Supreme Court New South Wales Medium Neutral Citation: GOWAY Travel Pty Limited v Critchley & Anor [2024] NSWSC 2 Hearing dates: 13, 14, 15, 16 & 17 February, 3 May, and 2 June 2023. Date of orders: 15 December 2023 Decision date: 09 January 2024 Jurisdiction: Equity Before: Slattery J Decision: Declaration made that from 15 March 2015 the defendants were not entitled to deal with the plaintiff on the basis that Ms Comito's had ostensible authority to act on behalf of the plaintiff with respect to the Staff Family and Friends travel scheme. Orders made for the defendants to restore to the plaintiff the net benefits received by the defendants under the Staff Family and Friends travel scheme from 15 March 2015 and for account to be taken of those benefits. Directions made for the resolution of consequential issues. Catchwords: EQUITY – first limb of Barnes v Addy (1874) LR 9 Ch App 244 - the plaintiff sold international travel services to the defendants over a five-year period between 2013 and 2018 – some of the plaintiff's travel services were sold through a "staff, family and friends" discounted travel scheme – defendants were offered discounted travel at rates substantially below market rates and below the likely wholesale cost of providing the travel services – the defendants were purchasers of those services – in July 2018 the plaintiff discovers that a rogue employee is responsible for irregularities in its staff family and friends travel scheme and that the plaintiff's travel services have been marketed and sold through the scheme without its authority and in breach of its employee's fiduciary duty to the plaintiff – the plaintiff seeks recovery of the cost of the travel services supplied to the defendants by the rogue employee – whether the defendants were aware that the rogue employee was selling them travel services without the authority of the plaintiff – whether the plaintiff is entitled on the pleadings to restitution from the defendants on the grounds the defendants made payments for the market value of the travel services supplied to or at the direction of the defendants by mistake or under a total failure of consideration – whether the defendants had the requisite level of knowledge that the rogue employee was acting in breach of her fiduciary duty to her employer, the plaintiff, to attract Barnes v Addy first limb liability – whether the defendants received all travel services from the plaintiff with some of them were supplied to other persons. Legislation Cited: Evidence Act 1995, ss 128, 140 Cases Cited: Baden v Société Générale pour Favoriser le Developpement du Commerce et de l'Industrie en France [1992] 4 All ER 161 Banque Commerciale S A (in Liq) v Akhil Holdings Ltd (1990) 169 CLR 279 Barnes v Addy (1874) LR Ch App 244 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 Briginshaw v Briginshaw (1938) 60 CLR 336 Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Egyptian International Foreign Trade v Soplex Whole Supplies Ltd (The 'Raffaella') [1985] 2 Lloyd's Rep 36 El Ajou v Dollar Land Holdings Plc & Anor [1994] 2 All ER 685 Farah Constructions Pty Ltd v Say-Dee Pty Limited (2007) 230 CLR 89 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 G v H (1994) 181 CLR 387 Grimaldi v Chameleon Mining NL & Anor (No. 2) (2012) 200 FCR 296 Hoare v McCarthy (1916) 22 CLR 296 Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) [2008] FCA 1920 Jones v Dunkel (1959) 101 CLR 298 Kalls Enterprises Pty Ltd v Baloglow [2007] NSWCA 191 Moriah War Memorial College Association v Augustin Robert Nosti [2020] NSWSC 942 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 Orbit Travel Services Pty Ltd v Trustees - Travel Compensation Fund & Ors (unreported, 24 March 1998) Orbit Travel Services v Travel - Compensation Fund [1999] NSWCA 63 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Payne v Parker [1976] 1 NSWLR 191 Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246 Schellenberg v Tunnel Holdings Pty Limited (2000) CLR 121 Smith v Peter & Diana Hubbard Pty Ltd [2006] NSWCA 109 Song v Ying [2010] NSWCA 237 Turner v O'Bryan–Turner (2022) 107 NSWLR 171 Wilhemsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32 Category: Principal judgment Parties: Plaintiff: GOWAY Travel Pty Limited ACN 002 767 839 First Defendant: Robert Critchley Second Defendant: Lynette Tarbuck Representation: Counsel: Plaintiff: A.E. Maroya, S. Scott Defendants: M.P. Cleary Solicitors: Plaintiff: Richard Glover, Richard Glover Law Practice Defendants: Gordon Grieve, Piper Alderman File Number(s): 2020/188401 Publication restriction: No Judgment 1. The Sydney-based company Goway Travel Pty Ltd ("Goway") provides wholesale travel agency services to its related international travel agencies and provides limited local retail travel agency services. Goway brings these proceedings against the defendants, Mr Robert Critchley, and Ms Lynette Tarbuck, to recover from them the value of steeply discounted retail travel services (mainly for airfares, accommodation, and car hire) that Goway supplied to the defendants and their family members from 2013 to 2018, less the amount paid by the defendants to Goway for those services. 2. Goway alleges that Mr Critchley and Ms Tarbuck received these discounted travel services through an employee of Goway, Ms Lisa Comito, under colour of a Goway scheme entitled "Staff, Family and Friends" and later just "Family and Friends". Goway accepts that it had a scheme so named but denies that Ms Comito was authorised under it to provide the defendants, or any customer, with such heavily discounted travel services as she supplied to the defendants. 3. Goway claims that Ms Comito offered Mr Critchley and Ms Tarbuck travel packages so substantially below their retail market value that they must have been aware when they took the benefit of those travel packages that Ms Comito could not have been acting in the course of her duties as an employee of Goway or in the interests of Goway, but that she was conducting an unauthorised operation within Goway in breach of her fiduciary duties to Goway and without Goway's authority to supply those travel products to them or at their direction. 4. Goway claims that the defendants are liable to account to it under the first limb of the principle stated in Barnes v Addy (1874) LR 9 Ch App 244 ("Barnes v Addy") for their receipt of the value of the services represented by these travel packages with the knowledge that they were provided to them in breach of Ms Comito's fiduciary duty as an employee to Goway. And Goway brings a claim for restitutionary relief, on the basis that the defendants have been unjustly enriched at the expense of Goway by accepting Goway's mistaken payment of unauthorised travel packages. 5. Mr Critchley and Ms Tarbuck deny Goway's claim. They accept that they received the travel packages at a cost to them that was substantially lower than the market value of the packages. But they say that all relevant times they believed that Ms Comito was acting within her authority, and they deny that they knew or had reason to know she was acting in breach of her fiduciary duty to Goway in supplying the travel packages to them. They contend they are not liable to account to Goway, either on the first limb of Barnes v Addy, or in restitution. And they say that substantial parts of the travel packages were supplied to their daughters, not to them. 6. Goway claims that it paid a total of $561,228.36 for the travel products and services that supplied to the defendants. This is made up of $279,011.40 for services provided to the defendants themselves, $15,544.63 in respect of travel services provided to Mr Critchley's daughter, Ms Jodi Storey and $266,672.33 in respect of travel services provided to Mr Critchley's daughter, Ms Fryer, her husband and children. By virtue of the difference between money paid to Goway by the defendants and the cost to Goway of engaging third-party suppliers to provide the services, Goway says that the defendants have been unjustly enriched in the net sum of $377,133.89 and claims that sum either in restitution or based on Barnes v Addy recipient liability. 7. Though initially put in contest, it was conceded by the defendants during the trial that Ms Comito was acting outside her actual authority as an employee of Goway in supplying the services within these travel packages to the defendants. But the defendants' case was that the supply of these services was always within her ostensible authority. Ms Comito's services with Goway were terminated in December 2018 on the grounds of her unauthorised conduct. The central issues for trial were whether she had ostensible authority to supply the travel packages and whether the defendants had the requisite knowledge that Ms Comito was acting in breach of her fiduciary duty to Goway in arranging their supply so they would attract Barnes v Addy first limb liability. 8. Mr A. Maroya of counsel together with Ms S. Scott of counsel, instructed by Richard Glover Law Practice, appeared for Goway in the proceedings. Mr M. Cleary of counsel instructed by Piper Alderman appeared for Mr Critchley and Ms Tarbuck. In a case with a long chronology of relevant facts, strongly contested and at times perplexing evidence, the Court was much assisted by the thorough analysis and careful submissions from the legal representatives on both sides. 9. These reasons first set out a narrative of relevant events. This narrative represents the Court's findings on the matters covered. For reasons of economy this narrative does not always refer to versions of the facts that have been rejected. The email correspondence between the parties was voluminous and detailed. It is not possible to include it all without making this judgment unreadably long. The Court has selected in these reasons the main communications and events which the Court regards as being of significance. Following the narrative of findings on the claim these reasons deal with legal issues presented by Goway's claim. 10. The plaintiff's case against each of the defendants maintains allegations of dishonest conduct. Mr Cleary's submissions on the half of the defendants often correctly emphasised that because of the seriousness of the case made against the defendants that the Court must be comfortably satisfied about the material aspects of the case and the conclusions that it that draws: Evidence Act 1995, s 140 and Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (at 361-2). The Court has taken that required approach to the assessment of the evidence in this case. That has required the Court to examine the detail of the evidence closely from the historical narrative between late 2013 in mid-2018 and to set out relevant parts of it in these reasons that bear upon the inferences drawn by the Court. 11. This narrative begins with a profile of the parties and the witnesses and makes some general comments about their credibility. Mr Critchley and Ms Tarbuck Arrange Their Travel – 2013 to 2018 Profile of Goway and Mr Critchley's Family 1. Goway called one witness in the proceedings, its former general manager, Mr Gregory Atkins. And only one of the defendants gave evidence, Mr Critchley. He called his two daughters, Ms Shari Fryer, and Ms Jodi Storey. Ms Tarbuck did not give evidence. 2. Goway and Goway North America. Goway is headquartered in Sydney. It is a subsidiary of Goway Travel Limited ("Goway North America"), which is incorporated in and operates out of Canada. Goway North America opened Goway in Australia to assist it to provide its North American customers with accommodation and tours in Australia and in later years, in New Zealand. 3. Goway had three directors at the times covered by the events in these proceedings. They were Mr Bruce Hodge, Goway North America's founder, Mr Peter Lacy, Goway North America's Chief Financial Officer and Mr Gregory Atkins, Goway's general manager of its Australian business. Both Mr Hodge and Mr Lacy worked in Toronto, at Goway North America's head office. Mr Atkins reported from Australia to Mr Lacy and Mr Hodge in Toronto. 4. Goway's core business is the operation of a travel agency, booking travel services, including airfares, accommodation, and car hire throughout Australia and New Zealand to support the business operations of its Canadian parent company. In the ordinary course of Goway's retail business, Goway books these services on behalf of its customers, pays the suppliers for the travel services, and charges the customer the cost of the travel services, together with an additional fee for the service provided by Goway. The plaintiff, Goway, provided travel services to the defendants. 5. Mr Gregory Atkins. Goway employed Mr Atkins as its general manager and the company secretary of its Australian business from 10 May 2006 until 12 December 2018. Mr Atkins' role was to oversee the strategy and direction of Goway's Australian and New Zealand businesses and in doing so to manage approximately 28 staff working within five departments named respectively Operations, Retail, Accounts, Products, and Groups and Incentives. 6. Mr Atkins was a puzzling witness. His evidence is replete with examples of failing to ask sufficient questions of Ms Comito, when confronted with transactions and behaviour on her part that objectively called for further inquiry on his part. But rather than question her, he kept accepting her word, apparently relying upon her authority within Goway as a trusted long-term employee. He says that despite her at times anomalous behaviour, he never lost faith in her commitment to Goway until the very end. He too left Goway not long after her employment was terminated. 7. But in the Court's view, by about early to mid-2017, Mr Atkins knew there was something seriously financially wrong with Ms Comito's administration of the Staff Family and Friends travel scheme, which warranted deep investigation and a suspension of judgment on his part as to whether he could trust her at all. But after mid-2017, he seemed to close his eyes to the constantly arising troublesome questions that her conduct raised for him. One of the curious puzzles of this case is that Goway asks the Court to infer that the defendants should have realised there was something seriously wrong with Ms Comito's administration of the Staff, Family and Friends travel scheme. But Mr Atkins, who knew far more than the defendants about what should have been the proper operation of the scheme, states that he was accepting at face value Ms Comito's false explanations about its anomalous operation under her management. The missing piece of this puzzle is that, quite surprisingly, Mr Atkins had, in the earlier years in question here, far less day-to-day contact than the defendants with the operation of the scheme. 8. Mr Atkins was mostly a reliable witness except in relation to events after mid-2017. From that time the Court cannot accept that as an experienced business executive, he could reasonably have believed what Ms Comito was telling him about the Staff, Family and Friends travel scheme. The evidence did not explore whether there was any secondary motivation for his failure to enquire of Ms Comito about the anomalies he observed in the scheme from mid-2017. But the Court does not accept that his failure to question Ms Comito once he was alerted to the scheme's financial dysfunction, was because he did not think there was anything wrong with the scheme. He was at times evasive in his answers. Despite the Court's doubts about him, his evidence was often preferred when it contradicts the evidence of Mr Critchley. 9. Ms Comito. Ms Comito did not give evidence. The Court was told that at the time of the hearing she would soon face criminal charges relating to her questioned conduct in the proceedings. Ms Comito's motivation for acting outside her authority as an employee in conferring very substantial benefits through discounted travel packages on a small group of people associated with the Staff, Family and Friends scheme, such as the defendants, is obscure. Ms Comito did not solicit, and neither Mr Critchley nor Ms Tarbuck ever offer her, any consideration in exchange for the benefits they received through her from Goway. It is possible that Ms Comito was motivated by earning commissions on the travel benefits she was supplying to the defendants. But there is no direct evidence of this. So, in the end her precise motive remains an unexplained mystery. 10. But it is not necessary to investigate Ms Comito's motive. In the absence of a clear motive two observations can be made. First, the lack of any demonstrable benefit passing from the defendants to Ms Comito to give her an incentive to engage in the conduct that she did makes the plaintiff's case harder to prove. And in the earlier years when she was operating the Staff, Family and Friends scheme, her conduct at least won her the friendship and affection of those that she benefited and that she perhaps wanted to impress. Due to the criminal charges being brought against Ms Comito, the Court did not draw any Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference against any party for failing to call her. 11. Mr Robert Critchley. Mr Critchley was the only defendant to give evidence. Goway sought to make its case against Ms Tarbuck directly from her email correspondence with Ms Comito, her husband, Mr Critchley, and other persons and from surrounding circumstances. 12. Mr Critchley retired after an active and successful business career. He was 80 years old at the time of the hearing. He had attended the University of Adelaide, graduating with a Bachelor of Economics in 1969. He qualified as a certified practising accountant in 1970. He completed most of the units towards an MBA degree at the University of Melbourne. Between 1960 and 1986, Mr Critchley worked in the domestic and then the international banking industry, partly dealing in foreign exchange transactions. In 1986 he successfully started his own accounting firm, working until 1996 as the managing director of the practice entity Critchley and Associates Pty Ltd. The firm was subsequently restructured and renamed Critchley Wetterling O'Rourke. 13. Between 1990 and 1997, Mr Critchley worked as CEO and Chairman of DBM Australia Pty Ltd, an Australian franchisee of an international group, DBM Inc, in the business of assisting employees to transition to new roles. He was a major shareholder in this Australian franchisee company until he sold it back to its US licensor in 1995. Between 1997 and 2000, he worked as President of the Asia Pacific region for DBM Inc, based in Sydney but responsible for operations in 11 countries. Between 2000 and 2004, he worked as the International President for DBM Inc, based in Sydney but with responsibility for operations in 49 countries. 14. Since midcareer, Mr Critchley has had professional involvement through these DBM entities in the field of labour transition, a field often associated with corporate reconstructions. From the early 2000s, Mr Critchley authored three books on the principles and practice of labour transition including in association with corporate reconstructions. His broad banking, international and specialist labour related professional experience made him an attractive addition to boards in medium sized enterprises. He has been a member of the boards of some 18 such companies throughout his career. 15. As might be expected from his professional career, Mr Critchley was self-assured and confident in style when giving evidence. He had firm opinions about management, business behaviour and business ethics. He regarded himself as maintaining high standards of business conduct. Mr Critchley is a sophisticated businessman with a sound insight into finance, management, and the practical operations of many kinds of businesses and he showed just that expertise in his responses to questions. 16. Mr Critchley sets high performance standards for himself and expects them of others. He is used to navigating difficult business situations. He was not the least overawed by cross-examination, challenging counsel from time to time when he thought counsel's questions were not formulated precisely enough for him to answer them. 17. Mr Critchley views his own conduct as righteous and ethical. He saw himself as an innocent deceived by Ms Comito all the way through from 2013 to 2018. This is indeed the correct analysis of his outlook for the first few years of his dealings with her. But he continued to see himself this way right to the end. As will be seen several factors, including the benefits he was receiving through her, blinded him to the accumulating signals from several directions that something was so seriously wrong with Ms Comito's administration of Goway's Staff, Family and Friends travel scheme that Ms Comito was probably running it as an unauthorised operation within Goway and misapplying its resources. 18. With some exceptions, Mr Critchley mostly gave credible answers that can be accepted when questioned about the period up to early 2015. But when being questioned about the period after then his answers often became evasive and less reliable. As a sophisticated businessman he was sometimes able to launch into a response which looked like an answer to a question but which he must have known did not engage with the real issue being put to him. 19. Mr Critchley's affidavit evidence was presented throughout with the kind of detail that was fundamentally at odds with a witness who is trying to give evasive explanations of questionable conduct. He gave a franker affidavit in response to the plaintiff's claim than do many defendants in his position. That may be attributed to his strong self-belief in his own innocence and the commendable thoroughness of his own lawyers in the well-presented case put on his behalf. He was keen to tell his side of the story to persuade the Court of his fundamental innocence in this affair. He did this plainly because of his belief that his position could be justified. 20. And as the Court's analysis shows, for about the first 18 months until March 2015, it could be justified. But beyond that time his self-belief in the righteousness of his conduct and the generous benefits he was receiving from Ms Comito blinded him from critically evaluating some of Ms Comito's conduct. As a result, he either downplayed or ignored increasingly clear signals that Ms Comito was probably conducting Staff, Family and Friends as an unauthorised operation inside Goway and misapplying its resources. As the evidence showed, eventually Mr Critchley was content deliberately to ignore this signals. 21. At times the Court was required to choose between conflicting evidence of Mr Atkins and Mr Critchley. Mr Atkins had his own credibility problems, and those choices are made on a case-by-case basis, sometimes Mr Critchley's evidence being preferred but after mid-2017 quite often the Court prefers the evidence of Mr Atkins. 22. Mr Critchley was compellable to give evidence and was called to give evidence by Ms Tarbuck in her case and objected to giving evidence, rather than electing to give evidence in his own case. As a result of the taking of this course the Court granted him a certificate under Evidence Act 1995, s 128 in respect of his affidavit evidence in chief, and his cross-examination avoiding the established restrictions upon the operation of that section: Song v Ying [2010] NSWCA 237. 23. Ms Lynette Tarbuck. Ms Tarbuck did not give evidence. At the time of the hearing, she and Mr Critchley had been together as domestic partners for about 13 years. She had known him before that, working for him in his business performing executive assistant functions. In this role, even before they became domestic partners, he came to respect and rely upon her judgment. The Court can infer from her email correspondence that while not having the business experience of Mr Critchley, she nevertheless appears to be highly efficient, collaborative, have good attention to detail and communicates with people and conveys information in a timely and organised way, including between Mr Critchley and other people. She was the main point of contact between the defendants and Ms Comito. She and Mr Critchley travelled extensively together around the world for business and leisure. In 2019 for example, just before the pandemic, she and he spent 16 weeks away from Sydney. 24. The parties contested what inference could be drawn from the unexplained failure of Ms Tarbuck, who was present in Court, to give evidence in her own case. The inference that the Court draws from her failure as a party to give evidence is that her evidence would not have assisted her case and the Court can make findings unfavourable to that party with greater confidence: Payne v Parker [1976] 1 NSWLR 191, at 201, G v H (1994) 181 CLR 387; [1994] HCA 48, at 391. Although there must be evidence that the party against them it is to be drawn is required to explain or contradict: Schellenberg v Tunnel Holdings Pty Limited (2000) CLR 121; [2000] HCA 18, at [51]. 25. Ms Jodi Storey. Ms Storey is one of Mr Critchley's daughters. She is a psychotherapist. She gave compelling and reliable evidence which the Court accepts. Her account of her interactions with her father about failed or failing travel arrangements organised through Ms Comito was starkly realistic. She had a good memory and could generally give a detailed account of events in which she had been involved. 26. Ms Storey's introduction to the scheme came with her father's imprimatur. She deferred to his superior experience in matters of business and finance. But she nevertheless had direct experiences of the failures of the Staff, Family and Friends scheme, which led her ultimately to discontinue its use. Faced with this disappointment, she commenced proceedings in the New South Wales Civil and Administrative Tribunal ("NCAT") against Goway for the recovery of the money she had paid into the scheme. 27. Mr Critchley had a close relationship with both his daughters. Ms Storey came across to the Court in evidence as a warm person who had a close relationship to her father. This close relationship and her evidence indicated she shared with him the detail of her at times very unsatisfactory experiences with Ms Comito's administration of the Staff Family and Friends travel scheme. The information that Mr Critchley's daughters gave him is an important part of his overall knowledge bank about the scheme from mid-2017. 28. Ms Shari Fryer. Ms Fryer is Mr Critchley's other daughter. Like her father Ms Fryer is accomplished in business. She gave evidence by AVL from Steamboat Springs in Colorado, USA where she lives and from where she conducts her business, which is also involved in the field of corporate reconstruction and labour transition. 29. She was well able to handle questions in cross-examination. She chose the words she used in her answers with the careful judgment of an accomplished businesswoman. She was quite conscious that words and anything imprecise or incorrect could disadvantage her. She took a more calculated approach to her evidence than her sister. The Court accepts her evidence of her interactions with her father and her dealings with the scheme. Like her sister, Ms Fryer has a good relationship with her father and that and her own evidence show she is likely to have shared with him the detail of all her adverse experiences with Ms Comito. 30. The combined knowledge of the, at times, alarming experiences that Ms Storey and Ms Fryer had with Ms Comito's operations of the Staff, Family and Friends scheme from mid-2017 constituted an important addition to the burden of background knowledge that Mr Critchley brought to his dealings with Ms Comito. 31. In the end, Mr Critchley's understanding of the Staff, Family and Friends scheme came through different knowledge sources: his own direct experience of Ms Comito, Ms Tarbuck's experience and his daughters' experience. To understand his state of mind at any time these knowledge sources must be aggregated. Goway's Business Structure and Ms Comito – 2006 to 2013 1. Goway's core business was as an inbound tour operator. Most of Goway's income came from coordinating the quoting, reservation, and confirmation of "ground" arrangements, that is the Australian land-based arrangements, for overseas based travel agents including Goway North America. Much of this core business was what is called in the travel industry Fully Independent Tours ("FIT"), which describes independent travellers who do not travel with groups, but rather who seek the assistance of agents to help them in designing their own itineraries and making the required accommodation and tour bookings. Goway's largest non-related client was a German-based travel group, Best of Travel Group, which represented multiple travel agents in Germany, the Netherlands, Switzerland, Austria, and Belgium. 2. Goway first employed Ms Comito as a FIT travel consultant in February 2004. She was well liked within Goway, regarded as a hard worker, and became trusted by management. After 10 years, in October 2014, she was promoted to become Goway's operations manager. The operations manager at Goway was responsible for its inbound tour operations including servicing its clients like Best of Travel Group. The operations manager supervised approximately 12 staff, who worked in the operations department of the business. In her capacity as operations manager, Ms Comito reported directly to Mr Atkins, the general manager, and was seated close to him in Goway's Sydney office. 3. A relatively small part of Goway's business operated as a retail travel agency, booking travel arrangements for members of the Australian public planning outbound travel from Australia. Goway did not have a retail shopfront and did not advertise its retail travel services. Reflecting its small component of Goway's operations, the retail department consisted of the retail manager who reported to Mr Atkins. Usually only one retail travel consultant reported to the retail manager at any given time. Goway's retail managers were Mr David Chipps between November 2008 and January 2016, and Ms Carrie Bell between January and December 2016. There was a gap in this position in the first half of 2017. Ms Comito was promoted to the position of retail manager in July 2017. Her primary role as retail manager was to maintain and expand Goway's retail client base, and to supervise the retail travel consultants employed by Goway. She served in this role from July 2017 until December 2018, when her services with Goway were terminated. 4. In its retail operations Goway did not directly provide flights or accommodation to customers. Goway had relationships with third-party suppliers of hotels, tours, cruises, and flights. Mr Atkins instructed his retail staff to book services through these operators and, once that had been done, to enter those services into Tourplan, Goway's enterprise software operating system. Mr Atkins required his retail staff, including Ms Comito, to invoice retail customers for the cost of the services together with a small commission and to collect payment before issuing tickets to them. Goway's Staff, Family and Friends Travel Scheme – 2006 to 2008 1. The Staff, Family and Friends travel scheme was not a fictitious creation of Ms Comito. It began as a genuine staff loyalty scheme to regularise previous informal arrangements within Goway and to take unnecessary pressure off the retail department in the booking of staff travel at discounted rates. As Mr Atkins' own introductory internal email to staff on 11 August 2006 stated, Goway "need[ed] to put in place a policy for all staff, family and friends travel so it becomes more formalised as [the retail department] are extremely busy". 2. Goway had been cementing staff loyalty and promoting staff retention with favourable travel arrangements for some time. But those arrangements had become administratively untidy, and Mr Atkins aimed to formalise them into a set of policy rules. Mr Atkins' 11 August 2006 email went to all staff members under the heading "Staff, Family and Friends Travel Arrangements" and announced the following eight-point policy: "1 Staff are able to access our nett nett rates, except if paying by card then fees need to be added. 2 Please request your travel through Sharon. 3 Payment should be received prior to travel for friends unless agreed to by the General Manager. 4 Payment for staff bookings need to be made by the end of the travel month, unless prior arrangements are made with the GM. 5 For any domestic air travel on Jetstar or Virgin, it is best for everyone to book and pay directly unless you are travelling on Goway business. 6 The published airfare is applicable for family and friends as there is only a 5% margin or less. 7 For hotels, tours, packages, cruises family are to be charged nett plus 5% and friends nett plus 10%. 8 Family and friends must pre-pay before tickets can be issued." 1. Mr Atkins' belief was that this was a reasonable scheme, given that Goway and the industry generally paid staff relatively low salaries and Goway's staff members were interested in travel discounts. The cost of the scheme to Goway was clearly financially contained. It was anchored to published airfares, providing defined discounts to staff of 5% from those airfares. Mr Atkins explained that 5% was the maximum commission margin usually available from airlines on ticket bookings. Travel agencies have more margin available on ground arrangements such as accommodation and car hire. In this policy the discount on the ground arrangements was limited to nett plus 5% for family and net plus10% for friends. 2. In August 2006 Mr Atkins had a secretary working for him, by the name of Sharon, who would monitor which staff members were accessing the scheme. She would report back to Mr Atkins. Sharon later left Goway and the scheme's administration was dispersed to the manager of the staff member who was seeking to access the scheme, generally either the operations manager or the retail manager. Those two managers in turn were expected to report to Mr Atkins from time to time about the operation of the scheme. 3. This change, taking the scheme away from Mr Atkins' own close superintendence and decentralising it proved to be one of the scheme's weaknesses. Over time, this weakness was ultimately compounded by other factors including, a lack of tight supervision of scheme usage by staff and of access to the scheme by friends and family members, a failure to rein in high scheme debt levels, and a lack of elementary fraud controls by a requirement for sign off on benefits by more than one person. But these problems did not emerge until later. 4. When Ms Comito became operations manager in 2014, by virtue of that position she had the authority to determine which of the staff members reporting to her and their family and friends could have the benefit of the scheme. From as early as 2013, she began to redesign the scheme to be far more generous than the original August 2006 eight-point policy, offering a range of travel services discounted below retail market value and below the discounts contemplated by the August 2006 eight-point policy. 5. In June 2008, Mr Atkins updated the procedures of the scheme to minimise its internal administrative burden on Goway staff and to ensure that Goway's retail customers still had priority over staff, family and friends using the scheme. 6. The scheme later changed its name to "Family and Friends", the change being of no special significance. For convenience in these reasons the various versions of the scheme are also often referred to by the acronym "SFF". And the channel through which it appeared to be administered on behalf of Goway is often simply referred to as "staff travel". Mr Critchley meets Ms Comito – July 2008 1. Mr Critchley first met Ms Comito through his accountant, Mr Steven Waite. Mr Waite was a partner at the accounting firm, Crowe Horwath, which had provided accounting services to Mr Critchley since about 1983. Mr Critchley respected the quality of Crowe Horwath's accounting work and had recommended the firm to many of his business acquaintances and friends over the years. Mr Waite became a partner of the firm in 2006 and undertook accounting tax and financial advisory work on Mr Critchley's account with the firm. 2. By 2008, Ms Comito had become Mr Waite's domestic partner. Mr Waite introduced Mr Critchley to her in July 2008 at a business function held by Crowe Horwath. From 2009, Mr Critchley and Ms Tarbuck became good friends with Ms Comito and Mr Waite, mixing socially with them, including over dinners and on sporting occasions. Mr Critchley and Ms Tarbuck were guests at Mr Waite's and Ms Comito's wedding in 2010. 3. Mr Critchley and Ms Tarbuck's relationship with Mr Waite is important background to later events. Mr Critchley respected Mr Waite's skill and judgment. He also knew that Mr Waite was familiar with Goway's internal structures and practices through his relationship with Ms Comito. When Mr Critchley became puzzled about Ms Comito's anomalous conduct, Mr Waite was one of the people to whom he turned for reassurance about her work at Goway, which Mr Waite gave. Information Exchanged Between Mr Critchley and Ms Tarbuck 1. Much of the correspondence between Ms Comito and the defendants took place between her and Ms Tarbuck, who was not called to give evidence. Some but not all the correspondence was copied to Mr Critchley. But Ms Tarbuck and Mr Critchley were close collaborators on their travel plans, and in the Court's view, she kept him informed of all her important communications with Ms Comito. As he explained, "she'd show me, definitely, if it was – she felt it was important". 2. A strongly contested issue is whether Goway has proved Mr Critchley's knowledge of communications that were made solely by Ms Comito to Ms Tarbuck. Even though Ms Tarbuck did not give evidence, the Court accepts Mr Critchley had an easy communicative relationship with her, in which he trusted her to arrange their joint travel and to inform him about all the important details. The defendants submit that Goway should be required strictly to prove that Mr Critchley saw each of Ms Tarbuck's email communications with Ms Comito and unless that can be demonstrated, the knowledge in them cannot be attributed to him. 3. This is too artificial an approach. It does not acknowledge the reality of their relationship. Mr Critchley praised Ms Tarbuck's organisational and communication skills and spoke of her with admiration, respect, and affection. The way he spoke about her gave the Court the impression that there was strong two-way communication within this couple who shared everything of importance to one another. He explained they long had, and continued having, access to one another's emails due to a business arrangement they created, when she was working for him as his executive assistant. At one point he agreed that he and Ms Tarbuck "have nothing to conceal from each other". 4. The Court can confidently infer from this evidence that Mr Critchley knew from his discussions with Ms Tarbuck and her showing him emails of significance from time to time, everything of importance about Ms Tarbuck's communications with Ms Comito about their mutual travel arrangements, in which he had a strong interest. Goway does not have to prove that Mr Critchley was shown individual emails to establish his awareness of the contents of her communications with Ms Comito. The Court infers for example from the Court's assessment of their relationship that Ms Tarbuck told Mr Critchley about the limits on communications of Ms Comito's office with anyone else at Goway, indeed he followed the same practice. He was also aware from Ms Tarbuck and from what emails she showed him that Ms Comito preferred communications on her Hotmail email address, although he did use Ms Comito's Goway email address from time to time. 5. This conclusion is not placed upon some theory of imputed knowledge or agency between the defendants. It is based on the Court's findings as to the nature of their relationship, the number of Ms Comito's and Ms Tarbuck's emails copied to Mr Critchley, the fact that he had visibility of her emails if he wanted to and the extent to which Mr Critchley from time to time chooses to intervene directly in or take up communications with Ms Comito. The defendants were critical in final submissions of the limited cross examination of Mr Critchley about which emails were specifically drawn to his attention. He was taken to several sample emails in 2013 and 2014. It is possible he did not see some of these early emails in these years as he says. But in the later years from 2015 on he is using the travel obtained through Goway himself more often or it is being arranged for his daughters. The reasons for his interest in and therefore knowledge of Ms Tarbuck's communications with Ms Comito becomes greater from 2015. The Defendants Become Goway Retail Customers – 2013 to 2014 1. Mr Critchley and Ms Tarbuck enjoyed travel. They had long been avid travellers. Mr Critchley acquired a taste for international travel when he was a banker. This couple had a weakness for seeking out luxury holidays at the best discounts, flying business and first-class on upgrades, and using frequent flyer points to fund their leisure choices. They were members of the Chairman's Lounge operated by Qantas, until they began to take up the flights offered by Ms Comito, which were often with other airlines. Mr Critchley's credit was attacked by Goway based on evidence that he gave about the Chairman's Lounge but that did not damage his credibility. The defendants were members of a club called Luxury Escapes, which offer discounted luxury resort accommodation. They were very interested in what Ms Comito and Goway had to offer them in travel discounts. 2. Prior to 2013, Mr Critchley and Ms Tarbuck had booked their travel services with Corporate Travel Management Pty Ltd ("CTM"), an independent all-inclusive travel booking and management service. But sometime in 2013 at a mutual social occasion, Ms Comito suggested to Mr Critchley that he and Ms Tarbuck "try our retail arm". This conversation coincided with Mr Critchley and Ms Tarbuck's booking contact leaving CTM. So, they decided to try booking their retail travel through Goway. 3. They quickly became Goway retail customers. Initially they dealt with Goway's then retail manager Mr Chipps. They were frequent travellers and principally made their bookings through Mr Chipps until Ms Comito's offerings largely displaced his services. Mr Chipps did not supply them with discounted travel services. But occasionally when he was away, Mr Critchley and Ms Tarbuck booked their travel through Ms Comito. Mr Chipps left Goway in 2016 and then they booked exclusively through Ms Comito. 4. Goway's case contrasts the defendants' bookings with Mr Chipps and Ms Comito. Goway contends in summary that the defendants' dealings, mainly through Ms Tarbuck, with Mr Chipps during 2013 and 2014 were plain examples of the defendants making unremarkable international travel bookings with a travel agent at commercial rates in the ordinary and unremarkable course of travel agency business. 5. And there is much to be said for this. During this period the defendants booked through Mr Chipps international return flights from Sydney as follows: to Greece for two in October 2013 for $14,701.26; a return economy flight for one to Colorado in December 2013 for $3,835.88; a return premium economy flight to LA in March 2014 for $5,338; return business class flights to Thailand in August 2014 for $3,798.00 each; return business class flights to Italy in October 2014 for $16,624; and a return business class flight from to California in December 2014 at a cost of $9,087. The Court infers that their booking and use of these flights gave the defendants a realistic sense of both the market prices of such international flights being offered through Goway's retail arm and a sense of the commercial practices that Goway ordinarily employed when customers were making bookings. 6. Those Goway commercial practices involved Mr Chipps doing the following: using Goway (@Goway.com.au) email addresses for communications; using Goway logos with invoices and correspondence; selling individual (single or return) tickets for specified journeys; issuing tickets immediately upon the payment of the price of the ticket; and offering tickets at publicly available prices which could be compared with the prices offered by other travel agents. The offers that Ms Comito began to make from late 2013 contrasted with these practices. She justified the differences in these practices on the basis that the offers she was making were not retail offerings but came through the Staff, Family and Friends travel scheme which she was administering. 7. One of the early questions to be addressed is whether her explanations of those differences should have been accepted by honest and reasonable persons in the position of the defendants or whether those differences would have indicated that she may have been acting against the interests of Goway. This involves examining the profiles of the offers that she began to make in 2013 and 2014. They show that Ms Comito was calculating, patient and often meticulous in cultivating her bond of friendship with Ms Tarbuck and the defendants' weakness for fine travel at cheap prices. Ms Comito Probes the Defendants – September 2013 1. Amid the defendants' regular dealings with Mr Chipps, on 26 September 2013 Ms Comito offered them a "special" opportunity, through what she described as Goway's "staff travel" section. The deal would permit the defendants to stay at the Wolgan Valley Resort in the Blue Mountains for Christmas in July 2014 for $250 per night. It was proposed that the defendants stay at the resort with Mr Waite and Ms Comito at a price that was a very significant discount on the commercial rates then being offered by this resort. 2. This introductory offer had a dual purpose from Ms Comito's perspective. She was testing the defendants' inclination to accept discounts through her private communication channels away from the supervision of Mr Chipps and the broader Goway retail structure. This first email had several features which were to repeat themselves over the coming years and which differed from the defendants' dealings with Mr Chipps. It said: "I have negotiated this special with Walgan directly as we are return guests. This is not through our Retail division at work this is separate and through our staff travel. If you were to book through Dave in retail they would charge you full rate so I have not told them that I am offering you this as you are one of their clients :) so appreciate if we keep this to ourselves. If you and Bob would like to attend please let me know and I will hold your spot. The only thing is you need to prepay now and you will only get a receipt until we pick the dates. The cost is $250pp per night as we are return stay guests. Steve and I will be going 3/9. If you are interested let me know, if not no problems. Just so you know I use this email as my work email is a central reservation that all staff can access so prefer my friends and close clients use this email." 1. This initiating email was cleverly constructed to test the defendants and to set different expectations for their future communications with Ms Comito from what they had experienced with Mr Chipps. It explained why Ms Comito's private Hotmail email address was being used because her work email was "a central reservation that all staff can access", implying it was inconveniently used for general retail booking purposes. This email made quite explicit for this first transaction that (a) Ms Comito was deliberately concealing this offer from Mr Chipps – "so I have not told them that I am offering you this as you are one of their clients", and (b) should the defendants choose to communicate about the offer with Mr Chipps they were likely to lose the advantage it conferred – "if you were to book through Dave in retail they would charge you full rate". Communicating only with Ms Comito was the way to secure the attractive discount. The offer also set expectations of a lower standard of service where precise booking dates, the issuing of receipts and other formalities would be delayed because this was staff travel. 2. This 26 September 2013 email raises obvious questions: that if Ms Comito was legitimately sharing with the defendants a benefit that was available to her as a staff member of Goway, why did it need to be kept from Mr Chipps; and, Ms Comito's work email did not look like a central reservations or other similar kind of generic email address because it actually used an abbreviation of her name followed by "@goway". 3. The defendants did not see what Ms Comito was doing. This is understandable. They were the unsuspecting victims of Ms Comito's wiles in playing upon their weakness for a good travel deal. 4. Goway submits that even at this early point that reasonable people in the position of the defendants would have had "immediate concerns" about Ms Comito's authority on behalf of Goway. As will be seen in the legal analysis later in these reasons, the conduct of a reasonable person in the position of the defendants is the touchstone of whether they were entitled to rely upon Ms Comito's ostensible authority to bind Goway. 5. Goway's submissions expect far too much of human nature at this early point in the narrative. Customers of travel agencies are not detectives. They are not looking for potential fraud or anomalous behaviour when dealing directly with people held out as travel agency employees. Even when it appears anomalous, behaviour takes time to recognise, absorb, process, and then to be questioned amidst the general pace of life. Fraud often free rides on people's desire for financial advantage. Reasonable people in the position of these defendants would be unlikely to have had sufficient reason to question at this early time that Ms Comito was not acting on Goway's business. 6. Neither Mr Critchley nor Ms Tarbuck subjectively interpreted Ms Comito's conduct up to this time in that way. It is not until later that they needed to bury their growing doubts about Ms Comito in rationalisations. The defendants' closing submissions also rightly point that this email should properly be construed as an email between friends, not some formal email between parties who do not know each other or have a business relationship. This is evident from the language used. Their submissions also contest a point said to be made by Goway commencing with this email, that what Ms Comito describes as "staff travel" was not legitimate. There was undoubtedly a staff travel operation within go away. The real question that arises later is whether Ms Comito's purported forwarding of emails from staff travel was real. 7. A realistic and objective view of the defendants' circumstances at this time must also recognise the power of three implicit influences which reassured them for a time that they could rely upon Ms Comito's communications being a legitimate part of Goway's business and that they could rely upon Ms Comito's integrity. 8. First, Ms Comito presented as a trusted, experienced, and long-term employee of Goway in a position of managerial responsibility. In that role, she appeared to operate the SFF which continued to deliver tickets and accommodation through Ms Comito's apparent capacity to direct the resources of Goway. And in that role, Ms Comito put in strong effort on behalf of the defendants, requiring constant engagement with detailed travel booking arrangements. Her work only later showed signs of unreliability. 9. Second, Mr Critchley had years of experience in corporate restructuring and employee management. He was entitled to assume that the business and employee structure that Goway presented to him had, absent continuing unusual behaviour on Ms Comito's part that was obviously contrary to Goway's interests, well-developed internal fraud controls. And he was entitled initially to rely upon the integrity of the employees that Goway had judged fit to be appointed to represent it to him. His first thought from his corporate experience is not likely to have been that Goway's customers, rather than Goway itself, should be scrutinising its employees for fraud. But over time his broad business experience should have sensitised him, or a reasonable person in his position to the anomalies that began to emerge with Ms Comito's behaviour. 10. Third, Ms Comito was married to Mr Waite, who was a trusted long-term professional adviser of the defendants. Mr Critchley's evidence revealed a comfortable but respectful professional relationship in which he placed deep financial reliance upon Mr Waite. He later reassured the defendants about Ms Comito's role within Goway and with the SFF. A man who the defendants completely trusted with their financial affairs, to be precise, professional, and efficient, had himself expressed a public judgment that Ms Comito should be his life partner in marriage. His marriage to Ms Comito brought with it the deeper implication on which the defendants were entitled to act: that if they were prepared to accept his continuing judgment and advice in respect of their financial affairs, then they should also accept that he had probably deployed those same character traits in his choice of life partner. Taking advantage of that relationship, this first email from Ms Comito was copied to Mr Waite. But even despite this relationship, the defendants were astute enough to be aware that Mr Waite's opinion of his wife was likely to be biased. 11. There is danger here of polluting the Court's judgment of the reasonableness of the defendants' conduct with the impermissible influence of hindsight. Their conduct should be assessed by how they were equipped at the relevant time to interpret what they knew. Goway's submissions tended to overlook this feature at the early stages of this complex factual narrative. 12. Ms Tarbuck responded to this first email as well as Ms Comito could have hoped, replying as follows: "All good here and thanks for your note and mums the word with regard to mentioning this to anyone. We'll also be mindful of the personal email address. How are you going this week? Thanks for the kind offer and I am sure we will take it up. We'll just have a chat to Bob this afternoon and come back to you. Thanks so much for including us. I will revert." 1. Mr Critchley explained in his affidavit that he and Ms Tarbuck questioned Ms Comito about the use of her Hotmail address. He explained that Ms Comito came up with "excuses" about using the Hotmail address on one occasion saying that she did not "want to get the family and friends specials muddled up with my commercial work". Goway submits this evidence should not be accepted. 2. The Court does not find Mr Critchley's evidence on this subject persuasive for at least four reasons. First, the tone and substance of Ms Tarbuck's reply email is quite the opposite of Mr Critchley questioning Ms Comito's use of the Hotmail address. Secondly, Mr Critchley's cross-examination on the subject was not persuasive, as his memory of questioning Ms Comito about it was poor. Thirdly, none of the extensive email evidence supports Mr Critchley questioning Ms Comito's use of the Hotmail address. Fourthly, Mr Critchley's evidence is different from the excuse that Ms Comito uses in her email that the objective was to keep information away from Mr Chipps because he would not give the defendants a discount. 3. The defendants paid $1,500 for three nights at this resort. The Court does not accept the defendants did not know this was a significant discount on the market price of accommodation at the resort. Goway paid $3,330 for the defendants' three night stay at the resort. The tone and substance of Ms Tarbuck's reply shows an awareness of a steep discount. Ms Comito's email had given a hyperlink to the resort's website, where its market prices could be verified. 4. But despite these doubts about the defendant's evidence, it was still too early for honest and reasonable people in the position of the defendants to get a sense that Ms Comito was working against the interests of her employer or was running her own unauthorised operation inside Goway. A general theory was open to satisfy honest and reasonable people that Goway could provide a quota of special benefits to staff, who could share those benefits with friends, provided the overall quantum of the benefits being enjoyed by the particular staff member did not exceed reasonable limits, causing further questions to be asked. 5. Mr Critchley justified his belief in the legitimacy of the SFF scheme by comparing it to travel schemes offered by large airlines to their staff. The Court accepts that the defendants had knowledge of these schemes and that these schemes could offer 90% discounts on the face value of airfares. The Court accepts that some of the defendants' thinking at this early time was influenced by this knowledge and that even keeping some transactions away from Mr Chipps could be rationally explained as Ms Comito giving part of a limited quota of Goway's available tickets out to the defendants and Mr Chipps potentially wanting to distribute the limited quota differently and having the power to do so. The defendants have not used this explanation overtly, but comparisons with these airline schemes were referred to by Mr Critchley in evidence and this logic was part of the background to their thinking. But this explanation can only go so far. When the benefits that the defendants were receiving became so large they could not possibly be explained by benefits related to kinds of travel scheme offered by airlines, or contained other anomalies, the circumstances called for honest and reasonable people in their position to start asking more questions. 6. Finally, the defendants' closing submissions point out there is no evidence that Mr Critchley received the email of 26 September 2013. He is not a copy addressee, but Ms Tarbuck is likely to have discussed it with him. Discounted Airfares to Europe – December 2013 to May 2014 1. On 17 December 2013, whilst emailing Ms Tarbuck further details about the Wolgan Valley Resort from her Hotmail address, Ms Comito began to seed another vaguely described "special" offer into her correspondence, saying "Staff travel head office sent a business class USA special and it prompted me to email re Wolgan and special. Let me know". 2. Ms Tarbuck had a weakness for "special" offers. She replied to the email account addressing the details about the Wolgan Valley Resort, and then continuing, "Separately, are you able to send me the details (or ask David) re-those business class deals to the USA please?" This shows that at this stage Ms Tarbuck assumed that the deals were also known to Mr Chipps and that whatever exclusivity she was getting Mr Chipps was aware of it. This was a reasonable assumption at this time, given what Ms Tarbuck knew. 3. Following Ms Tarbuck's email, she and Ms Comito discussed a business class airfares offer, the content of which may be inferred from an email Ms Comito sent to Ms Tarbuck on 20 December 2013 from her Hotmail address. "As discussed this is not through your normal contact and you cannot pass the below info on. This is a family/friend special and I am doing this for you if you wish to proceed as a friend. The info I received for the special is USA Business Class and Europe Business class. USA - $2000 per person not valid for travel until 01st July 2014 valid for 3 years (includes 2 internals) additional can be added for $100pp Europe - $2200 per person not valid for travel until 01st September valid for 3 years (includes 2 internals)" 1. Ms Tarbuck replied to Ms Comito at her Hotmail address about this offer saying she was "very excited" by it. 2. Goway submits that as Ms Tarbuck did not give evidence that whatever she would have said about the conversation with Ms Comito that is referred to in this email, it would not have assisted her case. That can be accepted. But the Court is not persuaded by Goway's submission that this email or the conversation associated with it put Ms Tarbuck on inquiry about whether Ms Comito's authority to make this offer existed and should have caused Ms Tarbuck to contact Mr Chipps. 3. This email and Ms Tarbuck's earlier email are consistent with the idea that Mr Chipps may have been aware of the general class of offer being made but that Ms Comito was including the defendants in her quota of friends in the staff scheme which Ms Comito wanted to keep as a limited class – "you cannot pass the below info on" – of her closest friends. The correspondence is consistent with the idea of some staff competition for a limited pool of such tickets. 4. The Court does not accept Goway's submission that the defendants must have automatically been put on inquiry as to Ms Comito's lack of authority from several features of this offer. Those features that Goway emphasised were the following: the steep discounts embedded in this offer for European business class airfares, the failure to immediately issue tickets but to delay them and to issue tickets for the same price over three years despite uncertain future changes in the air travel market, from the lack of public availability of such offers elsewhere, and from the lack of terms and conditions. 5. Goway's submission expects too much vigilance at this stage from the honest and reasonable travel consumer in the defendants' position. The pricing discount in these offers was generally consistent with the 90% discount available through airline staff travel schemes of which the defendants were aware. The unusual features of the offer the delayed issue of acquired tickets, ticket price consistency over three years and the lack of public availability of this offer were not so implausible that they demanded inquiry at this time. Mr Critchley himself said that he had experience pre-COVID of business class airfares to Europe and the USA for as little as $3000 on Fiji airlines, Korean Airlines and Asiana. Although he did concede that having five years to use them was new. 6. But the defendants were slowly being seduced into thinking that they were being admitted to an exclusive club run by Goway, where they could enjoy a quota of benefits available to a limited number of Goway staff, including Ms Comito, from the large turnover of Goway's substantial wholesale and retail operations. The fact that the tickets were being offered in a manner different from tickets that were publicly available was not strongly inconsistent with the idea that Goway's staff travel scheme had its own informal procedures and that Goway could probably purchase bulk wholesale airline tickets a long time in advance. The late issue of the tickets Ms Comito was flagging here, was also generally consistent with the possibility that Goway was still deciding which of the wholesale tickets it was going to sell by retail and which it was going to allow to be distributed through the staff travel scheme. Whilst this offer was still generally commercially plausible, it did not demand that the defendants make further inquiry of anyone else at Goway. 7. This conclusion is not disturbed at this time by Ms Comito's next email on the subject of this offer sent to Ms Comito on 20 December 2013. "I just stress to that you can't pass on as I will get told off…. Also, you must be clear that you only receive a tax invoice from staff travel and a tax receipt and that is all you get until you book your trip. … Any questions that you have or may arise send me an email here and I will answer, if I do not know the answer I will email staff travel. There is no flyer etc as the info is in our internal travel system. These are through our head office ticket consolidator so not all travel staff at other organisations get these or airline staff get different benefits again. Just want to be clear on this too as our company encourages us not to discuss and WE definitely can not have people we sell them to on sell…" 1. In addition to reminding Ms Comito of the informal procedures of staff travel, this email emphasised the exclusivity and limited availability of the offer which meant that on sales were inconsistent with the scheme only applying to Ms Comito's friends. But Ms Comito's email did promise "a tax invoice from staff travel and a tax receipt", an assurance of normal commercial behaviour that would later be tested in various ways. 2. The terms of Ms Comito's offer of these discounted business class airfares to the USA and Europe evolved over the next few months. In February 2014 the three-year validity period being offered for the $2,000 business class airfares was extended to four years from January 2015, on the basis that a cruise would also be taken by the nominated staff traveller "this year". Ms Tarbuck indicated to Ms Comito that she wished to reserve three European and three USA business class tickets for her and Mr Critchley. Then the validity period was extended to five years. Odd though these alterations were, to the objective observer and to the defendants, on their own at that point they did not add salient elements of inconsistency to Ms Comito's overall story and the defendants noticed nothing amiss from the alterations. 3. Elements that tested the coherence of Ms Comito's story began to emerge in April 2014. In that month the correspondence makes clear that Ms Tarbuck had already received a suggestion from Ms Comito that the staff travel scheme might allow the on selling of some of the discounted Europe/USA business class airfares on offer. On 11 April 2014, Ms Tarbuck emailed Ms Comito's Hotmail address explaining she could assist in distributing additional discounted tickets: "If there is no one else, we can probably do this for you to a reliable friend. We haven't spoken to anyone yet but can do." 1. Ms Comito responded confirming that she was prepared to include "friends of friends" to benefit from the SFF scheme: "If you are happy to ask them and they understand how it works that would be nice of you. Just need to make sure they totally understand how it works and that they must book with me etc as I would put them under your nomination in my system. xoxo" 1. Goway submits that this was inconsistent with Ms Comito's original restriction banning on-selling of these tickets. But reasonable people in the position of the defendants would not necessarily have seen the extension of the class to "friends of friends" as an arresting change from the original description of the discounted Europe/USA business class airfares offer. The defendants were only going to introduce people who would be "under your [the defendants'] nomination", and reliable in not distributing information about the discounted Europe/USA business class airfares and thereby generating unnecessary competition with other staff for these attractive but limited availability tickets. 2. On 15 and 16 April 2014, some confusion as to whether the defendants would take up 12 or 16 of the discounted Europe/USA business class airfares was resolved in favour of 16 but no invoice had yet been issued. Nothing happened to advance the defendants' acquisition of these tickets for another month. Then quite independently, on 26 May 2014, Mr Chipps quoted the defendants prices for return business class airfares to Europe ranging from $6,600 to $9,900. In response Mr Critchley (apparently using Ms Tarbuck's email) thanked Mr Chipps and said to him, "we will digest and come back to you". 3. This exchange appears to have prompted Ms Tarbuck to email Ms Comito with concerns that she had not yet received any invoice or other confirmation of their entitlement to the 16 discounted Europe/USA business class airfares, "I just thought I should let you know, I still haven't received anything and know we have to pay by Friday". Ms Comito responded on 28 May 2014 complimenting Ms Tarbuck, quickly apologising, and complaining about the pressure on her, in a pattern which would soon become far more frequent: "Hi Lovely, Sorry, just back in. Asked accounts to resend so you are definitely getting today from me. They said you can have extension if you require. Will confirmed by COB that you have received. Just off into meeting. X" 1. Ms Comito had a well-developed strategy to close off correspondence and prevent further queries by explaining that she was busy, stressed with a difficult business situation, or going into meetings. This strategy was usually crowned with expressions of close affection for her main point of contact, Ms Tarbuck. It is an early example of a dual pattern that was to persist in which (a) extensions, indulgences and waivers were offered subverting the conditions originally stipulated for by Goway, and (b) promises of confirmation or communication were made but not kept. 2. This was directly illustrated the next day. Ms Comito emailed Ms Tarbuck from her Hotmail address, explaining why Goway had not sent an invoice or other confirmation of the defendants' purchase of the 16 tickets. Ms Comito's email of 29 May 2014 was as follows: "Hi Lovely, Just my usual little follow-up email. They have just sent an email to entire staff advising that all invoices will be sent from this afternoon up until tomorrow. So, if I get before 5 pm today you will have, otherwise it will be tomorrow. Due to the delay, they have given payment extensions… So, you can either pay next week or have an additional week. This info will be on the email. … Lots of love (ps the accounting here is slack but the staff travel booking is a lot more reliable) We have so much going on here of late…xoxo" 1. The next day, 30 May 2014, Ms Comito emailed Ms Tarbuck information about staff travel procedures with an emphasis that it "is really important" that the defendants "feel comfortable with booking with me as staff travel is very strict on this". The reasonable consumer would perhaps have started to wonder why this was so strict as a matter of staff travel policy, as the plausible rationale for communicating only with Ms Comito was that she was seeking to husband her own quota of entitlements for the benefit of the defendants, without having other managers interfere, such as Mr Chipps. This could hardly be a matter of "staff travel policy". Once again this was early days, and a realistic view of the defendants' position would not have had them asking all these questions at the beginning. Nor would they or a reasonable person in their position necessarily have noticed that the author of the staff travel policy information was expressed to be "Retail Manager Staff Travel", an unnamed and therefore an uncontactable person. Whilst the vagueness of this would not necessarily have leapt out at the defendants on 30 May 2014, it was information that would have added significantly to the concerns of an honest and reasonable person who was trying to understand Goway's commercial rationale for its SFF scheme in early to mid-2014. 2. The defendants finally received a tax invoice from Ms Comito on 30 May 2014 for eight tickets to Europe for $2,000 and eight tickets to the USA for $2000. In hindsight the tax invoice was anomalous in many ways. Carrier information was missing. Whether the tickets were single, or return was not specified. The destinations they covered was unclear. But importantly the 20 December 2013 email had indicated that the discounted flights to Europe were $2,200 per person. But in a mistake favouring the defendants by $1,600, the invoice only billed flights to Europe at $2,000. The defendants did not query this error. But strangest of all for a commercial organisation, this invoice did not specify any payment details containing information about Goway's bank account for payment. Nor did it set out or say where the reader could find the "Payment: Agreed Terms and Conditions" on the invoice. 3. But the Court accepts Mr Critchley's evidence at least to this point as reasonable, that he was prepared at times to take the risk of acting without full paperwork as that is what he had done during his foreign exchange banking career when seeking to secure a good deal from a trusted counterparty. 4. The Court also accepts Mr Critchley's evidence that he had a conversation with Ms Comito about the offering of these tickets, in which she explained that Goway had "purchased lots of business class airfares to Europe and the USA for wholesale but the buyer reneged on the purchase. Goway is now offering the discounted tickets to staff for $2,000 each ticket, but not everyone can afford it." 5. Whilst it might have been wondered at the time why Goway did not resell the tickets that had been destined for the defaulting purchaser at their face value, promoting staff loyalty also makes commercial sense and was a plausible explanation for the availability of these tickets. But Ms Comito's explanation of promoting staff loyalty only goes so far – to account for the availability of a limited number of discounted business class tickets to two general destinations. 6. Ms Comito finally issued an amended invoice for the 16 discounted business class airfares on 11 June 2014 including Goway's payment details. And on 13 June Mr Critchley paid Goway. But Mr Critchley's credit card was debited for only $30,000, not $32,000. Ms Comito explained this further error in the defendants' favour as a Goway accounts error and that Goway would charge the defendants the additional $2000 shortly. But Goway did not soon follow up to demand the shortfall, an indication that such payment shortfalls arising under the SFF travel scheme were not being reconciled within a functioning accounts department. Mr Critchley eventually paid the remaining $2,000 in August that year. 7. These persistent errors in the defendants' favour did not yet bespeak unauthorised business activity on Ms Comito's part but they were cumulative anomalies. The Court does not accept Mr Critchley's evidence that before 2020 he had seen business class airfares to Europe offered for as little as $3,000. Had that been true the Court expects that detailed objective evidence of that kind would have been led in the defendants' case. But heavily discounted though these tickets were, they are still within the realm of the commercially plausible when framed as limited staff incentives, like the offerings airlines make to their staff. 8. But in growing tension with that possible rationale was Ms Comito's increasing willingness to allow the defendants, and mostly Ms Tarbuck, to introduce other friends into the benefits of the SFF scheme. And once that was allowed it was very difficult to understand the rationale for what Goway was doing commercially through the SFF, if it did not also permit, indeed encourage, these "friends" to be the object of general contact with Goway sales personnel. They would have been prime targets for Goway marketing. Not much thought was required for a person as sophisticated as Mr Critchley to work this out. But Ms Comito had introduced him to SFF and the discounted business class Europe/USA package so cautiously and strategically that his lack of reaction was still understandable as the conduct of an honest and reasonable person dealing with Ms Comito as Goway's agent. 9. Mr Critchley and Ms Tarbuck eventually used only eight of the 16 airfares from the discounted business class Europe/USA package. The defendants had a surplus of cheap travel options after Ms Comito offered the platinum travel pass to them in November 2015. In any final accounting a question will arise whether the $16,000 in respect of these eight unused airfares should be credited against any sums due to Goway. The Court concludes later in these reasons that all transactions that the defendants undertook at this time were acquired within Ms Comito's ostensible authority. Goway was continuing to clothe Ms Comito with authority to act on its behalf. She continued to work at Goway apparently controlling a staff travel portfolio of functions in which she actually delivered airline tickets and other travel services apparently on behalf of Goway. The Silverseas Cruise – December 2013 to March 2015 1. In parallel with the offering of the discounted business class Europe/USA package, on Christmas Eve 2013 Ms Comito first suggested to Ms Tarbuck that Goway could secure 70% discounts on cruises with Silverseas Cruises, an international cruise operator, with the offer commencing for cruises in 2015. Ms Comito provided little information on this offer from Silverseas. Ms Comito's follow-up correspondence on the subject indicated this was apparently another staff travel opportunity. 2. As with the discounted business class Europe/USA airfare package, anomalies began to emerge about this Silverseas cruise offering. Ms Tarbuck wanted to book a cruise ex Vancouver. Ms Comito was slow to issue invoices and confirm a clear cruise date and timetable, so Ms Tarbuck had to chase her to arrange payment to take advantage of this offer and secure a definite booking, as the defendants were to travel from Vancouver departing 9 July 2015. Ms Tarbuck did have cruising experience and Ms Comito's management of this booking was undoubtedly anomalous. The defendants did not have clear booking evidence showing their purchase of the cruise until a month out from the planned departure date. 3. The defendants made two more major travel commitments with Ms Comito before the end of 2014, one to Queensland and one to the Galapagos Islands. In June 2014, Mr Critchley and Ms Tarbuck accepted another special offer from Ms Comito on flights and accommodation at the Qualia Luxury Resort on Hamilton Island and on Hayman Island in the Whitsundays. On 24 September 2014, Mr Critchley paid a total of $4,400 towards this travel opportunity, which was said to be valid for two years from 1 September 2014 and was not expressly said to be on the SFF travel scheme. The defendants never took this holiday to the Qualia Resort before this travel opportunity expired. 4. On 19 September 2014, Ms Tarbuck received further correspondence from Ms Comito offering a discounted 25-day tour and cruise of South America and the Galapagos Islands which had been reduced by approximately 50 – 70%; as Ms Comito's email said the price was "this tour is $15K per person but currently on sale from $4,000 pp upwards, some options $5,000pp". This offer was clarified on 9 December 2014 to be "$4,000 pp (add on $1,000pp for Business class flight to South America only valid when purchased with tour)" and was at least implicitly being offered under the SFF travel scheme. Mr Critchley says that he purchased the discounted cruise for himself and Ms Tarbuck for $12,000 (being $6,000 each) in September 2015, although it is probable that in fact it was paid on Ms Tarbuck's credit card for an amount of $8000 on 20 March 2015, being two $5,000 business class Galapagos packages, less as an email from Ms Comito explained on 19 March 2015, "a credit on your account for $2,000 for the Silverseas adjustment". 5. Mr Critchley agreed that he did not know precisely on what basis the figure of $6000 had been reached, as he never saw the market value of this trip; he may have spoken to Ms Comito about it but could not remember. This is an early example of Mr Critchley being very relaxed about acquiring a travel opportunity and paying money upfront on the basis he knew he was getting a very good deal and that he did not need to concern himself with the details about how good the deal was as it appeared he was getting at least a 50% discount according to Ms Comito's emails. 6. In hindsight it can probably be seen that Ms Comito was slowly testing the defendants to see how flexible and undemanding they were about the details of what they thought to be good travel deals. By now they were revealing to Ms Comito a willingness to take bold steps to acquire good deals for which they had a weakness. In the end, like the trip to Hayman Island and the Whitsundays, this holiday was ultimately never taken as the defendants had so many travel opportunities, they could not find a free month to take it. The SFF Deals Look More Uncommercial – November 2014 to March 2015 1. But in early 2015, even the 16 discounted business class Europe/USA airfares package began to look increasingly uncommercial and chaotic as it drifted further and further without explanation in the defendants' favour, to the point that an honest and reasonable person would have begun to question whether it could possibly have been a legitimate part of a commercial profit-making organisation. 2. Following up a discussion they had had on 15 November 2014, on 20 November 2014, Ms Tarbuck requested Ms Comito to use one of the $2,000 discounted tickets for Mr Critchley's daughter, Ms Fryer, to travel out to Australia from Colorado in the USA. The proposed flight had a special purpose, for Ms Fryer to be in Australia for her mother's 70th birthday in late March 2015. 3. The tax invoice and scant terms and conditions for the recent purchase of the 16 discounted business class Europe/USA airfares appear to imply that the airfares were available for journeys from Australia to the USA and return. But without anyone questioning it, Ms Comito nevertheless proceeded to organise flights for Ms Fryer from the USA to Australia and return to the USA. And the tax invoice for the 16 tickets was addressed to Ms Tarbuck and Mr Critchley. The limited description of the terms and conditions of the 16 tickets did not make clear whether a family member could use them, rather than the defendants themselves. Ms Comito had communicated a very firm staff travel policy against the on-selling of these tickets. The defendants can perhaps be excused for not noticing these anomalies, due to the vagueness of the terms on their 16 tickets. The only hint of hesitation in Ms Tarbuck's email of request was her asking to "let me know what's possible". The same day Ms Comito volunteered to put in the request and said she would "be in touch". Despite several promises in late November, Ms Comito could not provide confirmation of the flights before 1 December. 4. From 1 December 2014, Ms Tarbuck made parallel booking arrangements with Goway (one set through Mr Chipps and the other through Ms Comito) that would have directly reinforced to the defendants the differences between what staff travel was offering the defendants as part of the SFF scheme and the ordinary retail operations of Goway. The differences were both as to price and booking procedures. 5. Ms Tarbuck had the value of the 16 discounted tickets brought to her attention on 1 December 2014 when she received quotes from Mr Chipps for a proposed return business class trip to the USA for Mr Critchley in January 2015 on United Airlines for $10,244 per person, on Qantas for $8,887 and on Virgin for $12,517. On 2 December 2014, Ms Tarbuck elected to "go firm" and take the Qantas flight for Mr Critchley which by then could only be purchased for $9,087. She paid for these flights using the clear payment instructions on the tax invoice generated on Goway's behalf by Mr Chipps. 6. Mr Chipps' quotation offered detail of exact flight departure times, a full itinerary of connecting flights, reservation booking numbers, seat allocations, aircraft types, estimated flight duration, entry of frequent flyer numbers with the booked airline, and meal types. Mr Chipps issued a Goway tax invoice a few just under three weeks later including additional travel leg and containing full payment details to Goway. 7. Ms Tarbuck's parallel booking with Ms Comito for Ms Fryer was exhibiting marked differences to Ms Tarbuck's dealings with Mr Chipps. There was some delay on Ms Comito's part, but this was perhaps explicable because of the lower priority given to staff travel at Goway, and a certain amount of business chaos is to be expected. On 9 December 2014, Ms Comito emailed confirming United Airlines flights for Ms Fryer's journey between 20 and 31 March 2015. Ms Comito explained: "Hi Lisa, These are the flights I can get for Shari. It is too early to issue so I can hold them in our system and issue at the end of Jan. Reminder we are closed. Before we go to issue we will check one last time okay. If Shari has frequent flyer number can you please get in the New Year to add to booking. It will not show on frequent flyer or airline system until we issue." 1. This was a departure from what Ms Tarbuck had just experienced with booking through Mr Chipps, who had caused a Goway invoice to issue immediately. Ms Comito explained through several emails on the basis that "full paying tickets are obviously same day". And "we are closed" in this email is a reference to an earlier communication in which Ms Comito had explained that staff travel was closed between mid-December 2014 and mid-January 2015. But Ms Tarbuck was still waiting on 19 February 2015, when Ms Comito promised her Ms Fryer's ticket "next week". Ms Tarbuck asked Ms Comito on 8 March 2015 "do you have Shari's ticket?" Ms Comito responded on 9 March 2015 that she was still waiting to receive the ticket. Ms Tarbuck expressed her gratitude. Ms Comito Goes Too Far – 9 March 2015 1. By the afternoon of 9 March 2015, it may be inferred from what followed that Ms Comito was feeling very uncomfortable in her communications with Ms Tarbuck about how long it was taking to issue the tickets to Ms Fryer for her departure only 11 days later. To allay Ms Tarbuck's concerns at 1513 on 9 March 2015, Ms Comito sent an email to Ms Tarbuck attaching a false communication from staff travel, that took a step beyond her previous communications. Looked at in the circumstances in which it was sent, this email would have alerted an honest and reasonable person that what Ms Comito was offering through staff travel was not commercially rational and, unless explained, pointed towards her running an unauthorised operation of her own using Goway's resources. 2. Ms Comito's 9 March 2015 email explained how she was "stressing out" and had tried to call Ms Tarbuck, so had decided to email her as well. Emphasising her stress and signed with her usual affectionate "xoxo", her email purported to forward an email from staff travel. The email from staff travel once again did not have any indications of who had sent it or when it was sent. It explained that "this one has fallen through the cracks" due to the death of the mother of a staff travel employee but that it was lucky Ms Comito had followed up today "as this is how we picked it up". 3. Then staff travel revealed the reason for the delay: it could no longer provide the promised departure from the USA on 20 March. The staff travel email text then continued as follows (reproduced here with its original errors): "Can you please check with Shari, if she can go on 19 March ex steamboat or the 21st March and we will give her a complimentary ticket to use another time? Or if her dates are flexible at all. I note she is coming for surprise party. Reason being the fare on the 20th should have been issued on Friday and it is proving difficult to get back the seat we are even trying at full paying normal fare ($22K)" 1. After covering other details, the email concluded: "I have also held a flight on the 21st March which is as per small screenshot below, not sure If this will work. We will pay for these flights so Critchley does use a ticket and still happy to offer Shari complimentary trip at another time as this was a staff error." 1. This was an extraordinary email. It would not have been accepted by an honest and reasonable person as being sent on behalf of Goway without further inquiry first of Ms Comito in the first instance and if no satisfactory explanation was forthcoming, of her managers. 2. Even assuming the whole of the defendants' story to this point was true, this email made no commercial sense. Ms Comito had told the defendants that these tickets were available because a purchaser had reneged on a bulk purchase of tickets. It may have made commercial sense to distribute some of these surplus tickets through staff travel. But it made no commercial sense for staff travel then to attempt to fulfil the incidental commitments it had made for the benefit of a family member of a friend of a staff member in using one of these surplus tickets by attempting to acquire other additional tickets for their full value, and thereby incurring further losses for Goway of up to $22,000. Nor did it make commercial sense for Goway to purchase and gift additional complimentary tickets (of up to $9,000 on the defendants' then very recent experience) to make up for staff travel errors that staff travel said had a good explanation – the death of a close relative. No detective work was required for the defendants to see this did not add up. The evidence shows that this flight cost Goway $19,232.14. 3. In the Court's view, this was a major inflection point in the narrative and the defendants should be given the benefit of a few days to process the implications of this email. But after those few days of reaction time, which the Court would allow up to 15 March 2015, they were on notice that Ms Comito was conducting a staff travel scheme that did not appear to be a commercially rational way of promoting staff loyalty and there was a real risk Ms Comito's conduct was an unauthorised application of her employer's resources. Ms Tarbuck is likely to have kept Mr fully informed about this development as it related to the travel of his daughter, Ms Fryer. Ms Tarbuck Begins to Use Ms Comito Exclusively – June 2015 1. In the first week of June 2015, Ms Tarbuck took another step along a course that confirmed the inflection point that had been reached in March 2015. Ms Tarbuck actively misled Mr Chipps to keep from him knowledge of the uncommercial benefits she was receiving from Ms Comito. Ms Tarbuck must have believed by June 2015 that the defendants' risked losing Ms Comito's uncommercial benefits if Mr Chipps were informed of them. Misleading Mr Chipps to conceal receipt of these benefits is not consistent with a belief that the benefits had a legitimate commercial rationale as part of Goway's business. 2. Ms Tarbuck was still dealing with Mr Chipps in the first week of June 2015. On 2 June, she emailed him to book a return premium economy airfare to Denver for Mr Critchley at short notice to leave in only four days' time. In reply, Mr Chipps quoted $5,272.00 including taxes for the fare with Qantas. Ms Tarbuck emailed back a few minutes later expressing gratitude to Mr Chipps, explaining that Mr Critchley "will know tonight/tomorrow whether he needs to go or not" giving the impression that Mr Critchley was at that stage undecided about the trip. Mr Chipps promised to hold the booking for a while as there was limited availability with Qantas. 3. Ms Tarbuck then emailed Ms Comito and asked if Mr Critchley could use one of the $2,000 tickets to travel to the USA: "If Bob needed to do a quick dash to the US leaving this weekend, is he able to utilise one of the ticket or is the turnaround time not quick enough (I would think not)? He would be happy to go United. Anyway, he asked me to ask. xxx" 1. Even Ms Tarbuck thought her own request was something of a stretch. Ms Comito replied at first saying that "they need a minimum of 60 days and you can request" and indicated that there appeared to be no availability. Ms Tarbuck had another thought: that Mr Critchley might be able to travel to Denver in August and use one of the 16 discounted business class USA fares, after giving the additional notice. Ms Comito indicated "August should be fine. I can request". 2. That was enough for Mr Critchley to decide not to go that weekend. In due course Mr Critchley obtained an August business class ticket from Sydney to Los Angeles and then economy from Los Angeles to Denver and then Steamboat Springs, using one of the 16 discounted tickets. But the next day Ms Tarbuck emailed Mr Chipps: "Many thanks for your assistance with this one. I have just found out that he doesn't need to go and will go a bit later in the year. So please take this booking off hold." 1. Goway seeks to characterise this as a lie. But that is going too far. It was literally true. Mr Critchley was going later in August but using Ms Comito's discounted tickets. Although not a lie, what Ms Tarbuck's email does demonstrate is that she knew she had to keep their communications with Ms Comito in a compartment away from Mr Chipps. But by this time, after the knowledge they had gained in March 2015, keeping their dealings with Ms Comito away from Mr Chipps was no longer consistent with the simple rationale that he wanted to limit Ms Comito's discretionary allocation of these scarce, valuable but legitimately issued tickets. Because of Ms Comito's email of 9 March, they had developed reason to believe that these tickets were not being issued as an authorised part of Goway's business and therefore may involve a real risk of misapplication of Goway's funds by Ms Comito. Because this related to Mr Critchley's travel Ms Tarbuck is likely to have kept him fully informed of these communications. 2. Mr Critchley did fly to Los Angeles, Denver and Steamboat Springs in mid-August 2015, purporting to use one of the discounted airfares. This flight was paid for by Goway with the international fire costing $8723.18 and the Los Angeles Steamboat Springs economy legs costing $784.10. 3. The defendants did not use Mr Chipps to make bookings after June 2015. They realised it was to their greater financial advantage to use their 16 discounted airfares booking through Ms Comito. 4. From June 2015 the defendants also began to use these 16 discounted tickets in a manner that either showed reckless disregard for the terms which Ms Comito had imposed on them, or which showed that they knew they could take liberties with the terms that Ms Comito had imposed, knowing that she would not be enforcing them. In the context of taking up extra discounted tickets on 14 June 2015, Ms Tarbuck emailed Ms Comito informing her that Mr Critchley "has sold four of them [meaning his existing discounted tickets] on to Shari for their trip later in the year". This was contrary to the instructions that Ms Comito had given, when the tickets were issued, that they could not be on sold. It did not earn, and the defendants did not by then expect any rebuke from Ms Comito for this sale. This behaviour demonstrates implicit recognition of the uncommercial nature of their dealings with Ms Comito and that there was a real risk Ms Comito's conduct was an unauthorised application of Goway's resources.. Goway's Ever-Increasing Generosity – June/July 2015 1. In June and July 2015, the Goway staff travel scheme flooded the defendants with offers which were either unaccountably and uncommercially generous, contravened limitations on staff travel that had previously been communicated to the defendants, or which without prompting, became more favourable to the defendants within hours or days. There were three of these: flights to Vancouver, additional $2,000 business class flights, and a package tour to Hong Kong. Taken either separately or together, these reinforced the message that Ms Comito's actions could not be consistent with any commercial purpose of Goway and without explanation from senior management, were likely to be unauthorised, and given the nature of the transactions probably involve a misapplication of Goway's resources. 2. As to the flights to Vancouver, from 26 June to 9 July 2015, the defendants used two more of their $2,000 discounted Europe/USA business class airfares to travel from Sydney to LA, then from LA to New York and finally returning to Sydney from Vancouver after a stopover in Boston and embarking on a cruise from Vancouver. Goway covered the $3,398.13 cost of their accommodation in New York. The cross Pacific flights cost Goway $22,077.82 and an internal flight from Montréal to Vancouver for both defendants cost Goway a total of $3,086.60. The defendants paid $666.62 themselves for two nights' accommodation in Boston. 3. Three aspects of this travel were outside the terms of the discounted airfares Ms Comito had originally published to the defendants for these tickets, "USA - $2,000 per person not valid for travel until 01st July 2014 valid for 3 years (includes 2 internals)". These originally published terms did not cover a flight from an airport outside the USA, such as the return flight from Vancouver to Australia. Nor did the originally published terms include accommodation in New York with the discounted tickets. Nor did the originally published terms include internal flights within Canada. The correspondence shows these additional benefits being conferred without prompting by Ms Comito and without resistance from the defendants, who were accepting without question surplus benefits that they must have appreciated they had not paid for with their $2,000 discounted business class tickets. Goway's abandoning in the defendants favour, without explanation, of the originally stipulated terms did not make any commercial sense. 4. As to Ms Fryer's flights, on 1 October 2015, Ms Comito emailed Ms Tarbuck reporting to her about staff travel's efforts to finalise bookings for flights from the USA to Australia for Ms Fryer, Ms Fryer's husband and her two sons. On 14 October Ms Comito was able to offer flight options from Denver to Brisbane on 27 October 2015 and returning to the USA from Sydney on 27 November and asked her to indicate which ones she wanted. Ms Tarbuck forwarded Ms Comito's email to Ms Fryer. In October 2015, Ms Fryer, her husband and their two children used four of Ms Tarbuck's $2,000 business class flights to fly from USA to Australia and return. The flights cost Goway $51,217.92. 5. What was happening here was not strictly at odds with Ms Comito's injunction at the time that the $2,000 discounted business class tickets were first offered – "we definitely cannot have people we sell them to on sell" – as Ms Tarbuck seemed to be giving the tickets away to family members and she was nominating, rather than selling them. But it was at odds with the early part of the same injunction, "I just stress…that you can't pass on as I will get told off." Just how a much wider range of family members came to be included in the reach of these $2,000 discounted business class tickets is not evidenced by clear negotiations or stipulations between Ms Comito and the defendants, as might be expected in an arm's length commercial arrangement. 6. As to the additional $2,000 business class flights, no sooner had Ms Comito forwarded a favourable travel offer of more of these $2,000 discounted business class airfares to the defendants, than the offer was spontaneously varied to favour the defendants even further. On 15 June 2015 at 8.58am, Ms Comito emailed Ms Tarbuck saying "I have to notify you of the below" and forwarding the usual formless email lookalike from staff travel making another offer expiring within a short period – in this case of two weeks. The email made the following offer: "Hi staff, Please be advised that we are doing one last BATCH of Europe/USA business class tickets for SALE until 30th June. These are the left over tickets that must be held prior to end of financial year, payment date will be end of July/August. Please note that this will be last of the Business Class tickets to Europe/USA. They will be valid for five years from January 2016. All previously purchased tickets no change and can still be booked as per normal. There is no change to other Business Class Fare destinations at stage. Please advise all nominated staff family/friends. If you have any queries, please ask Staff Travel. Kind regards Staff Travel [followed by a Goway logo]" 1. For the honest and reasonable consumer with the defendants' history of dealings with Goway, expecting some degree of business consistency from Goway, this offer should have been a source of many questions to Ms Comito, such as the following. What is the discounted price of these tickets: it is not indicated in the email. Why was this "one last batch… for sale", implying that previous batches had been sold on a regular basis – even though the previous offering of $2,000 discounted business class airfares to the defendants had come with an explanation that a buyer had reneged, implying it was a one-off event? Why was it necessary to hold these tickets prior to the end of the financial year, pay for them in July/August but allow them to be used over a period of five years, when they could presumably have been sold more quickly at a profit? How are these exceptionally generous benefits consistent with the reasonable commercial objective of ensuring staff loyalty, which would ordinarily have been secured at much more modest cost to Goway? 2. These questions needed to asked and answered before the defendants could reasonably assume this was a genuine offer made on behalf of Goway. But Ms Tarbuck did ask one question, quickly responding by email, "so, last batch ever?", indicating perhaps that because they already had 16 $2,000 discounted business class airfares, they might wait this offer out. 3. But Ms Comito had other plans. She wanted the defendants to buy more of these tickets. Within a few hours on the same day, the terms of sale of these tickets spontaneously improved in the defendants' favour. Ms Comito replied to Ms Tarbuck, apparently reporting upon another formless communication with staff travel, "I have just asked. I believe so and they have just sent an email to all staff advising they can be used for travel within 7 years." This sharpened the obvious questions how fixed prices could be offered for such valuable tickets for as long as seven years in a fluctuating market. 4. Although the Court accepts that the defendants could have relied upon Ms Comito's ostensible authority to purchase the original 16 $2,000 discounted business class airfares in May 2014, an honest and reasonable person in their position could not have made the same assumption about this offer. This offer displayed the same worrying characteristics that had appeared in March 2015, of spontaneous unexplained generosity veering sharply in the defendants favour at short notice. Just as honest and reasonable people are not only alert to scams by which they might lose their own money, they should also be alert to being used as vehicles in transactions that could cause other persons to lose money, in this case Goway. 5. Amid the same email exchanges, the defendants showed interest in acquiring some of these tickets, in terms that demonstrate they had a sense they were not arm's length commercial transactions. Ms Tarbuck inquired if they could be used in reverse from the USA, in which case Shari [Ms Fryer] would take some "in a heartbeat". Ms Comito signalled purchase for Ms Fryer "was okay". Ms Tarbuck then confessed that her interest in acquiring more tickets was because Mr Critchley "has sold four of them [the 16 existing discounted business class tickets] on to Shari", in an apparent breach of the terms on which the 16 had been sold to the defendants. Then Ms Comito emphasised this deal was a last opportunity: "These are the last batch. They are not selling them anymore. Sorry I miss read the email. I thought no more on sale for five years but they are not re purchasing at contracting time." 1. The statement "they are not re purchasing at contracting time" is a piece of gobbledygook with no obvious or certain meaning. The phrase does not describe a business that an honest and reasonable person could have understood, without further inquiry, Goway to be running. The defendants were intelligent businesspeople and could not reasonably have been satisfied with such nonsense. 2. Ms Tarbuck emailed Ms Comito on 19 June 2015, saying "hi again – Bob spoke to Shari this morning and they want to take 10 and he wants to take another 10 – is that possible? Are they all $2K?". 3. Then the pattern of spontaneous benefits to the defendants re-emerged. On 17 June 2015, Ms Comito emailed a reply to the defendants' request for 20 tickets pushing an even better offer: "Europe/USA tickets – I asked this morning and fine to get you 20. There is a value add, buy 30 get two first class tickets free. I did not know this until I asked this morning about getting 20 tickets. So just passing on." 1. This offer was becoming more nonsensical and lopsided in favour of the defendants. Even accepting the rationale that Goway was trying to promote staff loyalty with the original offer, it makes no commercial sense for Goway to incentivise staff to take up the offer by offering more generous complimentary benefits at a loss to itself. Goway benefited if staff did not take up the offers: it presumably could resell the tickets on available market. Moreover, it was left unstated and uncertain whether the first-class tickets would be to the same destinations as the package being offered, but if they were, they represented a substantial and potentially disproportionate financial incentive. Honest and reasonable people in the position of the defendants would have asked why such additional benefits were being showered on staff to take an already attractive offer, which if not accepted would still have left Goway with apparently resaleable tickets. 2. Ultimately the evidence does not clearly show that the defendants took up this additional package. This is understandable. They already had 16 $2,000 discounted business class airfares which they were struggling to use. But the fact this package was being offered, whether or not accepted, added to the defendants' experience of Ms Comito advancing proposals that, without explanation, do not fit any rational theory of benefit to Goway. 3. As to the Hong Kong package, it had a long gestation. On 23 April 2015, Ms Comito had first offered Ms Tarbuck a package for Hong Kong. The offer was made to "all staff" and was offered as valid from 1 September 2015 for three years and included return air fares and 7 nights of 5-star accommodation for $1,200 with payment of an extra $800 for an upgrade to business class flights. Ms Tarbuck showed great interest describing the offer as "an absolute bargain". On 27 April 2015, Ms Tarbuck asked Ms Comito to hold four of the Hong Kong packages. 4. The parties debated whether there was a market for a package such as this and whether these prices were well below that market. Mr Critchley says he and Ms Tarbuck "thought it was a very good deal". Goway submitted that it should be inferred that Mr Critchley must never have encountered a deal like this otherwise he would have advanced evidence of it. But whilst the Court is sceptical of Mr Critchley's evidence on the subject, it does not need to decide the availability of such packages at this market price, because the more significant element is the pattern of events that followed, that required explanation before it could be accepted as legitimate. 5. In June 2015 the offer of the packages spontaneously moved to the defendants' financial advantage in two ways. On 17 June, Ms Comito forwarded to Ms Tarbuck details of a value-add: a purchase of six of these packages would earn two complimentary packages, although the offer was still valid for three years from September 2015. But on 23 July 2015, Ms Comito indicated that the Hong Kong package offer was now valid for five years. Whilst businesses do make products more attractive, the changes here were inexplicable as part of a staff travel scheme, which should not rationally have had to compete to ensure staff took up the offers. 6. Mr Critchley paid Goway $12,666.62 on 19 June 2015. Of this sum, $666.62 was for accommodation in Boston during the defendants' trip to Vancouver. The remaining $12,000 was for six of the Hong Kong packages. 7. Then some more unusual correspondence passed between Ms Tarbuck and Ms Comito arising out of Mr Critchley seeking to alter the departure arrangements for a proposed return flight from Sydney to Steamboat Springs. On 24 July 2015 at about 1.00am, Ms Tarbuck confirmed the final flight dates and times that would satisfy Mr Critchley. There appeared to be some delay that morning in finalising the flights. Ms Comito emailed Ms Tarbuck saying, "hold on petal… I think we have better flights… xoxo". Then about that time – the sequence is not entirely clear – Ms Comito emailed Ms Tarbuck appearing to explain some delay on her part: "Very long story too…but someone at work being nosey…" 1. This appeared to convey that someone at Goway with supervisory powers around Ms Comito was inhibiting Ms Comito from undertaking this booking on behalf of Mr Critchley. Ms Tarbuck responded, apparently assuring Ms Comito that she had not contributed to any supervisory investigation of Ms Comito at Goway: "Oh no…first thing I did was check I had sent it to your non-private address!" 1. Ms Comito responded: "I don't use my work email anymore…It is a central reservations." 1. Ms Tarbuck responded: "Thought I had stuffed up! " 1. It should be inferred from this exchange that Ms Tarbuck knew that whatever Ms Comito was booking here would not survive scrutiny by Ms Comito's "nosey" supervisors. This is an admission by conduct that she understood that Ms Comito's actions in booking these tickets were being deliberately withheld from her superiors in circumstances that had not been explained as consistent with Goway's interests. 2. These various benefits kept accumulating. Each additional benefit accepted by the defendants, which had not been bargained for as part of the $2000 discounted business class airfares added to the defendants' notice that, unless these anomalies were explained, Ms Comito was probably conducting an unauthorised operation inside Goway, with Goway's resources. But in November the benefits that Ms Comito was offering the defendants reached a whole new level of commerciality, demanding further inquiry by the defendants of Goway before the offered benefits could be accepted as legitimate. The Platinum Travel Pass – November 2015 1. On 11 November 2015, Ms Tarbuck received an email from Ms Comito offering the defendants what was described as a "platinum travel pass" with subject heading "New Release of Travel Pass" and wrote: "Hi Lyn, Sending hugs. ….. Due to us holding a large batch of last tickets (which they will want us to pay soon) you and Bob are now eligible for the below and I don't think they would come out again as only come every 5 to 6 years. The irony is you don't need it as you have the other business tickets with Shari. I have committed to them to can't swap or cancel but I thought I should advise on the below as an FYI only. You both have made it to full privileges! Take care xx" 1. The defendants do not give evidence of their understanding how in November 2015 they qualified for the "full privileges" now being offered. It is certainly puzzling to try and connect those privileges with the glib explanation of eligibility: "us holding a large batch of last tickets (which they will want us to pay soon)". Despite the implication here of payment priority, curiously the defendants did not pay for their platinum travel passes until May the following year. 2. In the same correspondence, Ms Comito forwarded an email which purportedly came from the staff travel team. This email outlined, in part, that for the value of $8,000 Mr Critchley and Ms Tarbuck could purchase a 'platinum travel pass', which could be redeemed within a three-year period commencing 1 September 2016. Its main features were the provision of six domestic air travel flights per month, up to seven days domestic accommodation in one location for up to 35 days a year, three international trips per year including four internal flights per trip, 35 days international accommodation per year with up to seven days in one location, one tour per year, one cruise per year, and 30 days car rental in major cities. 3. The attached pasted message had the common formless characteristics of looking like an email but without the usual sender, time of sending or email address information that would be characteristic of an email routinely sent in the ordinary course of business. It contained no contact details for anyone at "staff travel". It did not contain a Goway logo or other corporate branding. It was designed to deceive, as all the other pasted staff travel "emails" were. On its own its deceptive power is potent, but that power would have been neutralised under the scrutiny of an honest and reasonable person presented with this transaction. The staff travel message said the following: "Hi Staff, Please see summary information from Travelpak system in regards to 3 year Travel Passes must be held by 16th November unless sold prior. If further information required please email staff travel with subject line - Question re Travel pass For those renewing please note changes apply to new passes some additional inclusions 5 year travel passes will be offered to renewal staff only and then to family friends upon any left over PLEASE DO NOT HOLD IF YOU ARE NOT TAKING AS YOU WILL BE RESPONSIBLE FOR FULL PAYMENT 3 Year Travel Pass (commences 1st September 16) Economy - $3000pp - Child - $2500pp Business -$7000pp - Child - $6500pp Inclusions 4 Domestic Air Travel trips per month (Virgin preferred) •note domestic trips Economy only except for long sectors eg, Perth Domestic accommodation up to 7 days in one location 28 days per year International Air trips per year Including 2 internal flights per each trip 28 days International accommodation included per year *note single supplement surcharge may apply depending on property of choice 1 cruise per year * note properties vary from 3star to 4star *note all inclusive resorts surcharges apply 3 year Platinum Travel Pass (commences 1st September 16) Economy Air Travel $4000pp • Child - $3500pp Business Air Travel $8000pp - Child - $7500pp Inclusions 6 Domestic Air Travel trips per month (Virgin preferred) *note domestic trips Economy only except for long sectors eg. Perth Domestic accommodation up to 7 days in one location 35 days per year 3 International trips per year including 4 internal flights per each trip 35 days International accommodation included per year up to 7 days in one location *note single supplement surcharge may apply depending on property of choice 1 Tour per year can not exceed 21 days or difference of days paid at time of booking eg. Trafalgar/Scenic 1 Cruise per year (note length and stay dependant on cruise choice surcharge may apply) Car rental up to 30 days in major cities Selected Rail Travel *note properties vary from 4star to 5star *note all inclusive resorts small surcharge apply Kind regards Staff Travel" 1. Apart from the deficiencies in its form as an email to Ms Comito, this offer raised many questions that businesspeople as astute as the defendants would have wanted to have answered by Goway. These questions partly arise from the form of the email and partly from what was being offered. 2. First, it purported to be "summary information from the Travelpak system". Whether this was a Goway system or an external system was unclear. Whatever the "system" was, it was a source of such extraordinarily discounted travel that a person such as Mr Critchley, if he had believed Ms Comito was acting as an agent for a genuine Goway system, would undoubtedly have been interested to understand how the offer could make commercial sense from Goway's perspective. But he confessed in cross-examination that he did not know "what the Travelpak system is" and that he never asked about it. 3. Secondly, the limited description of the Travelpak system, as it appeared in this email was glib to the point of nonsense. On its face, if it can be understood, this staff travel statement makes little commercial sense. What does 3-year travel passes "must be held by 16 November unless sold prior" mean? Apart from Ms Comito setting her own deadline, the commercial reasons for the so-called deadline such as who would hold the passes and why there was deadline urgency in selling something which was so grossly to Goway's disadvantage are matters that would immediately occur to a businesslike reader of the defendants' capability. Mr Critchley's cross-examination did not directly ask him to interpret this sentence, but it is so overtly ambiguous that it called either to be dismissed or to be queried. 4. Thirdly, the injunction in capital letters "please do not hold if you are not taking, as you will be responsible for full payment" is another piece of commercial nonsense which requires explanation before it could be accepted as legitimate by any reasonable person of Mr Critchley's capability. How would anyone come to "hold" passes of this description without paying for them, or does "hold" mean something like "reserve"? 5. Fourthly, the staff travel email shows several examples of poor grammar and spelling. It would reasonably have been expected by persons in the defendants' position here that something like this, addressed to "Hi Staff", would ordinarily have undergone managerial scrutiny. Less than perfect spelling and grammar do not indicate unauthorised conduct on their own. But they do contribute to the inference of the ordinary reader that this document was not the subject of any proper internal management review at Goway, which would be expected to have detected such errors. 6. Fifthly, the following terms of the offer are so obscure or commercially nonsensical in places that an honest and reasonable person in the position of the defendants would have sought further explanation or understanding of those terms so they could comprehend the value of what they were receiving. The following are some examples: 1. Which airlines, from Garuda to Qantas, would host the business class air travel? Even though the course of Mr Critchley's emails show that he does have distinct airline preferences, he says that he thought "it was Qantas and other preferred carriers". But he confessed he did not know "what was involved". He was prepared to take the choice of carrier risk without further inquiry. 2. The statement "three International air trips per year" does not specify the commencing point of the travel, whether the trip would involve one destination, a limited number of destinations, or even an around the world trip. To evaluate a genuinely commercial offer people in the position of the defendants would want to know things like whether flying to Auckland will be treated the same way as flying to New York. But the defendants made no such inquiry. 3. The domestic accommodation of up to seven days in one location for 35 days a year, does not indicate the class of hotel to be provided unlike the international accommodation, but Mr Critchley explained he was "not really fussed about my local accommodation". That answer cannot be accepted as it is at odds with the rest of his evidence, which shows his and Ms Tarbuck's close interest in the quality of their accommodation. 4. The offers of "1 tour per year" and "1 cruise per year" beg the questions of the quality, class of luxury, and length of the tours or cruises and whether they could be taken anywhere in the world and together or separately and how the statement "surcharge may apply" would operate. 5. The ordinary honest and reasonable consumer would be likely to ask questions about these matters if they believed this was a legitimate and binding offer from Goway and they were seeking to understand its value. The defendants did not ask. The fact they did not do so is rational at one level: the platinum travel pass was so lopsided in their favour that they would probably get value from it despite these details remaining fuzzy. 1. Sixthly, there was no formal purchase documentation for the defendants' platinum travel passes, which contained any more specific terms. The defendants' case was commendable in closing submissions in gathering and identifying all the travel information for all the flights and accommodation taken by the defendants that were the subject of Goway's claim. But for this, the single most valuable transaction of all, the purchase of the platinum travel pass, Goway did not issue a formal tax invoice or a receipt, or even a document that looked in form like a pass, containing the detailed legal terms applying to the pass. 2. Finally, and most importantly, looked at as a whole, this offer was on its face so disproportionately structured in the defendants' favour and against Goway's commercial interests that honest and reasonable people in the position of the defendants must have been perceived it as an improbable gift from Goway, unless its commercial rationale was explained from Goway's perspective. This needs further explanation. 3. The defendants knew they only had to enjoy a very small number of benefits from using the travel passes before they would each fully recoup their $8,000 investment and then they would be travelling free of charge for three years wholly at Goway's expense. The best explanation for the defendants' failure to inquire about these uncertain terms and Mr Critchley's indication in cross-examination that he was "totally relaxed" about some of those terms is that they acquired the travel passes without any real belief that they would be holding Goway to the strict terms of the passes and they would take from the passes what they could when they could until they were no longer available. This needs further explanation. 4. Just a few business class airfares and a few cruises would recoup the full value of the pass. The reasonably astute businessperson in the defendants' position would have wished to understand what business model, what loss leading behaviour, what staff incentives, what marketing opportunities, or what other commercial motive could rationally explain Goway offering airfares, tours, cruises, and accommodation for three years for nothing (once the $8,000 had been recouped). A person as astute as the defendants would have understood that those same airfares, tours, cruises, and accommodation would have had to be acquired at wholesale prices to fulfil the obligations under the travel passes and that these same products and services could otherwise be retailed by Goway to offset their wholesale cost to Goway, or at a profit. 5. What was in the platinum travel pass for Goway? The defendants' case did not grapple with this problem. The defendants never advanced any credible theory they believed could have ever made this offer commercially sensible from Goway's perspective. The discounts the defendants had been offered in the past – such as the 16 discounted business class airfares – were capable until March 2015 of being reasonably assessed by them as some kind of rational loss leading commercial behaviour on Goway's part. Such loss leading behaviour can generally be explained either as a tool to gain market share or as a basis for securing employee loyalty. But eventually honest and reasonable people as business-savvy as the defendants, expect that the underlying commercial purpose will be revealed. When they took up these passes the defendants seemed strangely incurious that after almost two years Goway's wider commercial purpose had still not been revealed. 6. A staff travel scheme to promote staff loyalty might be postulated to explain why the platinum travel pass discounts were being offered at prices which were never publicly advertised, and which were not available elsewhere. But the platinum travel pass could not fit any rational model of promoting staff loyalty at Goway. The benefits offered under the pass were likely to exceed the whole annual salary of some Goway employees. The pass was being offered to friends of friends who had no personal connection with staff members. The pass was far more generous than any airline staff travel scheme of which Mr Critchley was aware. And prices offered and payments made were fixed in advance, without a specific staff member's itinerary. 7. The defendants' understanding of how tilted these passes were in their favour can readily be illustrated. Even treating as market value, the heavily discounted price of $2,000 that they had recently paid Ms Comito for the 16 discounted business class airfares, the full asking price of $8,000 for the travel pass would be fully recouped after just four international business class flights each. But the defendants had up-to-date awareness of market prices. They had been required to pay much more than $2,000 for long haul business class flights from Australia: as recently as May 2014, Mr Chipps had quoted them market prices of between $7,813 and $10,274 per person for flights between Sydney and Rome. And the defendants had booked through Mr Chipps in October 2014 and been invoiced by Goway and paid for an 11-day Seabourn cruise from Venice through the Adriatic Sea for $10,196.26. They knew that one single cruise such as this would reimburse more than half the cost of the platinum travel pass. And the terms of their platinum travel pass were sufficiently vague that just this kind of luxury cruise might have been available. 8. Mr Critchley attempted to defend the travel pass as a commercial transaction. But his answers to questions on this subject were unconvincing and the Court does not accept them. When counsel put to Mr Critchley how he seriously thought that for $8,000 he could acquire three international flights, a cruise and six domestic flights per month (presumably therefore 72 flights per year – including business class flights to Perth), he said that he had been offered "cruise costs… at 50% off… many times". But when it was put to him that he had "never ever been offered anything like the platinum pass" he evaded the question saying, "I'm not sure of the comparison". When the question was put again, he simply said "I'm not aware". He then responded by saying that 24 of his and Ms Tarbuck's friends had "thought it was a good deal", being a reference to people to whom they had introduced the platinum travel pass. But this is not what was being asked. Mr Critchley had no answer to counsel's questions on this subject. 9. In answer to questions from the Court, Mr Critchley conceded that he was aware that this platinum travel pass offer was better than the 50% off he had experienced for cruises, and he acknowledged as he knew he had to, that he was aware these services were being provided to him and Ms Tarbuck below their wholesale cost. When the Court asked how he thought these services could be provided below the wholesale cost of producing them he gave a response that came closest to an answer: "No, I can't recall myself asking that specifically. I – my thinking was it was working similar to my example in the ski passes, that some people can get some benefits, some can't get very much benefit, and somewhere in there, I assume they have done their own economical analysis. But no, you make a good point." 1. Mr Critchley says he was prepared to assume that Goway "have done their own economic analysis". The Court does not accept that a man of his business experience and intellect made this assumption. Behind this statement lies the idea that he was content that somehow the economics would work for Goway. But without further facts or an explanation, it was obvious that without more facts the "economics" could not possibly work for Goway. 2. The ski pass example he gave bore no relationship to the platinum travel pass and he must have appreciated that. He explained that people could acquire worldwide ski passes for $1,000 a year and then could receive $10,000 a year of skiing, provided they were independently able to pay for their own travel to Japan, Canada, USA, and Europe to go skiing. But this example makes commercial sense for the vendor/operator, who can rely upon the substantial filter preventing people enjoying the full $10,000 in benefits on offer each year. The participating consumer has independently to spend large amounts on airfares to be able to enjoy the skiing benefits. But the defendants knew that the platinum travel pass that was being offered here had no such constraints. Upon a single payment of $8,000, the platinum travel pass would apparently over a three-year period give the right to nine international trips presumably involving multiple legs including around the world, 105 days of international accommodation, three tours of up to 21 days, three cruises, and 72 domestic flights anywhere in Australia. 3. When Mr Critchley was asked by Mr Maroya how he thought that $8,000 could cover just the three annual cruises, he responded unconvincingly. Appearing to resent the comparison he said, "if you use that comparison, but I had a chat with her, and no doubt I asked questions, but I accepted the offer". The Court does not accept this answer or that he asked any questions of Ms Comito about how the platinum travel pass could be economically viable. He then said that "I didn't delve into the situation from the point of view of the supplier. I was offered what I believed was legitimate, and I accepted it." This was in part accurate: he did not "delve" into this from Goway's point of view. But especially given the troubling history of his dealings with Ms Comito up to that point recounted in these reasons, he could not infer this offer was a legitimate offer from Goway without understanding how it worked for Goway. 4. What he believed was that it was an offer being made by Ms Comito, which was on such favourable terms that he preferred not to know how she had managed to construct it at Goway because it did not look objectively to be in Goway's commercial interests. Finally, he said, "I did not have the time to analyse [the offer of the platinum travel pass]". It is true the defendants only had five days to accept the offer. But they then had years to consider whether they should make further inquiries of Goway's management before choosing to enjoy its benefits. 5. Apart from the issue of GST, which is covered below, the defendants did nothing about their many defects in understanding whether this offer was commercially rational enough to be believed as a genuine offer being made by Goway. They decided to deal only with Ms Comito and not to conduct themselves as reasonable people in their position would and query staff travel or management at Goway to understand how these travel passes could possibly work as part of Goway's business. The staff travel email offered "if further information required, please email staff travel with subject line – Questions re Travel pass". This purported to be a direct invitation to the recipient to seek "further information". The defendants did not take up this invitation despite the obvious problems with the offer. Any attempt to take up this invitation would of course have revealed the obvious lack of an email address for staff travel and would have led to Ms Comito having to obfuscate about why staff travel could not be contacted. It may be inferred from Ms Comito's inclusion of this invitation in the structure of the "Hi Staff" part of this email that she was already confident that the defendants would not take up the invitation. 6. As to GST, at the time of arranging payment Mr Critchley asked Ms Comito by email "also will there be GST to pay?" She answered, "no GST to pay". Mr Critchley was applying his accounting knowledge sufficiently to analyse that if he wanted to use the travel pass for domestic airfares and accommodation for business purposes, he may be able to use the GST he had paid to Goway to offset any GST liability he had incurred in the rest of his business. But the deal was otherwise so disproportionately advantageous to him and Ms Tarbuck that he let this issue go. Although if "no GST to pay" meant as it seemed to Mr Critchley that Goway was not charging GST, a moment's thought would have puzzled an experienced accountant in his position how Ms Comito could be permitted in the ordinary conduct of Goway's business as its agent to sell a product that incurred a GST liability without Goway charging GST to its customers. This would reinforce the concern arising from the other anomalies on the sale of the platinum travel passes that Ms Comito was not acting on behalf of Goway. 7. Ms Tarbuck thanked Ms Comito for sending through the offer which she called "an absolute bargain!" She forwarded it to Mr Critchley who replied to Ms Tarbuck "let's investigate this carefully before responding. I want to think through all travel that may occur to be sure we don't say no prematurely". Despite that statement of intent, neither he nor Ms Tarbuck investigated the terms of the offer according to their own standards. 8. On 16 November 2015, Mr Critchley and Ms Tarbuck needed to calculate what travel they thought they would be undertaking the following year. Mr Critchley rang Ms Comito to enquire about what advance booking timeframe was required for the platinum travel pass. Ms Comito replied telling him that for international travel it was 60 days and domestic travel seven days. He then rang to accept the offer and sent the following confirmation email to Ms Comito: "Hi Lisa, Great to chat earlier and I hope you picked up my voicemail message. I just want to confirm that we would like to take up the very kind offer of the Platinum pass for $8000 x 2. It is a sensational deal. Please let me know how you would like us to pay. Kind regards. Bob" 1. Acting on this "sensational deal", Mr Critchley ultimately purchased two platinum travel passes for himself and Ms Tarbuck around 16 November 2015 for the total value of $16,000 ($8,000 each), although these were not paid for until May 2016. The Court does not accept that any contractual relations were made between the defendants and Goway in relation to the travel passes, because a reasonable person in the defendants' position could not have relied upon Ms Comito's ostensible authority to act on behalf of Goway in relation to them. But these reasons will from time to time use terms such as "purchase" the travel passes and "used" the travel passes and "covered by" the travel passes merely to express the external form of the transactions in question and such language in this narrative of facts should not be construed as a legal conclusion that legal relations were created between Goway and the defendants in relation to these platinum travel passes. 2. Mr Critchley and Ms Tarbuck could not use the platinum travel passes immediately. The passes did not commence until 1 September 2016, and they already had travel booked through some other travel agents and they still had not used all the 16 business class air tickets that Ms Comito had sold them. In addition, they still paid commercial rates for some flights. The Defendants Invite the Family into the Platinum Travel Pass – 2016 1. In the first nine months of 2016 before the travel pass commenced, the defendants continued to use their 16 discounted business class airfares and to enjoy other spontaneous complimentary benefits from the SFF scheme. Throughout that year the defendants introduced the platinum travel pass to Ms Fryer and Ms Storey and their families. And upon the defendants' recommendation, travel passes were issued to approximately two dozen of their friends. 2. Mr Critchley applied to use one of the 16 discounted business class airfares in January 2016. He emailed Ms Comito on 8 January 2016 to arrange flights to the USA in late February. He was short of the 60 days' notice period. But Ms Comito managed to waive that requirement. By 20 January 2016, she had confirmed flight details for late February. Goway met the cost of Mr Critchley's USA return business class flights from Sydney and an internal US flight at a cost of $9,582.44 and $873.60 respectively. But in addition to the discounted business class airfares this involved a gift from Goway of the internal US flight. This was a spontaneous benefit to Mr Critchley which was not covered by the way Ms Comito had described the 16 discounted business class airfares. 3. The implementation in April 2016, of the Hong Kong packages that the defendants had previously arranged with Ms Comito involved more spontaneous generosity on behalf of Goway to the defendants. On 4 April 2016, when Ms Comito confirmed that the defendants' Hong Kong flights meant they were only using five of the seven nights of their Hong Kong package, she offered to credit them with the two nights they did not use. This appeared to mean Goway would be bearing the loss for those two nights unless it was able to sell the accommodation back. 4. In an email to Ms Tarbuck on 30 April 2016, Ms Comito informed her that "from 01st January [2017] they are having a dedicated team just for the travel passes and you can go direct… YIPPEE YAY!!! Better service and will free me up." The later unexplained failure to deliver on this promise by January 2017 and the deterioration of the service from staff travel became a major nagging contradiction between the way Ms Comito was describing the operation of staff travel within Goway and the way it was being experienced by the defendants. 5. In the same email Ms Comito opened the possibility of Ms Fryer and Ms Storey being offered the travel passes. She did not reproduce the November 2015 offer but said: "Travel passes can be used in reverse for USA and Europe with Australia etc. I have only held you two which they will ask me for payment for shortly. In the event that you believe Shari and Jodie and their family may benefit I'm happy for you to offer as I will not have to take care of the bookings in the future and they will get better service. The last batch of the passes do not commence for travel until 01st March 2017 and can be deferred for one year." 1. The structure of this communication is important. Ms Comito is giving her consent for "you to offer" the passes to Ms Fryer and Ms Storey. It is contemplated that the defendants would be acquiring the passes from Ms Comito and Ms Fryer and Ms Storey would be allowed to use them. This is confirmed by later correspondence. 2. On 2 May 2016, Ms Tarbuck emailed Ms Fryer, including Mr Critchley as a copy addressee, introducing the benefits of the pass to Ms Fryer. Ms Tarbuck seems to have copy pasted part of the original November 2015 offer into her email to Ms Fryer, explaining "we locked in two last year and there is a new batch but not available for use until March 2017". Ms Tarbuck also acknowledged that the pass benefits were so one-sided they were hard to believe at first blush, declaring "now you might blink a few times when you read the below and then pinch yourself, but this is the real deal offered to you by Lisa". Whilst the defendants had by now buried any doubts they had about the legitimacy of the passes; this unselfconscious moment of intra-family candour speaks clearly: pass recipients needed to convince themselves that the deal was genuine. This is an admission by Ms Tarbuck that upon first encounter, the platinum travel pass did not look genuine. 3. Ms Tarbuck clarified for Ms Fryer that the deal could be accessed from the USA, explaining that she "had a long chat to Lisa yesterday about this". This meant Goway was conferring another benefit through the travel passes which was not obvious from their original terms, but which was now being refined by discussion with Ms Comito and confirmed in Ms Comito's email of 30 April. Honest and reasonable people would expect such terms would be specified from the beginning, so there were clear limits on consumer expectations for the pass. Otherwise, the pass risked damaging rather than promoting goodwill for Goway. 4. Ms Fryer thought the offer was "amazing", but she had her doubts. She spoke to her father on the telephone and asked him the questions "is this a legitimate offer?" and "what is your experience with Goway?" She wanted to understand "that there was a company behind [the pass offer] and that this was something that was going to be working". Ms Fryer's unprompted questions were a direct reminder to the defendants, of how a newcomer would react to the one-sided benefits from the pass: questioning whether it was legitimate, whether it would work in practice and whether the credentials of the offering company needed to be verified. 5. Mr Critchley also offered the pass to Ms Storey by email on 2 May 2016, explaining to her that "a special friend has offered this to me and has allowed me to extend it to you on a strictly confidential basis" to commence from March 2017. After Ms Fryer's recent probing questions, he pre-empted Ms Storey's potential reaction assuring her, "I know it seems too good to be true but this is legitimate". He concluded insisting that she stick by the rules Ms Comito had imposed, "it is important that you keep this confidential, as my friend is including me in their staff travel scheme". 6. Mr Critchley was being honest with his daughter. But in response to Mr Maroya's question, if he really thought "that all this [the travel pass] was too good to be true" he explained that his "writing of that to Jodi was to really encourage her to take it up". This was a neat deflection of the questioner, emphasising his genuine concern at that time for Ms Storey's welfare. But it was not an answer to the question. Mr Critchley had answered a more direct question earlier in his cross-examination. When asked whether he "thought at any point that all these deals – in particular these platinum travel passes – sounded too good to be true", he answered a simple "no". But the Court does not accept this answer. Just like Ms Tarbuck's earlier communication with Ms Fryer, in a moment of candour shared with his daughter, Mr Critchley was disclosing that he had true insight how a person coming freshly to the platinum travel pass would naturally react. 7. The first week of May 2016 saw the defendants, Ms Fryer and Ms Storey paying for their platinum travel passes. The defendants' payment was made with a $16,000 debit to Ms Tarbuck's credit card on 2 May. This was now over five months since Mr Critchley had indicated to Ms Comito that the defendants would be taking the passes and asking her how he should pay for them. 8. Ms Tarbuck emailed Ms Comito on 3 May indicating they would like to purchase two adult business class travel passes for Ms Fryer and her husband for $8,000, two travel passes for Ms Fryer's children at $7,000 and a single economy travel pass for Ms Storey for $4,000, totalling $34,000. The terms on which Ms Tarbuck proposed these purchases are relevant to one of the legal issues concerning whether the defendants, or Mr Critchley's daughters and their families were the recipients of Goway's services. Ms Tarbuck wrote to Ms Comito saying: "Hi Lisa I hope you're well. Surprise, surprise. Please see what we would like below if it is still possible and let me know if it makes sense. Understand if it's too late. Many thanks xxx" 1. Ms Tarbuck's email forwarded back to Ms Comito a version of the travel pass which Ms Tarbuck had highlighted to show which kind of passes were being purchased. An extract of this appears below with Ms Tarbuck's highlighting expressed in italics including the misspellings in the original: "3 Year Travel Pass (commences 1 September 16) Busniess – $7000pp – Child – $6500pp 2 x Adult for Jaxson and Jaydon. … 3 Year Platnimum Travel Pass (commences 1 September 16) Economy Air Travel – $4000pp – Child – $3500pp …1 x Adult for Jodi. Business Air Travel – $000pp – Child – $6500pp …2 x Adult for Shari and Darrin." 1. The language of Ms Tarbuck's email is clear: what "we would like below" indicates a purchase by the defendants themselves. But once completed the purchase would be allocated within the family for the benefit of the nominated family members. Mr Critchley's daughters are not parties to the purported transaction. 2. Ms Comito's 2 May 2016 email contains substantially the same deficiencies and signposts of her lack of authority, as appeared in the original offer of November 2015 and which have been analysed earlier in these reasons. They need not be repeated here but their implications are the same. One additional anomaly of this exchange is that the form of Ms Tarbuck's 3 May 2016 email to Ms Comito, copy pasted as it was from the original in November 2015, overlooks the qualification that the additional passes would only commence on 1 March 2017. 3. But this mistake did not trouble Ms Comito. The following day, 4 May, Mr Critchley's credit card was debited for the total of $34,000. 4. No Goway tax invoices preceded these payments. No receipts were issued after these payments. Nothing that looked like a "travel pass" was issued. All this reaffirmed the uncommercial environment of this transaction, which involved significant payments. Yet the defendants never seem to have asked for such basic transaction evidence despite Ms Fryer's declared interest in the credentials of Goway. The only objective evidence of purchase was the debiting of Ms Tarbuck's credit card for $16,000 and Mr Critchley's credit card for $34,000. The lack of a tax invoice meant Mr Critchley and Ms Tarbuck could not claim GST on any business-related travel using the passes. 5. The defendants rightly point in their defence to the extensive documentation they were issued by Ms Comito at the time of travel on their passes. This reduces the power of other signals showing Ms Comito was not operating the SFF scheme with Goway's authority. But a defect in the defendants' reliance upon this material is that the most fundamental documentation of all, evidencing the purchase of the travel passes themselves, was absent, was not asked for, and nor did Ms Comito explained its absence to the defendants. More Complimentary Travel for the Defendants – July 2016 1. Goway's SFF scheme began to look more irrational when complimentary tickets were offered to Ms Fryer and her family in July 2016 by staff travel. Delay had occurred in the first half of July in the issue of etickets for Ms Fryer and her husband and their two sons pursuant to what appears to be some of the discounted business class airfares that Mr Critchley had either given or sold to Ms Fryer. Ms Comito was embarrassed about the delay in issuing tickets for the original United Airlines flights on which Ms Fryer and her family wanted to travel from the USA and return between 26 July and 20 August. 2. In an invented staff travel email forwarded by Ms Comito, it was explained that the original flight tickets did not issue because they were showing up at a cost of $13,500pp and "that is not on the fare class valid for tix or what they were booked out". As a result, staff travel explained they had to arrange alternative bookings through Air New Zealand via Auckland. Leaving aside the obscurity of the explanation for the nonissue of the tickets, staff travel made an extraordinary offer: "We should hear back from AIR NZ rep later today. Hence why we were holding the United preferred flights too, which in the event AIR NZ can't help we will give complimentary. In the event they take these we will reimburse car hire for any domestic flights to Denver from Steamboat or other arrangements. We can book airport hotel in Brisbane too complimentary." 1. The arresting generosity of this offer resembled the offer staff travel had made to the defendants on 9 March 2015. This offer, in which staff travel undertook to provide complimentary tickets at Goway's expense on the originally booked United Airlines flights for which United Airlines was now going to charge $13,500pp, was not consistent with any commercially rational staff travel scheme. This meant that Goway was offering potentially to bear a loss of $54,000 for the four travellers to maintain their original staff travel booking. It is difficult to hypothesise any conceivable commercial advantage to Goway for making such an offer. After all it was being made to people who had just acquired platinum travel passes, which the defendants say they believed entitled them to services to Goway's continuing financial disadvantage for a further three years. 2. Ms Fryer's platinum travel pass did not commence until either 1 September 2016 or 1 March 2017, depending upon how Ms Comito's email is to be interpreted. She therefore had no entitlements to accommodation or car hire associated with the discounted business class airfares. Therefore, these complimentary offers of accommodation and car hire were equally eye-catching extras. These flights cost Goway $8,129.30 per person, a total of $32,517.20. 3. Mr Critchley expressed his deep appreciation to Ms Comito for this offer, saying in an email on 19 July 2016, "that was really special that you made them complimentary" and saying that "we can't wait" to start using the platinum travel passes. No honest and reasonable person could have thought that these offers came from Goway, as they did not resemble the product of any business model that would be recognised by people of the defendants' business experience. The Defendants' Friends Are Included – 2016 1. The defendants were unlikely to recommend the travel passes to their friends if they were conscious that Ms Comito was engaged in unauthorised conduct within Goway and acting against Goway's interests. They did not yet have direct knowledge of Ms Comito's misconduct. That would only come later in 2018. 2. But an inference in the defendants' favour that they had no notice of Ms Comito's misconduct because they were recommending these passes to their friends in 2016 is not available. This is because of the very specific way the defendants selected the friends who would be invited to join the platinum travel passes and the restrictions that the defendants placed upon them – ensuring that they only went through Ms Comito and Ms Tarbuck to redeem the value of the passes. The Court does not use the full names of any of these friends in these reasons. 3. For example, Mr Critchley wrote to one of these friends, Michael, in mid-September 2016 marked "Travel Passes Very Confidential" and explained to Michael that "there are a few rules around booking, so we don't waste their time. She advised over the weekend that she has a few extra travel passes and we thought of you". 4. In a subsequent email, Mr Critchley explained to Michael that "we have been capitalising on the amazing deals for some time". But he acknowledged that he understood that his formal association with Ms Comito in SFF was to a degree fictional, stating "the reason why we have to take this approach is that we are being grouped under staff travel and link as part of extended family… It is best to go through us at this stage". 5. When a few weeks later Michael expressed an interest as to whether he should "touch base with the travel company to introduce himself", Ms Tarbuck made it clear to him that Ms Comito would be "in touch in the New Year to make the introduction and [there was] definitely no need to call [Goway]". 6. About a week later whilst arranging a trip to Melbourne, Ms Comito thanked Mr Critchley for organising two more people to take passes and said "I have asked around to try and get another two". This implied that Ms Comito might be able to persuade other staff members to give up passes, a scenario that must have seemed highly improbable to anyone who thought about the matter for a moment. 7. Then Ms Comito made another offer that spontaneously further favoured the defendants and would scarcely have seemed credible to a reasonable person in Mr Critchley's position. She stated: "They sent out a value add on Friday. 6 passes = one year extra travel on all passes (3 years) 10 passes = two year extra travel on all passes (5 years)" 1. This offer does not make rational commercial sense at many levels. First it is hard to understand what is being offered. But if it is an extra year or two on the existing platinum travel passes any reasonable person who thought about it would have been puzzled as to what would motivate a commercial organisation such as Goway to add further benefits to an essentially private scheme which was already steeply tilted in the defendants' favour. Under cross-examination Mr Critchley even agreed this offer was "fanciful" and expressed understandable confusion as to what it meant. He really had no other alternative. This offer was yet another reason why by this time a reasonable person in the position of the defendants and with their characteristics would not have been prepared to believe that Ms Comito was acting in the interests of Goway and on its behalf, without obtaining further verification from someone senior at Goway about these fanciful offers, or of her credentials to make them. 2. In response Mr Critchley expressed that he was most impressed by this additional offer acknowledging "we appreciate all you do for us". He did not ask any of the obvious questions about it. But he did explain his approach to inviting other pass holders into the fold: "We will do more research on people for the travel passes. There are a lot of people we know well who could use them, but we have been very choosy to ensure anyone we put forward will never cause one second of stress. Hope that makes sense." 1. The subtext of this email is important. Mr Critchley is signalling to Ms Comito that he is being "very choosy" to ensure that she does not suffer "one second of stress". The stress in question was making complaints about her running of SFF that ran the risk of going beyond Ms Comito to senior Goway management. Mr Critchley and Ms Tarbuck knew by then that Ms Comito wanted to keep senior management out of their dealings with the SFF scheme. They had already actively collaborated in that exclusionary conduct for example in June 2015, in a manner which is not consistent with running a simple travel scheme to incentivise staff. 2. And the defendants were rigorous in never causing one second of stress. They never discussed with Goway's senior management at any time between December 2013 to June 2018 the benefits they were receiving from the SFF scheme through Ms Comito despite, as will be seen the multiple frustrations that they surprisingly meekly suffered at her hands. 3. Later the same month Ms Tarbuck wrote to another friend, Neil, to invite him to take up a pass, expressing and then dismissing her own disbelief at the platinum travel pass as "too good to be true and it is", on the basis that it started on 1 September and "it does work!" 4. But the argument that orders on the platinum travel pass worked and therefore it could be relied upon as a genuine Goway product, begs the important question as to how the pass could work in a manner that was consistent with Goway's interests. The defendants could never articulate to the Court any plausible commercial motive that Goway could have in making the platinum travel pass work as it does. It is unlikely then that they could have thought that Goway had such a motive. The Defendants Use Their Travel Passes – September to December 2016 1. The defendants sought to use the platinum travel passes to cover the cost of their trips after 1 September 2016, including the cost of airfares, accommodation, car hire and cruises. These included the following. 2. Gold Coast September 2016 – Ms Tarbuck wasted no time in using her travel pass. She travelled to the Gold Coast on 4 September 2016 and returned on 5 September 2016 on flights using the platinum travel pass but which had a face value of $1,090. This first flight exhibited one of the problems that was to recur throughout the operation of the platinum travel pass under the SFF scheme: Ms Tarbuck's tickets were only issued at the last moment. Then Mr Critchley and Ms Tarbuck travelled again to the Gold Coast for a funeral on 18 September returning on 19 September. The flights cost $360.74 each with car hire of $110 and accommodation of $161. Mr Critchley claims this was also covered by the platinum travel pass. Although Mr Critchley gave less than seven days' notice for domestic flights, Ms Comito seems to have waived that requirement because of the funeral but nevertheless in the process gifted the defendants close to $1,000, another example of her exercising broad discretion in the defendants favour that would have caused a reasonable person to question how she could be conducting this operation for the commercial benefit of Goway in any rational business operation. 3. Perth September 2016 – keen also to use his travel pass straight away, on 31 August 2016 Mr Critchley arranged a flight to Perth and return between 4 and 7 September 2016. The flights together with hotel accommodation in Fremantle (issued by a prepaid Goway voucher by Ms Comito) and hire car expenses were taken under cover of the platinum travel pass. For this trip Goway bore the cost of the air tickets of $4,017.80, accommodation of $685.35, and car hire of $223.08. 4. The same day, 31 August, Mr Critchley emailed his daughter, Ms Fryer, advertising to her the benefits of the pass. He was conscious of the value he was receiving from the pass. He estimated that the market price for the trip was about $5,000, commenting "that has covered year 1 of the travel pass and part of year 2", and concluding with, "just thought it might give you peace of mind". Despite Mr Critchley's denials in cross-examination, the most plausible meaning to "peace of mind" is reference to the early doubts Ms Fryer had expressed about the legitimacy of the travel pass. 5. Melbourne September 2016 – in early September 2016 Mr Critchley contacted Ms Comito to arrange flights to Melbourne for the AFL grand final. After a reminder from Mr Critchley on 17 September, the tickets issued on 27 September 2016 together with an accommodation voucher for The Langham Hotel in Melbourne. The flights for each of Mr Critchley and Ms Tarbuck had a face value of $1,798 plus the value of the accommodation voucher at the Langham Hotel of $1,155. 6. USA October 2016 – in September 2016, Mr Critchley emailed Ms Comito to book flights to the USA within the 60-day notice period for international flights under the platinum travel pass. Ms Comito could not secure a business class flight for Mr Critchley and offered a complimentary economy ticket in its place. Not having given the requisite 7-days' notice Mr Critchley was getting a benefit to which he was not entitled, and which was not clearly covered by the terms of the pass. This would have had a reasonable person wonder why Ms Comito had such discretionary largesse available to her. But Mr Critchley accepted it without question, indeed expressing some surprise at the largesse, saying to Ms Comito "this is sensational and I hadn't expected a free option but will gladly take it". The face value of the international economy ticket issued to Mr Critchley was $1,373.39. 7. Gold Coast October 2016 – Ms Tarbuck flew from Sydney to Coolangatta airport on 22 October 2016 and returned the following day using her platinum travel pass to cover the $439.93 cost of these flights. 8. Adelaide November 2016 – on 14 November 2016, Ms Tarbuck emailed Ms Comito in respect of organising flights from Sydney to Adelaide. These tickets and accommodation in Adelaide were paid in full, covered by the platinum travel pass with the defendants each gaining airfares to the value of $1,111.19, and car hire of $100. 9. Gold Coast December 2016 – the defendants travelled from Sydney to Brisbane on 3 December 2016 returning on 5 December 2016. Ms Comito said (forwarding a formless staff travel message instructed to look like an email) in which staff travel indicated it was not able to secure business class tickets for those flights and issued economy tickets instead. The Sheraton Mirage could not be secured but a Peppers resort voucher was provided instead. The air tickets at a face value of $267.68 each, the accommodation was $532.50 and hire car was $180 all apparently covered by the platinum travel pass. 10. South Africa in December 2016 – by the time the defendants reached the end of 2016 they had already recouped the full value of their travel passes. This was confirmed by their trip to South Africa in December 2016 which was taken under colour of their platinum travel passes. And this must have been clear to them as they enjoyed Goway travel on their platinum travel passes from January 2017. Ms Tarbuck arranged this trip to South Africa between late October and mid December 2016. They departed from Sydney on 14 December 2016. The face value of the tickets for each of the defendants was $7,809.71. Their accommodation in Cape Town cost $5,135.97. Accommodation at a game lodge cost $3,650.76 and at another hotel $658. The defendants paid for the game lodge accommodation, but Goway bore all the other outgoings. 11. Whilst organising the trip to South Africa Ms Tarbuck responded to a staff travel email offering a list of cruises that currently offer a 40 to 50% discount for 2017/2018 provided they were paid by the end of January 2017. This sparked Ms Tarbuck's interest. She emailed Ms Comito saying "I think we get something included in our passes" but saying she had not looked at the paperwork. As these reasons earlier show there was no clear money limit on the cruises that could be taken in the terms of the platinum travel pass. 12. In one of the few occasions the evidence discloses Ms Comito limiting the benefits provided by the passes, she replied, "You are correct you do get one cruise a year to give you a guide they are to a certain value (between $2000-$3000) per person. So, they will not cover all cruises." 1. Goway imposing money limits after the passes had been paid for does not reflect a commercial relationship. But more importantly this expressed limit was abandoned soon after it was applied. Cruises taken by the defendants under colour of the platinum travel pass in August 2017 on the Mediterranean cost Goway $8,470.65 per person and on the Baltic in July 2018 cost $6,094.10 per person. 2. In December 2016, Ms Comito made discounted offers to the defendants for them to acquire first-class air tickets to the USA or Europe return for $3,000pp including 28 days accommodation. Ms Comito purported to explain the offer on the basis that the product had to be "drastically reduced as they have to sell 30 tickets before the end of the year that they must sell". Tautologies are rarely compelling and this one is no exception. The honest and reasonable person in the defendants' position must have wondered what staff incentive or other business model benefiting Goway could rationally explain them receiving any offers on top of the platinum travel passes they already had. 3. The defendants encountered some problems with the operation of the platinum travel passes during 2016. But these problems amplified in intensity through 2017 and 2018. Staff, Family & Friends Begins to Unwind – January to May 2017 1. The defendants' case that their dealings with Ms Comito did not alert them to her lack of authority from Goway becomes even more difficult as events move into 2017. Examples of maladministration on Ms Comito's part, and the defendants' continuing incuriosity about the rationale of Goway's apparent largesse towards them, together with individual events that tended to show that Ms Comito was acting without authority, accumulate in 2017. This is discernible from the narrative of events from January 2017. 2. On 5 January 2017, Ms Tarbuck emailed Ms Comito giving her information about a trip that one of her friends, Neil, wished to book. The friend seemed perplexed that he had no one to contact at Goway. Ms Tarbuck forwarded the friend's email to Ms Comito. The friend had been issued a travel pass. He was so confused about who to contact to use the travel pass that he had drafted an email addressed to Ms Comito, which Ms Tarbuck appears to have passed on to Ms Comito by pasting it into her own email to Ms Comito. The friend's email to Ms Tarbuck commences as follows: "Hi Lyn, I am unsure who I should contact at this stage regarding our 60th birthday trip. I was thinking of flying to Dubai on approximately 15 April 2017… [the email continues with other irrelevant information concerning the proposed trip] … Sorry for sending to you as a contact but I don't have anything whoever other than a bank withdrawal? Thanks, Neil" 1. Ms Tarbuck took up the point arising from the friend's confusion about the difficulty in contacting Goway's staff travel and said to Ms Comito the following: "I think you said Staff Travel had a dedicated person from 1 January. Anyway, just forwarding it to you and let me know if you I should be doing something different. He is very specific re cabins etc but just doesn't know what yet so have copied as per his notes. Many thanks xx" 1. Ms Comito had made promises to Ms Tarbuck at the end of 2016 to improve the reliability of the SFF travel arrangements. Ms Comito had promised in December 2016 that a dedicated person would be appointed to manage this aspect of the business. No dedicated person was in fact ever appointed. 2. Goway submits that one of the features that should have begun to alert Ms Tarbuck to anomalies in the SFF scheme was Ms Comito's failure to deliver on clear promises like this that she had made. Throughout 2017, both directly and through Ms Fryer and Ms Storey, Ms Comito's broken promises accumulated. But it is difficult to accept that one or two broken promises would alone have alerted an honest and reasonable person in the defendants' position no longer to trust Ms Comito. Most customers of businesses understand that commercial life is full of competing business priorities and pressures. Sometimes sound and rational business plans are countermanded either for lack of funds, or by managers who have different ideas. Failure to deliver on a few promises is hardly on its own to be interpreted as a badge of dishonesty. And the defendants' understanding that SFF was a low priority internal staff travel scheme at Goway explained some of the untidiness in the administration of the scheme. But when persistent signals of Ms Comito's unreliability began to dominate communications, her failure to deliver on promises such as this would in the mind of the honest and reasonable person call for further inquiry so they could be understood in the context of a legitimate business operation. 3. Ms Comito sent a text message in response to Ms Tarbuck's email of 17 January 2017, a text which is not in evidence. The text seems to have been sent that same evening. Ms Tarbuck responded the next day in an email to Ms Comito, copied to Mr Critchley in which she pointed out that lines of communication for users of the SFF scheme were becoming very difficult for the defendants because the defendants, rather than Ms Comito herself, were the points of contact for these various users. Somewhat resigning herself to continued confusion, and using her friend, Neil, as the example to be cited, Ms Tarbuck wrote in the following terms to Ms Comito, copied to Mr Critchley: "Hi Lisa It looks like your late nights are still continuing. I just wanted to write regarding your text last night concerning Neil's email. We are just a little confused?? Neil's point about the only contact was the withdrawal is correct as you and I discussed that you would arrange to intro yourself in the New Year (some months back) when Michael came through with the same query. He has just written to me as I am his only point of contact at this time so is not being insulting. Neil is an intro through Bob – a 35 year friendship and business arrangement and was only chosen as we know they are mature travellers and will roll with the punches and not cause issues. Please give either Bob or myself a call if you want to chat. The key is to spell out to the new travel pass people the modus operandi and what can and can't be done and it should be smooth from there on. Anyway, let me know what you want to do. xx" 1. The then current arrangements with SFF were starting to appear to the defendants to be confusing, burdensome, and inconvenient for friends using the scheme, unless they were people who could "roll with the punches". In addition to the uncommercial features of the platinum pass, none of this was of this was looking very professional. 2. On 11 January 2017, Ms Fryer wrote to Ms Comito, copied to Mr Critchley, explaining that she would like to book a trip to Australia for February 2017. She was concerned to get at least 4 hours layover in Los Angeles or San Francisco, "so we don't miss flights like last time due to plane delays". But SFF had been slow and unresponsive. Ms Fryer finished her email saying: "Our original request was put forward November 9, 2016. At that time we made accommodation reservations, which become non-refundable in 2 days. If we can't get the flights confirmed in this time period. I will need to cancel all of that accommodation and then start again. Just sharing so you can appreciate our deadline. Please feel free to call me if you have questions. Thanks Lisa!" 1. The unreliability of SFF was affecting all family members. By early 2017, Mr Critchley and Ms Tarbuck must have appreciated the value they had already drawn down on the platinum passes had paid for them and they put up with the inconvenience because of the benefits the passes continued to confer. 2. Goway was critical in its submissions of the generous benefits the defendants derived from a trip that Ms Comito arranged for them from Sydney to Steamboat Springs and return in February/March 2017. The platinum travel passes were used on this trip. Goway submitted that during the trip the defendants took more internal flights than the two internal flights that were permitted by the terms of the platinum travel pass. Goway funded the additional airfares beyond the two permitted on the travel pass. The documentary evidence bases the conclusion that Goway covered cost of four internal flights per person on this trip. 3. This was another indication that Goway had poor business discipline in monitoring the specific terms of the platinum travel passes apparently issued under the SFF scheme. By now the defendants were used to poor discipline in the delivery of SFF services. But this further indiscipline in Goway's precise adherence to the terms of the SFF scheme was yet another indicator that Ms Comito's administration of the scheme was not being supervised through a normal business hierarchy at Goway and the result was commercial disadvantage to Goway, which could not be accepted by a third party in the position of the defendants as being part of Goway's legitimate business without further explanation. 4. But there was a hitch before they were scheduled to leave on this trip into the USA. On 2 March 2017, Mr Critchley emailed Ms Comito to enquire whether the Sheraton at Steamboat Springs knew of their booking. Mr Critchley complimented Ms Comito on her arranging of "perfect" flights and asked, "Lisa with the Sheraton at Steamboat would they now be aware of our booking?" He wanted to lock in some skiing discounts at Steamboat Springs based upon their making advance bookings. But on 3 March 2017, it became clear that the Sheraton at Steamboat Springs was not available for the whole period, another example of poor planning and execution by SFF. 5. The defendants argue that Goway was still delivering air travel to them under the SFF scheme giving them faith in its legitimacy. But that is not an answer to the question that an honest and reasonable person would have asked: how it could be doing so? By now the defendants knew Goway was losing money on their platinum travel passes, on every booking that they made. This level of losses on every journey did not resemble any airline staff travel scheme that Mr Critchley could describe in evidence. And no marketing or other approach had come to them from Goway management that would account for this as loss leading behaviour on its part. Indeed, they knew that Ms Comito's use of her Hotmail address and communication restrictions meant they were close to invisible to Goway's management and that such an approach was most unlikely. 6. Mr Critchley was grateful for Ms Comito organising the Steamboat Springs trip. This was not surprising: the USA trip cost Goway $18,822.13. He wrote to her thanking her for "all you are doing for us" and saying that it was "really appreciated". He was keen to stay on the right side of her, for understandable reasons: the benefits that he was now receiving were extraordinarily generous. But as she commonly did, Ms Comito replied explaining why there had been problems, painting an image that staff shortages accounted for the recent dysfunction: "No problems. Nothing like last minute – lucky I know you to have faith in me to get you there… May be a need to get you in for a motivational talk… Five staff have called in sick today!!" 1. On 7 April 2017, Ms Comito made a further offer to the defendants to travel business class return to Hawaii and stay for 10 nights at a cost of $2,500 or $3,000 per person. Ms Comito forwarded an email apparently coming from the "Staff Travel Team" to Ms Tarbuck and Mr Critchley. Ms Comito stated that "The Pass only covers this for 50% as resorts not available on pass in these room types": "Hi Lis We have been given 40 packages ONLY for 10 Nights return Business class at the Halekulani Hotel in Ocean View Suites and 40 packages ONLY for 10 Nights return Business Class at the Royal Hawaiian in Alii Suites Suites [sic] this is a PROMO so one off with wholesaler for the resorts with airline. Halekulani is $3,000per person Royal Hawaiian is $2,500per person Let us know today if you have any interest otherwise you can send out to your team as they will sell. Kind regards Staff Travel Team" 1. On 7 April 2017, Ms Tarbuck emailed Ms Comito to confirm whether for the travel pass holders it was an extra $3,000 each. Ms Comito replied "Good point. Will check". Then she emailed again shortly afterwards, "this is $1,500pp thanks". To which Ms Tarbuck responded "Hi – can we lock this one in please?" Mr Critchley paid the extra $3,000 for he and Ms Tarbuck for the opportunity to take up this booking. 2. On 11 April 2017, Ms Comito emailed Ms Tarbuck saying that two pass upgrades had become available for Ms Storey and her son to take up. Ms Tarbuck asked whether Ms Comito meant that Ms Storey could upgrade her pass and buy another pass for her son. Ms Tarbuck reminded Ms Comito that Ms Storey had not originally bought a pass for her son. Ms Comito confirmed that could be done. But this further added to the facts that would mystify an honest and reasonable person about Ms Comito's offering: how could Goway's business offer ever-expanding benefits at ever-accumulating losses to ever-more family members? 3. Ms Fryer was looking at a possible trip to Hawaii for herself and for her husband at this time. She wrote to Ms Comito to try and arrange a booking to take advantage of her travel pass saying that her family "are super flexible" about bookings. Within a day or so after this she complained on the telephone to her father. This is despite her not recalling an oral evidence raising such issues with her father. He felt compelled to explain to her on 12 April 2017 that the delays were worthwhile in the long run. He pointed out to Ms Fryer that in their recent trip to South Africa and the USA "we only received tickets and accommodation booking slips 48 hours before flights out!!" Mr Critchley expressed his amazement at the poor business organisation at Goway saying to Ms Fryer, "it is crazy as Lisa assured us there would be a dedicated helpdesk from first January, and also she told us she was recruiting three new people!" At one level he did not fully believe her. He appears to have therefore made an inquiry of her husband, Mr Waite and reported back to Ms Fryer that Mr Waite "mentioned that Lisa seems very stressed… and he said that she is interviewing but can't find any good people". Mr Critchley summed it all up to his daughter as "a bloody hassle" but thought they would be vindicated in the long-term, "I guess we will all smile when we have recovered our money six times over!!" Here Mr Critchley's business judgment is giving him doubts about this scheme he thinks is operating in a "crazy" fashion. But Mr Critchley's decision to consult Mr Waite rather than Goway's management shows him following Ms Comito's rules rather than exercising the judgment of an honest and reasonable person with the cumulative knowledge that he had by then acquired. But he was frank about the dominant financial consideration for his choice to accept the "crazy" side of this arrangement. 4. Late in April 2017, Ms Tarbuck arranged flights and accommodation for a long weekend in Melbourne through Ms Comito under their travel pass. This cost Goway $2,069.56. Once again SFF's administration was below par: Ms Comito only confirmed the travel details on 27 April 2017, the day before they left. 5. On 19 April 2017, Mr Critchley booked a commercial flight to Steamboat via Denver on 31 May 2017. Mr Critchley paid Goway $5,015 for this which did not appear to have been placed on his travel pass. Although at the same time, April 2017, as is explained elsewhere in these reasons, Ms Fryer and her family were travelling from Denver to Australia with her family at a cost of $5,205.60, using her travel pass. Mr Critchley Calls Ms Comito's Explanations "A Little Mythical" – May 2017 1. Mr Critchley and Ms Tarbuck's level of dissatisfaction with Ms Comito's service ratcheted up further May 2017. This was Mr Critchley's own assessment. In answer to an open-ended question from counsel for Goway, repeated by the Court, the following exchange occurred with Mr Critchley in which he identified May 2017 as an important time where his assessment of the chaos surrounding Ms Comito changed: "The Court: But I think another way of putting what Mr Maroya has just asked you is that in the phrase that you've used before, "it looks too good to be true" that you actually believed, or by certainly at the very least by sometime in the middle of, or the first half of 2018 that it was too good to be true and that it couldn't be a legitimate part of Goway's business? Mr Critchley: It was probably at that time, probably from May 2017, we were very concerned with th[ese] constant promises of support coming to help us get through all this, and it didn't seem to happen, and our frustrations. But as it went into 2018 we just were not sure, and then only when it all blew up on 19 June [2018] with this so-called fictitious letter I'd signed for 1.8 [million dollars] for a charity, it all came to a head." 1. The Court had initial doubts as to whether Mr Critchley was referring in this answer to May 2017 or May 2018. So, a question clarified with him whether he meant May 2018 and he said it was "17" rather than "18". Mr Critchley's answer accords well with the objective record of Ms Comito's growing inefficiency from May 2017. 2. The June 2018 events Mr Critchley mentions will be discussed later in these reasons. But this exchange is significant in that Mr Critchley himself points to May 2017 as being an inflection point in Ms Comito's failure in support through SFF and in his and Ms Tarbuck's consequent frustrations. And he was right about this. The defendants admitted greater doubts from May 2017 about what Ms Comito was telling them about SFF. 3. In about May 2017, Goway provided flights from Hayden, USA to New Orleans, USA for Ms Fryer, and her family at a cost of $4,825.60, secured under Ms Fryer's travel pass. 4. Mr Critchley and Ms Tarbuck planned to travel to Europe in August 2017 using their travel passes. They were closely planning this trip with two friends, a couple Stephen and David, who were travel pass holders and who were travel insiders. David had background knowledge of staff travel schemes as an ex-Qantas employee and his partner Stephen had also gained knowledge as a user of the Qantas scheme. 5. On 9 May 2017, Ms Tarbuck sent a lengthy email to Ms Comito to arrange the bookings, including alternatives, for travel and accommodation for a European trip in August stopping in London, flying to Barcelona, cruising (with Silversea Cruises) to Rome and returning to Australia. Stephen and David were to travel on different legs on their own and then to Paris before returning to Australia. This was a complex booking. 6. But the usual problem arose: Ms Comito was not able to provide definite bookings soon after 9 May 2017. This particularly annoyed the defendants travel companion and friend, Stephen, who had enjoyed the benefits of staff travel under Qantas. Upon being exposed to Ms Comito's services, Stephen was taken aback as to how the Goway SFF scheme was said to operate. In conversation Ms Comito said to Stephen that he "should know how staff travel works". In an emphatic email dated 26 May 2017 in response to this comment of Ms Comito, sent to Mr Critchley, Ms Tarbuck and to his partner David, Stephen said about the booking of a Silversea cruise as part of the tour package: "I do [know how staff travel works], and it works like this. Book a ticket today, paid today, and the E ticket is issued immediately. You turn up to your ticket at flight, and if there's seats, you get on. If there is no seats, you go home, or wait for the next flight with seats. In the absence of any further information from Lisa, the only takeaway I can apply from staff travel just described and adapt to our August cruise, is that we are all on standby, and if there's suites left, will get to. If not I guess we don't cruise. I don't quite know how this works when you've already been told our payment was for a veranda 4 [the cabin on the cruise]. … Lastly, I should also tell you the booking process with Silversea for staff/interline tickets: 1.If Silversea decide to open a cruise up for staff rates, only then can you make a booking. 2. The day after you pay Silversea, you'll find your booking shown under you 'My Silversea' login and you are guaranteed to sail. 3. You will have paid for a guaranteed suite category. Verandah 4 for example, and around 30 days from sailing your allocated suite number appears under 'My Silversea'. On our last Silversea cruise we paid for Verandah 4 and Verandah 6. Same deal for our cruise in 3 weeks. I hope I'm wrong, but my gut feeling is we're a long way from being on the August sailing right now." 1. Here Mr Critchley and Ms Tarbuck had the benefit of an amateur with deep relevant experience, who was telling them with force and precision, that one important feature of known airline staff travel schemes is that the traveller is always on standby, but the traveller has a definite ticket to travel right from the beginning. Yet Ms Comito was delivering something very different from this and calling it staff travel. 2. Mr Critchley accepted that this raised for him, coming from a something of a self-appointed subject matter expert in Stephen as it did, that "the staff travel scheme could not work the way it was being described to [him]". This was an important additional factor, which but for the soporific influence of the financial benefits conferred by the travel passes, would ordinarily have suggested to an honest and reasonable businessman of Mr Critchley's calibre and experience, that whatever Ms Comito was operating from Goway, it was not an ordinary staff travel scheme. 3. This prompted the obvious question: did Mr Critchley ask Ms Comito to explain the scheme, considering what Stephen had told him? Mr Critchley was asked this and accounted for Ms Comito's explanation to him as, "they made a mistake on the booking and it has been paid for, let me check it out". But by then Mr Critchley was becoming cynical. He curiously described in oral evidence what Ms Comito had said to him as "a story that was a little mythical". He explained what he meant by that phrase as, Ms Comito giving "an excuse more than an accurate explanation of the real situation". 4. Mr Critchley claimed this was a judgment that he was making in hindsight. But in the Court's view it was a judgment that was reasonably available at the time and that he did make at that time. Ms Comito was starting to give Mr Critchley excuses that did not make business sense to him and conflicted with the amateur but experienced advice available to him through his friends, Stephen and David. This should have been a moment of real dissonance for Mr Critchley and Ms Tarbuck: whatever Ms Comito was running out of Goway, they had reason to believe by May 2017 it was not a staff travel scheme, although she described it that way. But he was nevertheless prepared to accept financial benefits from a scheme which he judged to be "a little mythical", rather than ask for an explanation from Goway's management. By then these benefits had accumulated to the point that an honest and reasonable person of Mr Critchley and Ms Tarbuck's business experience would ask in what rational business model could Goway continue to bear losses of this order. 5. The following day, 27 May 2017, Mr Critchley emailed Ms Comito, forwarding to her Stephen's email to him. He distanced himself somewhat from Stephen's email, blaming Stephen and supporting Ms Tarbuck. "Unfortunately, Lyn has copped so much crap, and it has been terribly unfair to her. Here is the email she received from her friend, Steve, on Friday regarding the Silver Seas cruise. This is one of many emails she has received, and he is an experienced traveller. His partner, David, worked for Qantas, and they have done plenty of travel through Qantas staff travel. They are lovely guys, but are retired, do nothing with their lives but travel, and have all the time in the world to camp it up and cause issues for Lyn after she has done them such a favour. They don't understand the stress they're causing for her after having experienced such a horrendous period with her parents passing. She is the meat in the sandwich who can do nothing and has been totally shattered every night as everyone thinks she can solve the delays, but of course she can't. You are very special Lisa and we really appreciate the special friendship we all have. We just hope your employer appreciates how good you are and takes the pressure off you." 1. Mr Critchley was content to de-escalate Stephen's email as really a complaint about an over pressured Ms Comito. But in cross-examination Mr Critchley agreed that Stephen's email reflected the fact that "we all were [pretty dissatisfied]" at that point due to the constant promises that Ms Comito was making but on which she was not delivering. He classified his 27 May 2017 email to Ms Comito as "politely trying to point out that she had screwed up everything and everyone is getting frustrated". At the same time as this email was sent, Ms Comito was dragging her feet on booking Ms Fryer's then planned trip to Europe. 2. In the Court's view this was another important inflection point in the defendants' level of knowledge, which was available then and not just in hindsight. In addition to all the unbusinesslike inefficiencies Ms Comito had presented to this point and Goway's unexplained accumulated SFF losses, the defendants were now aware upon authority they respected that Ms Comito's conduct of the SFF scheme did not conform to the structure of known industry staff travel schemes. This meant that unless this disconformity was reconciled by further inquiry at Goway, persons with the defendants' then knowledge were aware she was unlikely to be deploying Goway's resources in an authorised fashion through the SFF in the manner that she had described it – as a staff travel scheme. The Defendants Prepare Their European Travel – June to August 2017 1. Anomalies within SFF continued to accumulate in June and July 2017, as the defendants prepared for their European trip in August 2017. They soon suffered more disappointment at the hands of Ms Comito. 2. On 21 June 2017, Ms Comito revealed to Ms Tarbuck a very attractive travel special package tour in Africa. Ms Tarbuck described it as "an absolutely AMAZING deal", which they would "love to take up". She was keen to have this deal and other special deals like it advertised to the other passholders she had introduced to the SFF scheme. This shows that whatever problems with service from Ms Comito that Ms Tarbuck had encountered, she was still thinking of recommending some SFF deals to her friends. At one level such recommendations ground an argument that the defendants were then unaware of misconduct on Ms Comito's part. But by this point she and Mr Critchley were prepared to accept what came from Ms Comito was "a little mythical", against their experienced business judgement. Little by little, they were deluding themselves about what SFF's increasingly obvious problems meant. 3. Two parcels of bad news crowded in on the defendants on 21 July 2017. First, Ms Tarbuck was informed by Silverseas that payment had not been made for the Mediterranean cruise from Barcelona to Rome booked by Ms Comito in her name. This was disquieting information for their imminent voyage. Ms Tarbuck emailed Ms Comito, complaining as follows: "…Silverseas has not received payment – I got off the phone from them a short while ago and that has been part of the problem with my number and issuing documentation. They asked me if I had paid, which of course I said yes. They said they have a payment advice but no money in their account and said I need to take it up with our agent as well. They said they have been chasing payment for months… 1. Second, on 21 July 2017, Mr Critchley's daughter, Ms Storey also began to complain about the service she was receiving from Ms Comito in relation to her planned trip to Hobart. Ms Storey and Ms Fryer's dealings with Ms Comito are dealt with together in a separate section of these reasons below. 2. The first issue was solved, but only about a week out from their proposed departure date. On 25 July 2017, Ms Comito sent Ms Tarbuck the documents for the Silverseas cruise, including when and where they would be joining the cruise, which was acquired by Goway for $16,941.30. 3. The party of four (the defendants, Stephen, and David) was due to leave for Europe by Singapore Airlines at 1500 on 3 August 2017. Less than two days before flying out of Sydney the party had neither their airline tickets nor their accommodation vouchers for their travel. Members of the travelling party were becoming agitated. They wanted something official from Ms Comito and Goway to verify that they could travel and be accommodated. 4. Intensifying complaints from Stephen or David about the lack of airline booking and accommodation information led to Ms Comito forwarding another email from staff travel to reduce the travelling party's irritation. The forwarded email was purportedly from an unnamed staff member at Goway addressed to Ms Comito, this time explaining that the requested hotels were not available. The language was clumsy. Set out below is the email purportedly sent to Ms Comito, which she has apparently pasted into her email to Ms Tarbuck and Mr Critchley with the covering greeting, "I hope that you are well" and the question "are you happy for us to send alternative hotels?" As usual, the formless communication from the Goway staff member did not show any evidence of having been sent to Ms Comito by an ordinary operating internal email system of Goway. It was as follows: "Hi Lis, Sorry for the delay, the requested hotels are not available on the travel pass and have been on REQUEST. Are we able to offer alternative properties? If not please see rates below. We can't even surcharge them as we can't get them through our wholesaler. The etix [airline tickets] we were hoping to issue today but maybe tomorrow due to our large delays." 1. The defendants had received many emails from Ms Comito before that (a) purported to contain, or forward, emails from other unnamed staff members at Goway, but (b) showed no evidence of the use of internal Goway email addresses. Even if the defendants had not noticed such oddities before, they now added weight to the need for the defendants to check the SFF scheme with senior Goway management before accepting its benefits as authorised emanations from Goway. 2. On 1 August 2017 at 2:34pm, Ms Comito responded by emailing Ms Tarbuck, first making use of her Goway email address. After preliminary greetings she said to Ms Tarbuck: "I have sent hotels from Hotmail. They are not available on the family/friends pass, so let me know if you would me to send alternatives (could not remember if these hotels were MUSTS). I sent from my Hotmail as will give Stephen the official email when I sent out the terms and booking forms etc." 1. Why the hotels needed to be sent from Ms Comito's Hotmail address was not clear and was not clearly explained by the last sentence in this email from her Goway email address. Then at 5:11pm, on the same day, the same structure was used with someone purportedly within Goway sending Ms Comito an email, which was pasted into Ms Comito's email to Ms Tarbuck and not part of a conventionally forwarded email, stating "Hi Lis, below hotels are included in pass. Kind regards". This is followed by a list of hotels, which eventually resulted in hotel bookings for Barcelona. 2. The ordinary traveller would probably then have asked Ms Comito for a list of the range of hotels in each of Barcelona and Rome for which the platinum travel pass qualified them. The ordinary business traveller would expect that a genuine pass would probably be linked by pre-existing commercial arrangements with specified hotels in specified destinations. Presumably any commercially available travel pass would have had an objectively identifiable list of hotels secured by existing commercial arrangements for the pass holder to consult. But these travellers seemed by August 2017 content to wait and to be told at the last minute what hotels were available. Rome accommodation bookings were not made until after the defendants' European trip was already underway. 3. Contrary to Ms Comito's earlier emails, she was here using her Goway email address to communicate with Ms Tarbuck. Although such usage was rare this is an example of it. Not only did Ms Comito's Goway email address not look like a "central reservations" email address, this ordinary use of her Goway email address for staff travel inquiry, contradicted Ms Comito's story as to why she needed to use her Hotmail address. 4. Ms Tarbuck confirmed at 7am on 2 August 2017 that the whole party wanted to stay at Room Mate Anna, a boutique hotel in Barcelona and thanked Ms Comito. But even then, neither the hotels nor the airline tickets had formally been confirmed as locked in. 5. What ultimately had the airline tickets issued at the last minute was an unusual request from Mr Critchley. A little over 24 hours before they were scheduled to fly on 3 August, he tried unsuccessfully to contact Ms Comito, who turned out to be in a meeting. So, he emailed her at 1223 on 2 August 2017 to ask if it was possible to have the tickets issued by 1430 that day. The reason he gave was expressed with remarkable quiescence in his email thus: "Hi Lisa, Got your message that you are in a meeting. What I was ringing about was to see if it is possible to issue the flight tickets by 2.30 today. Apparently, you can order much better meals online as long as you do so at least 24 hours before the flight. Just thought I would ask but understand if not possible." 1. Most travellers would be in a state of white knuckled panic at this point. The party still did not have air tickets or accommodation vouchers for their European journey scheduled to start the following day. But meek in the face of Ms Comito's chaotic SFF, Mr Critchley used his cuisine preferences to persuade Ms Comito to issue their tickets. This shows the defendants' relationship with Ms Comito's SFF had become one of dependence: a distortion of the arm's-length commercial relationship that Mr Critchley claimed existed. Despite the high stress of this pretravel crisis, the defendants were only prepared to issue diplomatic prompts for Ms Comito to do her job. 2. The tickets were issued later that day. An email sent at 10:03am on 3 August 2017, a mere five hours before they boarded a Singapore Airlines flight to Singapore on the way to Barcelona: Hi Lisa, thanks for sending through the tickets yesterday and we are all set. With accommodation can we assume that we are booked in at "Room Mate Anna" Hotel for tomorrow night. Thanks for your help. Regards, Bob" 1. Even then at that late stage, Mr Critchley was uncertain, yet uncomplaining about their missing Barcelona accommodation booking, which they were due to use early in their travels. The defendants were unprepared to use the consideration they had paid for the platinum travel passes as a basis for further complaint. They appreciated that the travel pass benefits were so lopsided in their favour that they should be treated as a gift for which appreciation, rather than criticism, should be offered to Ms Comito. 2. Even during their European trip, the defendants and their friends still did not have all their accommodation vouchers. On 16 August 2017, Mr Critchley emailed Ms Comito asking for confirmation, as to where they would be staying in Rome. He and Ms Tarbuck appeared to be approaching Rome aboard the Silverseas cruise but unable to tell Silverseas to what hotel they would need to be transferred upon their ships berthing at the Port of Rome. Ms Comito emailed Ms Tarbuck promising to send hotel vouchers for Rome. Eventually Ms Comito emailed vouchers for the Hotel Quirinale, which they had requested. As experienced travellers, the defendants, and a reasonable person in their position, must have appreciated that all of this was a significant departure from regular travel agency practice. 3. These flights to Europe cost Goway $15,008.40. And the accommodation in Barcelona and Rome, the flights and the Silverseas cruise were all provided under the travel pass. 4. But here in August 2017, the narrative diverts from the defendants' dealings with Ms Comito and looks at what Mr Critchley's daughters were experiencing with her and what they were telling him. Their experiences add to the notice the defendants had that Ms Comito was not running a staff travel scheme as a Goway employee might be expected to do. Ms Fryer's and Ms Storey's Bad Travel Experiences – 2017 to 2018 1. Shari Fryer. In late 2014 or early 2015, Mr Critchley had introduced his daughter Ms Fryer to Ms Comito so Ms Fryer could acquire pre-purchased travel at discounted rates. Ms Fryer understood from discussions with her father that Goway offered discounts to their staff, and that family and friends could access these offers for discounted travel services. From time to time Mr Critchley would send Ms Fryer emails offering the deals that he had received from Ms Comito for discounted travel services or packages. 2. Ms Fryer was forwarded an email from Mr Critchley in or around late 2014 which outlined a travel package, allowing her to purchase business class airfares for $2,000 each through the Goway SFF travel scheme. Ms Fryer purchased 10 discounted business class air tickets for a total cost of $20,000. Ms Fryer secured the 10 business class tickets by arranging for her father to pay Goway and she reimbursed him later. It was more convenient for Ms Fryer to deal with and pay her father to acquire the discounted business class air tickets rather than attempting to liaise with Ms Comito and Goway herself directly, given that she lived in the USA. 3. Ms Fryer decided to redeem at least four tickets in January 2017, for a trip from Denver in the USA to Sydney, Australia. She contacted Ms Comito on 11 January 2017, had further correspondence on 16 and 17 January 2017 and booked flights for herself, her husband and their two children. 4. The tickets that Ms Fryer redeemed and purchased permitted her to fly from Steamboat Springs to Los Angeles and then to Sydney between 9 and 11 February 2018 with a return journey on 25 February 2018. She undertook the journey without apparent complaint. She never redeemed the remaining six discounted business class air fares to the face value of $12,000. 5. In late 2015 or early 2016, Mr Critchley introduced Ms Fryer to the platinum travel pass, which she was told cost $8,000 per adult and $7,000 per child. Mr Critchley explained to Ms Fryer that "Goway Staff Travel are offering specials on platinum travel passes. Are you interested?" Ms Fryer expressed interest and requested details to be emailed to her. She purchased two platinum travel passes, one for herself and one for her husband, Darrin, and two more platinum travel passes for her two children, Jaydon and Jaxon, in or around May 2016. The total cost for the platinum travel passes for Ms Fryer's family was $30,000. Once again Ms Fryer reimbursed her father on the assumption that he had paid Goway for the four platinum travel passes she had purchased. 6. Ms Fryer and her family did not use the four travel passes until October 2017. In early October 2017, Ms Fryer and her family holidayed in Hong Kong. Ms Comito booked the trip for Ms Fryer using their respective platinum travel passes, but the trip did not unfold as planned. 7. Ms Fryer contacted Ms Comito by email on 11 October 2017, to express her dissatisfaction with the trip. She copied in her father, stating in the subject line, "URGENT, URGENT, URGENT", followed by the words "Flights for Shari Fryer". Ms Fryer made comment in the email of her disappointment to have flown economy class, rather than business class, and of her disappointment in their accommodation arrangements. 8. Ms Fryer had arranged with Ms Comito to book five nights' accommodation in Hong Kong. When they arrived, the booking had been reduced to four nights. Ms Fryer expressed in her 11 October 2018 email to Ms Comito, her further disappointment, as their travel arrangements had been submitted two months in advance. Ms Fryer was clearly anxious to communicate her dissatisfaction to Ms Comito, concluding her email "Just left you a message. Please call me when you can. I am waiting for your call, these flights don't work. Shari". 9. Ms Fryer expanded upon her sense of dissatisfaction under cross-examination. She agreed that she was "seriously dissatisfied with the service" that Ms Comito had given to her. She was also dissatisfied that her earlier request to use the platinum travel pass had received insufficient attention from Ms Comito, who had provided inadequate travel solutions for her. 10. Ms Fryer's evidence gave the same as others insight about an important trade-off in dealing with Ms Comito. When pressed about the reasons for the dissatisfaction she had experienced in dealing with Ms Comito, Ms Fryer said: "My experience in working with Lisa Comito was that most of the communications and services were sub-standard in their quality, although she consistently delivered with the ask at the end for the day for the flights that were requested, and not knowing how the friends and family travel passes work, I didn't know if that was something where friends and family get put at the bottom of the priority list, why it was always a last minute or a secondary thought process to resolve the requests." 1. She summarised her thoughts by saying that she put up with a "sub-standard service" because she thought that was "part of the deal", because other customers would take priority and friends and family requests were always handled at the last minute. 2. Ms Fryer had conversations with her father about her dissatisfaction with Ms Comito's service. That is evident both from her habit of copying her emails of complaint to him and her evidence that she presumed she spoke to him about this, although by the time she gave evidence in 2023 she did not "recall the specifics". Mr Critchley and Ms Fryer had a strong relationship and communicated often. The Court has no doubt she communicated all her dissatisfaction with Ms Comito to her father. 3. She decided not to escalate her complaints to anyone else above Ms Comito at Goway because her relationship with Goway was "one that I managed through my father". She thought that if there was going to be a complaint it would need to come from him and be based upon his pre-existing relationship with Goway. She wanted to complain but left that to her father. 4. Jodi Storey. In early 2016, Mr Critchley gave his daughter Ms Storey and her son two business class airfares, which they used. Then on 2 May 2016, Mr Critchley emailed Ms Storey to introduce her to the platinum travel pass Ms Comito was offering. 5. The terms on which he introduced Ms Storey to Ms Comito reveals his contemporaneous judgment of Ms Comito. Their relationship was a good one and he wanted the best for her, so his correspondence with her was candid. He introduced the platinum travel pass to her in the following way: "Hi Jodi, As per my phone message, please find below. A special friend has offered this to me and has allowed me to extend it to you on a strictly confidential basis: 3 year Platinum Travel Pass (commences 1st March 2017) Economy Air Travel $4000pp - Child - $3500pp 6 Domestic Air Travel trips per month (Virgin preferred) *note domestic trips Economy. Domestic accommodation up to 7 days in one location 35 days per year 3 International trips per year including 4 internal flights per each trip 35 days International accommodation included per year up to 7 days in one location *note single supplement surcharge may apply depending on property of choice 1 Tour per year cannot exceed 21 days or difference of days paid at time of booking eg, Trafalgar/Scenic 1 Cruise per year (note length and stay dependant on cruise choice surcharge may apply) Car rental up to 30 days in major cities Selected Rail Travel *note properties vary from 4star to 5star *note all inclusive resorts small surcharge apply This is through their staff travel and subject to availability on a first-come, first-served basis. As you will note, it cannot be actioned until March next year but represents all travel for three years after that. They refer to the child option but Cooper now needs to be classified as an adult being over 12. Also, Cooper can use this with his mates as he will be 16 in 2017 and hopefully earning money at McDonald's. As above, I need an answer fairly soon and you need to consider if you can afford the initial outlay of $4k just for you or $8k for both of you (recognising the huge benefits that you will save on travel with flights, accommodation etc) and being sure that you can cover it within your budget. Naturally, it would not be possible to take all the options listed above as there are going to be serious additional costs for other tours, food, entertainment etc on top of this. This might help for your Peru trip next year also, I know it seems too good to be true, but this is legitimate. If you do decide to go ahead, all bookings need to be centralised and come through Lyn, who makes the bookings direct. One of the pre-requirements is that international require three months' notice and domestic seven days. It is important that you keep this confidential as my friend is including me in their staff travel scheme and this is why I am able to extend it to you. Let me know. Love Dad xxx" 1. In May 2016, Mr Critchley would not have invited his daughter, Ms Storey, to participate in something which he suspected was dishonest. He can be taken at his word as expressing his true views when he said to her, "I know it seems too good to be true, but this is legitimate." He believed that the platinum travel pass was a legitimate authorised offer of services by Goway, despite its apparently uncommercial structure in selling travel products below their probable cost price. 2. The mutual candour of Mr Critchley's relationship with Ms Storey worked both ways. He was frank with her, and she listened to him. She was frank with him, and he listened to her. 3. Neither Ms Storey nor Ms Fryer seemed to be greatly perturbed by dealing with Ms Comito at her Hotmail address. They accepted that the exclusivity of their access through Ms Comito to what their father described to them as a legitimate scheme, seemed in their minds to justify contacting her through a private Hotmail address, although they commented later that they found it unusual. Ms Fryer said that at the time of these communications "it was more prevalent for people to be using personal [email] addresses at that point as a communications tool." They are both a useful contemporaneous litmus test of whether Ms Comito using a Hotmail address would itself arouse any suspicions in an honest person that she was conducting unauthorised selling of Goway's products. They were not as strongly motivated as the defendants to gain access to the travel services that Ms Comito was offering other than for convenience from time to time. At one level their subdued reactions to this feature of Ms Comito's dealings suggest it might be less significant than Goway now claims. But Mr Critchley had broad corporate experience and he and Ms Tarbuck had much closer dealings with Ms Comito than Ms Fryer or Ms Storey. But for him and Ms Tarbuck this would have by this time become significant when seen with the other anomalies in Ms Comito's behaviour. 4. In another respect Ms Fryer and Ms Storey's evidence assists their father's case. Neither of them seemed perturbed that the heavy discounts Ms Comito was offering as part of the SFF travel scheme to them, who were strangers, were signposts of misconduct on her part. Mr Maroya of counsel put to Ms Storey "did it ever occur to you, Ms Storey, how it was that you are eligible to partake in this travel, ordered by these passes when you understood that it was being offered to you pursuant to what was called a staff travel scheme". Ms Storey replied that she understood it was a "family and friends discount". 5. When she was then confronted with the question that she was "neither a member of Ms Comito's family nor a friend" she paused but accepted that she might be a "friend". But in her mind the logic of an offer of services that was probably below cost price, did not seem strange. She explained, "I think I was associating such a discount as someone who I know who is a pilot who, you know got discounts through their employer, and thinking it was more of a discounted offer…for people within an organisation." She understood that below cost discounts might be available to people who were associated with airlines. To her it did not seem that remarkable for a travel agent to offer such discounts. But at the time of which she was talking she had far less experience of what Ms Comito was offering than the defendants. 6. Soon after her father's introductory email Ms Storey purchased an adult economy platinum travel pass for $4,000 in May 2016 by transferring $4,000 to her father for what she understood would then result in a transfer of the same amount to Goway's bank account. Then in early April 2017 she decided to upgrade her economy platinum travel pass to include business class airfares for the more expensive $8,000 business class platinum travel pass Ms Comito was offering. She arranged to pay another $4,000. This time she paid it to Goway directly on 12 April 2017, a transfer which is established by her bank statement. 7. In July 2017, Ms Storey booked a trip to Hobart using her platinum travel pass. Ms Storey was so dissatisfied with her booking of this travel that she complained directly to Ms Comito about it. On 21 July 2017, within 24 hours before her planned departure she emailed Ms Comito at her Hotmail email address and her work email address: "Hi Lisa, I'm concerned about the arrangement we have for my travel. Do not have any details the day before departure is frustrating. I emailed you many weeks ago about my request for travel to Hobart. I've been really patient but it is making me worry about whether I have to deal with not having any details until the last minute with my future travel requests. This doesn't work for me at all. I don't have the flexibility some people do. To only find out details the day before. Can you please provide some assurance this won't happen again, or an explanation of how the travel pass works so I don't have any unrealistic expectations. Thanks, Regards, Jodi" 1. Ms Comito responded within half an hour as follows: "Hi Jodi, As per our telephone conversations this week I told you this was not normal and that I would get to you to Hobart and not take the trip off your pass?? I have called you to discuss your flight options and am awaiting you to return my call. I have booked the hotel and car rental. I you wish not too [stet] proceed, please let me know. My correct work email address is lisac@goway.com.au. Thank you." 1. Ms Storey's complaints about late booking arrangements were not unreasonable. She never received an assurance that this would not happen again or an explanation as to how the travel pass worked. 2. One of the conditions of the platinum travel pass was for the pass holder to give ample advance notice to Goway of her travel intentions. Ms Storey expected that she might get reciprocal advance notice from Goway. 3. Ms Storey travelled to Hobart. But her travel experience fell well short of her expectations. She thought that the upgrade to a business class platinum travel pass "would ensure luxury accommodation". But she described her hotel as "quite basic". Moreover, she complains that her "flight details didn't come through until late the night before the departure date and the communication with Lisa was quite frustrating at the time". 4. Ms Storey says, and the Court accepts, that "within months" of her 21 July 2017 email of complaint she reached the view that she could not rely upon Ms Comito's professionalism, had decided not to book further airfares with her, and had sought a full refund on her platinum travel pass. She also formed the view that she could not rely upon anything Ms Comito said. The course of Ms Storey's communications with Ms Comito justifies her adverse judgments about her. Ms Comito's poor response to the complaints led Ms Storey to hold ever more negative and ultimately brutal views about Ms Comito's competence, professionalism, and honesty. Ms Storey was a detached casual user of Ms Comito's services who was not mesmerised by the financial benefits that Ms Comito was providing and who was prepared to walk away from them. She judged Ms Comito with uncanny accuracy. 5. On 16 October 2017, Ms Comito emailed Ms Storey stating: "Hi Jodi, I chased this up today. I am waiting on some others and one about a week before yours came in today. I will check in with you daily. Thank you." 1. On 30 October 2017, Ms Comito further corresponded with Ms Storey stating: "Hi Jodi, They are starting to trickle in. I will send to you as I receive. Thanks for your patience. Lis" 1. On 6 November 2017, Ms Storey emailed Ms Comito requesting: "Hi again Lisa Could you please let me know when I will receive my $8000 refund? I believe I've been very patient but I really need that money refunded ASAP. Also, I'd appreciate it if you could confirm my business flight requests for January. Thanks for the offer of booking accommodation but I would like to look after that myself, so really would like as many details as possible so I can go ahead and plan our trip. Thanks Jodi Storey" 1. Ms Comito wrote back on 21 November 2017 stating: "Hi Jodi, I hope that you are well. Can you please check your account for me on Friday and confirm you finally received refund? In regards to your USA trip, can I triple check that I did not forget to send your son? If so I will add him. I will send these flight details by Thursday. Thanks for patience. Jodi Storey" 1. Some nine days later on 30 November 2017, Ms Storey emailed Ms Comito with another request for her refund: "Hi Lisa Can you give me an update on when you will process by refund as I still haven't received it. Thanks Jodi Storey" 1. In this email Ms Storey was clearly communicating that contrary to Ms Comito's claimed explanations the refund had not come through. A further two weeks later on 14 December 2017 at 9.33am, Ms Storey wrote to Ms Comito again pressing her request for her refund: "Can you please let me know when I can expect my refund. I have been patient for many months and now feel concerned that it has taken this long. Some communication and respect for me being out of pocket would be appreciated. Thanks Jodi" 1. On 15 December 2017 at 9.15am, Ms Comito replied: "Hi Jodi, I hope that you are well. I apologise, I will escalate this today. I had no idea you had yet to receive I got busy and did not follow up and I assumed you had received. I will come back to you today. Thanks Lis" 1. Ms Comito did not reply in writing the same day, But she sent an email on 19 December 2017 to allay Ms Storey's concerns: "Hi Jodi, Thanks for your patience. Goway hope this will be resolved at the end of the week. I will check in tomorrow in case done tomorrow. Thank you" 1. Ms Comito later admitted to "dropping the ball" but by the end of 2017 she had given Ms Storey a much worse impression. Ms Storey was entitled not to believe Ms Comito's emails of 15 and 19 December 2017. Her professed belief on 15 December that "I had no idea you had yet to receive [the refund]" was plainly false, given Ms Storey's 30 November email clearly signalling that the refund had not been received. And Ms Comito's further promise of action on 19 December was illusory. 2. Throughout the exchanges between Ms Storey and Ms Comito, Ms Storey was in close touch with her father. This may be inferred from her good relationship with him. It is also evident from the fact that she copied him into many of her emails with Ms Comito. Ms Storey was very upset by her dealings with Ms Comito. Ms Storey explained of these communications with her father, that she "kept him up-to-date with where I was at and my frustrations with Lisa at the time". She thought it important that her father was aware of what was going on between her and Ms Comito and she kept him fully apprised not only of those communications but of her opinions about Ms Comito. Mr Critchley sought to allay her distress, which he thought was exacerbated by her challenges in navigating the role of a single parent with limited funds. 3. But whatever the true reason for Ms Storey's distress was, Mr Critchley and consequently Ms Tarbuck were well aware of Ms Storey's dealings with Ms Comito. In the Court's view, this is the point at which, on Ms Storey and Ms Fryer's experience alone, an honest person in Mr Critchley and Ms Tarbuck's position seeking a refund would have escalated the matter to Ms Comito's manager. But neither of them did so. 4. Ms Comito's various excuses continued into January 2018. Ms Comito and Ms Storey exchange the following SMS messages in mid-January 2018: "Ms Comito: This will be branch deposited on Tuesday. They have given you two more Business tix as good will die [stet] to delay thank you. Ms Storey: That's great to hear. Thanks Lisa. Ms Comito: Due (sorry typo) X" 1. On 11 February 2018 Ms Storey pleaded by email with Ms Comito as follows: "Hi Lisa I really need my $8000 refunded ASAP Bank details again are.. [bank details not published] Thank you Jodi" 1. Ms Storey displayed remarkable courtesy here, despite Ms Comito's trail of broken promises. On 12 February 2018, Ms Comito responded to Ms Storey in the following email: "Hi Jodi, Sorry I was out of the office as really hurt my back. This is being depositing on the morning of the 15th February. We apologise for the delay. As compensation we have given you 4 x Business Class tickets. Thank you." 1. Ms Storey was entitled to expect that this definite promise of a deposit on 15 Feburary 2018 would be honoured. On 12 February 2018, she emailed Ms Comito with an empathetic message as follows: "Hi Lisa, Thanks for letting me know…and thank you for the 4 business class tickets. Sorry to hear about your back. Hope you feel better soon. Jodi" 1. But nothing came in on 15 February. Ms Storey next heard from Ms Comito via an SMS message on 20 February 2018, presenting yet another excuse: "Ms Comito: Was off sick but u should have. Can u flick me bank and I will check with them tomorrow really bad sorry xx" 1. Ms Comito sent another SMS message to Ms Storey on 26 February 2018 which conveyed the impression that payment of the refund was imminent: "Can you let me know as soon as that payment hits. Feel like giving you and your son a pass in Business X" 1. Nothing was received before the end of February. By this time the only reasonable explanation for Ms Comito and Goway's conduct to the objective observer was that Ms Comito was lying about a refund coming and that she really had no authority to request refunds through Goway's internal systems, or that Goway's internal systems were irretrievably dysfunctional. 2. But Ms Storey replied patiently on 1 March 2018: "Ms Storey: Lisa. Still no payment. I really need my money now. Please advise what's happening. Thanks Jodi Ms Comito: Hi Josi, update you later today. Will get sorted seeing boss at 5. Please book all travel still as well we will cover. Thx" 1. Ms Comito sent several further SMS messages to Ms Storey in March 2018. Each of them was a poorly drafted and set false expectations of imminent payment: "Ms Comito: Yes they were doing a bank cheque will go boss in 10 minutes and ask clearly you did not get hence text. Will call you when out thx. … Ms Comito: Will take myself tomorrow for you thanks. … Ms Comito: Hi Jodi, can you please check your account at 3pm tomorrow thx." 1. By now Ms Storey's patience was heroic. She emailed Ms Comito on 5 March 2018 at 2.53pm in restrained terms to the following effect: "Hi Lisa I have received numerous promises from you but I have still not been refunded my $8000.00 which was paid to you approximately 12 months ago. Can you provide me with the name of your manager or the head of your accounts department so I can follow this up. Your offer of providing business class flights as compensation is appreciated, however, I would appreciate it if you could provide formal advice of this, as well as any conditions of travel I need to be aware of. Lisa I'm doing my best to be patient but it has got to the point where I really need this money refunded asap. Regards Jodi Storey" 1. Ms Comito emailed back the same day at 3.14pm, a response that looked like nonsense: "Hi Jodi, Tomorrow is your lucky day. Can I check for Goway Cheque account name is Jodi Storey? Thanks again, upon confirmation tomorrow I send the good will compensation. Thanks Lisa" 1. Alas, 6 March was not Ms Storey's "lucky day". Nothing was received, confirming that yesterday's promissory email was indeed the nonsense it appeared to be. Ms Comito sent further reassurances to Ms Storey throughout March and April 2018 to the following effect: "Ms Comito: Hi Jodi, I am waiting for confirmation this is done. If not today I will do myself tomorrow and get Goway one back off you. As goodwill have let you keep the pass talk to you this afternoon thx. …. Ms Comito: Hi Jodi, you will receive by Thursday. Thank you." 1. In early May 2018 Ms Comito sent the following SMS messages to Ms Storey: "Ms Comito: Hi jodi, I will deposit first thing tomorrow and call you to confirm. Sorry at funeral otherwise would call now xxx … Ms Comito: Hiya, if you don't receive funds by Thursday I will pay you and wait. I am sorry for the stress xx" 1. These promises were becoming ever more desperate and ridiculous. No one would or should have believed them. Ms Storey stayed quiet until late May. There was little she could sensibly say or do, other than to go to Ms Comito's supervisor at Goway to bring her to account. 2. Ms Storey, still in search of answers from Ms Comito, finally returned to the subject and sent the following messages in late May 2018. By now she had no belief in the truth of anything that Ms Comito said. But her short messages give little of her thoughts away: "Ms Storey: Hi Lisa. Wondering if you can provide me with an update please. Ms Comito: Head of finance involved now. Out Tuesday so will be sorted. I have your flight options I will send xxx. Ms Storey: Hi Lisa. Just checking in for an update? Thanks." 1. Ms Storey finally wrote in frustration on 1 June 2018 to Ms Comito, both at her Hotmail and Goway email addresses, and copied to Mr Critchley. This appears to have followed an unsuccessful attempt by Ms Storey to make a travel booking with Ms Comito. It was as follows: "Hi Lisa Unfortunately I have to advise I am unable to travel now as I did not receive travel bookings from you (which you said you were going to forward) by the required deadline for me to make the necessary arrangements. I do not have the flexibility to be provided with details at the last minute. REFUND I have been waiting for this refund for over 12 months now and, as you will see by the emails below (and the text messages in the following email – and numerous phone calls), you have made so many promises yet I am still out of pocket for $8000. I'm afraid my patience is exhausted and I will not accept any more lies from you. I need this money!..and I need it ASAP. I will attempt to contact your head of finance and supervisor to discuss this matter so it can be resolved. Regards Jodi Storey" 1. Here Ms Storey finally stated the obvious about Ms Comito, calling her a liar. By now Ms Storey must have realised that she would have to seek satisfaction elsewhere. 2. Mr Maroya of counsel put to Ms Fryer the following questions about the 1 June email: "Mr Maroya: So you had formed the view by 1 June 2018 had you, Ms Storey, that Ms Comito was telling you lies? Ms Storey: Yes, that's correct. Mr Maroya: Is that a view that you still maintain about her conduct with regard to you? Ms Storey: Yes." 1. The Court then intervened in the cross-examination and indicated that the Court would only interpret the answers that had been given as referable to Ms Comito's attitude as at 1 June 2018 and not any earlier. Counsel then returned to the cross-examination, supplemented to a degree by questions from the Court: "Mr Maroya: In light as of 1 June 2018 I think your evidence just was - Ms Storey that you by then regarded all the excuses that Ms Comito had replied you with as being lies? Ms Storey: Yes that was my experience. Mr Maroya: Did you end up contacting or trying to contact head of finance and her supervisor to talk about all of these complaints? Ms Storey: I don't recall doing that. I am sorry that it is some time ago. Mr Maroya: Yes? Ms Storey: I know that I made the decision to go through NCAT instead of…. Mr Maroya: Yes? Ms Storey: Through her head of finance." 1. Ms Fryer then explained that she had conversations with her father at the time but rather than ask him to resolve it on her behalf, despite her frustration, she was "dealing with it independently". Then the Court put the following questions to her and she gave the following answers about the timing of when she first gained the impression that Ms Comito was lying to her: "The Court: I don't get the impression reading that correspondence that you thought she was lying to you then, is that right? Ms Storey: That's right. I think I gave her the benefit of the doubt after the Hobart trip. I was extremely frustrated, but I recall following the Hobart trip there was also a trip I was planning to do, to go, like, to Europe, and had asked her to arrange travel for that trip and that was not done in a way that I had hoped for and I was extremely frustrated at the time, your Honour. The Court: Well, it's clear that you had formed the view she was lying to you by June 2018, it's probable that you didn't have that view in July 2017; do you know when in that 12‑month period you began to form that view with some firmness? Ms Storey: I believe it was during the communication back and forth where there were a number of promises of I'm actioning this today or I'm speaking, the money will be in your account, I mean, those sort of communication that seemed to just be, yeah, without any meaning from her. The Court: This is particularly in relation to the refund of the $8,000, is it? Ms Storey: That's correct, yes." 1. Ms Storey's last answer was inconclusive about when she formed the view between July 2017 and June 2018 that Ms Comito was a liar. But the analysis above points to it being no later than late December 2017. By then Ms Storey also had the combined experience of dissatisfaction of Ms Comito's performance from her sister, Ms Fryer, she had received several broken refund promises, and six months had elapsed since her July 2017 primary letter of complaint. The Court infers from the nature of Ms Storey's relationship with her father and the seriousness of the adverse opinion of Ms Comito that she had formed that opinion, by no later than 1 January 2018. The Court infers that by no later than this same date Ms Storey had communicated to Mr Critchley and through him to Ms Tarbuck that she thought that Ms Comito was lying to her. This added to everything else that Mr Critchley and Ms Tarbuck then knew about Ms Comito's unprofessional performance and was another major inflection point in the defendants' acquisition of knowledge about Ms Comito's unauthorised conduct. 2. If Mr Critchley and Ms Tarbuck had not already drawn the conclusion by 1 January 2018 that Ms Comito was lying to them, Ms Storey's communication to them of her experiences with Ms Comito should have prompted them to that conclusion. Failure to deliver on refunds and the giving of contradictory or unbelievable explanations about why refunds were not being made are indications of an employee not acting in accordance with corporate policy and likely to be acting in their own interests rather than those of the employer. It is here that Mr Critchley's own experience in management of employee transitions should have sensitised him to the signals that Ms Comito's conduct was sending. 3. Failing in her attempts to recover the $8,000 Ms Storey had paid for the platinum travel pass, she eventually lodged an application with the NSW Civil and Administrative Tribunal (NCAT) on 23 November 2018 against Goway. The application before NCAT contains a contemporaneous record of what Ms Comito had offered to Ms Fryer to placate her from late 2017 and through the first half of 2018. It confirms that Ms Comito was making even more extravagant and incredible promises of travel benefits for Ms Storey to soothe her anxiety about the failed refunds. The NCAT application says the following: "From July 2017 I have been waiting to be reimbursed $8,000.00. I did not receive any travel in exchange for this payment made. I have made endless attempts to recover my money without success. I can provide copies of my communication to Goway if required. Also, for your information, Lisa Comito offered the following as compensation for my frustrations of not receiving the promised travel, although I have received none of these: 4 x business class international tickets and 4 x business class USA domestic tickets 2 x business class international tickets as 'goodwill' for inconvenience caused by delay refunding $8,000.00 4 x business class international flights 1 x business class, 3 year, international and domestic pass – as 'goodwill' Please don't hesitate to phone me on [phone number not published] if you require any additional information. Due to the fact I have experienced a huge amount of stress, frustration and inconvenience, I am grateful for your investigation into the matter, and I look forward to hearing from you in the near future." 1. Ms Storey's NCAT application was withdrawn in December 2018. The NCAT proceedings were then settled on confidential terms. 2. Mr Maroya returned to end his cross-examination of Ms Storey to challenge her that the discounts she was being offered were inherently suspicious: "Mr Maroya: In closing, Ms Storey, you when I asked you at the outset of your evidence about your impression about what was being offered in the travel pass, be it the standard grey travel pass or the platinum travel pass, I think the gist of your evidence was that you thought it looked like a very good deal and you were a little surprised by how generous it was, and you went on to say that you regarded as something a little bit like the sorts of deals you could get from airlines where there was a pilot involved who could get extremely cheap fares; do you recall giving evidence of that general character? Ms Storey: Yes, I do. Mr Maroya: And had you ever in the past availed yourself, I mean, do you know pilots, have you ever availed yourself that sort of perk? Ms Storey: No. The Court: I think it's cabin staff as well. Mr Maroya: I'm sure it is, your Honour. Mr Maroya: But you understand, though, that what was being offered to you in the platinum travel pass, or the ordinary travel pass, for that matter, was something very different from even the sort of deal that you were contemplating that one gets through pilots, or as his Honour says through cabin staff, much more generous than even that sort of deal, wasn't it? Ms Storey: I believe so. Mr Maroya: Those deals, to your knowledge, Ms Storey, don't give you three international flights, six domestic flights, 35 days' accommodation, one tour and one cruise, it's, looking at it, it's all rather improbable, isn't it? Ms Storey: Initially I didn't think so. I hoped it was what was presented, but it became improbable, upon my dealings with Lisa I realised that I didn't feel confident in maintaining the travel pass." 1. Ms Storey's evidence shows that the discounts presented to her did start to look suspicious, or "look improbable" to her but this arose "upon my dealings with Lisa". Given Ms Storey's good relationship with her father it is likely that all of this was brought to Mr Critchley's attention. 2. A remarkable feature of the defendants' communications with Ms Comito from about September 2017 is their capacity to compartmentalise the distressing experiences that Ms Fryer and Ms Storey had with Ms Comito from their own dealings with her. They seem prepared to overlook what was happening in parallel with Mr Critchley's daughters. The Court infers this was because it was financially disadvantageous for them to do so. 3. This concludes the narrative solely relating to Ms Fryer and Ms Storey up to late 2018. The narrative now returns to the defendants' dealings with Ms Comito. Questions About SFF Amid Booking Chaos – September 2017 to December 2017 1. Apart from the other indicators discussed earlier in this narrative, by September 2017 the accumulated value of the travel and accommodation and other ground services that the defendants had enjoyed long after recouping the value of the platinum travel pass, and without any obvious commercial advantage to Goway, was its own reason for the defendants to believe that Ms Comito was conducting an operation within Goway which was not authorised by Goway. Between their return from Europe and the end of the year, the defendants encountered more booking chaos under Ms Comito's administration of SFF. Despite the excuses Ms Comito offered, the management problems at Goway's SFF should eventually have been addressed and resolved if proper staff benefits were to be supplied to Goway staff. As it turned out Ms Comito appeared to have less control over the efficient delivery of SFF resources over time. 2. The defendants arranged to go to Melbourne between 28 September and 2 October 2017, and to stay there at the Langham Hotel. These flights and accommodation were provided under the travel pass. 3. Ms Comito was late again in providing flight options for this flight to Melbourne. She only emailed the details to Mr Critchley on 26 September 2017, providing the flights in the following unsatisfactory cryptic email: "Sorry for the delay. They can do these flights? Will send properly in about 1 hour. Have just typed up for now as ticketing down for ten minutes, thanks" 1. This was then followed by some typed up ticketing details. This email was sent from Ms Comito's Hotmail email address and has no Goway logos on it. Ms Comito was becoming sloppier in her use of Goway insignia by this time. She was not always bothering to dress up purported communications from "Staff Travel" to her with Goway logos before sending them on to Mr Critchley and Ms Tarbuck. This is perhaps understandable because the defendants were not questioning her authority. 2. Ms Tarbuck was planning to travel to the Gold Coast on 12 September 2017. The day before, the tickets had not been issued and she emailed Ms Comito chasing her air tickets, accommodation details and car hire vouchers for the following day. Ms Comito replied a few hours later on 11 September giving flight times leaving Sydney early the following day and an accommodation option at Broadbeach. This information was provided on Ms Comito's Goway email address. This is another example of Ms Comito contradicting her "central reservations" account of why she was using her Hotmail email address. Goway paid for flights, accommodation and car hire for Ms Tarbuck on her Gold Coast trip in the total sum of $602.67. 3. On 9 October 2017, Ms Comito responded to one of Ms Fryer's complaints about the trip which Ms Comito had arranged to Hong Kong for her. Ms Comito's email was to the following effect: "We are unable to get the Business Class flights back. We will need to issue 'Economy complimentary flight'." 1. The travel pass seemed to be operating on the basis that the complimentary flight would be available if business class flights could not be found when travel was desired. But detail like this was not written into the terms and conditions of the travel pass. Ms Fryer was not happy with a complimentary economy class flight back from Hong Kong, emailing Ms Comito and Mr Critchley in protest, copied to her father on 10 October 2017: "Hi Lisa, So flying Economy is clearly very disappointing. But the flights give me a red eye with 5am arrival and then a day and a half in Newark before I fly out. And then not having even 5 nights in Hong Kong as planned, and only 4 nights instead. What happened??? Business Class is the agreed plan we paid for with the Travel Pass. It would be reasonable to expect flexible layovers. But not for Economy. Seriously disappointed for a request that was put in over two months ago!!" 1. Ms Fryer's disappointment, expressed forcibly to her father, exposes obvious problems with the travel pass as a genuine Goway travel product. International travel requires consideration of options and issues about accommodation and flight availability. The platinum travel pass terms that Ms Comito had offered the defendants contained none of the fine grained detail, which would be expected in an ordinary commercial arrangement to deal with such matters. Ms Fryer's angry disappointment here must have brought home to the defendants, or any reasonable person in their position, a very natural reaction to problems caused by the absence of such detail: that the platinum travel pass was not fit for purpose in an ordinary commercial sense. 2. Although Ms Fryer could not clearly recall complaining to her father about Ms Comito's substandard service, she did mostly copy him into her correspondence with Ms Comito. The Court infers he was aware of her disquiet about Ms Comito's service on occasions such as this. 3. The defendants' holidayed in Thailand from about 10 October to 20 October 2017. But once again Ms Comito did not finalise the flights until 9 October 2017, the day before they were due to fly out. The cost of the flights was $9,829.12 and were to be covered by the travel pass. But upon arrival in Thailand the defendants talked together about their dissatisfaction with the way services had been provided under the platinum travel pass. Ms Tarbuck decided to email Ms Comito on 13 October 2017, attaching a "Travel Pass Protocols" document that she appears to have drafted. Her covering email explained what she was doing in putting this document together: "A couple of things I wanted to check on: * Read over the document and there are a few items in red that we need clarity on; * With regard to how Goway will respond, I know you said you have five people starting on Monday and I guess the frustration with a lot of people is the lack of certainty on anything until the last minute (appreciating it is staff travel). I am thinking Goway needs some protocols for response as well but only you/Goway can clarify in a way that they can be adhered to (does this make sense?). I really need your input on that. I also got a note from [name not published] today how it all works and how quickly they get flight details etc – haven't responded to that as yet; * Are Paul, Lorraine and co on my file or are they now separate given their family etc? I asked you that a little while ago and you said 'good question'. The reason I am asking is that with Paul and Lorraine aside, I sold 23 passes, less Jodi (as now revoked), and when I did so, I received the attached email stating that from 1 July, we are able to request exact flight numbers. Is that just for us or other ticket holders under our folder? I also ask because this obviously isn't happening and wondered if I missed something here as we didn't get to Europe or Qatar on Qantas and now to Thailand on Thai rather than Qantas? * Your email of 4 May also started with eight, an extra year plus value adds. I haven't advertised this because, as mentioned, it is not happening and I need some guidelines from you. You did mention verbally some time ago, it was all people attached to my file; [dated 13 October 2017]" 1. This email is extraordinary on several levels. First, the customer, not the service supplier is suggesting how to define the protocols for use of the travel pass. Ordinarily the issuer of the pass, providing the benefits and undertaking the burden of the cost would wish to be defining the protocols, especially where the benefits were so generous. The fact that Ms Tarbuck had to do this showed how distorted their relationship had become in the defendants' favour, how frustrated she was with Ms Comito's service, how much stress she was undergoing and how much she needed it changed. But rather than complain to a more senior officer at Goway, Ms Tarbuck's draft protocol was perceived as the solution. This was the soft option designed by Ms Tarbuck to seek change without a full-scale inquiry within Goway about the scheme. In their final submissions the defendants submit Ms Tarbuck's assistance with establishing these policies demonstrates "her belief that the scheme was legitimate". In the Court's view her participation in this process is more a demonstration of Ms Tarbuck's failure to see how unusually imbalanced in the defendants favour. 2. Ms Tarbuck followed up on 30 October 2017 with further suggestions for ideas that could be included in the Travel Pass Protocols as follows: "Hi Lisa I thought of a few other things that might be worth covering: * Is there or could there be a contingency when there is a natural disaster, ie floods, for staff travel. Or would it just be everything is on hold until all paying customers are sorted? I am guessing the latter; * Cyber issues, ie viruses, system downtime due to maintenance or system has just fallen over; * Changes-need to clearly spell out the rules; * What is covered and what is not under Goway insurance with respect to point 2 above; * Embargos, black out periods. I think we need to cover more fully. That's it for now xx" 1. These were helpful suggestions for what could be included in Travel Pass Protocols. They are common sense ideas to deal with contingencies which travellers would expect would be covered by ordinary commercial terms in travel industry offerings. But such terms had always been absent from the platinum travel pass and would have been noticed early by an honest and reasonable person with the defendants' joint business experience. 2. Correspondence at about this time also shows that Ms Tarbuck and Ms Comito were meeting up and that Ms Comito was showing considerable personal stress and Ms Tarbuck was enquiring about her health. Once again this was months after Ms Comito had apparently promised the defendants that she would be getting the assistance of more staff. In addition to everything else they knew by this time, it was apparent to the defendants that Goway was not supporting staff travel with the assistance she said had been promised. 3. The defendants planned to take a trip to Thailand in October 2017 and Hawaii in December 2017. But they had already been to the USA once in March, and again in May and to Europe in August. They had thus used their three trips to which the platinum travel pass entitled them. Neither of them gave any evidence of asking Ms Comito when planning to book the Thailand or Hawaii trips whether they would be covered by the travel pass, even though by then they must been aware they had exceeded the three international trip limit per year. 4. An ordinary consumer as intelligent as the defendants could read the available conditions of the platinum travel pass. The Court does not accept that people as business savvy as the defendants were not familiar with its terms. The "3 International trips per year" feature of the travel pass was important for them. They were avid international travellers and must have been conscious of the three-trip limit. Their failure to ask questions when they wanted to take their fourth international trip in 2017, even to check from what periodic date the three-trip annual limit was measured, can therefore only be explained as their attempting to enjoy whatever additional financial benefits that came under colour of the travel pass. But by taking such benefits without questioning what they were getting, they demonstrated consciousness of the uncommerciality of the travel pass. Ms Comito's failure to question this proposed trip showed the defendants that Ms Comito was not managing the benefits conferred by this pass in a manner that was protecting Goway's commercial interests, as an employee performing assigned duties would be expected to do. 5. In late 2017, the defendants continued to enjoy the platinum travel passes. Mr Critchley and Ms Tarbuck flew from Sydney to Adelaide return, costing Goway $325.39 each. They enjoyed accommodation at Peppers Waymouth, costing Goway $306.00 and car hire through Hertz Car Rental, costing Goway $585.00. These airfares, accommodation, and car hire were met by Goway under colour of the defendants' platinum travel passes. 6. Mr Critchley and Ms Tarbuck also stayed at the Four Seasons Hotel at The Rocks in Sydney on 12 November 2017, so they could celebrate Mr Critchley's birthday. The cost of this to Goway was $880.00. This accommodation was met by Goway under colour of their platinum travel passes. 7. On 20 November 2017, Mr Critchley followed up by email a telephone call he made earlier that month to plan a trip the defendants were planning to take to Hawaii before the end of that year. This trip was proposed to commence from 7 December for 10 nights and then move on to Steamboat Springs from 17 December for a further 10 nights returning to Sydney on 29 December. 8. The email follows an email earlier in the year, on 26 June 2017, asking whether it would "be possible to use our 10 day Halekulami on the front end of this trip," which refers to a reservation of a five-star hotel in Honolulu which had already been discussed between Mr Critchley and Ms Comito earlier in the year. Mr Critchley says that the flights to the USA and accommodation at the Sheraton in LA on this trip were provided for under the travel pass. That is certainly how it was paid for, despite the travel pass conditions. 9. On 22 November 2017, Ms Comito wrote to Ms Tarbuck, copied to Mr Critchley, explaining that she had not sent out the protocols to users of the SFF scheme as Ms Tarbuck had suggested. The explanation for not sending them out sounded vague, "No I have not sent out the protocols. I have sent these to contracting to get checked as a few issues have arisen that I have requested further clarification on. When these are sent, I will be sending you a copy so you will receive. I'm hoping to receive these back no later than tomorrow and then will be out this week." The protocols never went out. The idea seems to have run into the sand. 10. Ms Comito then went on to say in the same email, "I was extremely grateful to you that you sold the extra passes and still am." Ms Tarbuck appeared to be assisting Ms Comito by increasing her portfolio of platinum travel pass holders. But then Ms Comito deals with a problem that had arisen in relation to some of these pass holders in the following terms: "I appreciate the 5 passes that were cancelled as it was not working for them and I totally appreciate that and all parties were very nice about it. I also understand current frustrations for all parties but I too this week am extremely frustrated and upset with a pass holder's attitude. At the end of the day, the savings on the passes and the fact that they are for family/friends is still a huge saving for people and the benefit of my is my staff benefit that I have chosen to pass on. I personally have not taken any trip in a long time. This is no one else's problem but my own but when people challenge me and question me and speak rudely to me I sit at my desk wondering why moving forward I would deal with or allow people to bully me and use my benefit like that. Moving forward, even though large improvement is required there will be times where people will not get the service they expect, will not get the airline or hotel and will at times not get due to availability. This to me is common sense as the cost saving is huge and obviously availability is out of our control. These passes are designed for people who are flexible although, you do still get a number of options of airlines, flights, hotels etc. If people are not flexible with their airline choice, hotel choice etc. then that is fine but, they should pay full retail price rather than expect to get those specific choices on the pass. I thought this was made clear at the start. I appreciate that you and Bob have always been extremely understanding of this process and accepting and this does not in any way apply to you both." 1. It would have been difficult for a reader to accept that the statement, "the benefit is my staff benefit that I have chosen to pass on" meant that all the benefits that were conferred on the defendants, let alone all the other persons introduced by the defendants, were part of "my staff benefit", being understood as Ms Comito's own personal staff entitlement, but that is what she was saying. This added yet another dimension to the improbability of Ms Comito operating a Goway-authorised staff travel scheme. 2. Ms Tarbuck replied the same day, 22 November 2017, copied to Mr Critchley adding comments in red text to Ms Comito's email. As to the draft protocols, Ms Tarbuck offered to give them a "final review" and inquired whether her "other points" had been included. These offers were ignored by Ms Comito and neither she nor Mr Critchley sought to insist on these protocols being implemented. As to the problems with booking the trip to Thailand, Ms Tarbuck said "I appreciate travel passes are the bottom of the barrel in terms of work priorities and 'paying' customers need to come first". As to Ms Comito's comment that the passes "are designed for people who are flexible", Ms Tarbuck explained that "I felt I had made that clear to all the people I have spoken to". 3. In early December 2017, the defendants began arranging their trip to Hawaii later that month. Goway paid for their flights. But the defendants used the premium accommodation package they had previously secured through Ms Comito. The Hawaii trip bookings were not up to the defendants' expectations. The accommodation package and flights did not fit together neatly. The correspondence is odd in that Ms Comito offers the defendants credit for a night's accommodation in Hawaii that they had booked but were not able to use. This kind of spontaneous generosity from Ms Comito was not covered by the formal terms of the platinum travel pass, once again reminding the defendants of its uncommercial operation. To placate the defendants about the ill-fitting flights and accommodation Ms Comito offered to communicate with the hotel they were staying at in Honolulu, The Halekulani, on the beach at Waikiki, specifying that they were VIP clients to give them priority for an accommodation upgrade. 4. Ms Tarbuck was often the go-between, completing communications between Mr Critchley and Ms Comito. She often adds her own commentary to these transactions, as she did in her response to Ms Comito on 8 December 2017, "many thanks for trying and you know the old saying: "[I]f it sounds too good to be true, it probably is! [smiling emoji]" Goway highlights this aspect of Ms Tarbuck's response to Ms Comito's offer as evidence that Ms Tarbuck was conscious that the platinum travel passes were not legitimate. 5. This is a tempting but erroneously oversimplified inference. All in context Ms Tarbuck meant by those words was that not all luxury travel and accommodation offerings get delivered in the end and therefore frequent travellers such as the defendants should demonstrate flexibility and be prepared to accept disappointment. Yet Ms Tarbuck and Mr Critchley had many other reasons by this time not to believe the platinum travel pass was an authorised part of Goway's business. 6. Mr Critchley was asked about this correspondence in which Ms Comito had attributed the problems with this Hawaii booking to a "massive miscommunication and confusion on this package" and her assurance "I have sent an email today to contracting on this". Mr Critchley revealed his then judgment of Ms Comito. He agreed that he and Ms Tarbuck were assessing Ms Comito by this time on the basis "we'd been getting quite a few stories so our confidence level was reducing quite dramatically. I'd say both of us were probably sceptical about the excuse". He had been frustrated at Ms Comito's failures to make proper accommodation bookings at times which he and Ms Tarbuck only discovered upon arrival at hotels. He agreed he was well aware that he had the option of contacting the supervisor of an employee that he doubted; and he said he had done that in the past. But he explained his failure to take that course at this time with Ms Comito in the following terms, "I think we were a little softer simply because her husband was our accountant and we were trying to maintain good relations and walk the fine line" and that he was less influenced by Ms Comito's requests to keep their dealings confidential. 7. Mr Critchley's freedom of action was constrained by his relationship with Mr Waite. But he also did not want to go to Ms Comito's superior and risk losing the financial benefits of the platinum travel pass. An honest and reasonable person in his position would have sought an explanation from Ms Comito's superiors, once that level of scepticism of Ms Comito was reached. 8. But Mr Critchley's choices here were not binary. He did not have to choose between his relationship Mr Waite and criticising Ms Comito to her superior. The middle ground which must have been obvious to anyone of Mr Critchley's financial and business sophistication was not to use the platinum travel pass any longer and maintain his relationships. But that required a financial sacrifice that he and Ms Tarbuck did not contemplate. 9. The Hawaii trip went ahead. On 22 December 2017, during the trip, Ms Comito sent through a free accommodation voucher for Los Angeles to which the defendants also travelled. Goway paid for the flights to the USA and the accommodation in LA. At about the same time significant tension was building between Ms Storey and Ms Comito. This is dealt with during the separate unified narrative in these reasons about Ms Fryer and Ms Storey. 10. Mr Critchley and Ms Tarbuck's travel to the USA, on this trip cost Goway $5,829.66 and $6,969.66 respectively for international flights, as well as $504.60 each plus $523.30 each for domestic flights. They enjoyed accommodation at the Sheraton Gateway in Los Angeles, costing Goway $8,554.16. Mr Critchley says and the Court accepts that their airfares and accommodation were met by Goway under colour of the defendants' platinum travel passes. SFF Service Problems Continue – January to May 2018 1. By early January 2018, the defendants were still enjoying the accumulating the net value of the travel and accommodation from their platinum travel passes, without Goway seeking any obvious commercial advantage to offset those losses. This pattern continued with events in the first half of 2018. 2. On 2 January 2018, Ms Tarbuck emailed Ms Comito about taking flights to the Gold Coast. Mr Critchley also emailed Ms Comito on 2 January asking her if he could use one of his pre-purchased $2,000 tickets to travel to LA on 9 March and Steamboat Springs on 17 March 2018. On 3 January, he requested combining the $2,000 ticket to the USA with accommodation from his platinum travel pass. Ms Comito replied confirming that this was possible. Again, this was not an provided for in the special conditions for the platinum travel pass or the 16 discounted business class airfares. On 13 March 2018, Mr Critchley emailed Ms Comito to thank her for arranging this flight to Steamboat Springs. In due course the flights cost Goway $6,479.28 and were paid for under colour of the travel pass. 3. On 23 January 2018, Ms Tarbuck asked Ms Comito to book a 14 day cruise of the Baltic from and back to Southampton on the Cunard Line's vessel the Queen Victoria. The defendants were sufficiently alert to the terms of the travel pass to make this booking when they became entitled to their free international cruise in the third year of the travel pass, 2018. The booking took deep financial advantage of the free cruise element of the travel pass and was acquired at a cost of $6,094.10 for each of the defendants, a figure which almost represents the full value of each of their travel passes. Ms Tarbuck's 23 January 2018 email asked whether they would "have a login et cetera at this stage so we can go on and book restaurants and tours" through Cunard Lines in anticipation of this voyage. As these reasons explain below, by the time the defendants took this cruise they admitted they had completely lost confidence in Ms Comito. But they took it anyway. 4. The booking of this voyage was just over two years into the life of the defendants' travel passes. On top of the gross problems that the defendants had encountered with Ms Comito's services, honest and reasonable persons in their position must have realised the benefits they had received, and therefore the inexplicable losses Goway was accumulating had passed far beyond fathomable commercial proportions. And yet neither Ms Comito nor Goway had ever sought to link their use of the platinum travel passes to any other rational commercial purpose of Goway, such as the co-marketing of other Goway travel products or otherwise reaping the benefit of loss leading behaviour. 5. They knew well the extent of Goway's accumulating travel pass losses. Months before this, in an email sent on 17 May 2018, Mr Critchley had told Ms Fryer that Ms Tarbuck had been "keeping a spreadsheet on our benefits from the travel pass" but that the spreadsheet had been lost due to a computer change over. He commented to Ms Fryer that he and Ms Tarbuck were aware that as of November 2017, "we had gained $160,000 from the pass". 6. The defendants were still taking domestic flights on their travel pass but encountering booking delays from Ms Comito. On 6 February 2018 Mr Critchley had to follow-up his 29 January 2018 email to Ms Comito seeking to book flights to Brisbane. Eventually the bookings were made, and Mr Critchley flew to Brisbane at Goway's expense under the travel pass at a cost of $308.87. 7. February to May 2018 confronted the defendants with more chaotic management by Ms Comito of the SFF scheme. The defendants wanted to book flights and car hire for a trip to the Gold Coast. Ms Comito was unable to confirm a return flight booking for the trip. But Mr Critchley accepted the poor service he was given and on 15 February 2018 he thanked Ms Comito for organising the flights, commenting ruefully, "hopefully all goes well for the flight back." 8. Perhaps anticipating future trouble, in the same email Mr Critchley asked politely about his next booking, "I was wondering about my flight to the US on 9 March and accommodation." His courtesy in the face of Ms Comito's continuing service failures continues to reflect his distorted relationship with Ms Comito as a Goway service provider. He was unable to seek redress through ordinary commercial channels within Goway, despite having paid for his platinum travel pass, because of the financial risk in taking that course of losing the benefit of the pass. The next day, 16 February, Mr Critchley was still trying to hunt down a definite return flight from the Gold Coast from Ms Comito. 9. Mr Critchley wanted to travel to the USA on 9 March 2018. On 20 February 2018, his travel arrangements were still unconfirmed. After some urging on his part Ms Comito sent through possible travel options on 27 February. But Mr Critchley was unhappy with the workability of the choices. He pointed out that the travel pass service had declined, saying that "we used to be able to get quite direct flights and our preferred airlines but it is no longer the case". 10. Even five days before his planned travel, on 4 March 2018, Ms Comito had not given Mr Critchley firm travel arrangements for this trip. After ascertaining that there were only five seats left on the flight he wanted, in a state of some agitation and emphasizing the need for certainty in his travel arrangements, he emailed Ms Comito, saying "there are less than five seats left and wasn't sure if your people have already reserved a seat or not. If they have fine." Once again this demonstrated dissatisfaction with her service but a strong preference for pushing her rather than complaining to her superior. 11. Mr Critchley flew to the USA on 9 March 2018, costing Goway $5,560.28 and then $919.00 on his return. These airfares were provided by Goway under colour of Mr Critchley's platinum travel pass. 12. Yet more examples arose in this period that must have demonstrated to the defendants that Ms Comito was not operating systems within Goway to monitor the progress of outstanding travel requests on their platinum travel passes. On 13 March 2018, Mr Critchley had to email Ms Comito to remind her of their 23 January 2018 request for flights for a holiday in Thailand in May 2018. 13. In reaction to Ms Comito's poor performance, at one point Mr Critchley remarked to Mr Waite, "Is Lisa managing okay? They seem to have a real problem there", Mr Waite offered his informal assurance to Mr Critchley that "everything is going to be fine". He explained Ms Comito was under stress partly due to understaffing at Goway but that the issue would be resolved. 14. Mr Critchley said that his reconnaissance with Mr Waite gave him comfort. Mr Waite said to Mr Critchley about Ms Comito's odd behaviour, "it's the company's fault. They're not giving her enough staff to support her". Mr Critchley said that he now knows that was not accurate, but he says he did not know that at the time. But this cannot be accepted. When asked whether Ms Comito being out of control ever caused him to wonder "is this program real?" He answered, "I guess if we didn't have Steve as the partner reassuring us that everything is fine, Lisa is stressed, we would have done". But Mr Critchley was experienced enough in business and life to appreciate that because Mr Waite was Ms Comito's husband, whatever he was saying to Mr Critchley, it should be treated with caution. 15. But why should Mr Critchley go to Mr Waite, a clearly biased source, and not Goway itself? That he did not even see consulting Goway as the logical point of inquiry about Ms Comito in the first half of 2018, shows how far he was blinded by self-interest and was rationalising the improbable. 16. Ms Tarbuck visited Peru in March 2018 at the same time as Mr Critchley flew to the USA. Goway met the $9,587.56 cost of this flight to Peru under colour of the defendants' platinum travel passes. On 27 and 28 February 2018, Ms Tarbuck emailed Ms Comito to book her flight. 17. Ms Tarbuck's original plan was for Ms Comito also to book her accommodation in South America as well. But the accommodation bookings were not done in advance. The defendants were both worried about Ms Tarbuck not having secure accommodation arrangements in South America. In the end Mr Critchley abandoned the idea of booking through Ms Comito on the basis, as he explained it to Ms Comito, that Ms Tarbuck could not operate "last minute from South America". Both defendants were unhappy because the alternative arrangements were very expensive. This time Ms Tarbuck communicated an unusual level of exasperated dissatisfaction directly to Ms Comito about the situation they found themselves in: "Bob booked for me as close to wire as had nothing from you and paid dearly….it is peak season. I also booked Santiago before I left due to non-sensical fares. We give so much advance notice – will this change?" 1. The same questions had been asked many times before. Once again, the defendants were incapable of embracing the obvious solution of speaking to Ms Comito's superior. But this time they at least partially took the step of abandoning their potential benefits under the travel pass and prioritising Ms Tarbuck's travel safety in South America. 2. The defendants planned to travel to Thailand in May 2018. On 19 March 2018, Ms Comito sent through to Mr Critchley the flight details for the defendants' Thailand trip. On 27 March, Ms Comito confirmed the availability of these flights. Once again, the form of the email followed the familiar pattern of what at a superficial glance looked like an internal Goway staff travel email addressed to Ms Comito: "Hi Lis, I am holding business class Thai flights for Critchley and Tarbuck. The QF flights are not available at the moment but we are monitoring these. Thank you" 1. The fictitious internal email contained no other Goway logos or other authenticating email information. On 27 March 2018, Ms Comito sent a follow up email saying she was holding these flights. 2. It is impossible, yet again, from this purported internal email to find any other employee within Goway to telephone to check the source material or data from Ms Comito. 3. The Court accepts, as it has earlier been explained, that Ms Comito's artifice was sufficiently clever in this respect that in the early years an honest and reasonable person in the shoes of the defendants would not have noticed that the internal Goway emails lacked complete verisimilitude. But by this time once other anomalies had appeared, an honest and reasonable person's inquiries would have tested the fiction behind these formless internal emails. 4. Ms Comito emailed Mr Critchley and Ms Tarbuck about their planned July cruise on the Queen Victoria, with a complaint they had about being booked in the wrong cabin and giving them a definite cabin number for the voyage. Mr Critchley and Ms Tarbuck had apparently been booked in the wrong cabin. But on 2 April 2018 Mr Critchley was still asking for "the cruise reference for us so we can lock in our preferred excursions". They still did not have this vital information, having made the booking in January for the cruise in July. Ms Comito gave an unsatisfactory and unconvincing explanation for the lack of a cruise reference and a clear cabin, that "you did pay in full the discounted price in May last year which we passed onto the cruise consolidator at the time of receiving." As is explained below, Mr Critchley and Ms Tarbuck flew return to the United Kingdom and boarded the Queen Victoria for the cruise. Mr Critchley says, the Court accepts, these airfares and the cruise were met under colour of the defendants' platinum travel passes. 5. Mr Critchley planned to visit Melbourne from Friday 13 April to Sunday 15 April 2018. He first requested Ms Comito on 25 March 2018 for Melbourne flights and accommodation near the Etihad stadium. The booking had still not been confirmed by Tuesday 10 April 2018, so he sent a follow up email to see if "everything will be okay for Melbourne this weekend?" On 12 April 2018, the last day before flying, Ms Comito sent Mr Critchley his flight and accommodation details. Goway paid for Mr Critchley's flights and accommodation at a total cost of $1072.56, comprised of airfares costing Goway $636.96 and accommodation at Pepper's Docklands, costing Goway $435.60. All these amounts were met by Goway under colour of the defendants' platinum travel passes. 6. Mr Critchley wanted to fly to Perth on 1 May 2018. On 30 April 2018, he was still uncertain about his travel arrangements. That day he emailed Ms Comito "following up to see if my flights to Perth tomorrow are OK". He received an apology from Ms Comito and an assurance that "I have chased up". Goway paid for his flights, accommodation, and car hire in Perth at a cost of $1,278.84, under colour of Mr Critchley's platinum travel pass. 7. In May 2018, Mr Critchley and Ms Tarbuck flew to Thailand using their travel passes. Goway paid for their flights at a cost of $6,261,12. These costs too were met under colour of Mr Critchley's platinum travel pass. 8. Increasingly through the first half of 2018, Ms Tarbuck was inundated with complaints from dissatisfied friends who could not get answers from Ms Comito about their travel arrangements. As Mr Critchley himself said, "it all exacerbated through those last months". 9. Before taking the narrative of findings to events in June-July 2018, it is useful now to divert briefly and look at what was happening inside Goway, to a building investigation that finally came to Mr Critchley's attention in June 2018. The View from the Inside: Goway Investigates Staff Travel – Mid-2017 to Mid-2018 1. Early in the second half of 2017, prompted by Mr Lacy, Mr Atkins began to investigate Ms Comito's management of the SFF scheme at Goway. The scheme's debts had reached alarming levels in mid-2016. But Mr Atkins understood from Ms Comito that these debts had been fully cleared by January 2017. Mr Atkins had accepted Ms Comito's explanation in 2016 that the scheme's operations were supported and contributed to by a charity and its outstanding debts would be covered by that charity. Ms Comito had been allaying the fears of Mr Atkins about these deficits by explaining her plans to collect funds from contributors who had promised to support the charity. 2. Mr Atkins' investigations had started no later than early 2016, when Mr Lacy from Goway North America had shown an insightful concern about what Ms Comito was doing. A conversation between Mr Lacy and Mr Atkins on 14 March 2016 had prompted Mr Atkins to email Mr Lacy that day with a short report entitled "Goway Retail" covering Ms Comito's activities as he appeared to understand them at that time. Email explained that for the past four years Ms Comito had been providing go away with bookings from a charity called "Friends and Family" to support a friend had become a quadriplegic and that is part of the charity funds are raised for various promotions, raffles, events, and functions which can be redeemed for travel and other benefits for the winners. She explained that "Lisa uses Goway Retail for the recipients to redeem their travel arrangements". She further explained that the 'charity' committee responsible for funding what he described as the 'charity' part of the booking but individuals were free to make additional bookings for extra travel services at their own expense and settle these directly with Goway. He then continued to explain what had happened recently and what was planned: "Up until September last year the sales were running around 25-50k per month and were quite manageable and then in October for some reason it took off and was running at 200-300k per month. This dramatic increase caught the 'charity' off guard and the systems in place were not appropriate to cope with the amount of bookings and the debt owed to Goway by December had increased substantially. … In November/December we had discussed, Lisa, Glenda, David and myself, that with the new setup of Goway Retail using Travelbox processes would need to be put in place to accommodate this business. It was discussed that the 'charity' would deposit funds into a bank account or a dummy booking and when bookings are made by the charity that it would be drawn down from wherever the funds were being held. All bookings would be prepaid and this is what we are currently in with Tavelbox. … As well is the 'charity' bookings which represent about 60% of the bookings Lisa has also referred to Goway a large RSL club who purchase all its travel prizes through Goway, her husband's company use Goway for some of its corporate business and via the 'charity' bookings people are found out that Goway is the provider and now book their personal travel through Goway. Lisa is quite concerned about her reputation as she feels that everything is above board and was only trying to assist Goway with additional sales and is considering her current position with Goway." 1. This email shows Mr Atkins was only prepared to describe SFF as an informal 'charity'. It shows Ms Comito was prepared to push back internally against investigation of what she was doing with SFF on the basis that she would quit Goway and take her experience with her. It appears to be passing on what Ms Comito had told Mr Atkins. Given the way events later unfolded in relation to this 'charity' the Court has no confidence in the accuracy of any of the information that Ms Comito provided to Mr Atkins that found its way into in this email. 2. The defendants argue that the way that Mr Atkins explained the SFF scheme in this email provides a plausible business model for the way Ms Comito was operating the SFF scheme: that when people find out that Goway is the provider of the charity travel bookings that promotes goodwill and the experience of Goway and they then book their personal travel through Goway. 3. Such a scheme might be theoretically possible. But the difficulty for the defendants' argument is that that it is not the scheme that the defendants were experiencing. They knew little about any charity associated with the SFF scheme. As these reasons later show, the defendants found it both surprising and confronting that they or their business associates might have pledged to donate to a charity associated with the SFF scheme. Moreover, the part of this posited business model that is missing from the SFF scheme is any attempt by go away to encourage SFF scheme users to book retail travel through Goway at commercial rates. And as Mr Atkins explained the model to Mr Lacy, "all bookings would be prepaid", which was not what the defendants were doing. 4. Mr Atkins believed Ms Comito. But she was deceiving him. He was not aware at the time that there were no charitable contributions making up the missing balance of the airfares. But his email correspondence to Ms Comito at the time reflected his mistaken belief, sometimes being headed "Family & Friends Charity". Just how the original SFF created in 2006, which was not a charity, had morphed into this charitable structure Mr Atkins did not investigate and never really understood. But Mr Atkins said he had a belief that SFF was now structured as a charity. On the surface he acted as if he believed that it was so structured, and he worked with Ms Comito on that assumption in 2016 and 2017 to try and get the funding to balance by the nominated charitable contributors paying their contributions. 5. Mr Atkins was off work for a period of six months in the first half of 2017 after a medical operation. But upon his return it came to his attention that the SFF scheme debts had blown out again to unacceptable levels. In August 2017, Mr Lacy, flew to Australia to supervise an audit to enable this looming problem to be more accurately identified, then rectified. The audit showed that after a period of about eight months the scheme had gone from what was thought to be zero debt in January 2017 to an indebtedness of about $1.9 million. The business owners at Goway North America wanted Mr Atkins to fix the problem. 6. In his dealings with Ms Comito Mr Atkins reacted with a surprising restraint that belied the pressing nature of the scheme's woeful financial position and the demands from Mr Lacy. He wrote the following email to Ms Comito on 13 September 2017: "Hi Lisa, Until the current debt is cleared for the Family & Friends Charity no further air tickets, accommodation or any associated services can be booked or ticketed. Appreciate your adherence to this and we hope that this situation can [be] rectified as a matter of urgency. Once this debt has been cleared and moving forward, all services booked will have to be paid for in advance as per our normal travel agency procedures. Cheers Greg Atkins General Manager" 1. After 13 September 2017, Mr Atkins did not do the obvious. He did not directly contact 'the charity' described in this email to try and clear the debt. He left that task to his employee, Ms Comito. Although she had created the problem, he still trusted her because she had the contacts with "the charity" and he did not. Mr Atkins confessed in evidence that he did not ask Ms Comito enough about 'the charity'. Instead, he left it to her to pressure the charity committee to reduce the indebtedness. Ms Comito was merely keeping him at bay, so she could continue her scheme. 2. But Mr Atkins did focus some attention on the big donors that Ms Comito had identified. One of the fictional donors that Ms Comito had identified to Mr Atkins as a "large contributor" was Mr Bruce Turner, the Chief Executive Officer of Wynstan Blinds and Awnings ("Wynstan"), a manufacturer and distributor of domestic blinds. Ms Comito had set herself up as the channel for communications from Mr Atkins to these false donors, such as Mr Turner. The Court describes him as a fictional donor because the Court accepts (below) the account that he repudiated being labelled as a donor, from which the Court concludes at the best explanation for his being called a donor was an invention of Ms Comito. 3. Mr Cleary points out in the defendant's submissions that Mr Atkins' 13 September 2017 email does not instruct Ms Comito no longer to book travel through SFF. That is correct, the instruction subsisted only whilst the debt had not been cleared. But the debt was about $1.8 million in September 2017 and had not been cleared by January 2018 and somehow Mr Atkins still permitted Ms Comito to sell travel products and services under the SFF scheme. Mr Atkins explained he was expecting to receive $1.9 million from Mr Turner and permitted SFF to continue operating. 4. Mr Atkins must have been burying his own doubts about this explanation of Mr Turner being the scheme's saviour by donating $1.9 million. The idea sounds incredible and would require verification. Mr Comito gave Mr Atkins a fig leaf of respectability for his expectations. Ms Comito gave him an email dated 22 November 2017 which he had forwarded to herself at her Goway email address from her Hotmail address apparently from an email address of Mr Turner. Just when she gave it to him is difficult to work out. It read as follows: "Hi Lis, Please inform Goway travel that I will make a payment of 1.9 million by the end of the month. The Family/Friend group will then continue to make payments to rectify the outstanding debt be cleared by the end of January. Kind regards, Bruce Turner" 1. This email was as suspicious and uncommercial as the emails Ms Comito was sending the defendants. Mr Cleary's submissions rightly point out that Ms Comito appears to have forwarded of the purported email from Mr Turner at 1:22 pm that day but Mr Turner's email being forwarded purports to be generated at the later time of 9:33 pm that same day. Even if that were not noticed, the language of the email looks inauthentic: its commitment is vague for such a large sum, does not even promise to pay in dollars, and is inherently improbable for a private company without further explanation. 2. But if he received it in November 2017 Mr Atkins did nothing to follow-up Mr Turner. He appeared anaesthetised to the improbabilities that Ms Comito was weaving around him. He did not follow up the payment of the $1.9 million by the end of the month. 3. When answering questions about why in June 2018 he did not correct Mr Critchley's misunderstanding that Mr Critchley had promised to be the saviour of the scheme, he explained that that he did not have this 22 November 2017 email from Mr Turner (which would have quickly corrected the fact that it was Mr Turner not Mr Critchley who made the promise", "because it was in Ms Comito's possession". This evidence may well be correct, and Ms Comito may only have given him the email after his conversation with Mr Critchley. This conclusion fits his conduct in January 2018, described below, drafting an email for Mr Turner to send to Goway: something he is not likely to have done if you already had the 22 November 2017 email. 4. The defendants submit this shows very poor corporate governance by Goway over a significant period. That is undoubtedly correct: there were too few internal controls in Goway on Mr Atkins ad Ms Comito at this time. 5. The correspondence between Mr Atkins and Ms Comito amply demonstrates how thoroughly enmeshed in and accepting of her scheme he had become. He was surprisingly inert when it came to pressing Ms Comito for information. He appeared to accept that she should manage the contacts with the charitable donors. This was no better illustrated than when on 18 January 2018 Mr Atkins wrote to Ms Comito suggesting a form of draft for her note for the putative "donor", Mr Bruce Turner, to send to Goway to give it assurance that his charitable contributions would be coming in soon. "Hi Lisa, Should we write the note for Bruce and just get him or his secretary to write up on their company email or letterhead. Dear Goway, or Dear Lisa This is to advise that I will be forwarding today $500,000 with a balance of $???????? to be sent by ?? January 2018 to put towards the Family and Friends invoices that are currently outstanding. The remaining funds owed will be paid by other Family and Friend contributor's and this will also be finalised by the end of January 2018. We apologise that this matter has taken longer than expected to settle and appreciate your understanding. Kind regards What do you think? Greg Atkins" 1. No letter was ever sent based on this draft. Mr Atkins explains that he was acting under pressure from head office at Goway North America at this time and he only suggested this draft to Ms Comito because Ms Comito had by then shown him email correspondence to the effect that Mr Bruce Turner (and possibly others including Mr Critchley) were going to pay $1.8 million towards satisfying the outstanding debts of the charity by December 2017. Mr Atkins' plan was to get a letter of acknowledgement of the debt and then soon afterwards turn that into a letter of demand from Goway. But he did not yet have the first step, a letter acknowledging the debt. 2. At about this time Mr Atkins also drafted a "Family & Friends Discussion Points" document, which he thought was going to be used as an agenda at a meeting with Ms Comito, himself and the supposed contributors, such as Mr Turner. It included obviously important discussion subjects such as: agreeing on the debt owed to Goway, a statement of Goway's position on the debt, discussion of a plan to clear the debt quickly, and whether or not "Family & Friends" will be wound up. 3. But the meeting never took place. Ms Comito could never allow a meeting to be arranged which would expose her deception. Mr Atkins was asked why he did not seek to understand further at that point what Mr Turner's alleged legal liability to pay the debt was. In a flaccid response he readily conceded, "I probably didn't investigate as far as I should have". As will be seen, Mr Atkins did eventually initiate direct contact with Mr Turner but only after a delay of a further six months of inaction and so only when Ms Comito was away overseas and not in a position to block him. A Phone Call to Moscow – 19 June 2018 1. The 2018 FIFA World Cup was held in Moscow between 14 June and 15 July 2018. Ms Comito and her husband, Mr Waite, were planning to take a holiday at that time to see the World Cup. Mr Critchley's suspicions about Ms Comito's activities with SFF at Goway culminated in June 2018, whilst Ms Comito was on holiday in Moscow. 2. Early in June, Mr Critchley and Ms Tarbuck had caught up with Ms Comito in the Sydney CBD for a meal before Ms Comito departed on her travels to Russia. Ms Comito complained to the couple that she was being overworked, saying: "I'm probably facing a divorce as there was no way I will be able to free myself up to go to Russia. I have been working 14-hour days and a seven-day week for months." 1. They farewelled her that evening before she flew to Russia. It turned out to be the last time they had face-to-face contact with her. They were deeply troubled by the chaos within the SFF scheme. On 15 June, Ms Tarbuck wrote to a friend, with the first name Tony, who was one of the other pass holders introduced by the defendants. Tony and his wife were very disappointed in the poor service from Ms Comito. But even then, when placating Tony and apologising to him for the situation, Ms Tarbuck made clear that the relationship with the introduced pass holders was that they were not to complain to Ms Comito's superiors. Even then she gave no assistance to Tony or his wife in making that contact. She put it this way: "As it is sold as a 'Friends and Family Travel Pass', it would put us in a very difficult situation for you to write directly to her boss (sorry, not us but Lisa). There are lots of anomalies that we don't quite understand either, and there is also the relationship with Steve, our accountant for many years and Lisa's husband. We had not budgeted either to have to spend money on fares and we told Lisa not to worry about us in the hope that other people got serviced ahead of us and it appears that no one did. … All I can do is apologise for getting you involved. I don't know who Lisa's boss is but again, [Tony's wife] needs to do what she has to do. All the meetings with the people from Toronto seem to have gone nowhere." 1. The defendants' case can draw no comfort from the parallel behaviour of the introduced pass holders. The defendants had introduced them on the basis that these additional pass holders would not be asking questions. But as Ms Comito's service had deteriorated in 2017, even the defendants stopped introducing new passholders, as (a) managing the expectations with existing ones had become too stressful for Ms Tarbuck, and (b) it must have become more obvious to the defendants that there was something seriously wrong with the SFF scheme. 2. Whilst Ms Comito was away, on 19 June Mr Critchley, who was busy in a board meeting, received several missed mobile telephone calls from his friend and business acquaintance, Mr Bruce Turner. Both Mr Turner and his son, Mr Andrew Turner are the principals of Wynstan. Mr Critchley has known the Turner family for many years and is a board member of Wynstan. 3. Eventually Mr Bruce Turner reached Mr Critchley. Mr Bruce Turner was travelling in a car with Mr Andrew Turner at the time. They raised with Mr Critchley something that surprised him and to which he reacted quickly: "Mr Bruce Turner: We have just had a meeting with Greg Atkins from Goway, because he kept ducking us and he mentioned you signed a $1.8 million commitment to the Goway family and friends charity for a quadriplegic child. He offered to show us a signed copy of the letter. Mr Critchley: What are you talking about? That is absolute rubbish. I know nothing about it" 1. Mr Critchley was very disturbed by this. Mr Critchley elaborated on the conversation in cross-examination with additional information about its contents which the Court mostly accepts. Mr Critchley explained that the Turners had told him they wanted to have the meeting as much as Mr Atkins, because they had provided an advance of $600,000 to purchase travel from Goway under the SFF scheme and they wanted it returned. Mr Critchley explained that the Turners told him that Mr Atkins had said "we've got this charity for a quadriplegic boy that's been signed by Bob Critchley" and they said "what?" And Mr Atkins said, "I'll even show you the signed letter". Mr Critchley says he quickly realised from this information that Mr Atkins must be unaware that Mr Critchley was close to the Turners and served on their board. 2. Mr Critchley's sense from this phone call was that someone had invented a false documentary commitment on his part in a very large sum and put it in the hands of Mr Atkins, who had then used it to pressure the Turners. A direct account exists in the evidence of this meeting between Mr Atkins and the Turners. Mr Atkins says that he telephoned the Turners to set up a meeting at the offices of Goway. 3. The evidence as to what passed at the meeting is confusing. Mr Atkins says that he explained to the Turners that Ms Comito had told him that Mr Critchley had organised the letter from the contributors for the debt of $1.8 million, which included the Turners. The 19 June 2018 meeting provided quite a shock to Mr Atkins. According to Mr Atkins, Mr Bruce Turner said that he was not going to be contributing any funds and that he was in fact owed a refund of $600,000 for advance purchases he had made of packages to the value of that amount. But what passed at this meeting between Mr Atkins and the Turners is less important that what Mr Turner conveyed to Mr Critchley about the meeting, which has been described above. 4. Armed with the information in the telephone call from the Turners, Mr Critchley decided to ring Ms Comito. She was then on her planned holiday in Russia. He eventually contacted her on Mr Waite's telephone. He says, and the Court accepts, that they had a conversation to the following effect, a conversation which shows that Ms Comito was aware of Mr Critchley's relationship with Mr Bruce and Mr Andrew Turner: "Mr Critchley: Lisa, we've had a call from Bruce and Andrew, referring to a meeting with Atkins and my purported $1.8 million commitment to the 'Goway family and friends charity'. What [do] you know about it? It is totally unknown to me. Ms Comito: They have it all mixed up. I'll jump on a plane and come straight home. He is referring to someone else. It is not you. Mr Critchley: I am very stressed about this. Ms Comito: It is all okay." 1. This conversation is probably correct as far as it goes. Mr Critchley is likely to remember the moment he was falsely accused of being responsible for a debt of $1.8 million. He made various comments about the conversation which the Court regards as a mostly accurate description of his account of the conversation: "I didn't get satisfactory answers"; and "following that I lost confidence in that relationship". 2. This is unlikely to be the complete conversation. Having gone to the lengths of contacting her on holidays in Russia, the Court infers that the astute Mr Critchley is likely to have wanted more information than this about an apparently invented commitment on his part for $1.8 million. Obvious questions that he is likely to have asked were whether this apparently concocted letter of commitment purported to be signed on his behalf, where it had come from, and whether there were any co-signatories, such as Mr Bruce or Mr Andrew Turner, and how Ms Comito had deployed the letter. It is likely that some of these things were discussed. But Ms Comito did not provide answers that satisfied Mr Critchley. As she was the only point of contact for all the parties ensnared in this false letter, circumstances clearly pointed to her being its inventor. 3. This conversation had a profound impact on Mr Critchley. In cross-examination he repeatedly emphasised themes of lost confidence and disappointment from what Ms Comito had said to him on the telephone that day. The Court explored with Mr Critchley why he had lost confidence in Ms Comito at this time and what Mr Critchley meant when he said in evidence "my trust was a little shattered [in Ms Comito] after that day". His account was that his loss of confidence was deepened by Mr Atkins' behaviour in the days after this conversation with Ms Comito. Mr Critchley's answers to these questions are partly accepted as an accurate account of his state of mind: "The Court: Can I just ask, why was it shattered by their information [at] that moment…Because all she saying to you is, Mr Atkins has got it wrong, and it [can) be cleared up, and I'm coming home. Why wouldn't you wait until she came home to see what emerged, rather than just lose confidence in her? Mr Critchley: I didn't do anything straight away, your honour, but I had lost confidence from that moment, because when someone is waving around the letter they claim has been signed by me for a charity with Mr Atkins, as he was cross-examined, I just lost all confidence. The Court: Sure, but why wouldn't you accept Lisa Comito's explanation that Mr Atkins has got it wrong and wait to see it cleared up? Why wouldn't you accept that, given that you had been dealing with Ms Comito for so long? Mr Critchley: Between there and when we met Mr Atkins on the 23rd and my many attempts to try and meet Mr Atkins, and he kept avoiding answering my questions, I knew something was wrong. I did not convey my lack of confidence on that day, but that was when in, in my mind, I lost confidence." 1. The Court accepts that this conversation between Mr Critchley and Ms Comito resulted in him suffering some loss of confidence. But the Court does not accept that the loss of confidence happened precipitously just at this moment. This partly emerged from Mr Critchley's answers to the questions which immediately followed: "The Court: Did you have any doubts about Lisa Comito and Mr Atkins before that conversation, any at all? Mr Critchley: No. She was out of control, I knew that, but I put it down to inefficiency, incompetence or what, but I didn't put it down to dishonesty. The Court: So even before this conversation, you believed she was out of control and incompetent? Mr Critchley: Yes, your Honour. If I may answer that. The Court: Yes. Mr Critchley: Lyn [Tarbuck] had referred friends to the travel passes, and she was being inundated with friends, because they couldn't get answers from Lisa, so they're going to go to Lyn, and she was just so frustrated, because everyone's port of call was Lyn who had our own business operations to do." 1. But "out-of-control" also meant Mr Critchley and Ms Tarbuck could not trust Ms Comito. Their own evidence admitted as much. Increasingly from February to June 2018, and partly based upon what Ms Storey was telling him, Mr Critchley dismissed most of Ms Comito's excuses as to why his travel arrangements had not occurred as planned, describing the situation as "Lisa was coming up with an excuse every day, so I was paying no attention to what excuses were". And "at this stage I was trying to help Jodi to get her money back. Lisa was telling Lyn every story in the book. She was telling me every story. It's like water off a duck's back that one." 2. Mr Critchley appreciated before 19 June 2018 that Ms Comito was out of control and incompetent. But he denied thinking she was dishonest. But Mr Critchley must have thought by no later than 19 June 2018, Ms Comito was dishonest. The Court does not accept his answer that his assessment of her before that date merely that "she was out of control and incompetent". From the degree of the SFF scheme's dysfunction and the various other matters elaborated earlier in these reasons, from about January 2018 Mr Critchley had reason to believe dishonesty was one explanation for her being "out of control". But he chose not to make obvious inquiries to eliminate this explanation. 3. Mr Critchley's overall account fits with what Mr Atkins said about contact he had with Ms Comito at about this time. In mid-2018, Mr Atkins was investigating the financial deficiency in the SFF scheme. The Court accepts that Ms Comito had in 2017 shown Mr Atkins email correspondence, that appeared to record that Messrs Bruce and Andrew Turner were large contributors to a charity that funded the SFF travel scheme. The Court also accepts that Ms Comito had told Mr Atkins that Mr Critchley was organising to have the Turner's commitment guaranteed in writing in the form of a signed letter. 4. This of course was false. Mr Atkins' meeting with Messrs Bruce and Andrew Turner was his belated test of what Ms Comito had said to him. Mr Bruce Turner's phone call to Mr Critchley must have alerted Mr Critchley to the fact that Goway's general manager, Mr Atkins, was making inquiries into irregularities in Ms Comito's conduct of the SFF scheme. Mr Atkins was doing just that. 5. Mr Critchley now knew that Mr Atkins was investigating Ms Comito's conduct of the scheme, that Goway probably suspected she was dishonest, and that there was now therefore a greater reason for him to hold that suspicion as well. But the knowledge Mr Critchley obtained at this time was the perfection of knowledge that he had already accumulated imperfectly, but sufficiently, to draw an inference from March 2015 that Ms Comito's conduct of the scheme was unauthorised, and from January 2018 was also probably dishonest. 6. In addition to what he had learned on 19 June 2018 from the telephone call with Ms Comito, on 23 June Mr Critchley gained direct confirmation that Ms Comito had been lying to him. The 23 June 2018 Conversation at the Hyatt Regency Hotel, Sydney 1. Mr Critchley, Mr Bruce Turner, and Mr Atkins all met at the Hyatt Regency Hotel in Sydney on 23 June 2018 to try and resolve their conflicting understandings. Mr Critchley gives a long account of this conversation. But the Court prefers Mr Atkins' version where it conflicts with that of Mr Critchley, although aspects of Mr Critchley's version can be accepted. Mr Atkins' account of the conversation follows: "Mr Critchley: I believe you told Mr Turner that I was responsible for the 1.8 million. Mr Atkins: I never said that you were responsible for the 1.8 million. I said that you were organising the contra contributors to acknowledge the debt. Mr Critchley: That is not true. This is the first I have heard of this. I'm not responsible. Mr Turner: I have bought packages and I can't use them. You owe me money. Mr Atkins: I was not aware of that, and I will have to look into the email that that you sent to me a couple of days ago. We don't have any record of any purchases made by you. Mr Turner: Go back through your system and look at the dates that I paid. Mr Atkins: This is going to take some time for us to go back through our system because some of these payments were made years ago. Mr Critchley: I have worked with Goway for years and have been on many trips and everything was fine until now. Mr Atkins: I was not aware that you were a customer of Goway. Mr Turner: I want you to sign a document confirming that you will reimburse me by 30 June. Mr Atkins: I am not prepared to sign such a document." 1. The meeting ended in a stand-off. Mr Critchley learned from Mr Atkins that a false story about him (Mr Critchley) organising charitable contributors to the SFF travel scheme had been invented, probably by Ms Comito. Mr Atkins was disclaiming any knowledge of Mr Critchley being a customer of Goway. Mr Turner was getting no satisfaction from Mr Atkins that he would be reimbursed for what he claimed were advance purchases of travel through Goway. It must have been clear to Mr Critchley from this conversation that Mr Atkins was not yet fully aware of what Ms Comito had been doing with the scheme and that she had actively misled each of Mr Atkins, Mr Turner and him about important features of the scheme. 2. The Court does not accept Mr Critchley's self-serving version of this conversation, which has Mr Critchley putting all the blame on Goway and Mr Atkins being apologetic, conciliatory, and taking responsibility for the SFF scheme as an important part of Goway's outbound travel business. That was not correct, and Mr Atkins was unlikely to have put it forward as fact. The Court accepts that Mr Atkins was largely ignorant of the details of the operation of SFF under Ms Comito. He did not see Family and Friends as an important part of Goway's business. But the email evidence is inconsistent with Mr Atkins' evidence that he knew nothing about Ms Comito running the SFF scheme until a few days before this meeting. He had been chasing her for some time to rectify the deficit in the scheme. 3. Mr Cleary put to Mr Atkins part of Mr Critchley's version of this conversation in which Mr Critchley alleges he said to Mr Atkins "Greg, you are aware of the Goway Friends and Family scheme" and that Mr Atkins replied, "I'm aware of it, and normally refer all questions on it to Lisa?" Mr Atkins denied saying that at this meeting. The Court accepts that Mr Atkins did not give this answer. He was being cautious about what he admitted to Mr Critchley. He was indeed aware of the SFF scheme. He had a version of it from Ms Comito recorded in his email to Mr Lacy 14 March 2016. But he was hearing at this meeting from Mr Turner that he had purchased "packages and I can't use them" and that Goway owed Mr Turner money. Mr Atkins was not aware of these "packages" being purchased and for that reason he was not prepared to give blanket assent to his awareness. Nor did he say "I know about it but wasn't close to it until recently. Lisa was running it but has become stressed and I have taken it over for now". He did not take responsibility for the detail of the SFF scheme, because he was increasingly realising that Ms Comito had not told him about these details even though he was aware in a general sense from at least as early as January 2018 that some tickets were being sold through the SFF scheme to family and friends below their face retail value. 4. Mr Cleary put to Mr Atkins part of Mr Critchley's version of this conversation in which Mr Critchley alleges he said to Mr Atkins "Greg, you are aware of the Goway Friends and Family scheme" and that Mr Atkins replied, "I'm aware of it, and normally refer all questions on it to Lisa?" Mr Atkins denied saying that at this meeting. The Court accepts that Mr Atkins did not give this answer. He was being cautious about what he admitted to Mr Critchley. He was indeed aware of the SFF scheme. He had a version of it from Ms Comito recorded in his email to Mr Lacy 14 March 2016. But he was hearing at this meeting from Mr Turner that he had purchased "packages and I can't use them" and that Goway owed Mr Turner money. Mr Atkins was not aware of these "packages" being purchased and for that reason he was not prepared to give blanket assent to his awareness. Nor did he say "I know about it but wasn't close to it until recently. Lisa was running it but has become stressed and I have taken it over for now". He did not take responsibility for the detail of the SFF scheme, because he was increasingly realising that Ms Comito had not told him about these details even though he was aware in a general sense from at least as early as January 2018 that some tickets were being sold through the SFF scheme to family and friends below their face retail value. 5. Nor does the Court accept Mr Critchley's account of the part of this conversation that Mr Atkins promised Mr Critchley and Mr Turner that after speaking to the Canadian directors that he would "get them to sign an assurance to honour everything". Mr Atkins was not interested in Goway assuming or acknowledging liabilities, given what he had recently discovered. 6. But the Court accepts Mr Critchley's version to the extent he says that Goway's Canadian director Mr Peter Lacy, who was keen to hear the outcome of the meeting, tried to call Mr Atkins during the meeting. Mr Lacy's prior involvement had seen him seeking to identify and eliminate financial deficits in the SFF scheme. This phone call is a likely indicator of Mr Lacy's continuing interest in rectifying irregularities in this scheme and makes Mr Atkins' version of a hostile meeting the more likely course of events. The Queen Victoria's Baltic Cruise – July 2018 1. The Cunard Line's vessel, the Queen Victoria, was scheduled to cruise through the Baltic Sea in July 2018. On a 14-night cruise she was to depart Southampton on 6 July and berth in the ports of Hamburg, Copenhagen, Malmo in Sweden, Helsinki, Saint Petersburg, Kiel, and Gothenburg before returning to Southampton. The Queen Victoria had been launched a little over a decade earlier, in 2007, and was the smallest of the Cunard Queen luxury liners. 2. Mr Critchley and Ms Tarbuck were keen to cruise on her. They had arranged through Ms Comito to book this Baltic cruise early in 2018. But despite all they had learned from Ms Comito on 19 June, and about her on 23 June, they flew out of Sydney and spent a few nights in London at the beginning of July before embarking on the Queen Victoria on 6 July and cruising the Baltic for 14 days. 3. On 5 July 2018, one day before embarkation for their planned cruise, Goway made a public statement that it had discovered irregular procedures in the processing of trips via the SFF travel scheme. The statement was headed "Sydney Outbound Retail Travel Division" and was entitled "Statement re 'Family and Friends Clients'". It relevantly stated: "We have recently discovered some highly irregular procedures in the processing of 'Family and Friends' booking files and as a result, we must completely freeze all transactions effective immediately. Under instructions from Goway's lawyer, firmer forensic accountants has been appointed to fully inquire into these matters. That investigation may take some time. This investigation must be done before Goway can make refunds as may be required to its clients. Once we have all the facts it may then be necessary to refer the matter to the NSW police for possible criminal prosecution. Certainly, some of the 'Family and Friends' travel bookings appear to have been transacted outside of Goway's normal communication procedures and thus it may be that Goway does not have some of your records on file." 1. Mr Critchley became aware of this Goway announcement through his own independent research on Goway's website. But he does not admit that he received it on the day the Goway announcement was made. He cannot pinpoint the exact date on which he became aware of it. The Court cannot infer on this limited information that this announcement came to his attention before he and Ms Tarbuck departed for the Baltic ports on the Queen Victoria. The Court does not accept that either defendant was aware of this announcement before their embarkation in Southhampton. 2. Mr Critchley deposes that if he had known or suspected that any of Goway's discounted travel services were illegitimate, or involved dishonesty or misconduct by Ms Comito, he would not have booked them. But the Court asked him why he and Ms Tarbuck had proceeded with the Queen Victoria cruise, knowing what they did from the conversation they had with Ms Comito on 19 June. The following exchange resulted: "The Court: But knowing what you did at that stage, and having lost, as you said, lost confidence completely in Lisa after the 19 June Russia conversation, why didn't you cancel the Queen Victoria cruise and say that you wouldn't go on it, because you were, in effect, enjoying the benefit of something which you knew was illegitimate? Mr Critchley: We - the tickets had been issued. We did go on it because at that stage it was all a grey area, 19 June Lisa's words were, 'Don't worry, that's a mix-up about this charity, there's someone else, and I'm on a plane tomorrow to come back and fix it.' So by the time we left Australia it was still - we're not sure where everything was. The Court: But Mr Maroya, for example, might suggest to you that that in the three-week period between 19 June and 6 July that you must have known that it was too good to be true, and you still took the benefit of it? Mr Critchley: I don't know when Goway put out their announcements about everything, but when we headed out of Australia we - we weren't clear on what's going on. We just went - went along with it. You could argue that, on reflection, but we never thought that at the time. The Court: But Mr Maroya might suggest that a person who is really honestly approaching this would not take that benefit but would hand it back? Mr Critchley: The other way to - you're right, your Honour. The other side to that is that we had a look at travel we'd paid for in advance of $60,000 that we've never used. We've never claimed for it. It's separate to what we've been actioned against, and at that stage we didn't know any answers, no answers were coming out from anyone from Goway. And we wrote to Mr Hodge. He'd never responded to anything. So did Mr Turner. And we were booked out there, and we've - at that stage we just need to get out and go." 1. None of Mr Critchley's responses are a compelling answer to the inference that he must have appreciated by no later than 19 June 2018, Ms Comito was dishonestly running SFF as an unauthorised operation within Goway and that therefore to take advantage of any tickets purchased through their SFF platinum travel passes was to do so (a) by dealing with her, not with Goway, and (b) that Goway was probably unaware of what benefits she was providing to them or how she was doing so, and (c) that Goway was probably going to be financially disadvantaged as a result. 2. Each of the reasons Mr Critchley gives in the passage of his evidence above for proceeding with the cruise does not withstand close analysis. Those excuses were in summary: the tickets had already issued; it was all a "grey" area and was uncertain; they never thought about it at the time; they had paid for the travel in advance and were booked to go; and no clear answers were coming to their inquiries from Goway. 3. As to the tickets being already issued, this was nothing more than a statement of the obvious that they had already received a benefit from Goway. But the tickets had been issued at such a heavily discounted price to them that their issuance reinforced the conclusion that Ms Comito was running an unauthorised operation which was not part of Goway's business. It is not an explanation of why the tickets could not have been returned shortly after 19 June and before the defendants left Sydney. Goway may at least have had an opportunity to resell them at that point. 4. As to it being a "grey area" and uncertain, the 19 June 2018 conversation had displaced any uncertainty. It was clear to Mr Critchley from 23 June that Ms Comito was dishonestly running an unauthorised operation of her own using Goway's resources which was being investigated by Mr Atkins. Moreover, neither Mr Critchley or Ms Tarbuck was troubled that Ms Comito had on the one hand promised to come back to Sydney and sort everything out after 19 June but on the other hand she had failed to contact them again. They were not realistically expecting any further contact from her to clear up any uncertainty. Their lack of initiation of any further contact with Ms Comito is itself strong evidence that they knew that she could not sort things out, because she had long been concealing what she was doing from the principals of Goway. 5. Next the Court does not accept that Mr Critchley correctly described his and Ms Tarbuck's then states of mind as "we never thought that [namely, it's too good to be true] at the time". After 19 June it would be hard to shut out thoughts of Mr Critchley's conversation with Ms Comito that day and his subsequent conversation on 23 June. The Court does not accept that they were unconscious of these conversations as they planned to embark on the Queen Victoria. As a result, they must have appreciated that the cruise tickets they had purchased and were about to travel on were indeed "too good to be true" because they had been acquired through Ms Comito's dishonesty. The defendants knew that they were about to enjoy a benefit that resulted from Ms Comito dishonestly concealing from Goway her misuse of its resources. 6. Finally, as to them paying for the travel in advance and being booked to go, this too is nothing more than a statement that they desired to continue taking financial advantage of SFF notwithstanding the loss of confidence they had suffered on 19 June. The financial and personal advantages in proceeding to enjoy this luxury cruise were the incentive that made them continue and embark at Southhampton on 6 July. There is no evidence that they gave the slightest thought to allowing the tickets to be handed back to Goway and resold for the benefit of Goway. But that is what an honest person in their position and with their knowledge would have done. 7. The lack of clarity from Goway in the absence of any further conversations with Ms Comito, should also have confirmed in their minds: that Ms Comito was running an unauthorised operation through SFF and that Goway was still unaware of all Ms Comito had been doing with SFF. 8. The defendants' conduct at this late time in the narrative has broader implications for their whole case. It says something about them: that they were prepared to brush aside direct knowledge of Ms Comito's actual dishonesty to fly out of Sydney to London to enjoy the substantial benefits of the Queen Victoria's Baltic cruise, without first even checking with Goway whether what they were doing was a misuse of its funds. If they were prepared to ignore such direct knowledge of Ms Comito's dishonesty when it conflicted with their travel enjoyment, it becomes easier for the Court to infer that earlier in time they would have been prepared to brush aside less direct knowledge, where it conflicted with their financial interests. 9. The defendants ultimately properly withdrew a submission that they had purchased this cruise from their own funds for $7,392 and accepted it had been funded by Goway. Mr Critchley says in his affidavit that both the air tickets and the Queen Victoria cruise were covered by the platinum travel pass. So quite apart from the cruise, it is to be wondered why they chose to leave Sydney by air at all believing what Mr Critchley says in his affidavit with the knowledge that they had about Ms Comito. But whether they indeed left Sydney at Goway's expense is somewhat uncertain. Goway's lists of expenditure on account of the defendants' platinum travel passes does not include an amount for the defentants' airfares at this time. 10. The defendants also point to Cunard's cruising terms and conditions which the defendant's submit specify that if they cancelled within 30 days of travel they would lose 100% of the fare they paid. They contend that it would not have been reasonable for them in the circumstances to cancel the cruise. But the Cunard terms appear to be more nuanced than this and may have allowed up to 25% of the fare back if two weeks' notice was given. But there is no evidence that they made any attempt to ascertain what Cunard's terms were at the time and to explore whether handing the tickets back to Goway, an established travel agency, might allow it the opportunity to bargain with Cunard for the tickets to be resold. The Aftermath – June to December 2018 1. When Mr Critchley and Ms Tarbuck returned to Australia in late July 2018, they became aware from correspondence with Goway that it was alleging that Ms Comito had been running the SFF scheme without authority. They then corresponded with the customer service representative of Goway who was dealing with claims arising out of Goway's SFF internal investigation. 2. Ms Tarbuck emailed on 9 August 2018 their claim that the total money they had spent for which they claimed they had not yet been reimbursed in travel. In the email Ms Tarbuck explained their dealings with Ms Comito thus: "All our dealings with Goway have only ever been with Lisa Comito (with regard to family and friends) and her personal mobile and personal email were the only forms of communication. She insisted on this as she said we were under her umbrella of family and friends. We did always think this was strange but received a convoluted explanation whenever we asked. Maree, we have noted all the statements that Goway have set out over the previous weeks (four in total until now). You need to be aware also that Steve Waite (Lisa Comito's husband) is our accountant and completes all our tax returns and has for many years. We are conscious of this potential conflict. He is also the accountant from Bruce Turner add Wynstan." 1. Two matters stand out here. First Ms Tarbuck confesses that she and Mr Critchley did "always think" that using Ms Comito's personal mobile and email "was strange". This shows they had long noticed this peculiar feature of Ms Comito's correspondence. The Court has found that in the early years this alone was not enough to alert even an honest and reasonable person that Ms Comito was running an unauthorised operating within Goway. But combined with the other factors the Court has identified, such as attempts to conceal transactions from Mr Chipps, the defendants must have realised that Ms Comito's use of the Hotmail address was "strange" to the point of being one of several indications that whatever she was doing was not known to Goway's ordinary management hierarchy. 2. Secondly, Ms Tarbuck recognised here in August 2018 that her and her husband's relationship with Mr Waite was a "potential conflict". It was not a conflict of interest. But the defendants nevertheless appreciated that Mr Waite was not an objective judge of his wife's work performance. The defendants are likely to have been conscious of that when they made inquiries of Mr Waite about the unprofessional service that they had been receiving from the SFF unit in Goway. Mr Critchley was always astute enough to view Mr Waite's opinion with a degree of caution for this reason, especially as other evidence mounted against Ms Comito. 3. In June 2018, Ms Comito took stress leave from her employment with Goway. In December 2018, Goway terminated her employment for gross misconduct. Mr Atkins' employment was also terminated. Analysis of Goway's Claims for Relief Analysis of the Plaintiff's Claim 1. Goway seeks to maintain two claims for relief: 1. Unjust enrichment: Goway claims the defendants were unjustly enriched at its expense by taking travel with a value exceeding the amount they paid for it; and, 2. Barnes v Addy recipient claim: Goway seeks to impose liability on the defendants for receiving property transferred to each of them in breach of fiduciary duty, with the defendants having the requisite knowledge the breach. 1. The defendants defend both these claims on the ground that Ms Comito had ostensible authority from Goway to contract on its behalf to provide the travel services that she did to the defendants for the whole of the period in question from September 2013 to July 2018. They contend as a result that there is no room for either remedy to succeed against them. But in the event that either remedy is successful the defendants' field other defences. Restitution 1. A contest on the pleadings emerged in final submissions as to whether Goway could make a claim of unjust enrichment based on alleged mistake. Goway's case was based upon the principle that the receipt of a payment, or a service, which has been made under a fundamental mistake gives rise to a prima facie obligation make restitution in the sense of compensation for the benefit of an unjust enrichment to the person who sustained countervailing detriment: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48. Goway put in its final written submissions that it relied upon the mistake that it sold travel services to the defendants that it thought the defendants had paid for. 2. Relying upon well-known statements of principle that the pleadings must state with sufficient clarity the case to be met (see Banque Commerciale S A (in Liq) v Akhil Holdings Ltd (1990) 169 CLR 279), the defendants protest that this claim was not pleaded in the Amended Statement of Claim ("ASOC") and Goway should not now be permitted to rely upon it. 3. The defendants' submission on this issue must be upheld. The ASOC pleads a case in restitution, but it does not clearly identify mistake as the relevant vitiating factor Goway relies upon, an essential ingredient of the action. At a pre-trial directions hearing on 15 December 2022 the Court discussed the nature of the pleadings with the parties and gave leave to Goway to file the ASOC by 21 December 2022, to present an amended case relying upon Barnes v Addy recipient liability but based on the existing evidence. The defendants resisted this course but in the Court's view there was sufficient time for them to prepare for this claim based upon the same evidence and the trial was ultimately conducted satisfactorily on the ASOC without unfairness to the defendants. 4. Apart from the addition of the Barnes v Addy recipient liability case, the form of the ASOC pleading remained the same. Part of the existing pleading in ASOC [12] gave the impression that the necessary vitiating factor being relied upon to ground the claim for restitution was the plaintiff's provision of travel benefits and services to the defendants between 2013 and 2017 on the basis that Ms Comito had no ostensible authority to contract with the defendants on behalf of Goway. But as the defendants rightly point out, mere lack of ostensible authority is not itself a recognised vitiating factor providing grounds for restitution. 5. Ultimately the Court has not had to consider the alternative case in restitution, because the Court's findings and conclusions in relation to Barnes v Addy recipient liability cover the full period between 2013 and 2018, with the Court upholding the defendants' defence that they contracted with Goway up to 15 March 2015. Thereafter the defendants attract Barnes v Addy recipient liability. 6. But that alternative case in restitution could not have included relief based on Goway's mistake. Picking up the defendants' closing written submissions on this issue, during final oral submissions the Court addressed this question with counsel. Mr Cleary indicated that he had not interpreted the ASOC as raising mistake as a vitiating factor justifying restitution and had it been expressly pleaded then he would have taken different forensic decisions in the proceedings, including in the cross-examination of Mr Atkins. The Court accepts that statement from experienced counsel. It can be accepted that cross-examining Mr Atkins to establish the extent his knowledge of Ms Comito's conduct may have been different had mistake been clearly pleaded. Mistake was mentioned during the opening of the case on behalf of Goway. But that is not a substitute for a clear pleading of a case in mistake. 7. It would cause irremediable prejudice to the defendants if the Court were to consider their potential liability in restitution based upon Goway's mistake in providing travel services and products to the defendants. Such a claim against the defendants is rejected. 8. But the question arises as to what alternative case in restitution is pleaded. Total failure of consideration as a ground for restitution is not mentioned in the pleadings. The only potential ground of restitution that is clearly identified is in paragraph 17(ii) that "it would be unconscionable for the first and second defendants to retain the benefit thereof". But once the Barnes v Addy recipient liability case was pleaded it is difficult to see any room for this ground of restitution to operate in the alternative in any event. 9. The Court's findings mean there is no need to consider the operation of remedies in restitution or the defence of change of position against those remedies. By reason of the analysis below, until 15 March 2015 Goway is bound by the conduct of Ms Comito as its agent. And thereafter Goway pursues Barnes v Addy recipient liability against the defendants. 10. In answer to Goway's restitution and Barnes v Addy recipient liability claims the defendants plead that they were bona fide purchasers for value of all the travel products and services that they received from Goway. They contend that Ms Comito had ostensible authority to act on behalf of Goway to bind Goway in each of those purchases. In the alternative they plead that they did not receive all the travel products and services alleged and that Ms Fryer, Ms Storey and their families received a substantial portion of them. It is convenient to deal in this analysis first with the issue of ostensible authority, followed by Barnes v Addy recipient liability claim. 11. In answer to Goway's restitution and Barnes v Addy recipient liability claims the defendants plead that they were bona fide purchasers for value of all the travel products and services that they received from Goway. They contend that Ms Comito had ostensible authority to act on behalf of Goway to bind Goway in each of those purchases. In the alternative they plead that they did not receive all the travel products and services alleged and that Ms Fryer, Ms Storey and their families received a substantial portion of them. It is convenient to deal in this analysis first with the issue of ostensible authority, followed by Barnes v Addy recipient liability claim. Did Ms Comito Have Ostensible Authority on Behalf of Goway? 1. The classic statement of the principle of ostensible authority is that of Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, at 503: "An 'apparent' or 'ostensible' authority … is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract." 1. The High Court of Australia has applied this statement in many cases including Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49 and Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 ("Northside") and Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 ("Pacific Carriers"). 2. In a business context involving a corporate organisation Pacific Carriers at [37] the High Court explained that the representation must come from the company itself and the companies representational conduct "commonly takes the form of setting up of an organisational structure consistent with the company's constitution… [presenting] to outsiders a complex of appearance as to authority." 3. Because the doctrine of holding out is a form estoppel it will prevent the principal from claiming not to be bound by the representation that the agent had the necessary authority. But the estoppel will only be enlivened where the third-party could reasonably rely and did rely upon the representation that the agent had the necessary authority: Hoare v McCarthy (1916) 22 CLR 296, at 305-306 and Egyptian International Foreign Trade v Soplex Whole Supplies Ltd (The 'Raffaella') [1985] 2 Lloyd's Rep 36 at 41. 4. If the circumstances are sufficient to put the party dealing with the company on inquiry as to whether the authority exists, and no inquiry is made, or the company fails to satisfy the inquiry, then the party dealing with the company cannot assume the purported agents have that authority: Northside at 180, Smith v Peter & Diana Hubbard Pty Ltd [2006] NSWCA 109 and Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246, per Slade LJ at 284. 5. Relying upon the analysis of Emmett AJA in Wilhemsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32 at [205] Goway submits that the very nature of the transactions in which the defendants were involved and the circumstances in which the travel was offered and purchased was such that the defendant should have been on inquiry. 6. Goway also placed reliance upon the decision of Hodgson CJ in Eq in Orbit Travel Services Pty Ltd v Trustees - Travel Compensation Fund & Ors (unreported, 24 March 1998) ("Orbit Travel"). An appeal from Hodgson CJ in Eq to the Court of Appeal was brought in that matter, raising issues other than the authority question but the appeal was dismissed: Orbit Travel Services v Travel - Compensation Fund [1999] NSWCA 63. Goway says that the circumstances of Orbit Travel bear strong similarities to those in the present case and that the application of the principles of ostensible authority in that case can readily be transferred to the facts of this case. 7. It is understandable that Goway relies upon Orbit Travel, as it concerns a travel agency employee selling airline tickets at substantially discounted prices to third parties in circumstances that led to a finding that she did not have ostensible authority from the travel agency to do so. But the circumstances in which that occurred in Orbit Travel are sufficiently different that it would be unwise to seek to draw too much from Orbit Travel for this case. It was determined in a pre-email in era where the meetings between the employee and the customers occurred away from the workplace. The scheme in Orbit Travel involved overcharging some customers well above market prices for the products in question and charging others well below market prices. The travel agency in in Orbit Travel believed the agent was selling all the products at market prices. Nevertheless, there were some familiar themes of the irregular conduct by the agent in Orbit Travel: exceptionally low prices that were not publicly advertised, clients aware of the difference between market value and the prices being offered, and delay between purchase of the tickets and travelling. The Court prefers to look to general principle for analysis here because the nuances of the circumstances of each case can be very different. Ostensible Authority - Consideration 1. The defendants are correct that Goway made many representations that Ms Comito had the necessary authority on its behalf to bind Goway when providing travel products and services to the defendants and their family and friends through the SFF scheme. This was the content of the authority Goway represented that she had. 2. The Court accepts the defendants' submissions which identify the conduct of Goway constituting these representations as including at least the following. They include Ms Comito's email to Ms Tarbuck of 30 May 2014 annexing the staff travel procedures with the Goway logo and the title "Retail Manager Staff Travel" on each document. Whilst there were odd features of this document which the Court has highlighted in the factual narrative, Goway armed Ms Comito with the position and the resources to send out documents such as this. The defendants submitted that Mr Critchley was not cross-examined to suggest that this document was not legitimate or was a forgery. But that would not necessarily be proven through Mr Critchley. 3. In their Schedule of Travel with their final submissions, the defendants have comprehensively and helpfully gathered all the vouchers, invoices, paper tickets, e-Tickets and itinerary documents and receipts that they each received from Ms Comito from late 2013 to early 2018. This mass of material shows that Ms Comito had been placed in a position to use and was using Goway's insignia and resources to represent herself as arranging and effecting travel for the defendants on behalf of Goway. 4. And the defendants' bank statements show that payments to Goway from the end of 2013 to early 2018 were being accepted by Goway. And Goway was organising and supplying travel apparently in consequence of after those payments being made. 5. Other factors reaffirmed the implied representations of Ms Comito's necessary authority. Ms Comito was permitted physically to work as an employee at Goway's premises and interacted with its other employees and frequently spoke about her work with the defendants there. She was given formal titles such as retail manager and operations manager which gave her ostensible authority to deal with more complex travel booking transactions such as the ones involved in these proceedings. 6. Moreover, Mr Atkins allowed Ms Comito to set up and operate the SFF scheme which he admitted she did without proper supervision of her management of the scheme. The evidence shows that he grossly failed to supervise her, allowing her to misuse the scheme which he knew included the selling of 'charity' tickets and the using of Goway's travel booking system, Tourplan. Although none of what Mr Atkins did to arm Ms Comito with Goway's badges of authority gave her actual authority to deal on its behalf, what he did nevertheless furthered Goway's representations that she had its ostensible authority to bind Goway when providing travel products and services to the defendants and their family and friends through the SFF scheme. 7. Ms Comito in many respects behaved and presented herself from her position of employment consistently with her ostensible authority as a loyal employee of Goway. She presented as working diligently for Goway and often complained about making up for persistent staffing and organisational deficiencies within Goway. And Ms Comito did not mar the impression made on the defendants of her continuing to act in Goway's best interests: she never asked them for any personal reward for the benefits that she was distributing through the SFF scheme. 8. The defendants' submissions are correct that Goway held Ms Comito out as its agent between 2013 and 2018. During the whole of the period in question, right up to July 2018 it did not strip her of authority to deal with the defendants. Goway's representation of her authority had a powerful effect upon the defendants at the beginning of this period. But as the Court's narrative of findings shows this holding out steadily weakened even from 2014. It suffered a serious setback in March 2015 and then progressively declined through 2016 to 2018, overcome by the increasingly inconsistent and inexplicable conduct of Ms Comito detailed in the narrative of findings. 9. But it is not necessary for the Court to find when and if that representation of ostensible authority disappeared entirely. The strength of the representation declines in equal measure with the Court's increasing findings that it was not reasonable for the defendants to rely upon the representation of ostensible authority at any time after 15 March 2015. If it were necessary to place a date on when Ms Comito's own conduct so contradicted the implied representations of ostensible authority from Goway as to neutralise them entirely as a representation, leaving aside issues of the reasonableness of the defendants' reliance, the Court would place it at 1 January 2018. The Court selects this date for much the same reasons as are discussed below for choosing that date as representing a step up in the defendants' knowledge for the purposes of Barnes v Addy recipient liability. 10. But the decisive issue here is not the persistence of Goway's implied representation of ostensible authority but whether it was reasonable for the defendants to rely upon that representation and for how long. As the authorities make clear the test is objective. In the Court's view it was not reasonable for the defendants to rely upon Goway's representations of Ms Comito's authority after 15 March 2015, which the Court describes as a major inflection point in the narrative of findings. Ms Comito's email of 9 March 2015 purports to forward an offer from staff travel to Ms Tarbuck of a "complimentary trip at another time as this was a staff error". This spontaneous generosity was made in addition to Goway offering to "pay for these flights". As the Court's earlier analysis showed, this was a disproportionate response to the problem that had arisen for Ms Fryer. It should have caused an honest and reasonable person with the knowledge and experience of each of Mr Critchley and Ms Tarbuck to realise that without further inquiry this was unlikely to be an authorised part of Goway's business operation. Less than three months later, on 2 June 2015 Ms Tarbuck misled Mr Chipps confirming that the defendants appreciated that Ms Comito was unlikely to be acting in her employer's interests. 11. The Court's narrative of findings draws regular conclusions after this time that an honest and reasonable person in each of the defendants' positions would not have relied upon Ms Comito as acting in an authorised fashion within Goway's operations without further inquiry. Those findings only become stronger as time goes by after 15 March 2015. n the Court's view it was not reasonable for the defendants to rely upon Goway's representations of Ms Comito's ostensible authority at any time after that date. It is not necessary to repeat here all the Court's findings in the narrative after 15 March 2015 contrasting the defendants' conduct with that of honest and reasonable people in their circumstances. But each of these findings should be taken as a conclusion that it was unreasonable for the defendants then to rely without further inquiry upon any implied representation that Ms Comito had ostensible authority to act on behalf of and bind Goway when providing travel products scheme. 12. This conclusion means that Goway is bound by Ms Comito's dealings on its behalf up to 15 March 2015 but not thereafter. This is not the primary position put by either party. The Court foreshadowed to the parties several times during the hearing that it may well consider that the point at which Ms Comito might be said to be an agent able to bind Goway may not be the position contended for by either party. That is what has happened, even though neither party took up with any vigour the Court's express invitation to put submissions about that possible outcome. Mr Maroya put in the alternative that the defendants' liability might arise when the Platinum travel passes were accepted in November 2015. Mr Cleary was only prepared to concede the possibility of liability of his clients after 19 June 2018. Both these positions were carefully taken but understandably remained undeveloped. The Barnes v Addy Knowing Recipient Claim 1. The first limb of the rule in Barnes v Addy imposes liability on persons who received property transferred in breach of fiduciary duty, where the persons receiving the property have the requisite knowledge of the breach: Turner v O'Bryan–Turner (2022) 107 NSWLR 171; [2022] NSWCA 23 ("Turner") at [92]. To attract Barnes v Addy recipient liability the Court must consider whether (a) the third-party received the property that was transferred, in breach of a fiduciary duty; and (b) the third party had the requisite knowledge (not merely constructive notice) of that breach of fiduciary duty: Turner at [92]. 2. The issue of receipt is dealt with separately below. There is no issue that the defendants received some of the travel products and services Ms Comito supplied through the SFF scheme. The defendants contest that they qualify as recipients attracting Barnes v Addy recipient liability in respect of the travel products and services enjoyed by Ms Fryer and Ms Storey and their families. But in respect of the travel products and services they admit receiving and consuming themselves, the only issue is whether they held the requisite knowledge at the time of their receipt. 3. What level of knowledge is necessary? In Farah Constructions Pty Ltd v Say-Dee Pty Limited (2007) 230 CLR 89; [2007] HCA 22 ("Say-Dee"), at [171]-[178], the High Court adopted for Barnes v Addy second limb or accessorial liability the five-category classification of knowledge identified by Peter Gibson J in Baden v Société Générale pour Favoriser le Developpement du Commerce et de l'Industrie en France [1992] 4 All ER 161 ("Baden") at 574-87, which is as follows: 1. Actual knowledge; 2. Wilfully shutting one's eyes to the obvious; 3. Wilfully and recklessly failing to make such enquiries as an honest and reasonable person would make; 4. Knowledge of circumstances that would indicate the facts to an honest and reasonable person; and 5. Knowledge of circumstances that would put an honest and reasonable person on enquiry. 1. After Say-Dee courts have held that Baden categories (1) – (4), but not category (5) are sufficient to attract Barnes v Addy recipient liability: see Kalls Enterprises Pty Ltd v Baloglow [2007] NSWCA 191, Grimaldi v Chameleon Mining NL & Anor (No. 2) (2012) 200 FCR 296 at [251] – [286] ("Grimaldi"), and Moriah War Memorial College Association v Augustin Robert Nosti [2020] NSWSC 942 ("Moriah") at [91]. 2. Baden categories (2) and (3) are often classified in the authorities as species of actual knowledge, and categories (4) and (5) as forms of constructive knowledge. Proof of category (4) and (5) knowledge may be sufficient to allow a court to infer, in the absence of proof to the contrary, that a person had one of the subjective states of mind referred to in Baden categories (1), (2) or (3): Moriah at [92]. In Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) [2008] FCA 1920 ("Imobilari") (at [27]) Finkelstein J explained the knowledge requirement of Baden category as: "…knowledge of facts that would put an honest and reasonable person on notice (but not merely inquiry) of a real and not remote risk that the transfer was in breach of trust or fiduciary duty or involved the misapplication of trust property." 1. The Victorian Court of Appeal cited Imobilari with approval in Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 at [118]. 2. The defendants submitted that the test for the Baden categories (3) and (4) is a subjective test rather than an objective test, relying upon statements of the Court of Appeal in Turner (at [147]-[148]). The defendants' submission emphasised the language of the Court in Turner, which applied the test of what "an honest and reasonable person in their position" (emphasis added) would do. But emphasising that the test relates to an honest and reasonable person "in their position", does not make the test subjective. All that means is that the Court should select an appropriately comparable honest and reasonable person for conducting the objective test: that is someone with the qualifications and experience of the person under consideration. The Court has done this in the factual narrative, commonly referring to Mr Critchley's and Ms Tarbuck's business background for example and does so here. Barnes v Addy Consideration 1. The defendants contended in their final submissions that Goway's case only advances vague and scant evidence about Ms Comito's breach of her fiduciary duty to Goway or the nature of her "fraudulent scheme". It is true that there is little evidence in Goway's case that throws light upon what Ms Comito was doing in the years in question. Her motivation remains a mystery. The criminal charges against her have only been the subject of oblique reference. 2. But the defendants' submissions on this subject set the bar too high for Barnes v Addy recipient liability. It is not necessary for Goway to prove Ms Comito's "fraudulent scheme". That would be appropriate for Barnes v Addy second limb accessorial liability. It is sufficient for present purposes for Goway to prove that Ms Comito breached her fiduciary duty as an employee to Goway before going on to establish that the defendants had the requisite knowledge of that breach of fiduciary duty. 3. Goway has established that at least from 15 March 2015 Ms Comito had neither actual authority (the lack of which is admitted) nor ostensible authority (which the Court has found did not exist after that date) to provide the travel products and services she supplied to the defendants during this period under colour of the SFF scheme. Her supply of travel products and services to the defendants using Goway's resources and at Goway's expense and without authority from Goway is a breach of her pleaded (ASOC, 7A) fiduciary duty as its employee to Goway. That duty is to avoid conflicts of duty or interest with Goway and not to use her fiduciary position as an employee of Goway to effect an advantage for herself or for third parties. This inference is reinforced by the Court's findings as to the investigations that Mr Atkins undertook to find out how Ms Comito was misusing her role in administering the SFF scheme and his conversations with Mr Critchley in June 2018. 4. It is not necessary for Goway to go further and try and prove her collateral purpose or to understand the obscurities of the scheme in which she was engaged. It is sufficient for Goway to prove, as it has, that she was in substance giving away to third parties her employer's travel product inventory without authority. The evidence of Mr James Forno, a contractor engaged by Goway, proves the cost to Goway of the travel products and services that Goway provided to Ms Comito. 5. Most of the factors pleaded and particularised as showing breach by her of fiduciary duty (see the particulars to ASOC paragraph 13A) are made out in varying degrees. But as the Court's findings and reasoning show, principal among these factors is the exceptionally low price of the travel packages offered and the continuing grossly improvident nature of the offers made by Ms Comito to the defendants. 6. The defendants' knowledge about Ms Comito and Goway varied between September 2013 and July 2018, a period of just under five years. The parties principally invited the Court to consider the defendants' liability on an all or nothing basis. But this is unrealistic. The defendants constantly acquired fresh knowledge about Ms Comito's dealings over that period. The Court has undertaken a detailed analysis in the factual narrative from which conclusions can now be drawn about, if and when, the defendants gained knowledge which would attract Barnes v Addy liability. 7. Based on the findings in the factual narrative, the Court concludes that the requirements of Baden category (4) knowledge were established against the defendants from 15 March 2015. Baden category (4) is the threshold category of knowledge the plaintiff must make out to fix the defendants with Barnes v Addy first limb liability. Once that threshold was passed no conduct of the defendants, Ms Comito or Goway ever returned the defendants' knowledge below the Baden category (4) threshold. Instead, the defendants' constantly accumulating knowledge after mid-March 2015 continued to put an honest and reasonable person in each of their positions on notice of a real and not remote risk that Ms Comito was breaching her fiduciary duty as an employee of Goway continuing to supply Goway's travel products and services through the SFF scheme. 8. The Court's factual narrative reveals that not only did the defendants' knowledge reach Baden category (4) level but that at various times after mid-March 2015 it would have satisfied more demanding Baden categories of knowledge. The times that these various levels of knowledge were acquired can be demonstrated from the findings in the factual narrative. Goway's submissions pressed the Court to make findings of knowledge above Baden category (4) and the ASOC, paragraph [13C] alleged that they had such higher category knowledge. Moreover, it is a useful tool of analysis to examine the defendants' accumulating knowledge against the standards of the various categories from Baden category (4) upwards. 9. Baden Category (4) – 15 March 2015. Ms Comito's email of 9 March 2015 purports to forward an offer from staff travel to Ms Tarbuck of a "complimentary trip at another time as this was a staff error". This spontaneous generosity was on top of Goway offering to "pay for these flights". As the Court's earlier analysis showed, this was a disproportionate response to the problem that had arisen for Ms Fryer. It should in the circumstances have caused an honest and reasonable person with the knowledge of these defendants to realise that this conduct was unlikely to be an authorised part of Goway's business model. 10. It followed that it was likely that the benefits then being transferred to them by Ms Comito were unauthorised and there was real and not remote risk being applied by her in breach of her fiduciary duties to her employer. The response of an honest and reasonable person in this position would have been at this point, facing increasing levels of Goway generosity indicating such a breach of duty, to ask how this was possible. In the absence of a satisfactory answer an honest and reasonable person would have declined to be involved further. As the Court's findings show this was not asked by the defendants, who were strongly incentivised by the benefits they were receiving not to ask such obvious questions. 11. And as the Court's findings demonstrate, this level of Baden category (4) knowledge was confirmed less than three months later, on 2 June 2015, when Ms Tarbuck misled Mr Chipps. Her conduct in this respect is not consistent with the defendants believing that Ms Comito was acting in her employer's interests. 12. From that time on, the case supporting the defendants having Baden category (4) knowledge only strengthens. In November 2015, another strong inflection point occurs, giving weight to the finding of Baden category (4) knowledge, when the platinum travel passes were offered and accepted. These passes were so uncommercial that they could not be accepted by honest and reasonable people in the position of the defendants, without assurance after inquiry that Ms Comito was providing benefits that were consistent with the commercial objectives of Goway. Otherwise, the prima facie indication to the defendants was that the benefits were an unauthorised application of Goway's funds in breach of Ms Comito's fiduciary duties to Goway. 13. What occurred then after November 2015 further strengthened this inference, as the defendants enjoyed the accumulating financial benefits from the platinum travel passes. Indeed, they were so valuable that the defendants were keeping a spreadsheet of the benefits they had enjoyed. 14. In the lengthy factual narrative earlier in these reasons, from time to time slightly different and looser language is inevitably used by the Court to indicate what knowledge the defendants held from 15 March 2015 from their experiences of Ms Comito's conduct. But the test described in the language in this section of these reasons is the test applied by the Court to assess whether the defendants had the requisite Baden category (4) knowledge of Ms Comito's breaches of fiduciary duty. 15. Baden Category (3) – 1 June 2017. The next major inflection point in the defendants' state of knowledge occurred in May 2017, when their friend, Stephen (who had the authority of direct experience to speak on the subject) emphatically told them on 26 May 2017, if they had not realised it before, that whatever Ms Comito was offering, it was not a staff travel scheme of the kind offered by airlines but was some dysfunctional variant that Stephen could not understand or rationalise. That advice, together with the unbusinesslike inefficiencies that Ms Comito had begun to present more frequently to that point and Goway's obviously accumulating SFF losses on its dealings with the defendants, directly confronted the defendants with the likelihood Ms Comito was running an unauthorised staff travel scheme within Goway. The call for further inquiries at this point was so strong that not to make them was a wilful and reckless departure from the conduct of what an honest and responsible person would do. Such a person would seek to understand from Ms Comito's managers how they could be receiving these benefits. Their experiences during the use of their European travel between June and August 2017 further strengthened the need for them to make such inquiry. 16. Baden Category (2) – 1 January 2018. After the combined experience of both Ms Fryer and Ms Storey in the second half of 2017, together with their other knowledge the Court concludes that the defendants were wilfully shutting their eyes to the obvious. By 1 January 2018, Ms Storey was, with justification, calling Ms Comito "a liar" and communicating that opinion to the defendants. The defendants understood why Ms Storey was calling Ms Comito a liar. They must have appreciated she was justified in so doing. Not to go to Goway's senior management from this point, meant the defendants had to dismiss the expressions of well-founded opinions that Ms Comito was dishonest. In the Court's view from this time on they were wilfully shutting their eyes to the obvious and had crossed the threshold for Baden category (2) knowledge. 17. Baden Category (1) – 23 June 2018. Probably by 19 June 2018, in the phone call with Ms Comito, and certainly by no later than 23 June 2018, Mr Critchley (and therefore Ms Tarbuck who he would have fully informed about these conversations in which she had a great interest) both had no confidence whatsoever in Ms Comito. They knew that she was under investigation for running an apparently unauthorised and probably dishonest staff travel scheme using the resources of Goway without its knowledge. Ms Comito had been lying to Mr Critchley and his business associates about the funding and structure of that scheme. 18. By then the defendants had actual knowledge that any benefits that they were then receiving, including the Queen Victoria cruise had been applied in breach of her fiduciary duty as an employee to Goway. For the defendants to enjoy, without consulting directly with Goway, any benefits from staff travel after 19 June 2018 was not the conduct of honest and reasonable people in their position. The Defence of Receipt by Third Parties 1. Finally, the defendants contend in answer to the Barnes v Addy recipient claim that they did not "receive" any of the travel products and services that were consumed by Ms Fryer and Ms Storey. The narrative of findings sets out the various circumstances in which Ms Fryer and Ms Storey took the benefit of discounted business class airfares, domestic airfares or travel passes. The relative amounts consumed by the defendants and Mr Critchley's daughters are set out at the beginning of these reasons. 2. Those findings show that for all their airline travel and accommodation, Goway issued air tickets and accommodation vouchers directly to each of Mr Critchley's daughters and they used them to travel or to be accommodated. The Court is not aware an example where airline tickets were issued in Mr Critchley's name and used by either of his daughters. And the same applies in relation to accommodation vouchers: Goway issued them directly to Mr Critchley's daughters, who then consumed them by flying or being accommodated. 3. There is some authority on this subject. In Say-Dee, a case involving the liability of members of a family, the High Court emphasised the need to prove receipt against each individual family member for them to be made liable under the first limb of Barnes v Addy. The Court emphasised (see [111], [116] and [119]) actual transfer to the claimed recipient, rather than notional receipt by someone on behalf of the claimed recipient. 4. In Turner (at [92]-[93]) the Court of Appeal described the receipt requirements of a Barnes v Addy recipient claim as follows: "[92] Liability under either limb of Barnes v Addy is a personal liability although proprietary remedies may be available. A party liable under the first limb, for having received and been chargeable with property transferred in breach of fiduciary duty with requisite knowledge of the breach, may be liable to pay compensation even if he or she no longer holds the property, just as an accessory liable under the second limb of Barnes v Addy may be liable to pay compensation. A third party's personal liability under the first limb of Barnes v Addy should not depend upon the mechanism by which the property was transferred, but rather upon whether the third party received property that was trust property, or was transferred in breach of fiduciary duty, or was traceable to property so transferred, and, if so, whether the third party had the requisite knowledge (not merely constructive notice) of the breach of trust or breach of fiduciary duty so as to warrant the imposition of personal liability arising from the receipt. [93] In El Ajou v Dollar Land Holdings plc (1994) 2 All ER 685, Hoffman LJ said, in relation to the requirements of liability for knowing receipt, "for this purpose the plaintiff must show, first, a disposal of his assets in breach of fiduciary duty. Secondly, the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff; and thirdly, knowledge on the part of the defendant that the assets he received are traceable to a breach of fiduciary duty" (at 700)." 1. The reference to El Ajou v Dollar Land Holdings Plc & Anor [1994] 2 All ER 685 in Turner, makes clear that the receipt must be "beneficial" rather than nominal. The defendants argue with some force that the only beneficial receipt of the travel products and services consumed by Mr Critchley's daughters was their receipt not his. This argument is persuasive. It is difficult to see how Mr Critchley or Ms Tarbuck received many of those services beneficially. 2. Mr Maroya answers this argument by emphasising that the defendants have taken a wilfully narrow construction of the word "received" and that the defendants understood the tickets purchased by them could be used by third parties, being nominated family, and that is what they chose to do. 3. A Goway counter argument also arises out of Court's findings in the narrative that on several occasions Mr Critchley dealt directly with Ms Comito on his daughters' behalf and paid Goway for aspects of his daughters' travel and was later reimbursed by them, for example with the platinum travel passes. 4. But it is important not to import into the reasoning at this point the idea that Mr Critchley made a contract with Goway on behalf of his daughters to purchase platinum travel passes. As a result of the Court's conclusions about Ms Comito's ostensible authority, there was no contract ever made on or after November 2015 between Goway and Mr Critchley for the supply of platinum travel passes. There was only a payment by Mr Critchley to Goway and then Goway supplied travel products and services, without contract, directly to Ms Fryer and Ms Storey who consumed them. They were the sole recipients of those services directly from Goway. 5. But there are several cases mainly prior to 15 March 2015 with respect to the discounted business class airfares, for example, where Mr Critchley acquired and paid for tickets in what the Court has found were binding contracts with Ms Comito. After making binding contracts to acquire the discounted tickets Mr Critchley requested the tickets (and accommodation where relevant) be gifted onto his daughters and issued in their names. In so doing he was nevertheless disposing of his beneficial interest in what he had acquired, by a method of his own choice – namely by gifting them to his daughters. It does not matter whether he was the ultimate consumer of them or not. In those circumstances he was still a recipient because he exercised the powers of a beneficial owner over them as his own property. But the problem for Goway's claim in this earlier period before 15 March 2015, is that although he may have received the tickets he did not receive them with the requisite knowledge, if they were issued before 15 March 2015. 6. It would appear therefore that there is some room for a finding that the defendants have Barnes v Addy recipient liability for some of the Goway travel products and services consumed by Mr Critchley's daughters and their families. This would be for discounted business class airfares or like products that were acquired before 15 March 2015 but were only actually only issued, received, and disposed of by Mr Critchley to his daughters after that date. 7. The parties will need to examine this area of the defendants' Barnes v Addy recipient liability for the cost of travel products and services consumed by Mr Critchley's daughters. This can be done whilst the parties are undertaking the necessary quantum calculations based upon the Court's findings. The parties may wish to agree upon a timetable for this and submit it to chambers. Conclusion and Orders 1. Goway has submitted that whatever the outcome of these proceedings it wishes to contend that this proceeding should have been commenced in the District Court and that, although successful, Goway should not recover all its costs. The Court will hear submissions on this subject and any other application for a special costs order at the same time as the parties advance remaining submissions as to quantum. 2. Accordingly, the Court makes the following orders and directions: 1. Declare that in the circumstances that have occurred, 1. Ms Lisa Comito did not have, at any time after 15 March 2015, ostensible authority to act on behalf of the plaintiff to make binding travel and ancillary services bookings or contracts through a Staff, Family and Friends travel scheme ("the SFF scheme") that she was purporting to operate on behalf of the plaintiff, and 2. the defendants were not entitled, after 15 March 2015, to rely upon any ostensible authority of the kind described in sub-paragraph (a). 1. Order the defendants to pay and restore to the plaintiff the value of all travel and ancillary services received by them at the expense of the plaintiff after 15 March 2015, less any amounts that it may be determined have been paid by the defendants to the plaintiff on account of travel and ancillary services received by them from the plaintiff after 15 March 2015. 2. Order that the account be taken of the amount ordered pursuant to (2). 3. Note that ordinarily costs should follow the event in these proceedings and that the Court would ordinarily therefore order that the defendants pay the plaintiff's costs of the proceedings. 4. The Court will order in accordance with (4) in the absence of any application for a special costs order by either party, which should be filed by motion by 25 January 2024 and which may be made returnable on 2 February 2024 at 9:30 AM. 5. The proceedings are adjourned for mention to 2 February 2024 at 9:30 AM to give directions in relation to the holding of the account ordered in (3) and any issues of costs. 6. Grant liberty to apply. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 January 2024