New South Wales Supreme Court CITATION : Vitarni Pty Ltd and Others v Macquarie Bank Ltd [2002] NSWSC 978 FILE NUMBER(S) : SC 50115/01 HEARING DATE(S) : 14/10/02,15/10/02,16/10/02,17/10/02 JUDGMENT DATE : 6 November 2002 Vitarni Pty Limited - 1st Plaintiff Michael Angel Sanchez - 2nd Plainitff PARTIES : Vantian Investments Pty Ltd - 3rd Plaintiff Lynette Enid Sanchez - 4th Plaintiff Padroth Pty Limited - 5th Plaintiff Macquarie Bank Limited - Defendant JUDGMENT OF : Gzell J COUNSEL : Mr R G Forster SC with Mr N J Kidd - Plaintiffs Mr P R Whitford - Defendant SOLICITORS : Selby Kent Levitt Attorneys and Consultants Clayton Utz CATCHWORDS : TRADE PRACTICES - Consumer Protection - No Misleading or Deceptive Conduct - No Unconscionable Conduct - EQUITY - Fiduciary Obligations - If a Fiduciary Relationship no Breach of Duty - CONTRACT - Construction and Interpretation of Contracts - Best Efforts Clause - EVIDENCE - Admissibility and Relevancy - Rejection of Expert Report - No Criteria for Evaluation - JURISDICTION, PRACTICE AND PROCEDURE - Courses of Evidence, Statements and Addresses - Refusal of Leave to Re-open Case - DAMAGES - Damages Sustained by Shareholders as Mere Reflection of Losses Sustained by Company Irrecoverable LEGISLATION CITED : Trade Practices Act 1974 (Cth) Australian Securities and Investments Commission Act 2001 (Cth) Jones v Dunkel (1959) 101 CLR 298 Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at 141-143 Cubillo v Commonwealth (2000) 103 FCR 1 at 120 Commercial Union Assurance Co of Australia v Ferrom Pty Ltd (1991) 22 NSWLR 389 Cafe v Australian Portland Cement Pty Ltd (1965) 83 WN (Pt 1) (NSW) 280 at 286-287 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 46 at 64 CASES CITED : Blomley v Ryan (1956) 99 CLR 362 at 405 Commercial Bank of Australia v Amadio (1982-1983) 151 CLR 447 at 461, 474 Australian Competition and Consumer Commission v CG Berbatis Holding Pty Ltd (No 2) (1999) 96 FCR 491 at 502-504 Louth v Diprose (1992) 175 CLR 621 at 637 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Gould v Vaggelas (1983-1985) 157 CLR 215 Johnson v Gore Wood & Co [2002] 2 AC 1 DECISION : Judgment for the Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST GZELL J WDNESDAY 6 NOVEMBER 2002 50115/01 VITARNI PTY LTD AND OTHERS v MACQUARIE BANK LIMITED JUDGMENT 1 The plaintiffs were involved in a joint venture for the development of land at Port Melbourne known as the HMAS Lonsdale Site ("Land"). The defendant, Macquarie Bank Ltd ("Macquarie"), became the exclusive finance arranger to the joint venturers. Macquarie agreed to use its best efforts to arrange mezzanine finance facilities for the joint venturers on the basis that the plaintiffs retained no interest in the development. The plaintiffs alleged that, in so doing, Macquarie made misrepresentations and acted unconscionably in breach of the Trade Practices Act 1974 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth) or was in breach of fiduciary duty and the plaintiffs were entitled to damages. 2 In January 1998, Oceanview Properties Pty Ltd ("OVP"), the first cross-defendant, entered into a contract to purchase the Land. OVP was then owned and controlled by interests associated with Michael Angel Sanchez, the second plaintiff, a Sydney property developer. 3 In February 1998, Mr Sanchez entered into a joint venture agreement with Epaminondas Katsalidis, a Melbourne based architect and developer. Vantian Investments Pty Ltd ("Vantian"), the third plaintiff, became the owner of 50% of the shares in OVP. Lynette Enid Sanchez, the fourth plaintiff, was the sole shareholder and director of Vantian. Padroth Pty Ltd ("Padroth"), the fifth plaintiff, transferred its 50% shareholding in OVP to Allegro Technologies Pty Ltd ("Allegro"), a company wholly owned by Mr Katsalidis. Mr Katsalidis and a Sydney investor, Samuel William Ballas, were its directors. 4 A number of agreements were executed in December 1998. A joint venture was established to develop the Land. The joint venturers were Vitarni Pty Ltd ("Vitarni"), the first plaintiff, a company owned equally by Mr and Mrs Sanchez, Republic Tower Pty Ltd ("Republic"), a company owned by Mr Katsalidis and Arnicon Pty Ltd ("Arnicon"), a company owned by interests associated with Mr Ballas. Vitarni had a 50% interest in the joint venture and Republic and Arnicon each held 25% interests. The joint venturers appointed One Beach Street Pty Ltd ("OBS"), the second cross-defendant, as their agent. The joint venturers held the issued capital of OBS in proportion to their interests in the joint venture. 5 OVP and OBS entered into a development agreement under which OBS agreed to provide development and marketing services for two 18 level towers containing 240 apartments and a restaurant to be constructed on the Land. 6 During 1999 the joint venturers approached various banks for the provision of funding for the development and builders to construct it. Mr Sanchez had dealings with Bankers Trust Australia Ltd ("BT"), Multiplex Constructions (Vic) Pty Ltd ("Multiplex") and its associated finance company, Capital Finance Ltd ("Capital") and with Macquarie. Mr Sanchez had dealings with Multiplex as a prospective builder while Mr Katsalidis negotiated with Grocon Pty Ltd ("Grocon"). 7 By mid-1999, 75% to 85% of the apartments had been sold off the plan. The contracts contained a sunset clause enabling purchasers to terminate the contracts if not completed by 1 January 2002. Construction was scheduled to commence in November 1999. Grocon, which became the builder, estimated construction would take 18 months. 8 Mr Sanchez was in dispute with Macquarie with respect to a previous project of his. Macquarie was keen to be involved in the development but, as Mr Sanchez was aware, some officers of Macquarie did not want to deal with interests of Mr Sanchez. 9 Guy Frederick Nelson was the person with whom Mr Sanchez dealt at BT. When BT was taken over by Macquarie, Mr Nelson continued to deal with Mr Sanchez on behalf of Macquarie. He was the face of the bank to the joint venturers. He believed that Mr Katsalidis was Melbourne's leading up-market residential apartment architect/developer and that the project was Melbourne's most high profile residential apartment project. He believed that the project was a very good opportunity for Macquarie and that it should not miss out on the deal. 10 Mr Nelson became aware that at least one senior officer of Macquarie had reservations about the involvement of Mr Sanchez by, at the latest, 23 July 1999. He discussed the problem in a meeting with Mr Katsalidis and Bruno Charlesworth, the solicitor for the joint venture, on 26 July 1999. Mr Nelson raised the idea of a buy out of the interests of Mr Sanchez by Macquarie, Grocon or a combination of both. Mr Sanchez said he was informed of the problem by Mr Nelson about the end of July 1999. 11 Mr Sanchez said the question of buying out his interests was suggested to him in a letter of 13 August 1999 to which he responded by telephone to Mr Nelson that he was not interested. In cross-examination, he said there was no bargaining backwards and forwards on this issue because it was over in one or two conversations. That was not the impression of Mr Charlesworth who thought negotiations on a buy-out continued even after a letter of 27 August 1999. Mr Nelson's evidence was that Mr Sanchez was actively pushing the buy-out. He said that on 29 July 1999, Mr Sanchez telephoned him and said he was prepared to look at any proposal Macquarie had to buy him out. Mr Nelson responded that he was thinking of some money up front and some at practical completion. The up front amount was likely to be at a 15 to 20% discount. In cross-examination, Mr Sanchez accepted the broad outline of the conversation but maintained there was no bargaining back and forth because the whole thing was over and done with very quickly. 12 The evidence does not bear out Mr Sanchez' view. On 4 August 1999, Mr Nelson sent a handwritten facsimile to Mr Sanchez commenting that Mr Sanchez' suggestion of $14 million and a balance of unsold stock was unacceptable because it required too much money up front. Mr Nelson suggested $16 million to get unencumbered title to the Land and the balance in unsold stock of approximately $20 million. His facsimile records alternative figures suggested by Mr Sanchez in a subsequent telephone conversation of $18 million up front and $18 million in unsold stock. Mr Nelson attended a meeting on 6 August 1999 with Mr Sanchez, Mr Katsalidis and Adam Grollo of Grocon. His note of the meeting records Mr Sanchez repeating his offer to sell out his interests for $18 million up front and $18 million in unsold stock. 13 Mr Nelson sent a facsimile to Mr Sanchez and Mr Katsalidis on 13 August 1999 indicting that senior debt funding of approximately $85 million would leave a gap of about $20 million plus capitalised interest. Macquarie was interested in providing this mezzanine finance, but there was a problem in dealing with Mr Sanchez. He said: "I have discussed the above position internally at Macquarie – there is good interest but for the reasons we discussed, Mike being even a part Borrower is a real issue. Grocon as Borrower is not seen as a suitable alternative because Grocon will not take settlement risk. Macquarie would prefer to look at a possible buy out of Mike's interests and joint-venture participation in the project (ie 50/50) with Nonda and Sam Ballas. Buying Mike out obviously adds to the funding "ask" of Macquarie but it appears this is the only way they will look at participation." 14 Mr Sanchez said this was the first time Macquarie indicated to him that being even a part-borrower was a real issue. When confronted in cross-examination with his earlier knowledge that his involvement in the project was a problem, Mr Sanchez said he did not focus on this part of the letter and it was in the context of statements made to him that it was not an insurmountable problem. Mr Sanchez said that what he meant to convey was that this was the first time the matter had been raised in writing. This was another unsatisfactory part of Mr Sanchez' evidence. He had sought to convey the impression that 13 August 1999 was the first occasion he became aware of a problem associated with his involvement in the project. That was clearly not the case. His explanation that this was the first written communication on the topic, I found to be too cute. 15 In the facsimile, Mr Nelson estimated the surplus from the project at $18 million and commented that the $10 million suggested buy-out could be regarded as an increase in value of the Land and that if and how that payment and the remaining 50% of the surplus was to be divided amongst the old joint venturers was a matter for them to agree. On his copy of the facsimile, Mr Nelson recorded a telephone conversation with Mr Sanchez on 14 August 1999 in which he said he would not sell his interest in the project on the basis proposed because the cost of equity was too high. He said there should be a split of $10 million to himself, $14 million to Mr Katsalidis and $4 million to Macquarie. Mr Nelson suggested a split of $10 million to Mr Sanchez, $9 million to Mr Katsalidis and $9 million to Macquarie. Mr Sanchez said he would think about it. 16 Mr Sanchez' version of this conversation was that he said to Mr Nelson he was not interested in selling his interest, he was going to look at alternative means of finance, he had already approached Multiplex and they were actively attempting to obtain funding for the project. Mr Nelson denied this version of the telephone conversation. In cross-examination, Mr Sanchez agreed that Mr Nelson might have discussed a split of the surplus and he might have said he would think about it. When confronted with the inconsistency between this acceptance and his stated version of the conversation, Mr Sanchez suddenly said there were two conversations, the second following quickly on the first because of his conclusion that the buy-out was not going to work. Again, I was unimpressed by this evidence. I regarded it as a witness box attempt to overcome the dilemma with which Mr Sanchez was faced. 17 On 13 August 1999, Mr Nelson sent a draft proposal for development funding participation to Steven Papadopoulos, the head of property investment banking at Macquarie and to Grant Munro, the head of property finance. The proposal was for Macquarie to invest $30 million, $10 million to acquire Mr Sanchez' interests and $20 million to underwrite the mezzanine debt component. 18 In an email sent on Monday 16 August 1999 by Mr Nelson to Mr Papadopoulos and Mr Munro, Mr Nelson recorded that Mr Sanchez had telephoned him over the weekend to say he was not happy with Macquarie's cost of equity and that he was to consider his position over the weekend and call Mr Nelson that day. Mr Nelson was concerned that Macquarie was at a dangerous point in the deal and that Mr Sanchez might "ditch" Macquarie and go elsewhere. Mr Munro responded to the email saying, amongst other things, that the pay-out to Mr Sanchez seemed too high. 19 By 18 August 1999, Mr Nelson had formed the view that Mr Sanchez might not accept the buy-out proposal. On that day he put a further proposal to Mr Papadopoulos limited to the provision by Macquarie of $20 million mezzanine debt. He enclosed a draft letter to the joint venturers, a copy of which he also sent to Mr Sanchez and Mr Katsalidis. In that draft it was stated: "Following our recent discussions, I confirm Macquarie Bank is prepared to consider possible funding participation in the project on a basis which involves our focus only being on the required mezzanine funding for this project (ie no equity buy out involved)." By this stage Mr Nelson's attempt to overcome opposition to Mr Sanchez within Macquarie by a buy-out had come to an end. 20 A major business initiatives group meeting of Macquarie took place on 24 August 1999. At that meeting, Mr Nelson put forward a proposal for $20 million mezzanine debt for the project which, while acknowledging that Mr Sanchez was someone with whom Macquarie did not wish to be involved, suggested that the problem was overcome by an alternative borrowing structure which sought to isolate Mr Sanchez from having influence over the everyday carriage of transactions and, hence, interaction with Macquarie. What was proposed was the interposition of a special purpose vehicle owned by Katsalidis Developments Pty Ltd ("Katsalidis Developments") between Macquarie and the senior debt financier and OVP. The proposal included a diagram of the structure. 21 The meeting did not, however, agree to this alternative structure. Mr Munro was the main opponent. There was consensus that Mr Sanchez should be removed entirely from the structure, in the sense that neither he nor any interest associated with him should have any ownership or control interest. This meant that Mrs Sanchez' interest in Vantian was to be removed. 22 There was some confusion as to the role of the major business initiatives group. Mr Nelson, who was not a member of the group, said that its decision either to abort a project or to go forward with it was determinative. Mr Papadopoulos said it was essentially an opportunity to talk through some of the major transactions in which Macquarie was involved or likely to become involved. As the head of the property investment banking group he was a member of the group as was Mr Munro as the head of the property finance group. Mr Papadopoulos reported to Mr Bill Moss who was the head of the property division. He was also a member of the group. Mr Papadopoulos said the responsible head of a group would consider an opinion expressed at a meeting but it was up to the group head to propose an application for finance irrespective of a view expressed at a major business initiatives group meeting. 23 In rejecting an application to re-open the plaintiffs' case after the cross-examination of all defence witnesses had concluded, I accepted the evidence of Mr Papadopoulos on this issue in preference to that of Mr Nelson. 24 Notwithstanding the consensus view, Mr Nelson sent to Mr Sanchez, Mr Katsalidis and Mr Ballas a letter of 27 August 1999. It contained some of the elements of the draft letter of 18 August 1999. The letter reiterated Macquarie's preparedness to consider the provision of mezzanine funding without an equity buy-out. The letter proposed the funding structure rejected by the major business initiatives group. The letter stated: "For the reasons we have discussed, the proposed funding structure (see Annexure B) would involve Oceanview entering into a Development Agreement with a special purpose developer vehicle owned by Katsalidis Developments (or Grocon). This developer vehicle would be responsible for procuring project delivery (by entering into a Building Agreement with the Builder) and would borrow the necessary project finance (by entering into loan documentation with the providers of senior and mezzanine debt funding). Oceanview Properties would guarantee the obligations of this vehicle, and grant security over the Project, to the project financiers. We would be pleased to entertain alternative funding structures should you so desire provided they meet with our requirements." Annexure B contained the diagrammatic structure proposed to the major business initiatives group involving the interposition of a special purpose vehicle owned by Katsalidis Developments between the financiers and OVP. 25 Mr Bill Moss was absent from the business initiatives group meeting of 24 August 1999. In cross-examination, Mr Nelson said he reported the views of the meeting to Mr Moss a few days later and before 27 August 1999. He said Mr Moss telephoned Mr Munro and indicated that because Mr Sanchez was not a director or a shareholder of any company in the structure, Katsalidis Developments was the developer and Mr Sanchez had no major day to day control, he supported the structure. Mr Moss told Mr Nelson to get on with it. 26 Mr Nelson had not mentioned this evidence in either of his statements. It was put to him that the evidence was a fabrication. It was put to him that there was no mention of this in any of the documents. Mr Nelson denied it was a fabrication. 27 It was submitted that the failure of Macquarie to call Mr Bill Moss or Mr Munro raised an inference adverse to Macquarie in terms of Jones v Dunkel (1959) 101 CLR 298. The rule only applies where a party is required to explain or contradict something. In the absence of evidence requiring an answer the failure to call evidence has no probative significance (Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at 141-143). Furthermore, the rule does not require a party to give cumulative evidence. The rule does not compel time to be wasted in calling unnecessary witnesses (Cubillo v Commonwealth (2000) 103 FCR 1 at 120). 28 Reference was made to Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 in which Handley JA at 418-419 took the view that the principles in Jones v Dunkel apply when a party by failing to examine a witness in chief on some topic indicates, as the most natural inference, that the party fears to do so. Mr Nelson said that Mr Papadopoulos might have been party to the telephone conversation between Mr Bill Moss and Mr Munro on a telephone conference line. He could not recall. Mr Papadopoulos was not asked in examination in chief if he recalled the conversation. Evidence from him that he was a party to the conversation would have been cumulative and the inference is open that he was not a party to the conversation. 29 Furthermore, an inference that the evidence of Mr Bill Moss, Mr Munro and Mr Papadopoulos on this topic would not have assisted Macquarie may, not must, be drawn in appropriate circumstances (Cafe v Australian Portland Cement Pty Ltd (1965) 83 WN (Pt 1) (NSW) 280 at 286-287). It is inappropriate, in my view, to draw that inference in circumstances where evidence came from Mr Nelson, could be tested against contemporaneous documentation and additional evidence on the topic would have been cumulative. In my view no inference adverse to Macquarie under the Jones v Dunkel principle should be drawn in this case. 30 On 26 August 1999 Mr Nelson sent an email to Mr Papadopoulos. It was submitted that the email made no mention of any overruling by Mr Bill Moss. If Mr Papadopoulos had been party to the conversation, there was no need to mention it. Attached to the email was a proposal "consistent with what we agreed with Sanchez". It specified the structure rejected at the business initiatives group meeting of 24 August 1999. The email reminded Mr Papadopoulos that he was to speak with the credit department and Mr Munro to gain their approval before a mandate letter was sent to the joint venturers. It stated: "The other key issue is making Credit Department, Grant Munro and others happy on the Sanchez issue. I think you were going to talk to Christine Hope (and Grant?) before we table any mandate letter to the client – ie so we know if we are likely to be able to ultimately deliver on this deal." Far from this communication indicating a continued stance by Macquarie consistent with the view of the meeting of 24 August 1999, it indicates that the proposal put by Mr Nelson to that meeting was to be put to the joint venturers after support for it was received from the credit department and Mr Munro. That is entirely consistent with Mr Nelson's testimony that Mr Bill Moss overruled the consensus reached at that meeting. 31 In the minutes of the meeting of the major business initiatives group of 14 September 1999 it was noted, with respect to the project, that a mandate was due to be signed that day. The minutes contained the following: "Sanchez issue mitigated by pre-sales and Katsalidis will manage on day to day basis". There was also an email sent by Mr Nelson to Mr Munro on 16 September 1999 reporting on the project and stating that once there was an agreement on commercial terms, Mr Nelson would focus on the detail of the structure as regards Sanchez' involvement to which Mr Munro responded that he had got the impression from Mr Papadopoulos at the latest major business initiatives group meeting that a deal had been done and a mandate was about to be signed. Both are consistent with an overruling and subsequent report on the project to the 14 September 1999 meeting. 32 I found Mr Nelson to be a forthright witness who was precise in his answers to questions. He had hinted in earlier cross-examination that he had been instructed to proceed with the structure but confined himself to answering questions put to him, and counsel for the plaintiffs did not take up with him that earlier evidence. Mr Nelson said he would not have sent the letter of 27 August 1999 without approval. That was an entirely plausible statement. His evidence was supported by the minutes of the 14 September 1999 meeting and the emails of 26 August 1999 and 16 September 1999. It was put to Mr Nelson that no mention was made of this issue at the next meeting of the major business initiatives group on 26 October 1999 which he attended. Mr Nelson said by that stage matters were well down the track. I accept the evidence on Mr Nelson on this issue. 33 Mr Sanchez said that when he received the letter of 27 August 1999, he formed the view that Macquarie was no longer concerned about his position. In cross-examination he said he did not focus on the structure. He said this was a matter under discussion with Mr Charlesworth. He said the joint venture structure and the appointment of OBS as its agent had been in place since December 1998. He was asked why he thought Macquarie was proposing some other structure. His answers were evasive. He refused to accept that this was an alternative to the buy-out as a means of placating those persons in Macquarie who were opposed to his involvement in the project. He continued to say that he was assured that it was a problem that could be overcome. However, he finally agreed that the structure was intended to provide a solution to the problem that had been encountered within Macquarie to his involvement in the project. 34 On 2 September 1999, Mr Nelson issued the first of a series of letters in the form of a mandate. It described the role of Macquarie as a finance arranger to OVP on an exclusive basis for an underwriting commitment of a $20 million mezzanine debt facility on the basis of the attached indicative terms and for a senior debt facility from a lender for an estimated $85 million. The indicative terms specified the borrower as a special purpose developer vehicle owned by Katsalidis Developments or Grocon. The sponsors and guarantors were specified as OVP, Allegro, Vantian, Mr Katsalidis, Mr Ballas and Mrs Sanchez. Consistent with the notion of excluding Mr Sanchez from the arrangement, neither he nor Vitarni were included in this category. The letter contained Macquarie's understanding of the project funding structure in the same diagram as in the letter of 27 August 1999 interposing Katsalidis Developments between the financiers and OVP. There was a disclaimer in the following terms: "This assignment is to be carried out by MBL on a best endeavours basis and MBL does not warrant that the project funding will be arranged or available for draw down. In addition, this letter does not constitute a Letter of Offer of Finance by MBL. Any participation by MBL in the project funding arrangements will be subject to formal Credit approval from MBL Credit Committee and to execution of satisfactory Facility and security documents and to satisfaction of all conditions precedent to any facility." 35 A number of amended mandate letters issued to effect variations sought by the joint venturers. On 15 September 1999, Mr Charlesworth forwarded to Mr Nelson his hand written requested amendments on the latest mandate letter. In the diagram of the funding structure, he crossed out Katsalidis Developments and inserted OBS. In the specification of the borrower he substituted for "a special purpose developer vehicle owned by Katsalidis Developments Pty Ltd (or Grocon Pty Ltd)", "a special purpose developer vehicle being One Beach Street P/L ACN 085 384 578." 36 On 16 September 1999, Mr Nelson forwarded a mandate letter ("First Mandate") signed by him and Mr Papadopoulos. It contained the amendments requested by Mr Charlesworth. Mr Nelson said when he incorporated the amendments into the First Mandate, he did not know that OBS had entered into a development agreement with OVP, OBS was a company in which Vitarni held a 50% interest or that Mr Sanchez was a director of Vitarni and owned 50% of its issued capital. He believed that OBS answered the description of a special purpose developer vehicle owned by Katsalidis Developments. The First Mandate was signed on behalf of the joint venturers on 16 September 1999. 37 Mr Nelson included in the First Mandate a variation to the sponsors and guarantors not sought by Mr Charlesworth. He added any other company or director involved in the project ownership structure. Mr Nelson could not recall his reason for this inclusion. It was submitted that if he believed OBS was a special purpose vehicle owned by Katsalidis Developments, there was no need for this extension. I do not accept this proposition. Katsalidis Developments and its directors were not included as sponsors and guarantors in the earlier mandate letters and the extension may have been aimed at addressing this omission. More importantly, I was impressed by Mr Nelson as a witness and have no doubt of his belief as to the ownership of OBS. 38 Mr Sanchez was aware of the handwritten amendments sought by Mr Charlesworth. He said he did not participate in the change of borrower to OBS. However, he regarded that change as reflecting what was contained in the letter of 27 August 1999. He said the introduction of OBS was a means of streamlining the structure and providing some sort of better structure for the joint venturers. I found the evasiveness of this part of Mr Sanchez' evidence highly unsatisfactory. He said he did not regard the fact that OBS did not conform to the requirements expressed by Macquarie in the letter of 27 August 1999 as a big issue: "no one was expressing to me that that was a deal breaker". 39 Mr Charlesworth was aware that Macquarie had a problem with Mr Sanchez' involvement in the joint venture before he saw the letter of 13 August 1999 stating that Mr Sanchez being even a part-borrower was a real issue. He was also aware that the attempt by Mr Nelson to solve the problem by Macquarie buying out Mr Sanchez' interest had failed and he was aware of the structure suggested by Mr Nelson in the letter of 27 August 1999 with the interposition of a special purpose vehicle owned by Katsalidis Developments between the financiers and OVP. Yet Mr Charlesworth requested the amendment to have OBS substituted as purchaser knowing full well that it did not answer the description of a special purpose developer vehicle owned by Katsalidis Developments without one word orally or in writing to Mr Nelson alerting him to this highly significant alteration. Mr Charlesworth did not appear to think that there was anything untoward in this conduct. He gave his evidence openly and responded expeditiously to Mr Nelson's subsequent request for information. He said he did not see the interposition of a special purpose vehicle in which Mr Sanchez held no interest as the method by which Mr Nelson was seeking a commercial solution to the Sanchez problem. He said he understood the solution sought by Mr Nelson as one of perception that Mr Sanchez was not involved in the management of OBS rather than as holding no interest in it. He said at some unspecified time he had drawn a diagram of the structure on a whiteboard in the presence of Mr Nelson and other representatives of Macquarie in which he identified OVP and OBS respectively. Mr Nelson denied that he was present on any such occasion. Even if that had been the case, I would have thought that Mr Charlesworth's request to substitute OBS as the purchaser required some comment from him to alert Mr Nelson to the fact that it did not answer the description of a special purpose developer vehicle owned by Katsalidis Developments. 40 Mr Charlesworth is a solicitor. I am surprised that he took this course of action. However, it was not put to him in cross-examination that he knowingly misled Macquarie in requesting that OBS be the borrower. Mr Charlesworth was not given the opportunity to respond to such a suggestion and I make no further comment on the issue. 41 Mr Nelson was asked whether he had any recollection of a whiteboard being used by Mr Charlesworth to explain the joint venture structure. He said he did not. He was asked whether he was saying there were no such discussions or he did not remember them. He answered: "yeah, they could have occurred, I guess. I can't remember". It was put to him that before Mr Charlesworth's hand written request for alterations to the mandate letter, OBS had been mentioned in his presence as a company associated with OVP. Mr Nelson said: "no I can't recall" and "and I don't think it was". It was put to him that, once again, it might have been that he had no recollection. He answered: "no, I am pretty firm that the first time I saw that was when Bruno had written it into his response". I accept that evidence. As I have said, Mr Nelson confined his answers strictly to the questions he was asked and he conceded, time and time again, when he did not recollect a matter that it might have happened. On this occasion, however, he was not prepared to make that concession. 42 Mr Sanchez said that upon receipt of the First Mandate he understood Macquarie no longer had a problem with his ownership interests and that was no longer an impediment to Macquarie providing funding for the project. I reject that evidence. Notwithstanding his evasive answers, I find that Mr Sanchez well knew the requirements in the letter of 27 August 1999 and he well knew that nothing had occurred between then and 16 September 1999 to alter those requirements. 43 Mr Sanchez also said that upon receipt of the First Mandate he ceased negotiating with Multiplex for the provision of funding for the project. In cross-examination he asserted that he also ceased negotiating with others. This raised another unsatisfactory portion of his evidence. Mr Sanchez agreed that he, personally, was not negotiating with anyone other than Macquarie and Multiplex at that time. He kept referring to negotiations by his joint venturers with other financial institutions and then suddenly said he was dealing with Capital. While it was associated with Multiplex, he said he regarded them as separate organisations. Finally, he said he meant to convey that he ceased negotiating with Multiplex and he, through his joint venture vehicle, ceased negotiating with other potential lenders. I found this attempt to explain away a clear assertion in his statement as reflecting badly on his credibility as a witness. 44 On 21 September 1999, Mr Nelson met with Mr Charlesworth and requested information including details of the corporate structure. In providing that material, Mr Charlesworth indicated that OBS was the nominee and agent of the joint venture and that Vitarni held a 50% interest in the joint venture. Company searches dated 21 September 1999 were attached to this document. The company search for OBS contained no shareholding information. The company search for Vitarni showed it to be owned equally by Mr and Mrs Sanchez. 45 Mr Nelson sought advice from Blake Dawson Waldron as to the influence of Mr Sanchez in the project. He was advised on 11 October 1999 that because Mr Sanchez appeared to control Vitarni which had a 50% interest in the joint venture and Vitarni had the right to appoint half the directors of OBS, he appeared able to exercise significant control over the joint venture. Mr Nelson immediately telephoned Mr Charlesworth. It was put to Mr Charlesworth that Mr Nelson expressed genuine surprise about Mr Sanchez' involvement in OBS. Mr Charlesworth did not accept this proposition. He said Mr Nelson said he had not realised how much Mr Sanchez was involved in the management and he interpreted this to mean that he was concerned with the extent rather than the fact of Mr Sanchez' involvement. 46 Mr Nelson denied that, prior to the Blake Dawson Waldron advice, he knew Mr Sanchez had an interest in OBS. Mr Charlesworth said that when Mr Nelson called him in mid-October 1999 he genuinely misunderstood the position in relation to OBS so far as its ownership structure was concerned. If Mr Nelson had known of the ownership structure before mid-October 1999, one would have expected mention of it in the business records of Macquarie. There was none. I accept Mr Nelson's evidence in preference to that of Mr Charlesworth on this issue. 47 On 12 October 1999, Mr Nelson sent an email to Mr Charlesworth. It included a diagram prepared by Blake Dawson Waldron which showed the interests of Vitarni, Republic and Arnicon in OBS. He asked whether the diagram was correct and whether Mr Charlesworth agreed with the Blake Dawson Waldron assessment of Mr Sanchez' influence. He asked whether it was possible to re-structure the shareholding in Vitarni so that Mrs Sanchez was the only shareholder. Mr Nelson said this was not an ideal solution but it was a step in the right direction. 48 On 12 October 1999, Mr Nelson sent an email to Mr Papadopoulos saying: "Michael Sanchez has stronger control than we were led to believe". By that he meant that Macquarie's belief that the only interest was the 50% shareholding of Mrs Sanchez in OVP had turned out to be incorrect because of Vitarni's 50% interest in OBS. Mr Nelson sent an email to Mr Sanchez on 14 October 1999 asking whether Mr Sanchez saw a problem in selling his shares in Vitarni to Mrs Sanchez. Mr Sanchez responded on 14 October 1999 indicating that, on advice given to him, there were stamp duty and capital gains tax implications. Mr Sanchez requested Mr Nelson to reconsider allowing the existing structure to stand. 49 Mr Nelson attended a major business initiatives group meeting on 26 October 1999 at which a request was made that Mr Alan Moss, the managing director of Macquarie, consider the credit application for the project. A meeting was held on that day with Mr Alan Moss who did not accept the credit application. He would only accept such an application if Mr Sanchez and any interest associated with him ceased to have any ownership, management or control rights to the ownership of the Land or its development. 50 The plaintiffs submitted that Mr Alan Moss went further than was necessary to rectify any misunderstanding about the interests of Mr and Mrs Sanchez in OBS and by requiring Mrs Sanchez to relinquish her interest in OVP, Macquarie demonstrated that the representations in the letter of 27 August 1999 and in the subsequent mandate letters, to the effect that the interest of Mrs Sanchez in OVP was no longer an impediment to Macquarie providing funding to the project, were false. 51 There were no such representations. Mr Sanchez was aware that throughout the negotiations, his interest in the project was a problem. In using his best endeavours to secure funding approval, Mr Nelson tried a number of alternatives to overcome this problem. One such endeavour involved leaving the structure of OVP alone and interposing a special purpose vehicle owned by Katsalidis Developments. That was the structure the subject of the letter of 27 August 1999 and the subsequent mandate letters. It was not a representation that funding would be made available on this basis. It was an incident of the performance by Mr Nelson of Macquarie's obligation to use its best efforts to obtain the finance. The approval of Mr Alan Moss was required. It was not forthcoming. That did not constitute a breach of any promise, an unconscionable exercise of power or signal a misrepresentation by Macquarie or a breach of its obligation to arrange mezzanine finance on a best efforts basis. That required Macquarie to do all it reasonably could in the circumstances to obtain the finance, but no more (Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 46 at 64). 52 Following the meeting, Mr Nelson informed Mr Sanchez that Mr Alan Moss had refused to accept the application because of Mr Sanchez' direct and indirect interests in the project. Mr Nelson said he would try to work up a way around the problem. 53 Mr Sanchez said he was shocked when he had this conversation because he had been led to believe since the middle of August 1999 that there was no problem with his continuing ownership interest in the project. I do not accept that evidence. In cross-examination, Mr Sanchez agreed that his involvement in the transaction was an issue from the first day Mr Nelson spoke to him when he joined Macquarie until the very end. However, Mr Sanchez did not regard it as a large issue. He said it was never expressed to him in terms that it would be "a walk away" situation for Macquarie if it was not "sold" to higher echelons within the bank. Contrary to Mr Sanchez' assertion, I am of the view that it came as no surprise to Mr Sanchez that the credit application was rejected by Macquarie because of his involvement in the structure. 54 Mr Nelson immediately set about developing a structure to meet the requirements of Mr Alan Moss. The suggestion was that Mr Katsalidis buy out the Sanchez' interests in OVP and OBS for 50% of the profits, thereby securing to the Sanchez interests the same result they would have achieved if their interests remained in the structure but without any risk to ANZ, the senior debt provider, or to Macquarie, the mezzanine debt provider. 55 By 28 October 1999, Mr Sanchez had reluctantly agreed to the proposal as had Mr Katsalidis. Both Mr Sanchez and Mr Charlesworth said there was no alternative. Grocon was on site, or shortly to be on site, under an early works package with a "drop dead" clause. 56 Mr Grollo's estimate was that the project would take 18 months to construct. The sunset clauses would become effective if completion was not achieved by 1 January 2002. In cross-examination, Mr Sanchez agreed there was ample time from the receipt of the email from Mr Nelson of 14 October 1999 to arrange alternative finance to complete the development. The following question and answer were given at the end of Mr Sanchez' cross-examination: "Q: What I am endeavouring to suggest is in the period between October 1999 when you learnt that your involvement in the transaction would be fatal from the point of view of Macquarie's credit approval, and 1 January 2002, there was plenty of time both to arrange alternative finance and to complete the construction of development in accordance with the projected time for construction, do you agree with that? A: Yes." Mr Sanchez was not re-examined. 57 Mr Charlesworth pointed out that there had been a deal of negotiation with Macquarie on documentation at an informal level which would need to be duplicated if a new financier was involved. He estimated this would mean a loss of two to three months. He regarded this as jeopardising the project. In view of Mr Sanchez' unequivocal acceptance of the proposition that there was ample time to organise alternative finance, Mr Charlesworth's evidence is of less weight. In any event, even if it would take until mid January 2000 to arrive at a similar position with another finance company, a projected completion date for the construction of July 2001 would still leave ample time to prevent the sunset clauses coming into operation. 58 In late October and early November 1999, there was a flurry of activity amongst the advisers to the joint venturers and the advisers to Macquarie. The joint venture incurred costs in reconstituting the documentation. The amount was agreed by the parties at $166,753.80. A new mandate letter issued on 18 November 1999 ("Second Mandate"). It was accepted on 25 November 1999. 59 Both Mr Nelson and Mr Papadopoulos gave evidence that Mr Sanchez expressed satisfaction with the end result. Mr Papadopoulos nominated one occasion in his statement. In cross-examination, he said that Mr Sanchez had expressed satisfaction to him on several other occasions. It was put to Mr Papadopoulos that Mr Sanchez was expressing his satisfaction with the project and not with his exclusion from the structure. Mr Papadopoulos did not accept this suggestion. He said Mr Sanchez had expressed satisfaction with the way in which the project was structured. In cross-examination Mr Sanchez accepted that he had said to Mr Papadopoulos one evening that he had become very happy with the venture and the way that it was going. He did not recall whether he had said to Mr Papadopoulos he was entitled to the same return but had no exposure to Macquarie or ANZ. I do not regard Mr Papadopoulos's reference to more than one occasion in his cross-examination as reflecting on his credit. 60 The plaintiffs claimed that Macquarie, in trade or commerce, engaged in conduct that was misleading or deceptive in terms of the Trades Practices Act 1974 (Cth), s 52(1). It was alleged that Macquarie's letter of 27 August 1999 and subsequent mandate letters and its failure to inform Mr Sanchez of its firm resolution to remove him from the structure constituted the following misrepresentations: (a) the fact that Mr Sanchez was a part owner of the development was no longer an impediment to Macquarie providing funding; (b) to the extent that Macquarie might offer funding for the development, it would do so on the basis that the plaintiffs were part-owners of the development and without imposing a condition that the plaintiffs sell their ownership interests in the development; (c) Macquarie would act as finance arranger for OVP on an exclusive basis on terms more fully described in the First Mandate; (d) Macquarie was ready willing and able to perform its services under the First Mandate in accordance with its terms on the basis that the plaintiffs were part-owners of the development and that the finance to be arranged would not impose a condition that the plaintiffs sell their ownership interests in the development; and (e) Macquarie would not force the plaintiffs to renegotiate their arrangements with the other joint venturers. 61 It was alleged that, to the extent to which those representations were with respect to future matters, Macquarie had no reasonable grounds for making the representations such that they were taken to be misleading in terms of the Trades Practices Act 1974 (Cth), s 51A(1). 62 I reject the submission that Macquarie made the misrepresentation in terms of par (a). As Mr Sanchez said in cross-examination, throughout the entirety of the negotiations there was an issue in relation to his involvement in the development. That never changed. He said he regarded it as not a large issue and one that would be overcome. The letter of 27 August 1999, having dropped the earlier attempt to find a solution by an equity buy-out, prescribed a funding structure which interposed a special purpose vehicle owned by Katsalidis Developments between the financiers and OVP. That requirement, which remained constant through the negotiations of the terms of the First Mandate, did not constitute a representation that Mr Sanchez' involvement in the structure was no longer an impediment. 63 I find that the alleged misrepresentation in terms of par (b) was not made. Neither the letter of 27 August 1999 nor the subsequent versions of the proposed mandate letter nor the First Mandate represented that if Macquarie offered funding for the development it would do so on the basis that the plaintiffs were part-owners of the development and without imposing a condition that they sell their interests in the development. Until the First Mandate, as Mr Sanchez well knew, the structure to be considered by Macquarie on a best efforts basis in an underwriting commitment for mezzanine debt finance was that the plaintiffs' participation in the development was limited to Mrs Sanchez' interest in Vantian and its 50% interest in OVP. The structure, involving the interposition of a special purpose vehicle owned by Katsalidis Developments, excluded the plaintiffs from participation in the property development. Mr Nelson believed that OBS answered the description of a special purpose developer vehicle owned by Katsalidis Developments. At no stage was a representation made by Macquarie that part-ownership by Mr or Mrs Sanchez of the special purpose vehicle was acceptable to it. 64 There was a representation in the First Mandate in terms of par (c). Macquarie stated that it would act as a finance arranger for OVP on an exclusive basis to arrange, on a best efforts basis, an underwriting commitment for a mezzanine debt of $20 million plus capitalised interest. The First Mandate went on to state that Macquarie would carry out its assignment on a best endeavours basis and did not warrant that the funding would be arranged. It stated that the First Mandate did not constitute a letter of offer of finance and any participation by it in the underwriting would be subject to formal credit approval by the Macquarie credit committee and the execution of satisfactory facility and security documentation. There is nothing in the evidence to suggest that those representations were false. They involved no misrepresentation. 65 I find that no misrepresentation in terms of par (d) was made. For the reasons set out above, Macquarie did not represent that the participation of Mr and Mrs Sanchez in the special purpose vehicle to be owned by Katsalidis Developments was acceptable to it. 66 I find that no misrepresentation in terms of par (e) was made by Macquarie. Mr Nelson used his best endeavours to receive credit approval for a structure including OBS. He was unsuccessful in his endeavours. He proposed to the joint venturers a structure which excluded Mr and Mrs Sanchez from ownership, control or influence in consideration for the payment of 50% of the profits of the development, placing them in the same position they would have been in had the structure with OBS been approved. The re-structure was accepted by the joint venturers. In using his best efforts to obtain credit approval for the development under that re-structure, Mr Nelson was successful. 67 In light of my findings that no misrepresentations were made, the plaintiffs' diminution in profit sharing in an amount equal to 50% of the agreed re-structure costs paid by the joint venture does not constitute damages suffered by them by the conduct of Macquarie in terms of the Trades Practices Act 1974 (Cth), s 82(1) or s 87(1). 68 The Australian Securities and Investments Commission Act 2001 (Cth), s 12CA(1) provided that a person must not in trade or commerce engage in conduct in relation to financial services if the conduct is unconscionable within the meaning of the unwritten law from time to time of the States and Territories. To the extent that financial services were not involved, a like obligation arose under the Trade Practices Act 1974 (Cth), s 51AA(1). For the purposes of those provisions, conduct was unconscionable in terms of the unwritten law if a party to a transaction was under a special disability in dealing with the other party to the transaction with the consequence that there was an absence of any reasonable degree of equality between them and the special disability was sufficiently evident to the other party to make it, prima facie, unfair that that other party procure, accept or retain the benefit of the disadvantaged party's assent to an impugned transaction in the circumstances in which he or she procured or accepted it (Louth v Diprose (1992) 175 CLR 621 at 637. See, also, Blomley v Ryan (1956) 99 CLR 362 at 405, Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 at 461, 474, Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) (1999) 96 FCR 491 at 502-504). 69 The plaintiffs submitted that Macquarie was guilty of unconscionable conduct in this sense. It was submitted there were two aspects to this issue. First, by inducing the plaintiffs' consent to the First Mandate by knowingly false representations as to its position. Secondly, the subsequent refusal to perform the First Mandate at a time when the plaintiffs had no alternative other than to accede to Macquarie's conditions. 70 For the reasons set out above, there were no false representations by Macquarie as alleged by the plaintiffs nor was there a refusal to perform its obligations under the First Mandate. As already indicated, Mr Nelson used his best endeavours to obtain credit approval for the structure including OBS. That credit approval was not forthcoming. That did not constitute a refusal to perform in terms of the First Mandate. 71 The plaintiffs relied, in particular, on the following conduct as unconscionable: (a) Macquarie withheld its true position from the plaintiffs from 24 August 1999. The major business initiatives group met on that day and it was the consensus of the meeting that Mr and Mrs Sanchez should be removed from the structure. That was not, however, the position of Macquarie. The meeting served the purpose of enabling the heads of various departments to discuss existing and prospective large funding arrangements. Its views had no structural significance. It was for the department head to approve an application for finance. Approval at a higher level was required depending upon the amount involved. Large amounts required the approval of the managing director. Furthermore, Mr Bill Moss approved the then contemplated structure, effectively overruling the view of the meeting, before Mr Nelson sent the letter of 27 August 1999. There was no withholding by Macquarie of any position. Mr Nelson continued to indicate that the Sanchez interests in the project were a problem and he continued to communicate his endeavours to overcome that problem. The view of the 24 August 1999 meeting was superseded by Mr Bill Moss's position and that was put to the plaintiffs on 27 August 1999. (b) It did so with the intention of, and in any event with the effect of, inducing the plaintiffs to consent to OVP appointing Macquarie as exclusive finance arranger – it was part of an intentional strategy on Macquarie's part to get the commercial deal done first and sort out Sanchez' involvement in the project later. This allegation falls with par (a). While Mr Nelson sent an email to Mr Munro on 16 September 1999 which stated that focus on the detail of the structure as regards Mr Sanchez' involvement would follow agreement of commercial terms, Mr Munro was aware from the major business initiatives group meeting of 14 September 1999 that agreement had been reached on a structure interposing a special purpose developer vehicle owned by Katsalidis Developments and that a signing of a mandate was about to happen. There was no intentional strategy of arriving at a commercial deal and then dealing with the development structure. Both occurred simultaneously as part of the negotiation of the terms of the First Mandate. (c) Macquarie knew that upon execution of the First Mandate, the plaintiffs would cease, and that they did cease, negotiating with other lenders to provide funding for the development – the First Mandate gave exclusive rights to Macquarie. Macquarie did gain exclusive rights as a finance provider under the First Mandate. That was not, however, unconscionable conduct on Macquarie's part, nor did it arise from unconscionable conduct. (d) Macquarie accepted appointment as exclusive finance arranger on 16 September 1999 knowing that it was not, or with reckless indifference as to whether it was or was not, willing to offer mezzanine funding for the development without imposing a condition that the plaintiffs sell their ownership interests in the development and knowing that it was not willing to make any endeavours whatsoever to arrange such a facility from any other lender – again, this was part of Macquarie's intentional strategy. Macquarie accepted appointment as an exclusive finance arranger under the First Mandate assuming that OBS was a special purpose developer vehicle owned by Katsalidis Developments. Mr Nelson sought credit approval even though, in due diligence, he discovered Mr Sanchez, through Vitarni, held a 50% interest in OBS. There was no condition imposed upon the plaintiffs to sell their ownership interests in the development. Credit approval was not forthcoming with respect to that structure and an alternative proposal was put forward by Mr Nelson and accepted by the joint venturers. Credit approval under that structure was obtained. The joint venturers were free to reject the proposal or the Second Mandate. They did not do so. There was no unconscionability in the conduct of Macquarie in this regard. (e) Some six weeks after its exclusive appointment, Macquarie informed Sanchez of its true position in late October 1999 – that the plaintiffs could not have any ownership control interests in the development. For the reasons set out above, Macquarie did not adopt the parameter that the plaintiffs could have no ownership or control interests in the development until after the rejection of the structure including OBS. In rejecting the credit application put to him, Mr Alan Moss did not act unconscionably. In attempting to find a solution, as Mr Nelson did thereafter, he was not acting unconscionably. The plaintiffs did not suffer any damage as a result of their acceptance of the alternative structure because the joint venturers were free to go elsewhere and had time to arrange alternative finance. (f) That communication amounted to a refusal by Macquarie to perform its obligations under the First Mandate – namely, to use best efforts to arrange finance on the terms annexed. For the reasons set forth above there was no refusal by Macquarie to perform its obligations under the First Mandate. (g) The communication was made at a time when the plaintiffs had no choice other than to accede to the Macquarie conditions. For the reasons set out above, the joint venturers had plenty of time in which to organise alternative finance and to complete the construction before the sunset clauses came into operation. (h) Macquarie knew that it was essential to the success of the development that construction finance be in place by November 1999 to enable construction to commence and avoid the risk of losing the pre-sales. For the reasons set forth above this was not the case. The construction was estimated to take 18 months and the sunset clauses would not operate until 1 January 2002. (i) In acting as it did, Macquarie acted in bad faith. There was no evidence to establish that allegation. 72 It was alleged that the plaintiffs were at a special disadvantage because of their inability in late October 1999 to do anything other than accede to Macquarie's conditions. For the reasons set out above there was, as Mr Sanchez accepted, ample opportunity for the joint venturers to have organised alternative finance and completed the construction before the sunset clauses came into effect, even allowing the two to three months of informal negotiation which Mr Charlesworth estimated would be necessary with respect to an alternative financer. I find the plaintiffs were not at a special disadvantage. 73 I find that the conduct of Macquarie was not unconscionable for the purposes of the Australian Securities and Investments Commission Act 2001 (Cth), s 12CA(1) or the Trade Practices Act 1974 (Cth), s 51AA(1) and that the plaintiffs are not entitled to damages in terms of the Australian Securities and Investments Commission Act 2001 (Cth), s 12GF(1) or s 12GM(1) or the Trade Practices Act 1974 (Cth), s 87(1). 74 In the alternative, the plaintiffs alleged that Macquarie owed fiduciary duties to the plaintiffs which it breached. In view of my findings, if there was a fiduciary relationship between the parties, which it is unnecessary for me to determine, there was no breach of duty on Macquarie's part. 75 Clause 10.4 of a priority deed executed on 30 December 1999 by Vitarni, Vantian and Mr and Mrs Sanchez provided that they released and discharged Macquarie from specified liabilities. Macquarie pleaded this provision in its defence. In view of the findings I have made, it is unnecessary for me to determine whether that defence was a good one. 76 The First Mandate contained a limitation of liability by OVP for any losses sustained by it or its associates in favour of Macquarie to the amount of fees actually received by Macquarie. It also contained an indemnity by OVP in favour of Macquarie for all losses in excess of such fees against all damages, liabilities, expenses and costs which might be incurred in respect of any claims, actions, inquiries, hearings, judgments or compromises arising out of or in connection with the services provided by Macquarie. Similar limitations and indemnities were provided by OVP and OBS under the Second Mandate. 77 By its cross-claim, Macquarie sought orders that OVP and OBS indemnify it for any amount in excess of $775,000 for which it might be liable. In view of my findings, it is unnecessary for me to deal with the cross-claim. 78 I gave the plaintiffs leave to file in court four reports of William Neill, a chartered accountant. Macquarie had filed a report by Wayne Lonergan, chartered accountant, in response. I rejected the tender of the first report of Mr Neill on the basis that it was embarrassing in failing to divorce lines of argument of Mr Sanchez from expressions of opinion and in failing to provide any criteria to enable an evaluation of the validity of conclusions (Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705). The plaintiffs then abandoned reliance upon any of Mr Neill's reports. Mr Lonergan's report was not tendered. 79 The plaintiffs submitted that Vitarni, as the entity holding an interest in the joint venture, suffered damage as a result of the incurrence by the joint venture of the re-structure costs. Mr and Mrs Sanchez held the issued capital of Vitarni. It was submitted that they, too, suffered damage as a result. However, any damages suffered by Mr and Mrs Sanchez merely as a reflection of the losses sustained by Vitarni are irrecoverable (Gould v Vaggelas (1983-1985) 157 CLR 215, Johnson v Gore Wood & Co [2002] 2 AC 1). Vitarni is the proper plaintiff. It alone can recover damages for losses sustained by it. To allow otherwise would be to duplicate the damages necessary to compensate for the single wrong. Had there been an award of damages, I am of the view that Vitarni alone would have been entitled to a verdict. 80 I would dismiss the statement of claim and give judgment for the defendant. I will hear the parties on costs. Last Modified: 11/08/2002 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.