cost of sales 1,232,000 -- Gross profit 168,000 -- Gross margin % 12.00 -- Institutional Distribution Sales 1,000,000 109,550 Cost of sales 700,000 96,410 Gross profit 300,000 13,140 Gross margin % 30.00 12.00 Wholesale Sales 1,090,000 910,988 Cost of sales 872.000 837,712 Gross profit 218,000 93,275 Gross margin % 20.00 8.00 Retail Sales 2,500,000 -- Cost of sales 1,750,000 -- Gross profit 750,000 -- Gross margin % 30.00 -- Mr Wanchap projected SEA's operating costs, in the new business, to be $1,102,000. I will return to this aspect of Mr Wanchap's evidence. Before dealing with the specific problems in the projections adopted by Mr Wanchap, I will refer to the principal conceptual problems, if I may describe them as such, with the approach. The first problem is Mr Wanchap's characterisation of what SEA would have done at Thurecht Parade as a "new business". If the enterprise was properly so characterised, it would be expected that some account would be taken of the time it would take for the new business activity to become established and to develop a sufficient client base and supply sources. It would not be unreasonable to expect that additional expenditure would be incurred during this period and that turnover and margins would not be at optimum levels. There is evidence that, at least with respect to scallops and the retail outlet, the time and cost associated with establishment would have been significant. Mr Wanchap did not take any account of those factors. Any suggestion that the effect of averaging the projected sales, margins and profits over the five year period would take account of an establishment period is not to the point. A fair analysis of Mr Wanchap's projections suggests that they are "best case" projections. There is no evidence, or at least no credible evidence, that the "new enterprise" could have achieved results any better than those projected by Mr Wanchap. On the other hand, if what SEA would have done at Thurecht Parade is more correctly looked upon as an expansion of the business it was carrying on at Tubbs Street, it would have been appropriate to take as a starting point SEA's historical trading figures and to specifically identify those areas in which it was expected that improvement would be made, as well as the new product lines and areas of trading, such as retail and scallop processing. In my view, SEA's opportunity at Thurecht Parade was not an opportunity to carry on a new business. It was, rather, an opportunity to carry on and expand its existing business. The business SEA was engaged in at Tubbs Street was to continue, and, hopefully, expand and SEA was going to add to that business retail operations, the processing of scallops and the processing, as opposed to trading in, spanner crabs. The consequence of my view in this regard is that I do not accept that Mr Wanchap valued the correct opportunity. The second conceptual problem relates to the question of the improvements. Mr Wanchap's calculations are based upon what turnover SEA would have achieved at Thurecht Parade as improved. It will be recalled that SEA would not have been able to carry on its processing operations from Thurecht Parade without the improvements being carried out and that this was to occur prior to the commencement of the mullet season in March or April 1995. Further, it was planned that the existing retail area at Thurecht Parade (utilised by SFM) would be significantly expanded so as to match or exceed that of Morgan's next door. Mr Wanchap did not make any allowance in his calculations for the time it would have taken for the improvements to be completed, during which time SEA could not have conducted processing operations and presumably, could not have operated a retail outlet which complied with the relevant health and safety standards. For the reasons expressed earlier, averaging the projected profit over the five year period does not overcome this deficiency. More importantly in relation to improvements, there was no attempt to identify with any particularity the nature, extent and likely cost of the improvements required at Thurecht Parade to enable SEA to achieve the projected results. Mr Wanchap's calculations are expressed to be based upon Thurecht Parade offering "processing areas four or five times larger [than Tubbs Street], freezer storage two to three time larger [than Tubbs Street] as well as a large retail area and full wharf access". The evidence in relation to the anticipated size and nature of the retail area goes no further than that Mr Bostock envisaged that Thurecht Parade would have the same cooking capacity as Morgan's and that Mr Teh acknowledged that significant improvements would be required to Thurecht Parade to achieve the projected retail results. With respect to the processing area, the improvements actually made by Huxham resulted in a processing area twice the size of that at Tubbs Street. In order to achieve a processing area four times the size of that at Tubbs Street, or to otherwise carry out the improvements in accordance with the architect's plans or Mr Bostock's plans, it would have been necessary to reposition a stormwater drain running through Thurecht Parade. There was no evidence that it was possible to reposition the drain or the likely cost of doing so. Similarly with respect to the freezer storage capacity, it is by no means clear that Mr Wanchap's assumption was correct. The consequences of this lack of particularity with respect to the improvements to the sustainability of Mr Wanchap's projects are manifest. The nature and extent of the improvements, and thus the cost of them, would have affected the amount of rent payable by SEA to Huxham. If the improvements planned by the architect had been carried out, SEA's rental obligations would have been substantial. The nature and extent of the improvements would also have determined the period of time during which SEA would have been unable to operate from Thurecht Parade at all. The nature and extent of the improvements would also have determined the size of the Thurecht Parade premises and the extent of the facilities to be utilised there by SEA, impacting directly upon the likely scope of the retail and processing operations, and the recurrent cost to SEA of running its business from those premises, such as electricity, wages, equipment costs and the like. Mr Wanchap's adoption of the operating expenses of the new business takes no account of the proposed nature and size of the improved premises but is based on estimates which have no basis historically or by reference to what was proposed for Thurecht Parade. Related to the lack of particularity as to improvements, is the patent lack of any factually or logically reasoned basis for the adoption by Mr Wanchap of the sales and cost of sales figures in his calculations. Those figures appear to be substantially based upon the projections prepared by Mr Teh with respect to stage one of the proposed expansion referred to in the company profile. That proposal, as I have said, was for an operation, particularly with respect to retail, on a far grander scale than anything contemplated, or possible, at Thurecht Parade. Mr Wanchap did not have access to, nor it seems did SEA seek, any expert evidence in relation to the market in the Scarborough area for a retail seafood outlet in competition with the established and successful Morgan's operation next door to Thurecht Parade. It is simply assumed that it would have been possible to achieve, on average, retail sales of seafood of $2,500,000 per year for five years from Thurecht Parade. Commonsense suggests that it would have been difficult to successfully compete with Morgan's next door having regard to the performance and reputation of that business. There was no evidence relied upon by Mr Wanchap that SEA would have been able to achieve sales of processed scallops of $1,400,000 per year for five years, nor for a gross margin of twelve percent on those sales. The evidence before me was that it would have been very difficult for SEA to establish itself as a new entrant in the market for processed scallops and that SEA would have experienced considerable difficulty in securing sources of supply of scallops sufficient to achieve sales of that magnitude. Further, significant reliance is placed by Mr Wanchap upon the beneficial effect upon SEA's business which would have been achieved by "economies of scale" at Thurecht Parade. According to Mr Wanchap, Thurecht Parade "offered an opportunity for maximising SEA's operational structure and approach by capitalising on the vertical integration of the Tasmanian operation, purchasing entire catches and having access to different markets for those products, including export, wholesale and retail". Again, the precise nature of the economies of scale to be enjoyed were not identified. Nor was it sought to reflect, in any reasoned way, the effect on sales and expenses of any such economies of scale. It is not sufficient, in my view, even when seeking to ascribe a value to a chance, to state generally that economies of scale will be enjoyed. There must be identified some credible, logical and reasoned basis or bases to support the conclusion that defined economies of scale, rather than diseconomies of scale, will be achieved or enjoyed. Perhaps most significantly, there was no independent expert evidence led by SEA or upon which Mr Wanchap professed to rely which could support the figures adopted by Mr Wanchap in relation to the seafood processing aspect of the business. There was no independent expert evidence as to the sustainability of the volume of sales adopted by Mr Wanchap, the likelihood or otherwise of SEA being able to obtain sufficient amounts of "new" product to be able to achieve those sales, the appropriateness of the prices, to be paid and received by SEA for its product, adopted by Mr Wanchap and other issues going directly to the likelihood of SEA achieving the projected outcomes. SEA relied upon the evidence of Mr Teh and Mr Bostock, which was to the effect that they agreed with Mr Wanchap's projections. The evidence of Bernard Hart, a seafood industry expert called on behalf of the respondents, who I found to be an impressive witness, underscored the fragility of the projections adopted by Mr Wanchap. Mr Hart gave evidence, which I accept, of a general decrease in the margins on wholesale, retail and cooked seafood over the last few years and which was thought to continue, due in part to the entry into the market of the large supermarket chains. Mr Hart also gave evidence, for example, that the prices paid to fishermen for mullet increased significantly in the 1995 and 1996 seasons without a commensurate, or any, increase in the prices obtained by seafood wholesalers on the export of mullet, that government imposed catch limits on spanner crabs had affected the supply of that product and that the trade in spanner crabs was, at the present time, not profitable. None of the issues raised in Mr Hart's evidence were taken into account by Mr Wanchap or met with credible, independent evidence on behalf of SEA. As I have said, I have concluded that the business to be operated by SEA from Thurecht parade was not a new business but was an extension or expansion of its existing business into retail sales and the processing of scallops and spanner crabs. Accordingly, I am of the view that the approach adopted by Mr Wanchap was incorrect, and that he should have had regard to SEA's trading history and then provided a reasoned analysis, based on appropriate expert marketing and fishing industry evidence and on particular bases to support expansion and improvement in existing lines (including by reference to certain and costed improvements), of what SEA would have achieved by carrying on this expanded business. However, even if it is correct to value the opportunity said to have been lost by SEA in the way in which Mr Wanchap did, I would not have been persuaded, for the reasons set out above and for the reasons to which I will come relating to the particular problems with Mr Wanchap's calculations, to find that SEA would have operated its processing operations from Thurecht Parade any more profitably than it had done from Tubbs Street (ie generally at a loss). Nor would I have been persuaded, on the state of the evidence before me, that SEA would have achieved retail sales and profits any greater than those actually achieved by Huxham in operating from Thurecht Parade. In that regard, I would not have considered Mr Bostock's evidence as to what Huxham achieved whilst he was employed there as providing a sufficient basis for an assessment of the profitability (or otherwise) of Huxham's retail operation. I would conclude, therefore, on either basis, that SEA suffered no quantifiable loss by being prevented from taking up the opportunity to operate from Thurecht Parade. I turn now to deal, as briefly as possible, with what I have called the particular problems of Mr Wanchap's calculations. There was no basis disclosed for adopting, as Mr Wanchap did, as the projected mullet sales from Thurecht Parade a figure arrived at by taking the quantity of mullet roe sold in the 1994 season and working back to calculate the quantity of other mullet products which must have been sold and thus total mullet sales. It is extraordinary that Mr Wanchap did not simply calculate the actual mullet sales from the books of SEA, as the respondent's expert did. There being no warrant to conclude that mullet sales would increase by virtue of processing operations being moved to Thurecht Parade, the actual figure for 1994 mullet sales should then have been adopted. The convoluted approach adopted by Mr Wanchap was indicative of the failure on his part to come to terms with the relevance of SEA's trading history and the actual results achieved by SEA trading from Tubbs Street. There can be no suggestion that this failure was a result of him being unable to calculate actual figures from the appropriate source documents or of him not having access to the appropriate documents. On the sixth day of the trial it became apparent that SEA had failed to discover or produce for inspection relevant source documents such as invoices and expenses, sales and purchases ledgers and supporting documents, underpinning its actual historical trading results. The trial was adjourned for approximately three months to allow Mr Fielding, the respondents' expert, to inspect those documents and to make appropriate consequential changes to his report to reflect the calculations he was able to make from those documents. The relevant source documents were available at all times to Mr Wanchap. He chose, in effect, to ignore them and to base his evidence primarily upon what Mr Teh and Mr Bostock told him was achievable. The figure adopted by Mr Wanchap for operating expenses is not supportable because, as I have said, there is no attempt to link those costs to the nature and size of the improved premises. More particularly, the figure adopted by Mr Wanchap for wages ($322,000) is, as I understood his evidence, an estimate based on Mr Wanchap's expert assessment of what wages would likely to have been paid. The figure is drastically understated when one records that in the 1994 year SEA paid wages, at Tubbs Street, for processing only, of approximately $450,000, that SFM, at the date of the contract with Huxham, was paying wages of $3,950.80 per week (ie before any expansion) and that Huxham, in the period 1 January to 30 June 1995, paid wages in respect of its retail operations of more than $130,000. Additionally, Mr Wanchap's projected operating expenses do not bring to account any directors' fees, do not make any allowance for depreciation on the additional freezing equipment which would have been required to operate Thurecht Parade as projected and reduce the allowance for repairs and maintenance notwithstanding that expensive freezing equipment was to be purchased and installed. Mr Wanchap projects sales for institutions (ie Davids Holdings, Pick and Pay, Coles Myer) of $1,000,000 as compared with actual sales in that area in 1994 of approximately $75,000. Mr Wanchap's projection is baseless. There is no reason advanced in the evidence why institutional sales were inherently something which could only be achieved in that magnitude from Thurecht Parade. It is simply not credible that, if sales of $1,000,000 at a gross margin of thirty percent were achievable, as projected, SEA would not have exploited the opportunity from Tubbs Street. In addition, there is the evidence of Mr Hart that the institutions to which these projected sales were to be made were entering the market for themselves and were by-passing wholesalers like SEA. The projections in relation to SEA's proposed entry into the market for processing spanner crabs must also be doubted having regard to the evidence of Mr Hart that the trade in spanner crab is not profitable at present and that, in any event, SEA would have faced substantial hurdles in seeking to establish its reputation and market in this area in the face of competition from Ocean Pacific, the largest exporter of spanner crab in Queensland. Mr Teh's and SEA's reputation and contacts in this area were all established when SEA dealt with Ocean Pacific product on an agency basis. According to Mr Hart, SEA previously exported to Taiwan spanner crab packed by Ocean Pacific and branded "Ocean Pacific" and "another product of SEA". Ocean Pacific now exports its own product direct. The above is not an exhaustive exposition of the particular problems with Mr Wanchap's projections. Rather, it highlights the problems when it is sought to set those projections against a basis in fact or to seek to make some assessment of the likelihood of them being achieved in light of the relevant facts and circumstances. Conclusions on the applicant's claim SEA has failed on each aspect of its claim against the respondents. There will be judgment on the application for the respondents and an order that SEA pay the respondents' costs of and incidental to the application, including reserved costs, if any, to be taxed if not agreed. Megamix was joined as a respondent by SEA on the basis that, at the time the joinder was sought, it was unclear whether Mr Lam was acting for Huxham or for Megamix at the relevant times. The application for joinder was opposed. It must have become clear to SEA at some point, at least when the two contracts relating to Thurecht Parade were discovered, that Mr Lam could only have been acting for Huxham at the relevant times. It was not sought at any time to discontinue the proceedings as against Megamix. However, Megamix was not separately represented at trial, is a cross-claimant and would have required representation for the whole of the trial given that the factual issues relevant to the cross-claim were required to be ventilated on the application. No application for any separate or special order for Megamix's costs was made. Nor is any such order appropriate. THE CROSS-CLAIM Introduction Counsel for the cross-claimants sought to support the relief claimed only on the basis of a claim under s 82 of the TPA and on the basis of an entitlement to an order that the loan from Megamix to SEA be repaid. In light of the view I have taken in relation to those claims and counsel's position, it is unnecessary to consider the other causes of action raised by the cross-claim. Trade Practices Act The cross-applicant's cross-claim pleads the making of a series of representations, characterised as the first representations, by Mr Teh, as a director, servant and agent of SEA and Lake Yale, to Mr Lam, between 30 May and 23 June 1994, the making by Mr Teh, in that same capacity, Lake Yale and SEA, of a series of representations to Mr Lam and/or Megamix between 23 June 1994 and 11 October 1994 ("the second representations") and a failure by Mr Teh, SEA and Lake Yale to inform the cross-applicants of SEA's trading results in the 1992, 1993 and 1994 years ("the omissions"). Before dealing with each of the first representations, the second representations and the omissions, it is necessary to say something about the statutory preconditions for the application of the TPA. The cross-respondents do not admit that Lake Yale was a trading corporation within the meaning of the TPA. Nor is it admitted that, at the relevant times, Lake Yale was engaged in "trade or commerce" within the meaning of s 52 and s 53 of the TPA. Counsel for the cross-respondents did not address the issue in his submissions. There is no evidence as to Lake Yale's activities save for statements made by Mr Teh which referred to Lake Yale as a holding company and an Australian Securities Commission ("ASC") search with respect to it which lists its principal activity as "Management consultants/importers and exporters". I am prepared to assume, for the purposes of these proceedings, that the principal activity listed in the ASC search accurately depicts the activities actually engaged in by Lake Yale. On that basis, I am satisfied that Lake Yale, at the relevant times, was a trading corporation within the meaning of the TPA (Hughes v Western Australia Cricket Association (Inc) (1986) 19 FCR 10 at 20 - 21). I am similarly satisfied that Lake Yale's conduct, through Mr Teh, in negotiating the sale of and selling part of its shareholdings in SEA, as was intended prior to the execution of the deed, was conduct in trade or commerce in the relevant sense (Bevanere Pty Ltd v Lubidineuse (1984) 7 FCR 325 at 330 - 332). The First Representations The first representations are pleaded in paragraph 11 of the further amended defence and cross-claim. I have found that the representations pleaded in paragraphs 11(b) and 11(e) were not made by Mr Teh. However, I am satisfied that the remaining representations pleaded in paragraph 11, save for that pleaded in paragraph 11(g), were made. The facts as I have found them reveal that Mr Teh said to Mr Lam, between 30 May and 23 June 1994, that :- (i) a proposed advance of $1,000,000 be used by SEA for obtaining and developing a lease of land on the Redcliffe Peninsula to enable SEA to develop its seafood products exporting business (paragraph 11(a); on 18 June 1994 at Mr Teh's house, or on various occasions on and up to 18 June 1994); (ii) SEA had achieved a turnover of $10,000,000 in the 1994 financial year, thereby indicating or implying that SEA was a successful company in which an investment of $1,000,000 would be sound (paragraph 11(c); on or up to 20 June 1994); (iii) SEA would use the $1,000,000 for expanding its Redcliffe plant (Tubbs Street) and buying and processing spanner crabs to increase turnover to $15,000,000 (paragraph 11(d); on or up to 20 June 1994); (iv) SEA would use the $1,000,000 to go into a profitable spanner crab business, downstream projects such as retail sales and value-added products such as pre-packing for the tourist industry (paragraph 11(f); on or up to 18 June 1994); (v) SEA and Mr Teh would provide the 1994 financial accounts of SEA to Mr Lam as soon as they became available, but the financial accounts for the 1991, 1992 and 1993 years were available and would be provided (paragraph 11(h); on 18 June 1994 and/or 20 June 1994). The representation pleaded in paragraph 11(g) was :- "SEA's books did not reveal the large profits that SEA was in fact earning because importing prices into Taiwan were written down and the additional price of such goods was paid off shore;" The statement which I found was made by Mr Teh to Mr Lam on 5 or 6 June 1994 concerning understated values in shipping documents is set out earlier in these reasons. It does not bear the construction which the cross-claimants seek to put on it in paragraph 11(g). There is no evidence that the books of SEA do not record full invoice values and it was not put directly to Mr Teh that the books of SEA understated its true income. Further, there was no evidence led from Mr Fielding, the expert accountant called by the cross-claimants, that the books of account which he inspected did not reflect the full invoice value after all of the invoices were ultimately made available for inspection by him. The representation pleaded in paragraph 11(g) is not made out. The representations pleaded in paragraphs 11(a), 11(d) and 11(f) were representations as to SEA's intentions with respect to the proposed investment of $1,000,000. The misleading or deceptive nature of the representations falls to be determined therefore, as at the date upon which the representations were made and not by reference to whether or not the represented intention was carried out at some later time. That is, the making of the representations must have contained or conveyed some misrepresentation (Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202; Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 36, 45 - 46) or the representations, in the context and circumstances in which they were made and having regard to the form and content of them, were misleading or deceptive or likely to mislead or deceive (Rhone-Poulenc Agrochime SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 488, 504; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 93). Section 51A of the TPA, upon which the cross-claimants rely, would operate, if the cross-respondents fail to show that there were reasonable grounds for the making of the representations, to deem the representations to have been misleading and therefore, to have contravened s 52 and/or s 53 of the TPA. In my view, the evidence is such as to discharge the onus on the cross-respondents to make out reasonable grounds and thus avoid the operation of s 51A. It is apparent from the contents of the company profile and from the contents of Mr Teh's facsimile transmission to Mr Lam of 23 July 1994 that Mr Lam's $1,000,000 investment was indeed intended to be used for the represented purposes. It is not to the point that the money was ultimately used for different purposes or that the money was used, or was brought to account in the books of SEA, for some different purpose. Nor is it relevant to whether the representations were misleading or deceptive that at some point in time after they were made, SEA's intentions with respect to the use of the money changed. This is particularly so when it is considered that from about 21 September 1994, Mr Lam (and Megamix) knew of the details of SEA's plans. Further, it was not pleaded or argued that it was misleading or deceptive for SEA not to communicate to the cross-claimants any change in the uses to which it was intended that the money be put. Absent the operation of the deeming provision of s 51A, the cross-claimants have not shown that the representations pleaded in paragraphs 11(a), 11(d) and 11(f) were misleading or deceptive. The cross-claim, insofar as it relates to these representations, fails. The representation pleaded in paragraph 11(h) is promissory in character. It was, as pleaded and made, a representation as to Mr Teh's intention to provide the financial accounts of SEA to Mr Lam. To the extent that the representation carries with it representations that the 1994 accounts were not completed or available and that the other years' accounts were available, the representation was, on the evidence which I accept, true when it was made and was not otherwise misleading or deceptive, notwithstanding that the 1993 accounts were provisional accounts at the relevant time. The operative part of the representation was that the accounts would be provided as soon as they were available. That is a representation as to intention and the same considerations referred to above apply to it. It is difficult to escape the conclusion that Mr Teh was reluctant to provide the financial accounts of SEA to Mr Lam, and in particular the 1994 accounts, showing, as they did, SEA's history of trading losses, in circumstances where he was seeking to convince Mr Lam that he should invest in SEA and where he had sought to convey to Mr Lam that SEA was trading profitably and represented a sound investment. That conclusion is strengthened in the context of Mr Teh's prevarication when the financial accounts were requested of him by Mr Lam's accountants, as is borne out by the course of the correspondence set out earlier in these reasons and, in particular, by the contents of Mr Teh's facsimile transmission of 27 July 1994. I am satisfied that Mr Teh, at the time he made the representation pleaded in paragraph 11(h), had no reasonable grounds for making the representation that the financial accounts would be provided. It was not his then intention, in my view, to provide the accounts to Mr Lam until at least after Mr Lam had invested in SEA. If I am wrong in concluding that a positive case of no reasonable grounds is properly made out, I am not satisfied that Mr Teh has discharged the evidentiary burden imposed upon him by s 51A of the TPA. The representation pleaded in paragraph 11(h) was, on either basis, misleading or deceptive. However, I am not satisfied that the representation was relied upon within the meaning of s 82(1) of the TPA by Mr Lam in coming to the decision to invest the $1,000,000. It is illogical to conclude that any loss or damage suffered by Mr Lam was caused by the misleading or deceptive conduct of SEA and Lake Yale, by Mr Teh, in making the representation pleaded in paragraph 11(h), in circumstances where Mr Lam invested the money without being provided with the financial accounts. If the provision of the accounts was in any way important to Mr Lam's decision to invest, it is difficult to see why Mr Lam invested without the accounts having been provided. It is not pleaded in paragraph 11(h) that the representation carried with it a representation that, upon provision of them, the accounts would support Mr Teh's position that SEA was trading profitably. A representation in those or similar terms is pleaded in paragraph 11(c) and paragraph 13 (the omissions), to which I will come presently. At the highest, the representation pleaded in paragraph 11(h) formed part of the context in which that representation (11(c)) was made and the omissions occurred. The representation pleaded in paragraph 11(c) was, on its face, correct. SEA did record turnover of $10,000,000 in the 1994 year. However, the representation, in the context in which it was made, carried with it the pleaded implication that SEA was trading profitably and represented a sound investment. Mr Teh acknowledged as much in his evidence in cross-examination, by his statements at various times to the effect that Mr Lam would not regret investing in SEA and by his reference to a holding company having offsetting tax losses. As I have found, in the period up to and including 20 June 1994 Mr Teh sought to impress upon Mr Lam that an investment by him in SEA would be a sound one and that SEA was a company performing well and earning profits. Whilst it is not necessarily misleading or deceptive to represent that a company with a history of significant trading losses, but with high turnover, is a sound investment, it is misleading or deceptive to represent that that company is performing well and trading profitably. A representation in those terms in respect of SEA in June 1994 was palpably false and amounted to a contravention of s 52 of the TPA. I will return to the issue of whether any loss or damage suffered by the cross-applicants or either of them was relevantly caused by the representation once the second representations and omissions have been discussed. The second representations The second representations were pleaded as being made in writing and contained in Mr Teh's facsimile transmission of 27 July 1994, the minutes of 11 October 1994 and the deed entered into on that date. It was pleaded that SEA, Lake Yale and Mr Teh represented to Mr Lam in those documents that :- (a) the advance of $1,000,000 had provided an increase in the working capital of SEA and had been used to expand its activities; (b) that part of the advance which was to be an advance of $300,000 by Megamix to SEA would be secured; (c) finalisation of SEA's 1994 financial accounts was due in the second or third week of August and the accounts would be provided. Each of the representations was made. Representations (a) and (c) were made in Mr Teh's facsimile of 27 July 1994. Representation (b) was contained in the resolution in the minutes of 11 October 1994 to accept Megamix's offer of working capital and to have a second charge over the assets of SEA registered as security for that loan and in paragraph 1(d) of the deed of 11 October 1994. It is unnecessary to decide whether or not the second representations or any of them were misleading or deceptive. The second representations were said to have been relied upon by the cross-claimants, together with the first representations and the omissions, in entering into the deed on 11 October 1994. Those representations and omissions being misleading or deceptive in contravention of s 52 and s 53 of the TPA, the cross-claimants sought an order setting aside the deed ab initio, presumably pursuant to s 87 of the TPA. However, in the face of Mr Lam's evidence in cross-examination that he did not rely upon anything said by Mr Teh in entering into the deed but did so based on legal and accounting advice, the cross-claimants did not pursue in submissions an order setting aside the deed ab initio. Nor could they sensibly have done so. The omissions The cross-claimants allege that, in the circumstances leading up to the investment of $1,000,000 on 27 June 1994, and in particular, in the context of the making of the first representations and Mr Teh's conduct in seeking to portray SEA as a profitable company in which an investment would be sound, it was misleading or deceptive for the cross-respondents (in effect, Mr Teh) to fail to inform the cross-claimants (ie Mr Lam) of SEA's actual trading results for the 1992, 1993 and 1994 years. It is well established that silence or non-disclosure can amount to conduct which is, in all the circumstances, misleading or deceptive (Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 31 - 32; 40 - 41; 46; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452). In the circumstances leading up to the $1,000,000 investment, it was in my view, misleading or deceptive for Mr Teh, having made such of the first representations as I have found and having sought to convey to Mr Lam that SEA traded profitably and was a company in which an investment of that magnitude would be sound, to then fail to disclose to Mr Lam that SEA had historically, with the exception of the 1993 year, traded at significant losses and would do so again in the 1994 year. Without that disclosure, Mr Lam was left with the impression, sought to be conveyed by Mr Teh, that SEA had traded and was trading profitably. That impression was at odds with the facts and was misleading or deceptive in all the circumstances. Reliance It is appropriate to deal with the question of reliance with respect to omissions and the representation pleaded in paragraph 11(c). That is the only conduct which I have found to be misleading or deceptive and which could have been relevantly relied upon for the purposes of the statutory cause of action. Counsel for the cross-respondents submitted that Mr Lam did not rely upon any representations made by Mr Teh but relied upon his own experience and assessment of the merits of the proposed investment. Counsel's submission was sourced in the following evidence given by Mr Lam in cross-examination :- "MR MORRIS QC: You see, what I would suggest to you, Mr Lam, is that when you decided to invest in this business what you were working on was your own experience and your assessment of how good a business it was?---Yes. ..... ... But if I can put it to you this way: from what you saw, you formed in your own mind the impression that this is a very good business that is correct, is it not?---That's right. ..... What was important to your mind was your own assessment of what you saw and heard: that is right is it not?---That's right." These passages from the transcript referred to by counsel do not accurately reflect the circumstances in which Mr Lam invested in SEA and the factors influencing him to do so. Mr Lam knew nothing about the seafood industry and no experience of it. He relied upon Mr Teh in that respect. Importantly, the impressions formed and the assessment made by Mr Lam as to the soundness of the investment were formed and made in circumstances where Mr Lam had no information or source of such information as to SEA, other than Mr Teh and what Mr Teh told him. The financial accounts were not provided to Mr Lam to enable him to form a view uninfluenced by what Mr Teh told him. Mr Teh sought to convey to Mr Lam that SEA traded profitably and represented a good investment opportunity. Mr Teh was successful in doing so. It was, in my view, the representations made by Mr Teh as to the profitability of SEA (both by the omissions and by first representation (c)) which led Mr Lam to invest $1,000,000. The evidence as to the circumstances leading up to the investment does not admit of any different conclusion The Deed of Settlement It is convenient to deal at this point with the deed of settlement executed on 11 October 1994 by Lake Yale on the one hand and Megamix, Mr Lam and James Lam on the other. Counsel for the cross-respondents submitted that in order to recover the damages claimed by the cross-claimants, it was necessary that the deed be set aside so as to relieve the cross-claimants of the contractual obligations provided for in the deed, namely that Megamix provide $300,000 of loan funds and $700,000 by way of share purchase. The basis for counsel's submission is apparently that the payment of the $1,000,000 was ultimately referrable to the obligation flowing from the deed and, unless the deed is set aside, not referrable to any misleading or deceptive conduct on the part of the cross-respondents. The submission was not responded to by counsel for the cross-claimants. The payment of $1,000,000 by telegraphic transfer by Mr Lam on 23 June 1994 was induced by the misleading or deceptive conduct of the cross-respondents. The issue which arose thereafter was not what had induced the payment but for whose benefit and for what purpose it had been paid. Whether it was a temporary loan to Lake Yale, a purchase of shares in SEA from Lake Yale or an investment in SEA comprising an investment in equity and an advance of working capital. That issue was resolved by the deed of 11 October 1994. The deed was expressed to take effect from 1 July 1994 and the $1,000,000 already contributed by Mr Lam, brought to account in the books of SEA as a $700,000 capital contribution and a $300,000 loan, was to be considered to have been advanced by Megamix in anticipation of the deed. Megamix's obligations under the deed were, therefore, satisfied at the date the deed was made. The effect of the deed was that in return for the $1,000,000 contributed by Mr Lam, Mr Lam's nominee, Megamix, was to receive, and did receive, a forty percent shareholding in SEA and a chose in action constituted by the debt due to it from SEA. Whether or not Mr Lam suffered any loss or damage in making the payment of $1,000,000 is not foreclosed by the deed. The deed operates to require that any loss or damage alleged to be suffered by him be measured in respect of what the parties by the deed agreed that he received for his payment: the value of the shares held by Megamix and the value of the debt of $300,000 dependent upon the prospect of its recovery. The deed did not on its face, in terms or by necessary implication purport to release the cross-respondents from any past misleading or deceptive conduct inducing Mr Lam to pay over the $1,000,000. It is extraordinary that if it was intended by the parties to the deed, each of whom had engaged legal advisers, that any future claims arising out of the investment be compromised, that a release in those terms would not have been included in the deed. The submission that no claim may be advanced while the deed remains on foot fails. Loss or Damage There are a number of difficulties which arise in seeking to identify what loss or damage was suffered by the cross-claimants and each of them by reason of the misleading or deceptive conduct as found. Similarly, the capacity in which Mr Teh was acting, whether for SEA or for Lake Yale, at the various times, was not explored in any detail in the evidence or in submissions. It is pleaded in paragraph 15 of the further amended defence and cross-claim that $1,000,000 was advanced by Mr Lam to Lake Yale for the use of SEA. The allegations of fact contained in that paragraph are denied. Mr Lam's evidence, from which he did not resile in cross-examination, was that of the $1,000,000, $500,00 was contributed by him and $500,000 by his son, James Lam. James Lam's evidence is silent on this point. James Lam is not a party to the cross-claim. This issue was not addressed at all before me. There was some suggestion in the evidence that Mr Lam's insistence that $500,000 was contributed by James Lam was in some way related to requirements to be satisfied by James Lam under a business migration program. The terms of the Mr Lam's facsimile to James Lam of 22 June 1994 requesting that he arrange the remittance of $1,000,000 in two lots of $500,000 and that the entire $1,000,000 appears to have come from the same account might, on deeper analysis, be thought to support a finding that the $1,000,000 was paid by Mr Lam alone. However, the terms of the receipts, which on this issue were not the subject of dispute, that James Lam was a party to the deed and Mr Lam's evidence that the account from which the money came was a joint account with his son leads me to conclude that Mr Lam and James Lam each contributed $500,000. Although references were made through the submissions, and so far similar references have been made in these reasons to an investment, advance or contribution by Mr Lam of $1,000,000, the fact is that Mr Lam invested $500,000 and James Lam invested $500,000. Mr Lam is therefore, on the question of loss and damage, limited to the payment of $500,000 made by him on his own account. Similarly, counsel for the cross-claimants did not identify any basis upon which Megamix was entitled to any other relief against the cross-respondents under the TPA, once an order setting aside the deed was no longer sought. There was no evidence that Megamix suffered any loss or damage by reason of any conduct of the cross-respondents. Megamix did not invest in SEA or otherwise provide any contribution. Megamix was no more than Mr Lam's (and James Lam's) nominee as the entity controlled by them to which the shares should be issued and the entity to which the debt was to be owed. It could not, on the appropriate measure of loss and damage referred to below, have suffered any loss or damage, only because, subsequently, it acquired, at the direction of Mr Lam and James Lam, that to which they were entitled by their investment. Having found that Mr Lam invested $500,000 and was induced to do so by representations made by Mr Teh in contravention of s 52 of the TPA, the measure of loss or damage suffered by Mr Lam is the difference between the value of the investment as represented (ie $500,000) and what the investment was actually worth when made, no consequential loss having been claimed (Gates v City Mutual Life Assurance Society Ltd (1968) 160 CLR 1 at 7; Gould v Vaggelas (1985) 157 CLR 215 at 220, 255, 265; Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 291). It is necessary to, perhaps somewhat artificially, assume that Mr Lam's investment of $500,000 acquired for him one-half of that acquired by the investment of the whole $1,000,000. That is, that Mr Lam acquired a twenty percent shareholding in SEA (valued at $350,000) and a debt owing to him by SEA of $150,000 (see the terms of the receipts issued to each of Mr Lam and James Lam and the terms of the deed). Mr Lam has suffered no loss or damage relating to the debt. It is still owing. There is no evidence that SEA cannot or will not repay it. The cross-claimants and cross-respondents led expert evidence in relation to the winding-up application as to the value of a share in SEA. Mr Fielding for the cross-claimants valued one share in SEA at $42.43, making a twenty percent shareholding worth $14,850.50. Mr Fielding valued SEA as at 30 June 1995 and did so by valuing SEA on the basis of a notional realisation of SEA's net assets as at that date. Mr Wanchap for the cross-respondents valued a share in SEA as at 11 October 1994, adopting a capitalisation of future maintainable earnings approach, at $1,054.48, a twenty percent shareholding therefore being worth $369,068. In reaching his valuation, Mr Fielding had regard to SEA's trading history, and in particular, to the trading results for the 1995 year. He concluded that SEA's trading history did not support a conclusion that it would be able to generate a maintainable profit. Accordingly, he valued the company, and the shares in the company, on the realisation of net assets approach by reference to the balance sheet of it as at 30 June 1995, adjusted to remove the value of the goodwill of the Tasmanian operations. Mr Wanchap, on the other hand, adopted as the future maintainable earnings of SEA the projections prepared in conjunction with the company profile on the assumption that SEA would be operating from the proposed Redcliffe site. Mr Wanchap's valuation applied a capitalisation rate of thirty-three percent to those earnings, to arrive at a valuation which excluded external debt. It is not apparent to me why those figures were adopted and not the figures projected by Mr Wanchap to be likely to be achieved by SEA operating from Thurecht Parade. I have earlier recorded my reasons for concluding that the projections prepared with the company profile are irrelevant. There is not before me, therefore, any valuation of the shares in SEA as to the date of Mr Lam's investment, being 27 June 1994, the date upon which the transferred funds were received. However, I accept that the general approach adopted by Mr Fielding is the appropriate one in all the circumstances. For the reasons already outlined with respect to the question of damages, I do not accept that it would have been appropriate or correct for Mr Wanchap to select as the basis for his calculation of the maintainable earnings of SEA, the projections for Thurecht Parade. However, there is even less reason to accept that the projections adopted by him, being the projections prepared in conjunction with the company profile, are appropriate. Further, I agree with Mr Fielding as to his other criticisms of Mr Wanchap's valuation. By ignoring SEA's external debt, Mr Wanchap values SEA's business, rather than the company, and therefore the shares. I also accept Mr Fielding's evidence that, in circumstances where SEA displayed a history of the trading losses, it is inappropriate to seek to value the company by reference to future maintainable earnings, but that the realisation of net assets method should be used. It is possible, by reference to the balance sheet of SEA as at 30 June 1994 to value the company at the date of Mr Lam's investment, 27 June 1994. There are no circumstances, once the effect of the investment itself is accounted for, which could make the balance sheet at 30 June 1994 inappropriate for such a purpose. SEA's balance sheet at 30 June 1994 shows total assets (current and non-current) of $1,211,552. Conformably with Mr Fielding's approach, and in particular considering that the Tasmanian operations were loss-making at 30 June 1994 and thus could not support maintainable earnings so as to generate goodwill, the $100,000 representing the goodwill of the Tasmanian operations should be deducted, leaving $1,111,552. I have made no reduction in the amount for SEA's total assets on account of the $700,000 which was directly invested in SEA. That money was not entirely paid over to SEA until 27 October 1994 and does not appear to have been brought to account in the 1994 accounts but in the 1995 accounts. The total liabilities as per the balance sheet were $1,437,824. Those liabilities must be reduced to $1,137,824 to remove the $300,000 loan recorded from Megamix. Therefore, the value of SEA on a realisation of net assets basis was, at 27 June 1994, in my view, a negative value. Mr Lam suffered loss or damage in the amount of $350,000 and is entitled to damages in that amount. Mr Lam is also entitled to interest, pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) on that sum from 27 June 1994 to the date of judgment. I will allow interest at ten percent per annum, to reflect the rate currently adopted in the Supreme Court of Queensland. Such a rate is reasonable and appropriate. I award interest of $128,493.14 ($350,000 x 10% x 1,340/365). It remains on the TPA claim to record that the damages and interest will be awarded against SEA and Mr Teh but not Lake Yale. I am satisfied that at the relevant times, Mr Teh was speaking for SEA in seeking funds from Mr Lam. Mr Lam certainly understood him to be doing so. It was always understood that Mr Lam's money would go to SEA and the operative misleading or deceptive conduct related to SEA. Lake Yale simply held the funds on SEA's behalf until late October 1994. Relief was sought by the cross-claimants against Mr Teh pursuant to s 75B of the TPA. Mr Teh was the controlling mind of SEA and was at the centre of that conduct which I have found to be in contravention of s 52 of the TPA. He was clearly knowingly concerned in the relevant conduct for the purposes of s 75B (Yorke v Lucas (1985) 158 CLR 661 at 670). Megamix's claim for recovery of the debt Megamix seeks recovery from SEA of the $300,000 advanced by way of loan. It is admitted in paragraph 9(b) of the reply and answer that $300,000 was advanced to SEA to bear interest and be repaid in accordance with the deed. The loan was to be repaid as to $150,000 by 30 June 1996 and as to the remaining $150,000 by 30 June 1997. It had not been repaid as to the first $150,000 as at 7 May 1997. I have not been informed that it has subsequently been repaid. There was no circumstance raised against Megamix which would disentitle it to a judgment in its favour for the full amount of the loan and interest. Subject to the solicitor for the cross-claimants filing an affidavit of debt in respect of the loan, including a calculation of the interest due, there will be judgment accordingly. Conclusion on the cross-claim There will be judgment on the cross-claim for the cross-claimants. There will be an order that Mr Teh and SEA pay to Mr Lam $478,493.14 ($350,000 + $128,493.14) and an order that SEA pay to Megamix $300,000 plus that sum calculated to be due in the affidavit of debt referred to above on account of interest. The cross-respondents will be ordered to pay the cross-applicants' costs of and incidental to the cross-claim. Lake Yale's position is materially identical to that of Megamix on the application. There will be no separate or special order in relation to its costs of the cross-claim. THE WINDING-UP APPLICATION On or about 14 February 1995 Megamix received from SEA a Notice of General Meeting to take place at 7.00 pm on 1 March 1995. The only agenda item was a resolution, in accordance with regulation 62(2) of the Articles of Association of SEA, that Mr Lam be removed as a director of SEA and that the position remain vacant. On 1 March 1995, Megamix filed in the Supreme Court of Queensland an application seeking an interim injunction restraining the passing by SEA of any resolution removing Mr Lam as a director and certain final relief, including that SEA be wound up pursuant to s 260 or s 461 of the Law. Dowsett J granted the interim injunction on 3 March 1995. On 7 March 1995, Dowsett J ordered, by consent, that the interim injunction extend until the trial of the action or earlier order and made directions for the further conduct of the action, including as to the delivery of the pleadings. On or about 16 March 1995 Megamix received from SEA a further Notice of General Meeting for 4.00 pm on 31 March 1995 to consider a resolution that the plant, equipment and other assets of SEA's Brisbane operation be sold and that SEA's Tasmanian operation be sold. Undertakings were given by SEA not to dispose of any of its assets other than in the ordinary course of business. Megamix delivered a statement of claim in the winding-up proceedings on or about 3 April 1995. The statement of claim pleads the making of the agreement of 11 October 1994 recorded in the deed and adopted by SEA on that day. It alleges that the effect of the deed was to create a partnership between Lake Yale and Megamix to be carried on through the corporate structure of SEA (paragraph 9). It alleges breach of the agreement by Lake Yale and/or SEA (paragraph 17). The statement of claim also pleads that Lake Yale, Mr Teh, and SEA, made representations substantially identical to those pleaded in the cross-claim in the proceedings in this Court (paragraph 20), that Mr Lam invested $1,000,000 and entered into the agreement in reliance on those representations (paragraphs 22 and 23), that each representation was false or grossly inaccurate (paragraph 24) and that, as a result, Megamix and Mr Lam "have lost all faith and trust in Lake Yale and its directors and their ability to manage and conduct the affairs of [SEA] in the interests of its members" (paragraph 26). These allegations go to support the application to wind up SEA on the basis that it is "just and equitable" that such an order should be made (s 461(k) of the Law). The pleading continues :- "26. Since on or about 11 October 1994 the company has made the following decisions: (a) to a [sic] notice terminating its tenancy of the Tubbs Street premises at Redcliffe; (b) not to provide its financial accounts to Huxham; (c) not to comply with those terms of the agreement referred to in paragraph 10 hereof [that Mr lam would represent the interest of Megamix on the board of SEA]; (d) that action be commenced in the Federal Court of Australia against Mr Lam and Huxham; (e) to call a meeting to consider a resolution to remove Mr Lam as a director; (f) to refuse to undertake not to hold the meeting referred [to] in (e) above and to incur legal expenses in that regard; (g) to call a meeting to consider a motion to sell all of the companies [sic] undertaking; (h) to cease to operate its business rather than find premises from which such business could operate. 27. Neither the applicant nor Mr Lam was consulted about, given notice of, or in any way involved in any of the said decisions until after the same were made. 28. The applicant had to seek an injunction from this Honourable Court in order to restrain the company from holding the meeting referred to in paragraph 19(e) hereof. 29. Unless restrained the company will hold the meeting referred to in paragraph 19(e) hereof and the proposed resolution will be passed. 30. In the premises: (a) the directors have acted in the affairs of the company in their own interests rather than in the interests of the members as a whole; (b) the directors have acted in the affairs of the company in a manner which appears to be unfair and unjust to other members; (c) the affairs of the company are being conducted in a manner that is oppressive and unfairly prejudicial to the applicant as a member of the company; (d) the proposed resolution that Mr Lam be removed as a director of the company would be oppressive and unfairly prejudicial to the applicant as a member of the company; and otherwise (e) it is just and equitable that the company be wound up." These allegations in paragraphs 26 to 30 inclusive of the statement of claim go to make out a ground for relief under s 260 of the Law. Section 260 of the Law Section 260 of the Law provides that the Court may make orders, including that a company be wound up, if the Court is of the opinion that :- (a) affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or in a manner that is contrary to the interests of the members as a whole; or (b) an act or omission or a proposed act or omission, by or on behalf of a company, or a resolution or a proposed resolution of a class of members of a company, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or was or would be contrary to the interests of the members as a whole. Conduct prescribed by s 260 is not limited to conduct affecting a member qua member but extends to conduct which affects a member in any other capacity (s 260(5)(b) and s 260(5)(c)). In the instant case, the conduct complained of is conduct affecting Megamix as a member, and its nominee Mr Lam as a director of SEA. The phrase "oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member" is to be viewed as a composite whole. Conduct will be oppressive if, in the eyes of a commercial bystander, there has been or will be commercial unfairness (Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459 at 471 - 472 per Brennan J; Thomas v H W Thomas Ltd [1984] 1 NZLR 686; Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704 per Young J). The essence of the alleged oppression in these proceedings is the exclusion of Mr Lam (as nominee of Megamix) from the management of SEA and the proposed or attempted removal of Mr Lam as a director. It is not in dispute that the removal of Mr Lam as a director of SEA by ordinary resolution of the company in general meeting would be lawful in the sense of being permitted by the Articles of Association (see regulation 66(2)) and could not therefore, of itself, be oppressive (Warwick Howard (Aust) Pty Ltd (1982) 7 ACLR 441 at 443). It is also not in dispute that Mr Lam has been excluded from the management of SEA. The question is whether the proposed removal of Mr Lam as a director and the exclusion of him from the management of the company would be or was oppressive of Megamix in the sense of amounting to commercial unfairness. Once regard is had to the basis of Mr Lam's and Megamix's investment in SEA and what subsequently occurred, it is plain that there is no oppression in excluding him from the management of the company or in seeking to have him removed as a director. Nor is it contrary to the interests of the members as a whole to do so or to seek to do so. It will be recalled that Mr Lam came to Australia seeking "passive" investments. He invested in SEA on that basis. It was always intended that Mr Lam, through Megamix, would have a minority interest in SEA and that control of the company and its day to day operations would remain with Mr Teh and his wife. That this was the intention is evidenced by Megamix's forty percent shareholding leaving control of the company with Mr Teh and his wife, and by the fact that Mr Lam, on his own admission, knew nothing about the seafood processing business engaged in by SEA. Mr Lam was appointed a director of SEA to represent Megamix's minority position in pursuance of the deed executed on 11 October 1994, Mr Lam being the controlling mind and will of Megamix. Subsequently, through another company controlled by him, Mr Lam reneged on a promise to grant a lease of Thurecht Parade to SEA and set up in opposition to SEA from those premises. In those circumstances, it was not commercially unfair to exclude Mr Lam, as Megamix's nominee, from the management of SEA or to seek to have him removed as a director. The action taken in this regard was necessary to protect the interests of SEA from a competitor. It cannot, in my view, be commercially unfair to Megamix to exclude its nominee from the management of SEA and to seek to remove him as a director once regard is had to the basis upon which Megamix became a member of the company, and to the basis for the exclusion being to prevent the controlling mind of a competitor from becoming involved in and privy to the day to day management of the company and decisions as to how SEA should respond to the changed circumstances brought about by the failure of Huxham to grant a lease of the premises at Thurecht Parade and to carry out improvements to those premises as had been promised on 11 October 1994. It is also relevant to the question of oppression that Mr Lam did not seek to be involved in the management of SEA and, in his evidence before me, indicated that he had no desire to so become in the future. Mr Lam's conduct in reneging on the agreement to lease and in setting up business in competition serves to strengthen the conclusion that the conduct by SEA which is complained of was not unfair in the relevant sense (Re London School of Electronics Ltd [1986] 1 Ch 211 at 221 - 222. The application to wind up SEA, insofar as it is founded upon s 260 of the Law, fails. Section 461 of the Law: the "just and equitable" ground Megamix also relies upon the "just and equitable" ground (s 461(k) of the Law) for an order that SEA be wound up. Counsel for Megamix submitted that the agreement of 11 October 1994 (recorded in the deed and the minutes) should be viewed as a form of joint venture or partnership combining the skills of Mr Teh and Mr Bostock with Mr Lam's money which proceeded on certain assumptions, which the evidence reveals to be incorrect, including that SEA was a profitable business looking to expand. The whole basis of the joint venture or partnership having now broken down (in the circumstances recounted at length earlier in these reasons), counsel submitted, it is just and equitable that SEA be wound up. Counsel's submission, as I understood it, was based upon the following passage from the opinion of Lord Wilberforce in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 379 - 380 :- "My Lords, in my opinion these authorities represent a sound and rational development of the law which should be endorsed. The foundation of it all lies in the words 'just and equitable' and, if there is any respect in which some of the cases may be open to criticism, it is that the courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The 'just and equitable' provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise. Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be 'sleeping' members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members' interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere. It is these, and analogous, factors which may bring into play the just and equitable clause, and they do so directly, through the force of the words themselves. To refer, as so many of the cases do, to 'quasi-partnerships' or 'in substance partnerships' may be convenient but may also be confusing. It may be convenient because it is the law of partnership which has developed the conceptions of probity, good faith and mutual confidence, and the remedies where these are absent, which become relevant once such factors as I have mentioned are found to exist: the words 'just and equitable' sum these up in the law of partnership itself. And in many, but not necessarily all, cases there has been a pre-existing partnership the obligations of which it is reasonable to suppose continue to underlie the new company structure. But the expressions may be confusing if they obscure, or deny, the fact that the parties (possibly former partners) are now co-members in a company, who have accepted, in law, new obligations. A company, however small, however domestic, is a company not a partnership or even a quasi-partnership and it is through the just and equitable clause that obligations, common to partnership relations, may come in." It is immediately apparent from the detailed recitation of the facts earlier in these reasons, and from what I have said in relation to the basis for and circumstances of Megamix's minority shareholding in SEA, that the considerations spoken of by his Lordship have no application to these proceedings. The suggestion that the agreement of 11 October 1994 was some from of joint venture or quasi-partnership so as to bring into play the equitable considerations referred to by Lord Wilberforce, is, for the reasons I have already expressed at length, not supported by the evidence and I reject it. Mr Lam was a passive investor in SEA under an arrangement which was a purely commercial one. The investment was in an existing company with an existing business to provide equity capital and working capital to enable the company to expand its operations in the way described in the company profile set out at length at the beginning of these reasons. That the relationship between Mr Teh and Mr Lam is now one of mistrust and disharmony is not to the point (cf Thomas v Mackay Investments Pty Ltd (1997) 22 ACSR 294 at 302). This is not a case where the parties commenced their relationship based on mutual trust and common goals and intentions where that relationship has now broken down making it just and equitable that their enterprise be disbanded. Similarly, this is not a case of deadlock. SEA can continue to operate and has done so to date on the basis that Mr Teh and his interests control the company, in accordance with what was always intended. Counsel for Megamix then submitted, as a factor in favour of granting the relief, that Megamix was "locked in" because its shares in SEA could only be transferred with the approval of the directors of SEA (regulation 5 of the Articles). There is no evidence upon which I would conclude that Megamix is necessarily "locked in" to SEA. There is nothing to suggest that Megamix has sought to transfer its shares but that the directors have declined to register the transfer without good reason. Nor could it be said that the controlling directors have evinced an intention to adopt that course. It is premature to conclude that Megamix is "locked in" in the absence of a proper examination of the prospects of finding a purchaser of Megamix's shares acceptable to the directors of SEA, or indeed the prospects of Megamix's shares being purchased from within SEA and a proper examination of the value at which those shares could be sold (Thomas v H W Thomas at 696, 697; Morgan v 45 Flers Avenue at 708). Finally, the conduct of Mr Lam leading up to these proceedings, would, in my view, have been a strong circumstance in favour of declining to grant the relief sought or any relief had grounds for such relief otherwise been made out. It would be an absurdity if Mr Lam and his companies, having created a situation where it was virtually impossible for the majority shareholder in SEA, acting in the best interests of SEA as a whole, to allow him to participate in the management of the company, were entitled to relief on the basis that he had not been allowed to participate. Had grounds for relief on the just and equitable ground been otherwise established, I would have declined to grant any relief for this reason, whether "unclean hands" operates by way of defence (Ebrahimi v Westbourne Galleries Ltd at 387 per Lord Cross) or whether one simply looks at the conduct of the applicant for relief in determining whether it is just and equitable to grant relief (Re London School of Electronics at 221 - 222; Morgan v 45 Flers Avenue at 708). The conduct of Mr Lam in creating the circumstance which gave rise to his exclusion from management operated to effectively deny him a remedy under s 461(k) of the Law. The application for an order that SEA be wound up pursuant to s 461(k) of the Law also fails. Conclusion on the winding-up application The application will be dismissed. Megamix will be ordered to pay SEA's costs of and incidental to the application, including reserved costs, to be taxed if not agreed. I certify that this and the preceding one hundred and One hundred and five (105) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper Associate: Dated: 27 February 1998 Counsel for the Applicant/Cross-Respondents: A Morris QC and M Martin Solicitor for the Applicant/Cross-Respondents: H C F Lawyers Counsel for the Respondents/Cross-claimants: S Doyle SC and R Lilley Solicitor for the Respondent/Cross-claimants: Deacons Graham & James Dates of Hearing: 6, 7, 8, 9, 12 and 13 May and 18, 19 and 20 August 1997 Date of Judgment: 27 February 1998