New South Wales Supreme Court CITATION : Bruce Harvey and Anor v State of New South Wales [2006] NSWSC 1436 HEARING DATE(S) : 6 June 2005, 7 June 2005, 8 June 2005, 9 June 2005, 10 June 2005, 14 June 2005, 15 June 2005, 16 June 2005, 25 August 2005, 28 November 2005, 29 November 2005, 30 November 2005, 5 December 2005, 6 December 2005, 9 December 2005, 13 December 2005 JUDGMENT DATE : 21 December 2006 JURISDICTION : Equity Division JUDGMENT OF : Johnson J at 1 DECISION : 1. Verdict and judgment for the Defendant ; 2. Plaintiffs to pay the Defendant's costs of the proceedings. CATCHWORDS : CLAIM FOR DAMAGES - misleading and deceptive conduct claim against State of New South Wales for false and misleading statements made by officer of the Department of Aboriginal Affairs - whether ostensible authority established to render State of New South Wales liable - whether Plaintiff put on inquiry by circumstances of dealing with officer - whether Department of Aboriginal Affairs carrying on business for purposes of Fair Trading Act 1987 - whether State of New South Wales vicariously liable for acts of officer - whether officer engaged in a frolic of his own - whether direct liability in negligence established against State of New South Wales arising from appointment of officer to departmental position and supervision of him Fair Trading Act 1987 LEGISLATION CITED : Law Reform (Vicarious Liability) Act 1983 Real Property Act 1900 Uniform Civil Procedure Rules De Gioia v Darling Island Stevedoring & Lightecage Co Ltd (1941) 42 SR(NSW) 1 Challenge Finance Limited for Forshaw (No 4) (1995) 217 ALR 264 Hunt v Watkins (2000) 49 NSWLR 508 Carr v Baker (1936) 36 SR(NSW) 301 R v Serratore (1999) 48 NSWLR 101 Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 Paramedical Services Pty Limited v Ambulance Service of NSW [1999] FCA 548 State of New South Wales v RT & YE Falls Investments Pty Limited (2003) 57 NSWLR 1 Meadow Gem Pty Limited v ANZ Executors and Trustee Company Limited (Supreme Court of Victoria, Hedigan J, 18 May 1994, BC9401058); (1994) ATPR (Digest) 46-130 Northside Developments Pty Limited v Registrar General (1990) 170 CLR 146 Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 CASES CITED : Freeman and Lockyer v Brockhurst Park Properties (Mangal) Limited (1964) 2 QB 480 Essington Investments Pty Limited v Regency Property Pty Limited [2004] NSWCA 375 Armagas Limited v Mundogas SA (1986) AC 717 Deatons Pty Limited v Flew (1949) 79 CLR 370 State of New South Wales v Lepore (2003) 212 CLR 511 Starks v RSM Security Pty Limited [2004] NSWCA 351 Rosenberg v Percival (2001) 205 CLR 434 R v Watkins [2005] NSWCCA 164 Neill v NSW Fresh Food & Ice Pty Limited (1963) 108 CLR 362 Vozza v Tooth & Co Limited (1964) 112 CLR 316 Kingshott v Goodyear Tyre & Rubber Co Australia Limited (No. 2) (1987) 8 NSWLR 707 Sellars v Adelaide Petroleum NL and Others (1992-1994) 179 CLR 332 Malec v JC Hutton Pty Limited (1990) 169 CLR 638 PARTIES : Bruce Harvey and Bruce Harvey Enterprises Pty Limited (Plaintiffs) State of New South Wales (Defendant) FILE NUMBER(S) : SC 5051/01 Mr F Donohoe (Plaintiffs - 6, 7, 8, 9, 10, 14, 15 and 16 June 2005) COUNSEL : Mr S Titus (Plaintiffs - 25 August 2005; 28, 29 and 30 November 2005; 6, 9 and 13 December 2005) Mr P Menzies QC; with Mr D Mallon (Defendants) SOLICITORS : Mr S Titus - Carneys Lawyers (Plaintiffs) IV Knight, Crown Solicitor's Office (Defendants) LOWER COURT DATE OF DECISION : --- LOWER COURT MEDIUM NEUTRAL CITATION : --- IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Johnson J 21 December 2006 5051/01 Bruce Harvey and Anor v State of New South Wales JUDGMENT 1 JOHNSON J: In June 2005, I embarked upon the hearing of two sets of related proceedings which were to be heard together: (a) Equity Division proceedings 5051/01 Bruce Harvey and Bruce Harvey Enterprises Pty Limited v State of New South Wales and (b) Common Law Division proceedings 20525/01 Bruce Harvey Enterprises Pty Limited v Victor Tjakamarra Forrest and Henry Kelly. 2 At the commencement of the second hearing day, I was informed that the Common Law Division proceedings had settled in their entirety together with cross claims in the Equity Division proceedings. By consent, I made certain orders to give effect to the settlement. Thereafter, the hearing proceeded of the balance of the Equity Division proceedings in which the Plaintiffs, Bruce Harvey Enterprises Pty Limited ("Enterprises") and Bruce Harvey, sue the Defendant, the State of New South Wales, upon several causes of action. Overview of the Plaintiffs' Claims 3 The Plaintiffs maintain that the Defendant is liable to them for damages under the Fair Trading Act 1987 or in negligence with respect to actual loss, and the loss of opportunity to make significant profits from the marketing, in the context of the 2000 Sydney Olympic Games, of framed items of Aboriginal art accompanied by a Certificate of Title as tenant in common to a remote area of land outside Hill End. It is the Plaintiffs' case that these items were to be sold to the general public, including international visitors, at a price of about $1,000.00 per item and that the project would have been very successful. 4 The Plaintiffs sue the Defendant upon the following causes of action: (a) misleading and deceptive conduct on the part of one Adrian Tucker (then an officer of the New South Wales Department of Aboriginal Affairs ("DAA") which is alleged to have given rise to loss or damage for which it is claimed that the Defendant is liable for damages by way of apparent authority under s.70 Fair Trading Act 1987 ; (b) negligent misstatements on the part of Adrian Tucker which are said to have caused loss and damage for which the Defendant is said to be vicariously liable; (c) negligence on the part of the Defendant in the employment and supervision of Adrian Tucker in 1999 and 2000 within the DAA, for which it is alleged that the Defendant is directly liable. 5 As will be seen, it is common ground between the Plaintiffs and the Defendant that Mr Tucker, whilst an employee of the DAA, made a series of false and misleading statements to Mr Harvey and persons associated with Mr Harvey. Mr Tucker is not a party to these proceedings. Nor was he called as a witness by the Plaintiffs or the Defendant. A central issue to be determined is whether Mr Tucker's undoubted false and misleading statements give rise to any liability on the Defendant's part to the Plaintiffs. 6 The Plaintiffs assert that ostensible or apparent authority is established so that the Defendant is liable for Mr Tucker's false and misleading statements. The Defendant denies that this is so and contends, as well, that Mr Harvey was put on inquiry by aspects of Mr Tucker's conduct and did not act reasonably so that, even if ostensible authority was established, the Plaintiffs cannot succeed. 7 The Defendant contends that Mr Tucker was engaged in a "frolic of his own" so that the Defendant is not vicariously liable for his actions. The Defendant contends further that the Plaintiffs have not established any cause of action in negligence arising from the selection of Mr Tucker to work in the DAA and the supervision of him in that employment. Appearances at the Hearing 8 At the first stage of the hearing in June 2005, the Plaintiffs were represented by Mr F Donohoe, of counsel, instructed by Mr S Titus, solicitor. At the resumed hearing of the matter in November and December 2005, Mr Titus appeared for the Plaintiffs. At all times, the Defendant was represented by Mr P Menzies QC with Mr D Mallon of counsel, instructed by Ms N Haddad of the Crown Solicitor's Office. The Course of the Hearing 9 The Plaintiffs called the following witnesses in support of their claims: (a) Bruce Harvey, engineer, a Plaintiff in the proceedings (T82-112, 7 June 2005; T1-116, 8 and 9 June 2005; T93-98, 10 June 2005); (b) Peter William McDonald, marketing consultant - Mr McDonald's evidence concerned marketing opportunities said to be available with respect to the framed items of Aboriginal art and Certificate of Title (T106-161, 10 and 14 June 2005); (c) Michael Wilson, financial advisor - Mr Wilson's evidence concerned the availability of finance for the project (T171-179, 14 June 2005); (d) Jo-Ann Zamora, web development and training consultant - Ms Zamora's evidence concerned internet advertising and promotion issues relating to the project (T185-189, 14 June 2005); (e) Anthony Arthur Amatto, unemployed - Mr Amatto's evidence related to the involvement of the Wiradjuri people in the project (T246-249, 16 June 2005); (f) Martyn Henry Betts, accountant - the evidence of Mr Betts related to accounting work said to have been undertaken for the Plaintiffs during the period when the project was under development and consideration and his involvement with Mr Harvey and Mr Tucker in 1999-2000 (T271-289, 301-318, 28 November 2005); (g) Terence Peter Griffin, Commissioner of the Police Integrity Commission - Mr Griffin's evidence related to an investigation carried out by him prior to his appointment to the Police Integrity Commission, whereby at the request of the Crown Solicitor's Office, he investigated the conduct of Mr Tucker within the DAA concerning his dealings with Mr Harvey - his evidence was brief and was confined essentially to the tender of certain notes of interviews conducted during the investigation (Exhibit N) (T290-300, 28 November 2005). 10 In addition, affidavits or statements of the following persons were read in the Plaintiffs' case with the deponent or author not required for cross-examination: (a) Robin Geoffrey Humphreys, chartered accountant - Mr Humphreys' affidavits contained calculations of damages for the loss of opportunity said to have arisen from the inability of the Plaintiffs to proceed with the project marketing framed items of Aboriginal art and Certificates of Title; (b) Margaret Colleen Hole, solicitor - Ms Hole's affidavit concerned opinions the reasonableness of a solicitor acting in certain capacities with respect to the project; (c) Ronald John Brouwer, engineer - Mr Brouwer's statement concerns the income which Mr Harvey could have earned as an engineer in 1999-2000; (d) John Edward Roberts, company director - Mr Roberts' statement relates to Mr Harvey's business activities in and after 2001 and his business acumen in those activities; (e) Robin Glass, investor - Mr Glass' statement concerns his dealings with Mr Harvey on and after 29 June 2000 with respect to possible investment in the Plaintiffs' project involving the marketing of framed items of Aboriginal art and Certificates of Title. 11 At the conclusion of the Plaintiffs' case, Mr Menzies QC, for the Defendant, moved for dismissal of the proceedings under Part 29 r 29.9 Uniform Civil Procedure Rules ("UCPR"). Mr Titus, solicitor for the Plaintiffs, stated that the Plaintiffs wished to argue the question raised by the application for the purpose of Part 29 r 29.9(3) UCPR. Thereafter, I heard submissions and ruled that I would not accede to the Defendant's application for dismissal of the proceedings (T357.18). 12 On such a dismissal application, the Plaintiffs' evidence should be taken at its highest: De Gioia v Darling Island Stevedoring & Lightecage Co Ltd (1941) 42 SR(NSW) 1 at 3; Challenge Finance Limited for Forshaw (No 4) (1995) 217 ALR 264 at 268-9; Hunt v Watkins (2000) 49 NSWLR 508 at 510. 13 In evaluating a submission of "no case to answer" in civil proceedings, the Court does not evaluate the evidence nor make findings of fact. I was in the same position as a judge with a civil jury, except that I fulfil both roles. It was necessary to consider whether, as a matter of law, the Plaintiffs' case met the standard set out in De Gioia, Challenge Finance Limited v Forshaw (No. 4) and Hunt v Watkins. If there was sufficient evidence to surmount this barrier, then, in due course, the case proceeds with it falling to me, as the trial judge, to evaluate the evidence and to decide the case and make findings of fact. 14 Where, as in the present case, the Plaintiffs' case is based partly upon inferences which the court is asked to draw from evidence in the Plaintiffs' case, and there are countervailing probabilities, it would be a very exceptional case in which the judge could be justified in taking the case away from a jury in civil proceedings: Carr v Baker (1936) 36 SR(NSW) 301 at 306-307. A similar approach is adopted where a submission of no prima facie case is made in criminal proceedings based upon circumstantial evidence: R v Serratore (1999) 48 NSWLR 101 at 130. 15 Having applied these principles to the submissions advanced by the parties, I refused the Defendant's application for dismissal of the proceedings. 16 Following the rejection of the Defendant's application for dismissal of the proceedings, the Defendant adduced evidence as permitted under Part 29 r 29.9(5)(a) UCPR. The Defendant called the following witnesses: (a) Ian Allen Myers, Deputy General Manager of Indigenous Business Australia - the evidence of Mr Myers related to his contact with Mr Harvey concerning the project in 2000 and associated matters (T357-369, 29 November 2005); (b) Warren Lloyd Steadman, Regional Manager, Department of Aging and Disability and Aboriginal Home Care - Mr Steadman's evidence concerned his employment between 1998 and 2000 as Manager of the Research and Policy Unit within the DAA, in which capacity he supervised Mr Tucker and had some knowledge of Mr Harvey and his project (T369-386, 29 November 2005); (c) Brian David Higginson, supervisor in the Department of Lands - Mr Higginson's evidence concerned legal and practical issues surrounding the issue by the Registrar General of multiple Certificates of Title to tenants in common of land (T386-389, 29 November 2005); (d) Neville James Moses, solicitor - the evidence of Mr Moses involved his expert opinion concerning Land Titles Office practice, the issuing of Certificates of Title and related issues concerning Mr Harvey's project (T392-400, 30 November 2005); (e) John Colquhoun, art dealer - Mr Colquhoun's evidence concerned contact with Mr Harvey in late 1999 relating to the framed Aboriginal art/Certificate of Title project and the prospect of financial success arising from that project (T400-407, 30 November 2005); (f) Gavin Ronald Bartier, solicitor in the Department of Lands - Mr Bartier's evidence concerned his contact with Mr Harvey about the project in and after July 2000 and the question of registration and the issue of multiple Certificates of Title and the practicability, legality and cost of that step (T408-412, 30 November 2005); (g) John Moore, Chief Executive Officer (Asia Pacific) of the Nuance Group - Mr Moore's evidence concerned his involvement, at relevant times, as Group General Manager of Marketing and Image of the Sydney Organising Committee for the Olympic Games ("SOCOG") - Mr Moore's evidence touched upon the viability of Mr Harvey's project and the question whether it could have ever received endorsement by SOCOG having regard to the criteria applicable for SOCOG-endorsed products (T412-418, 30 November 2005); (h) Margaret Craig-Lees, Associate Professor of Marketing at the Auckland University of Technology - Dr Craig-Lees gave expert evidence concerning the practicability and viability, from a marketing perspective, of Mr Harvey's project to market framed items of Aboriginal art/Certificate of Title (T419-444, 30 November 2005); (i) Geoffrey William Scott, research chair at the University of Technology - Mr Scott's evidence concerned events in 2000 when he was Director General of the DAA, issues concerning Mr Tucker and statements made by Mr Scott to Mr Griffin during his investigation (T447-467, 6 December 2005); (j) Linda Jean Burney, Member of the New South Wales Legislative Assembly - Ms Burney's evidence related to the period when she was Deputy Director General, and then Director General, of the DAA in 1999 and afterwards and her knowledge of Mr Tucker's dealings with Mr Harvey concerning the Plaintiffs' project (T468-494, 6 December 2005). The Plaintiffs' Pleaded Claims 17 The Plaintiffs' claims are set out in the Further Amended Statement of Claim ("FASC") filed by leave on 9 June 2005, which is the principal source for the following narrative and which serves to introduce a number of persons and entities to be referred to later in this judgment. 18 Enterprises was incorporated on 14 June 1984. At all relevant times, the second-named Plaintiff, Bruce Harvey, was a director of Enterprises and the company acted through him as its agent. 19 By Deed of Trust dated 1 September 1999, Enterprises became trustee of the trust known as "The Australian Indigenous Peoples Hill End Land Trust" ("the Trust"). 20 Prior to 25 July 2000, Sir Barry Jowett was a director of Sydney-Beijing Development Corporation Pty Limited. He was also a registered proprietor of 99,980 out of 100,000 shares of land near Hill End comprised in Lots 63, 64 and 107 in Deposited Plan 756105, being the land comprised in Certificate of Title Volume 8647 Folio 246 ("the Land"). Sir Barry Jowett employed Henry Kelly, solicitor, in respect of his dealings with Mr Harvey and Enterprises. 21 During 1998, Mr Harvey was introduced to Sir Barry Jowett. During discussions, Sir Barry Jowett introduced Mr Harvey to the concept of the sale of 100,000 individual shares in the Land including mounted and authenticated Certificates of Title. During 1998, Sir Barry Jowett and Mr Harvey attempted to develop projects for the sale of similar products into China and elsewhere, but without success. 22 On or about 11 August 1999, Mr Harvey contacted the DAA to notify it of the project and to seek the co-operation of the DAA in its promotion. He was directed by the receptionist to Adrian Tucker, a person employed as a policy officer in the DAA. 23 On 12 August 1999, Mr Harvey met with Mr Tucker at the offices of the DAA and thereafter Mr Harvey and Mr Tucker communicated with each other concerning the Plaintiffs' project. 24 Mr Harvey's project involved the marketing of products in co-operation with the Wiradjuri Council of Elders ("the Elders"). As a result of Mr Harvey's co-operation with the Elders, the project was refined to a plan to market a mounted and authenticated Certificate of Title which was said to be for the mutual benefit of Mr Harvey (or his nominee) and the Wiradjuri people. It was proposed that the Trust would develop a product for sale to the public which consisted of: (a) a framed full freehold title deed for each of the 100,000 shares available in the Land; (b) an authentic Aboriginal painting; (c) a certificate of authenticity for the Certificate of Title and the painting; which together would be mounted in a glass-enclosed frame and given an individual limited edition number. 25 It was proposed that the product would then be marketed to the public in Australia and overseas for an expected price of $A1,000.00. It would be a condition of the sale of each item that the purchaser enter into an agreement appointing the Elders as managers of the land in perpetuity. 26 It was proposed that the Trust would pay a fixed price to the painters and, after recovery of expenses, it was envisaged that the Trust would retain a profit of $250.00 per item sold. 27 On about 24 November 1999, the Elders on behalf of the Wiradjuri people, obtained a company for their use in connection with the product named Wiradjuri Council of Elders Limited, which was purchased as a shelf company by Mr Harvey on behalf of the Elders. 28 By agreement made between Enterprises and Sir Barry Jowett on 13 December 1999, it was agreed that: (a) pursuant to a contract for the sale of land, Sir Barry Jowett would sell the Land to Enterprises with completion to take place on 24 January 2000; (b) Sir Barry Jowett would assign the (so-called) intellectual property in the business said to be conducted by him with respect to the sale of remaining shares in the Land (99,980 out of 100,000 shares) for the price of $950,000.00 on certain terms. The Plaintiffs' Causes of Action 29 In the FASC, the Plaintiffs allege that nine separate sets of representations were made by Mr Tucker, each of which is alleged to have been made in trade or commerce and to constitute representations for the purposes of the Fair Trading Act 1987. The form and date of the representations alleged are as follows: (a) oral representations allegedly made at a meeting between 13 and 31 August 1999 between Mr Harvey and Mr Tucker (the first representations) (FASC, paragraphs 14-15); (b) written representations contained in a letter dated 31 August 1999 from Mr Tucker to Mr Harvey and Enterprises (second representations) (FASC, paragraphs 16-17); (c) written representations contained in emails from Mr Tucker to Mr Harvey dated 24 September 1999 and 8 October 1999 (third representations) (FASC, paragraphs 18-20); (d) written representations contained in a letter dated 26 October 1999 from Mr Tucker to Mr Harvey and Enterprises (fourth representations) (FASC, paragraphs 21-22); (e) oral representations alleged to have been made at a meeting in 1999 at a restaurant between Mr Harvey, Mr Tucker and Rene Rivkin (fifth representations) (FASC, paragraphs 23-25); (f) written representations alleged in a letter dated 24 December 1999 from Mr Tucker to Mr Harvey and Enterprises (sixth representations) (FASC, paragraphs 27-31); (g) written representations contained in a letter dated 24 January 2000 from Mr Tucker to Mr Harvey and Enterprises (seventh representations) (FASC, paragraphs 32-33); (h) written representations contained in a letter dated 7 February 2000 from Mr Tucker to Henry Kelly, solicitor for Sir Barry Jowett, a copy of which is alleged to have been copied by Mr Tucker on that date to Mr Harvey (the eighth representations) (FASC, paragraphs 34-38); (i) written representations contained in a letter sent on or about 15 March 2000 by Mr Tucker to Mr Kelly (a copy of which is alleged to have been copied to Mr Harvey by facsimile) (ninth representations) (FASC, paragraphs 39-42). 30 The Plaintiffs allege that each of the nine representations were: (a) misleading and deceptive within the meaning of s.42 Fair Trading Act 1987 ; (b) made negligently by Mr Tucker (FASC, paragraph 46). 31 In the alternative to the claims under the Fair Trading Act 1987 and for negligent misstatement, the Plaintiffs allege that the Defendant owed a duty of care to the Plaintiffs and breached that duty by negligently appointing Mr Tucker to the position he held within the DAA, by not supervising or adequately supervising the conduct of Mr Tucker in his dealings with the Plaintiffs and by not supervising the correspondence between Mr Tucker and the Plaintiffs adequately or at all (FASC, paragraphs 55D-55E). 32 The Plaintiffs assert various forms of loss and damage as a result of the alleged misleading and deceptive and/or negligent conduct of Mr Tucker (FASC, paragraph 56). The Defendant's Response to the Claims 33 The broad approach of the Defendant to the proceedings involves admissions that Mr Tucker was employed as a policy officer by the DAA and made communications and representations to Mr Harvey in respect of funding of the project, but denies that the communications and representations were made by Mr Tucker during the course of his employment and denies that the Defendant was vicariously liable for the actions of Mr Tucker (Defence to FASC filed 29 November 2005, paragraph 4). 34 The Defendant denies that any of the nine sets of representations alleged by the Plaintiffs have been established through the documentary or oral evidence. 35 With respect to the whole of the claim of the Plaintiffs under the Fair Trading Act 1987, the Defendant says that it did not at any material time carry on a business within the meaning of and for the purposes of that Act (Defence to FASC, paragraph 31). 36 In relation to the whole of the FASC, the Defendant says that: (a) Mr Tucker acted outside his authority as an employee of the DAA and outside his scope of employment; (b) Mr Tucker was not authorised to act, behave and conduct himself in the manner alleged by the Plaintiffs in these proceedings and he was not directed or authorised to so act (Defence to FASC, paragraph 32). 37 With respect to the claims in negligence, the Defendant denies both vicarious and direct liability. Relevant Legal Principles 38 There is little dispute between the parties concerning the legal principles applicable to the claims for relief. Rather, the controversy lies in the application of these principles to the facts of the case. Claims Under the Fair Trading Act 1987 39 The Fair Trading Act 1987 binds the Crown in right of the State insofar as the Crown in right of the State carries on a business, whether directly or by an authority of the State: s.3(1) Fair Trading Act 1987. 40 The term "business" includes a business not carried on for profit and a trade or profession: s.4(1). 41 "Public authority" means a public or local authority constituted by an Act (whether or not a statutory body representing the Crown), a Government Department of an administrative office: s.4(1). 42 The term "trade or commerce" includes any business or professional activity: s.4(1). 43 A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive: s.42(1). 44 Section 70 Fair Trading Act 1987 relates to conduct by directors, servants or agents. It was common ground before me that s.70(3), (4) and (5) were the relevant parts of s.70 for the purpose of these proceedings. Those provisions state: " (3) If, in a proceeding under this Part in respect of conduct engaged in by a person other than a body corporate, it is necessary to establish the state of mind of the person, it is sufficient to show that a servant or agent of the person, being a servant or agent by whom the conduct was engaged in within the scope of the servant's or agent's actual or apparent authority, had that state of mind. (4) Conduct engaged in on behalf of a person other than a body corporate: (a) by a servant or agent of the person within the scope of the actual or apparent authority of the servant or agent, or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a servant or agent of the first-mentioned person, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the servant or agent, shall be deemed, for the purposes of this Act, to have been engaged in also by the first-mentioned person. (5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for that intention, opinion, belief or purpose." 45 It was common ground between the parties that Mr Tucker did not have actual authority of the Defendant to act in the way in which he did. The relevant concept for the purpose of this case is apparent or ostensible authority. I will return to this issue shortly. 46 The claim under the Fair Trading Act 1987 will only run if the Court is satisfied that the Defendant, through the DAA, was "carrying on business" (s.3(1)) or was engaged "in trade or commerce" (s.42(1)). 47 The term "business" is not capable of a precise definition and its meaning is to be derived from the context in which it is used: Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 at [51]. The expression "carry on a business", in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction: Sirway at [52]. A business may still be carried on when the activities engaged in are purely altruistic or charitable in scope: Sirway at [54]. Usually, the less commercial the character and objectives of an organisation, the greater the degree of system and regularity required for the organisation's activities to be characterised as a business: Paramedical Services Pty Limited v Ambulance Service of NSW [1999] FCA 548 at [86]. 48 It was common ground between the parties that relevant principles were to be found in the decision of the Court of Appeal in State of New South Wales v RT & YE Falls Investments Pty Limited (2003) 57 NSWLR 1. 49 Spigelman CJ observed that it is necessary to identify with some degree of precision the particular conduct in issue in proceedings, in order to determine whether that conduct can be characterised as having been performed "in trade or commerce" or in the course of "carrying on a business": Falls at 5 [24]. The Chief Justice observed, at 5 [24], that the conduct in issue in that case involved representations to the effect that a particular proposal under consideration by a government department (the Department of Agriculture) was "highly unlikely" to be rejected or that approval was "almost a foregone conclusion", and that the representations were made by an officer of the Department of Agriculture in the course of the administration of two of the large number of acts for which that Department was responsible. 50 At 7 [33], Spigelman CJ agreed with Hodgson JA that it was not possible to characterise the conduct in question in Falls as the "carrying on of a business" or as having been engaged "in trade or commerce". The Chief Justice concluded that it was erroneous to take one aspect of the scheme of compensation and thereby characterise the process as a whole. Spigelman CJ concluded that "the governmental character of the process remains not only the dominant but, in my opinion, the sole characterisation of the process" (at 7 [33]). 51 Sheller JA, in Falls at 9 [47], agreed that the representation was not made in the course of a business carried on by the New South Wales Department of Agriculture, a department with no separate legal status. Sheller JA observed that the concept of the Crown carrying on a business "is a difficult one in borderline cases" and "the answer tends to be more intuitive than the product of a process of reasoning". Sheller JA at 9 [47] adopted what was said to Sundberg J in Sirway Asia Pacific Pty Limited v Commonwealth of Australia at [62] that, because the New South Wales Department of Agriculture's activity in Falls "so obviously relates to the execution of a government function which is in the interests of the community, it does not have the characteristic of carrying on a business". Sheller JA concluded that the assignment to the Department of part of the owner's interests in the proceeds of sale in Falls was to achieve a policy objective and had nothing to do with business considerations and, accordingly, the Fair Trading Act 1987 had no application to the representation complained of (at 9 [47]). 52 In Falls, Hodgson JA at 34-35 [129]-[135], considered whether the Crown, through the Department of Agriculture was carrying on business for the purpose of the Fair Trading Act 1987. Hodgson JA accepted, at 34 [129], that the fact that certain activities are part of the provision of governmental services will generally be relevant to the question whether or not they amount to the carrying of a business although it will not be conclusive. Hodgson JA accepted, at 34 [130], that a government agency may be carrying on a business, by activities which are themselves only a part, perhaps even a small part, of activities which are, when considered as a whole, plainly the provision of government services and not a business. However, his Honour said at 34 [131] that "the activities in question must be sufficiently systematic and regular, and sufficiently similar to commercial activities that private persons might engage in, to justify being characterised as a business". Hodgson JA concluded that the New South Wales Department of Agriculture was not relevantly carrying on a business and, for similar reasons, the representations were not made in trade or commerce (at 35 [135]). 53 I will return later in this judgment to apply these principles to the facts of the present case. Ostensible Authority 54 It is common ground that Mr Tucker was not acting within the scope of his actual authority and the Plaintiffs put their case as one of ostensible or apparent authority. 55 If Mr Tucker was acting within the scope of his apparent authority, then the Defendant may be liable for breach of the Fair Trading Act 1987 (s.70(4)) if other elements of the statutory claim are made out. 56 Whether or not someone has ostensible authority to act on behalf of a principal depends, not on the conduct of the person who has purported to act on behalf of the principal, but rather on the conduct of the person or body alleged to be the principal, being the person or body upon whom liability may be fixed: Northside Developments Pty Limited v Registrar General (1990) 170 CLR 146 at 187; Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 466-467 [36]. In Pacific Carriers Limited v BNP Paribas, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said at 466-467 [36] (footnotes excluded): "It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole." 57 A claim that someone is bound by the acts of someone having ostensible authority "may be rejected on the ground that the circumstances of the case were such as to put the party who makes the claim on inquiry to ascertain the actual state of affairs. Those circumstances may be the nature of the transaction or facts of which the claimant was aware": Northside Developments Pty Limited v Registrar General at 154, 164 (Mason CJ), 178, 181 (Brennan J) and 212 (Gaudron J). As will be seen, this principle assumes particular importance in this case. 58 If Mr Harvey is acting on behalf of a disclosed principal (Sir Barry Jowett), then Mr Harvey, as agent, has no right of action against a third party: Bowstead and Reynolds on Agency, 17th edn, 2001, paragraph 9-010. Where the principal is undisclosed at the time of contracting, the contract is made with the agent and he is personally liable and entitled on it. If an agent is acting for an undisclosed principal then, if he sues in tort, he can generally only recover his own loss and not that of the principal: Bowstead and Reynolds on Agency at paragraph 9-013. 59 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, and in fact acted on 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 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: Freeman and Lockyer v Brockhurst Park Properties (Mangal) Limited (1964) 2 QB 480 at 503-504; Essington Investments Pty Limited v Regency Property Pty Limited [2004] NSWCA 375 at [39]. 60 Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it: Armagas Limited v Mundogas SA (1986) AC 717 at 777; Essington Investments at [43]. 61 In Pacific Carriers Limited v BNP Paribas, it was observed at 467 [38]: "A kind of representation that often arises in business dealings is one which flows from equipping an officer of a company with a certain title, status and facilities. In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd , for example, the court spoke of the representation that might flow from supplying a particular person with 'a blank order form, thus arming him with a document which, when he signed it, would bear the hallmark of authenticity' ((1975) 133 CLR 72 at 80; 7 ALR 527 at 533). The reference to corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority ( Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 200; 93 ALR 385 at 422; 2 ACSR 161 at 198 per Dawson J, CLR 212; ALR 430–1; ACSR 206–7 per Gaudron J). The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation." 62 It will be necessary to consider the evidence to determine whether the Plaintiffs have established that Mr Tucker had ostensible authority from the Defendant to act in the way he did so as to satisfy the requirements of s.70 Fair Trading Act 1987 and the general law with respect to this aspect of the claim for damages. Vicarious Liability of the Crown 63 The Crown is vicariously liable in respect of a tort committed by a person in the service of the Crown in the performance or purported performance by the person of a function, where the performance or purported performance of a function is in the course of the person's service with the Crown or is an incident of the person's service: s.8(1)(a) Law Reform (Vicarious Liability) Act 1983. 64 An employer cannot be vicariously liable for the acts or omissions of an employee who acts "on a frolic of his own": Deatons Pty Limited v Flew (1949) 79 CLR 370; State of New South Wales v Lepore (2003) 212 CLR 511 at 535-536 [41]; Starks v RSM Security Pty Limited [2004] NSWCA 351 at [12]-[13]. 65 It will be necessary to make findings of fact for the purpose of determining whether Mr Tucker was engaged in "a frolic of his own" in his dealings with the Plaintiffs in 1999 and 2000. Determination of Issues Affecting Liability Preamble 66 It is appropriate to first consider the question of liability. There is a substantial and separate body of evidence touching the question of damages. For the moment, I will place that evidence to one side. 67 It is appropriate to take as a starting point with respect to liability the point in time at which Mr Harvey came to meet Mr Tucker in August 1999 and commenced contact with the DAA. 68 It should be kept in mind, however, that by that time, Mr Harvey had not been able to successfully advance his project involving framed items of Aboriginal art and Certificates of Title. 69 In July 1999, World Vision Australia had declined to be involved in the project because of concern that the name of World Vision would be "tarnished" as a result of connection with the Trust and/or Enterprises (Exhibit 9). The Sydney Olympic Games were to take place in September 2000. Mr Menzies QC submits that Mr Harvey's conduct towards Mr Tucker, and his willingness to proceed in his dealings with him, were tinged by financial desperation to progress the matter. As will be seen, there is force in this submission. 70 What follows represents a narrative of relevant facts, together with my findings on issues of significance. Events Before August 1999 71 In March 1995, Mr Harvey acquired an interest in an undivided 1/100,000th share, as tenants in common, of land at Hill End formerly owned by Sir Barry Jowett. Sir Barry Jowett had initiated a scheme to market the Land in China. It was originally known as the "Lord Edward Trust" (T104, 7 June 2005). The scheme as marketed by Sir Barry Jowett involved the Land only, and despite his efforts, only about 10 Chinese people had taken up the idea of remembering their ancestors by buying this concept (T104.5, 7 June 2005). The shares were being marketed at that time at $149.95 each. The experience of the "Lord Edward Trust" provided no cause for optimism with respect to Mr Harvey's later project. 72 Mr Harvey attempted to obtain Olympic endorsement, but was unsuccessful. He took the concept of sale of land together with Aboriginal artwork to World Vision Australia in November 1998, but the proposal was rejected by World Vision Australia in July 1999. 73 Mr Harvey's concept was to market the proposal in the run up to the Olympics and during the Olympics (Affidavit of Mr Harvey, 6 March 2004, paragraphs 9 and 10). The proposal, as ultimately settled, was to sell, for $A1,000.00 each, a 1/100,000th undivided share as tenant in common in the Land, together with an Aboriginal painting. The painting with the Certificate of Title was to be framed together to comprise a "limited edition". 74 The Land in question at Hill End was valued by the Valuer General at $25,000.00 and Mr Harvey placed a value of $50,000.00 on it (T106.40, 7 June 2005). 75 The Registrar General is required to effect the registration of a transfer in registrable form, provided his fee is paid and registration is not opposed by the Office of State Revenue (s.100(3) Real Property Act 1900; Affidavit of NJ Moses, 17 December 2003, annexed statement, paragraph 16). 76 Following the withdrawal of World Vision Australia from its participation in Mr Harvey's project, he determined to seek another source of funding. Mr Harvey Meets Mr Tucker 77 On or about 11 August 1999, on his account, Mr Harvey contacted the Office of the Minister for Aboriginal Affairs and spoke to a lady and said "I have a project relating to indigenous peoples that I think would be very successful for the Olympics" and requested to speak to the Minister. He was told "You've got to go through the Department of Aboriginal Affairs before you get to him [the Minister] in the first instance". Mr Harvey then said "What is the procedure? … Can I have the number of the contact people?". The Plaintiff was then given the telephone number of the DAA (T83, 7 June 2005). 78 Mr Harvey described his initial contact with Mr Tucker as follows (T109-110, 7 June 2005): "MENZIES: Q. When you went to the Department of Aboriginal Affairs wasn't what happened that you attended the office, you were speaking to a receptionist and in the course of your conversation somebody walked out of the lift and you were told, 'That's the man you should speak to, Mr Tucker'? A. Yes, I think, yeah, that's what happened, yeah. Q. Is that right? A. I got confused before whether he said you have to talk to Tucker but now I recall he did come out of the lifts as I was speaking to the lady the day before that I met him with my accountant. Q. And that's when you were introduced to him? A. Uh huh. Q. You made an arrangement to come back and see him the next day, is that right? A. And bring some art and the concept, yes." Early Concerns About Conflict of Interest 79 At the first meeting with Mr Tucker, Mr Harvey (who was accompanied by his accountant, Mr Betts) had concerns about a possible conflict of interest arising from Mr Tucker's proposal to involve his partner, Suzanne Ingram, and a company, Jariah Productions Pty Limited, in the project. Mr Harvey was asked in cross-examination (T62-64, 9 June 2005): "Q. You went into the building and just by happenchance Mr Tucker came out of the lift when you were talking to the receptionist? A. Yes. Q. She said something to the effect, 'Well, here is the man you need to see'? A. 'That's the man'. She was talking about the man and he got out of the lift. Q. He introduced himself to you? A. Yes. Q. Told you he was a policy officer? A. Yes. Q. Did you ask him what does a policy officer do, or anything of that nature? A. I asked him whether he handled this type of thing and he said yes. Q. And then you told him what the idea was? A. Yes. Q. And he was very keen about it? A. Yes. Q. And in the course of that very first conversation he mentioned to you Susan Ingram? A. The second conversation, I believe. Well, on the 12th. Q. On the 12th? A. As I recall. Q. The first conversation was nothing more than a formal introduction, wasn't it? A. Yes, to see if they had interest. Q. So the second conversation, that took place in his office? A. Next day. Q. And Mr Betts was with you? A. I believe my accountant had a piece of art in his hand in the framed pieces. Q. In the course of that very first conversation Mr Tucker said, well, something to the effect, 'It was by extraordinary coincidence Susan Ingram, my defacto, just happens to be a Wiradjuri and she works for the Land Council' or words to that effect? A. Yes. Q. And he suggested that she be involved in it? A. Yes. Q. Through her corporation Jariah Productions? A. In relation to the art and that, yes. OBJECTION. QUESTION ALLOWED Q. You immediately said, 'Well, wait a minute, wouldn't there be a potential conflict of interest'? A. Yes. Q. Because you knew, through your dealings with government and large corporations, of the risk of conflict? A. Yes, and public servant pecuniary interests. Q. So straight up, first meaningful, if you like, or lengthy conversation, a conflict of interest looks to you at least as if it might be looming? A. It wasn't the first meaningful. The first meaningful conversation was the description of the project and all the rest of it. Q. The first lengthy conversation? A. The first conversation about Jariah I raised the point of the conflict of interest knowing they were government departments. Q. It was pretty plain, wasn't it? A. Well, I thought it was Q. And you took that up? A. I did. I asked the question. Q. And his response was 'There's no conflict because her company's done that before'? A. Exactly." 80 Mr Harvey observed that he regarded the practices being discussed by Mr Tucker at the meeting on 12 August 1999 as "questionable" but that Mr Tucker had assured him that nothing was wrong (T65, 9 June 2005). 81 Mr Betts had told Mr Harvey that there may be a conflict of interest arising from Mr Tucker wishing to have his girlfriend, Ms Ingram, as manager of the Trust (T313, 28 November 2005): "Q. Well please, Mr Betts, just answer my question. You thought it was pretty odd, didn't you? A. Yes. Q. And you told Mr Harvey that you thought it was pretty odd, didn't you? A. No. I think I told him it may be a conflict. Q. A conflict? A. Yeah. Q. Well, that's a pretty serious matter, isn't it? A conflict is a serious matter? A. That's correct." 82 Mr Harvey agreed that he was "desperate to get the thing off the ground" at the time of the first meeting with Mr Tucker (T66.9, 9 June 2005). Mr Harvey was asked by Mr Menzies QC (T66-67, 9 June 2005): "Q. And the only way out, that you could see at that time, was pulling off a deal which would restore your financial fortunes; that's right, isn't it? A. I objected to the word 'pulling' of a deal. Q. Entered into a successful entrepreneurial scheme? A. That is better. Q. Which would save your financial fortunes? A. I like that. Q. You like that? A. Yes. Q. And this was going to help the indigenous people? A. Exactly. Q. And the funds to help the indigenous people were going to come from the State? A. The sale of the trust, the grant, to the Wiradjuri, yes. Q. And it involved the Wiradjuri people getting a grant of money and paying that money, at least half of it, as I understand it, to Mr Jowett for the land? A. They were going to purchase half of the trust and I was going to pay Jowett. Q. Where were the funds coming from which would enable you to pay Jowett? A. From the government grant. Q. How were you going to get the government grant? You are not a Wiradjuri person? A. No. The Department of Aboriginal Affairs assured me they could get the grant which would enable the Wiradjuri to put half of the trust the money would be put into the trust. The trust would pay Jowett. The trust would have a manager from the Wiradjuri people as well as auditors and all the rest of it. Q. How much money were you putting in? A. I was just putting in the scheme, that was my contribution. Q. Are you familiar with the concept, or the description of a concept, being all smoke and mirrors? A. Of course. Q. That is what you were doing, wasn't it? It was all smoke and mirrors? A. No. It was a viable project." 83 Mr Harvey sought to raise $3 million by way of a grant to the Wiradjuri people who would then apply that grant to acquire a half share in the Trust. The Wiradjuri people did not have funds themselves to invest in the project (T248.15, 16 June 2005, Mr Amatto). Mr Harvey would hold 50 per cent of the Trust. The sum of $3 million would be disbursed, as to $1 million, to purchase "the land and intellectual copyright for the subdivision concept" (Affidavit of Mr Harvey, 6 March 2004, paragraph 18) and the balance would fund full production and advertising of the product. 84 On 27 August 1999, Mr Harvey and Mr Betts picked up Mr Tucker and took him to a fish market restaurant for lunch, for which Mr Harvey paid. There was further discussion concerning the involvement of Ms Ingram and conflict of interest. According to Mr Harvey and Mr Betts, Mr Tucker said that "it happens all the time within the indigenous community". 85 By facsimile dated 31 August 1999, Mr Tucker wrote to Mr Harvey on DAA letterhead: "I refer to our recent discussions regarding the proposed Australian Indigenous Peoples Hill End Land Trust. As you are aware the location of the land is Wiradjuri country meaning the Aboriginal people that the land traditionally belonged to are of this group. I have informally approached the Wiradjuri Council of Elders, who I must say reacted with barely restrained enthusiasm, and briefly outlined your proposal. The Council immediately recognised the benefits and was able to provide me with some information in regards to the establishment of the cottage industry and the availability of Wiradjuri artists that would be able to contribute to the project. I can say with confidence that there would be minimal problems in regards to establishing the cottage industry and accessing the artists that would be required as employment programs are currently operating throughout the region. I can provide you with more information about this aspect if you require. The purchasing of the land from Sir Barry Jowett is feasible out [sic] would require formal proposals to be developed and submitted to the Commonwealth Development Corporation (CDC) and/or to the Indigenous Investment Fund (IIF). Once the proposals are developed and submitted it would take 6-8 weeks to obtain a decision. I believe the decision would be a positive one because of the economic benefits for Aboriginal communities. The appropriateness of the Wiradjuri people eventually controlling the Trust and the land would also contribute to a positive outcome from the CDC and/or IIF. To move the project forward, exempting the land purchase from the equation, to a point of having the cottage industry and artists ready to begin working would require 6-8 weeks. I have approached Ms Suzanne Ingram, Jariah Productions Pty Ltd, with a view to acting as your liaison with the Wiradjuri Council of Elders. Ms Ingram is a Wiradjuri woman who has extensive personal and professional networks throughout the region that includes west of the Blue Mountains through to Hay, down to the NSW/Victorian border and as far north as Dubbo. Ms Ingram would be of great assistance in facilitating the involvement of the Wiradjuri people. In closing I would like to state that I am genuinely excited about the project and I am confident that the project will not be at all difficult to initiate and will be successful with many positive benefits, in both the short and long term, for all involved. If you have any further queries please do not hesitate to contact me on 9290 8723." 86 In the first half of September 1999, a further meeting took place between Mr Harvey, Mr Betts and Mr Tucker at a restaurant in Balmain. Mr Betts and Mr Harvey allege that Mr Tucker said that funding was available from the CDC if and when the Elders were given the grant and purchased 50 per cent of the Trust. Mr Harvey and Mr Betts allege that they returned to the DAA office and were introduced to Ms Burney. This is denied by Ms Burney. As will be seen, I do not accept the evidence of Mr Harvey and Mr Betts that they met Ms Burney on this occasion or at all. 87 On 24 September 1999, Mr Tucker sent an email to Mr Harvey in the following terms: "Here is an update for you. 1. After the meeting with you I referred the matter onto Suzanne Ingram of Jariah Productions for discussions with the Wirudjari [sic] Council of Elders. Suzanne met with the full Council on Saturday. She relayed some feedback to me and it all seems very positive. The Council are extremely excited and have initiated the following: a. A company search and land title search for their own peace of mind. I expect that I will facilitate this process and get it completed in about 14 days. b. Begin the development of the submissions/investment application. Completion is expected a few days after response of the company and land search. c. They have stared to identify the best areas for the cottage industry aspect. d. They have begun compiling a list of artists to undertake work. Bruce, I would expect that Suzanne will contact you on Monday 27 September with a more detailed report of the meeting. The Council did say that they were appreciative of the appropriate approach that you are taking and would not like to see it go off the rails. I do not believe that now that they are aware of the land at Hill End that they will let to [sic] much else be done with it. I am glad you are doing it this way because they would be really pissed if it was done any other way. They do have a range of legal options they could take if they feel that are getting screwed. These options include: a. Slapping an Aboriginal Heritage Order on it. Which means that it is purchased from the vendor at current market value. etc, etc. This would also block any future sale. b. A land rights claim. Probably wouldn't succeed but would take 2-3 years before the owner could do anything with it. So I am happy that everything is being done the right way. I will talk to you soon." 88 On 1 October 1999, Ms Suzanne Ingram, the Managing Director of Jariah Productions Pty Limited (and Mr Tucker's partner) sent an email to Mr Harvey in the following terms: "I write following discussions I have had with you and Mr Tucker about the Hill End Trust Project. I introduced the project to the Wiradjuri Council of Elders at their recent meeting in Parkes, NSW. The Council was very pleased to hear the proposal and have indicated a keen interest to be a part of the project. To this end, Council has asked that I take care of the initial steps to establish their involvement. This management will be conducted under the auspices of my company, Jariah Produstions [sic] Pty Ltd. Since speaking with you and Adrain [sic] , I have given some thought to marketing and management aspects. I have approached Mrs Evonne Goolagong-Cawley to gauge her interest. You are no doubt familiar with Evonne as a two-time Wimbledon tennis champion. What you may not be aware of is that she is a Wiradjuri woman. Evonne has also given me a firm indication of her willingness to participate in the project. This should provide a significant marketing edge for promoting the sales. May I add that the Council praises you for acting appropriately and has asked me to extend an invitation to you to speak to the full Council of Elders at their next meeting. In relation to your offer as Manager, Australian Indigenous Peoples Hill End Land Trust, I am pleased to accept the position. The Wiradjuri Council of Elders has asked me as a Wiradjuri person to be responsible for safeguarding their involvement. I look forward to speaking to you again soon. Yours sincerely Suzanne Ingram Managing Director Jariah Productions Pty Ltd." 89 On 8 October 1999, Mr Tucker sent an email to Mr Harvey as follows: "I hope that this finds you well. Soory [sic] I have been a bit uncontactable this week but we have had a Chinese government delegation in the office. One was one of the Foreign Affairs Secretary (Mr Wang) the other is one of the Trade Secretary (Mr Yao) plus about seven lackeys. I asked if either had heard of Sir Barry. They hadn't. Didn't think they would considering the amount of people in China. But made very good contacts for future. Just a brief update on what has been happenning [sic] to date. 1. The contract has been forwarded to the Councils legal people and I am hoping to get some feedback today. Verbal feedback at least. 2. You have been invited to attend the full Council of Elders meeting. I will get the dates for you. 3. I should have a draft investment submmission [sic] finished by earl next week. I will need to talk to you about certain aspects of the submission. 4. The cottage industry component is starting to shape up with facilities in Bathurst, Wellington, Cowra, and Orange benig [sic] the most likely places. There are about 200 Aboriginal people on work for the dole schemes that are able to be accessed quickly if needed. There is a number of skilled wood workers that would be perfect to get it started. Anyway I will talk to you very soon with some preliminary comments from the Elders legal people. Regards … Adrian Tucker." 90 On 21 October 1999, Ms Ingram wrote to Mr Harvey on the letterhead of Jariah Productions Pty Limited as follows: "Dear Bruce I refer to our most recent meeting to discuss the Australian Indigenous Peoples Hill End Land Trust. Please be advised that I can confirm the following: · the Wiradjuri Council of Elders intends to enter into a partnership with Bruce Harvey Enterprises regarding the purchase of a fifty per cent share in the Trust · the investment submission will be lodged with the Commonwealth Development Corporation (CDC) by Friday 29 October 1999 · Ms Joanne Hamilton, a Wiradjuri artist, has been selected to replace the existing artwork in the frame. I shall meet with Joanne to ensure that the replaced artwork is completed by end of November · a promotions and marketing plan to retail the artworks will be forwarded by mid-November. I regret to advise that Council is unable to accommodate your attendance for discussion of our project in their meeting scheduled for Friday 29 October. Council has agreed to convene a special meeting to take place toward the end of November to formalise the Trust partnership agreement. I understand that Mr Tucker will be in attendance to advise Council at this rescheduled meeting. Of course, the partnership agreement would have to be developed and approved by you and Council prior to the rescheduled meeting. I expect the CDC will also have guidelines for inclusions in the proposed partnership agreement to protect their investment and Council. I am pleased to hear that your effort to locate an Aboriginal solicitor has been successful. I believe that the protocol of a non-Wiradjuri person being involved in the project would not be a significant issue as it does not impact on any cultural aspects. I look forward to speaking with you again soon." 91 By this time, Mr Harvey had retained Mr Forrest to act as his solicitor. 92 On 26 October 1999, Mr Tucker wrote to Mr Harvey on DAA letterhead in the following terms: "I refer to your letter of 13 October 1999 and your kind words regarding assistance that I have provided to your Hill End project. I wish to confirm that the Wiradjuri Council of Elders is enthusiastic about your project. The Council has indicated to me that they see their purchase of 50% of the Australian Indigenous Peoples Hill End Land Trust as extremely beneficial to the Wiradjuri Nation. The employment of local Indigenous people and artists in the production of the art works and frames would do much to redress the high unemployment in rural NSW. Further to this is the prospect of reducing welfare dependency through the promotion [sic] economic independence will do more for the pride and self-esteem of the Aboriginal people involved than most of the other Government initiatives that have been implemented in the region. I am currently providing advice to the Council in regards to them obtaining the investment funds needed to purchase 50% of the Trust. The Wiradjuri Council of Elders will in the first instance be seeking funds from the Commonwealth Development Corporation (soon to change its name). Verbal response from the CDC should be forthcoming by the end of next week (subject to their reviewing procedures). I have been more than happy in providing advice and introducing you to the Wiradjuri representatives. I would like to add that I can continue providing advice to you and the Council as I do not have any involvement in the business side of the discussions between yourself and the Council. The Council will still be seeking advice from me on a number of issues (eg employment, etc) that do not impinge on the financial and business side of your dealings. If you wish I can still provide advice to you on issues such as employment, cultural appropriate processes and other such things. I hope that we can continue to keep in contact with each other as l believe the project is an extremely worthwhile venture." 93 On 7 December 1999, Mr Tucker sent a facsimile to Sir Barry Jowett on DAA letterhead in the following terms: "I must apologise for not making contact with you at the times I Indicated to Bruce Harvey. But working for the Government means you are at the whim of the powers that be. I will ring you on your office number on Wednesday morning at 9am your time. I hope that this is suitable for you. I have tried on two previous occasions but I was unable to get through. Once again my apologies and I look forward to discussing, what is viewed as, a very exciting project." " Something Fishy" About Mr Tucker 94 In early December 1999, a meeting occurred between Mr Harvey, Mr Betts and Mr Tucker at a restaurant in Victoria Street, Darlinghurst. Ms Ingram accompanied Mr Tucker. During the meeting, Mr Tucker said to Mr Harvey "Can I have a word to you alone?". Mr Tucker then told Mr Harvey that Mr Betts should have nothing to do with the project. The next day, Mr Harvey informed Mr Betts of this, explaining that Mr Tucker "says you do not seem to understand tribal protocols or the Aboriginal way in dealing with obtaining the finance for the project". Mr Harvey agreed in cross-examination that he was warned by Mr Betts concerning Mr Tucker as a result (T69-70, 9 June 2005): "Q. Mr Betts warned you, didn't he, about Mr Tucker? A. Not about Mr Tucker, about the lack of documentation forthcoming. I believe he's a chartered accountant and he asked accountant questions. Q. You see, Mr Betts said to you something to this effect, 'Be careful of Mr Tucker. There seems to be something fishy about the way he is going on and in not wanting an outside professional to oversee the accounting and commercial procedures'? A. He said, yes." 95 Later in cross-examination of Mr Harvey, Mr Menzies QC returned to this issue (T72-74, 9 June 2005): "Q. Mr Betts, you've told us, expressed to you his thought there was something, in his words, fishy about the way Mr Tucker was conducting himself; do you remember that? A. Yes. Q. That arose, didn't it, that conversation, as a consequence of a meeting in December 1999 with Mr Tucker and Miss Ingram and yourself and Mr Betts at your restaurant? A. Yes. Q. And during the meeting Tucker asked to speak to you privately? A. Yes. Q. And after that meeting, the following day, you told Mr Betts that Mr Tucker had said that you were to have I beg your pardon, that he, Betts, was to have nothing to do with the project? A. Yes. Q. It was as a consequence of that that Mr Betts raised his concerns? A. Yes. Q. Well, didn't that concern you, as a competent, careful entrepreneur, that something very odd was going on, when your financial adviser was being asked to be excluded from discussions? A. Yes. Q. But you felt compelled, didn't you, to proceed in the way that Mr Tucker was asking you because you were desperate to get this project approved. That is right, isn't it? A. The word desperate, you talk about my parlous financial position. I had a restaurant that was operating. It was worth 180,000. I had a home worth three quarters of a million. The reason I wanted this project going. I had put a large portion of my life into it. It's not in my nature to give up. I knew it was a good project. I was told protocols needed to be obeyed and that Betts was crossing the line. When I'm advised by senior members of the department that there are certain protocols that have to be observed, and that Betts may, you know, there might be a conflict there with them, it's easier for me to say 'Martin, you are still my accountant but you can't' Q. Regardless of all of that, didn't that raise in your mind serious concerns about the person you were dealing with? That is to say Mr Tucker? A. Yes. Q. Didn't you think that then, that it wasn't reasonable to rely upon what he was telling you? A. I felt it was unusual. Q. He told you at some point, didn't he, that he was the beneficiary of a trust himself? A. Yes. Q. $14.5m? A. Yes. Q. Which sum A. Mr Russo. Q. Mr Russo had made him a beneficiary? A. The senior son of an Italian. Q. And he told you that if all else failed he, the grade 6 policy officer at the Department of Aboriginal Affairs, would fund the thing himself? A. Yes. Q. That must have sounded to you like an absolute cock and bull story? A. Stranger things have happened. Q. That may be so but it sounded like a cock and bull story, didn't it? A. Well, you haven't called Mr Tucker, but he is a very plausible person. Q. It sounded like a cock and bull story, didn't it? A. No. I took him at his word. I couldn't see any reason for him lying to me. Q. Well, indeed, you were suspicious of him, weren't you? A. I sought advice from private investors; Rene Rivkin. Q. Well, the people from whom you sought advice thought, you said, you said to them you thought his stories were farfetched and they agreed with you, didn't they? A. Yes. Q. And you thought, well, what's in it for him? I've only made two personal loans to him of $200 and $50? A. Yes." 96 Mr Betts was clearly troubled by Mr Tucker's conduct in December 1999 and told Mr Harvey of his concerns. Mr Betts was asked in cross-examination (T317, 28 November 2005): "Q. When was it that you believed that Tucker was lying? A. When I made the statement, 'I believe there is something fishy going on' and I'm talking about the requirements that are required to complete a loan application with the Commonwealth development application, the requirements that they would have and the normal commercial procedures involved that. Q. That was as early as December 1999? A. Must have been around that time, yes. Q. Did you tell Mr Harvey that you thought that Tucker was a liar? A. As I've said I used the word 'fishy' about the way he's going on and not wanting an outside professional to oversee the accounting and commercial procedures." 97 Mr Betts explained his belief that there was something "fishy" about Mr Tucker in December 1999 (T312, 28 November 2005): "Q. What was the fishy; what was it that stank? What was the fishy odour that you were detecting? A. I think that's got to do with Tucker not wanting me there. Q. Yes. Well, that was pretty odd, wasn't it? A. Well, that's where I most probably got I felt that it was fishy at that point of time. Q. Well, what you thought clearly enough was, wasn't it, that here was this fellow Tucker wanting to keep you out of the loop, the very person who would be able to give the client independent advice, that's what was fishy, wasn't it, combined with the lack of paperwork? A. Correct. Q. Isn't that right? A. Correct. Q. You were seriously troubled about it, weren't you? A. Well, I made that statement. That's the way I put it at that point of time, yes. Q. Despite that, you were brushed aside by Mr Harvey with the explanation, well, I just got to do it this way; isn't that right? A. That's correct. My job is not to argue, just to give advice." 98 On 8 December 1999, Mr Tucker sent an email to Sir Barry Jowett in the following terms: "Thank you for your prompt email in respnse [sic] to our telephone conversation. Further to our discussion please see following point in regards to the project: I have had further discussions with the Government investment authority and they are happy with the submission and they think it is a great project in regards to outcomes for the Indigenous people involved. The submission will be lodged on Thursday subject to them clarifying the issue of the land purchase vis-a-vie evidence of the exchange and/or the actual ownership of the land. I will clarify that with them in the morning. I have had a brief discussion with Bruce Harvey today and he was happy that I had spoken to you. I will forward a letter to you in the morning (it will be there at the start of a working day) confirming our discussion and the position of the project in regards to the investment funds from the Commonwealth." 99 On 10 December 1999, Mr Tucker sent a further email to Sir Barry Jowett in the following terms: "Sorry about the delay I have just got off the telephone with Gerry from the investment authority regarding the application for funds. The advice recieved [sic] is that the application is good and that it has all the requirements that they want. They have stated that the Trust must have evidence of some assets (eg the land) prior to any decision by them. They have asked if the contractual arrangements can be structured so as the purchase of the land is staged (eg that if the land is sold to the trust than it should be on a proviso that the intellectual property sale be completed with in [sic] a set time limit 6-8 weeks otherwise the title of the land reverts back to the owner). I have advised them that I would have to speak to Bruce as he is negotiating with you and that it would have to be to by both parties prior to me informing them about the what arrangments [sic] are made. I apologise if this is going to cause problems in your dealings but you can the understand [sic] the position of the Authority as they have to be able to safeguard their investment as much as possible and protect the Wiradjuri people. Thank you for your time and I hope that this can settled reasonably quickly so as the iivestment [sic] application can be formally lodged and processed (hopefully before Christmas)." 100 On 24 December 1999, Mr Tucker sent a facsimile to Mr Harvey on DAA letterhead in the following terms: "I am writing to notify you of the current status of the investment application made by the Wiradjuri Council of Elders (WCE) to the Commonwealth Government. As you are aware the application has been proceeding through a process of evaluation and assessment by the CDC. I have had a number of discussions with the Authority over the last two weeks and I am happy to advise you that I have been verbally notified by the CDC, that the investment application has been approved for support. The level of support is still to be determined. However I can confidently say that the amount of the investment will be sufficient to ensure that the land and intellectual property is purchased by the Trust with a suitable level of funding for the implementation and preliminary operations of the project. I have been notified that a letter advising the WCE of this decision will be forwarded in the New Year (with a copy sent to you). I would like to take this opportunity to once again express my support for the project and I look forward to seeing it coming to fruition with ongoing benefits for the Indigenous people. If you have any queries please don't hesitate to contact me and I am sure that this information will contribute to you have [sic] a Merry Christmas and Happy New Year." 101 As it happens, no application of any type has been lodged with the CDC by Mr Tucker. The suggestion that it had been was entirely fictitious. 102 On 24 January 2000, Mr Tucker sent a further facsimile to Mr Harvey on DAA letterhead in the following terms: "I am writing to notify you of a slight delay in obtaining written notification of the success of the Wiradjuri Council of Elders grant submission to the CDC investment authority. I have been verbally notified that the Wiradjuri Council of Elders is successful and will be receiving a Government grant in excess of $2,000,000.00 for the project. As I have already advised you the Authority is awaiting the formal paperwork to be approved by the Commonwealth Minister of Finance. I have been notified this morning that the aforementioned Minister supports the project and will be finalising the paperwork from his office shortly. Once this has been received by the authority, I would suggest that it will be this afternoon or first thing in the morning, a formal letter will be sent to the Wiradjuri Council of Elders, with a copy to myself of which I will forward to you. Once again I apologise for the delay but as you are aware I can not [sic] control federal public servants and their processes. In closing I would like to reiterate the support for the project from all parties involved and we look forward to participating in a very exciting and innovative project. If I can be of any further assistance please don't hesitate to contact me." 103 Once again, the contents of this letter are false. No application had been made to the CDC, let alone approved by it, and no documentation was awaiting approval by the Commonwealth Minister of Finance. 104 On 7 February 2000, Mr Tucker wrote to Mr Kelly, solicitor for Sir Barry Jowett, on DAA letterhead in the following terms: "l am writing to you following a telephone conversation that I had with Sir Barry Jowett this morning, 7 February 2000. I had received a fax from the Wiradjuri Council of Elders, which originated from you to Mr Victor Forrest regarding the settlement of the contract today with Mr Harvey. The Wiradjuri were concerned that the project would be terminated. The following is what was agreed upon with Sir Barry: 1. That the settlement would be extended following my advice that the CDC is finalising the terms and conditions of the funding grant to the Wiradjuri Council of Elders. This is a legal matter between the Commonwealth Government and the Wiradjuri Council of Elders. 2. The legal aspect of the funding grant will be finalised over the next 48 hours or so. The Letter of Offer too the Wiradjuri Council from the CDC will be released after the legal aspects are finalised. I have been advised that once the Letter of Offer is released Mr Harvey is able to organise bridging finance to finalise the sale with Sir Barry. Mr Harvey is to notify you of this fact. If you wish to confirm any aspect of this letter I can be contacted on 9290 8723 or 0411 293379." 105 On 22 February 2000, Mr Tucker sent an email to Sir Barry Jowett in the following terms: "Sorry that I haven't got back to you sooner but it has been busy over this end if the world. I spoke to the CDC this morning and I have been told that 'all the paperwork has been completed and the letter of offer to the Wiradjuri Elders is going out the door'. It is his exact words. I am now following up to ensure that the Wiradjuri get the letter, sign and return it ASAP so funds are made available. I am glad that this is now being finalised and the project can get moving. I will talk to you soon about aspects of the project." 106 Once again, it was false to assert that the CDC was progressing the matter. The CDC knew nothing of the project. 107 On 15 March 2000, Mr Tucker sent a facsimile to Mr Kelly on DAA letterhead in the following terms: "I refer to our telephone conversation this morning 15 March 2000 regarding the aforementioned project and its current status. 1. The Wiradjuri Council of Elders has received a letter of Offer from the Commonwealth Government for the purposes of this project. 2. As the project is a significant one with benefits to the Wiradjuri people the Council of Elders have decided that the Letter of Offer will be formally opened and signed at a ceremony with the full council. This will be taking place on the 25 March 2000. 3. As you were already notified an Elder from the Council passed away early last week which Imposed a number of cultural obligations on the Council which precluded them from having the Letter of Offer ceremony prior to the due date for settlement of the project. 4. l have been assured by the Council that they are aware of the contents of the Letter of Offer and that there is no breach of the time constraints for acceptance. 5. The Council has also assured me that they will be signing the Letter of Offer and entering into a partnership arrangement with Mr Harvey through the Australian Indigenous Peoples Hill End Land Trust. 6. The Wiradjuri Council of Elders have stated to me that they have no concerns about Mr Harvey and look forward to working with him on this project. In closing the Council wish to delay settlement with Mr Harvey until later this month with a full settlement with Mr Jowett on or before the 31 March 2000. I hope that this letter is satisfactory and I know that the Wiradjuri Council of Elders is looking forward to finalising the settlement with Mr Harvey and Mr Jowett by the end of the month." 108 It was false to suggest that a letter of offer from the Commonwealth Government had been received by the Elders. No such letter existed. 109 On 30 March 2000, Mr Harvey sent an email to Mr Tucker enclosing a draft of an email which he (Mr Harvey) wished Mr Tucker to send to Sir Barry Jowett "to put him in the frame of what's happening" and to "convince him to wait until the 12th of April for an answer". On 30 March 2000, Mr Tucker sent an email to Sir Barry Jowett in the form drafted by Mr Harvey. 110 On 30 March 2000, Mr Harvey sent an email to Mr Tucker (entitled "Mysterious Business") in the following terms: "A development has just occurred which has totally shattered me and left me wondering where I go now ATSIC or where????? I just received a phone call from Tjakamarra. Apparently after you spoke to him this morning, ...he rang Flo as a courtesy to let her know that he wouldn't be coming with the letter of offer. He told her he had spoken to you and asked if Flo had also ... Flo said no, she had spoken to Suzane [sic] who had said that she wasn't hap[py [sic] with some of the content of the letter of offer... Victor thought she must have been confused and said that he was going to pick it up from Ron Moroney today till you phoned and that's why he was letting her know... Flo apparently knows Ron Moroney and Victor said she could ask him to let her look at a copy so she could make up her own mind … Victor just phoned me and said that Ron Moroney had just phoned him, and said he knew absolutely nothing about any application for any Grant … any letter of offer … and he had checked all of his staff and no one knew anything about it … He said in any case they didn't give grants that was ATSIC and he was curious to know what was going on..… Victor said he'd get back to him when he sorted it out …… He then phoned me to ask me what kind of Game I was playing and I told him I'd talk to you …… Please … please Adrian …. Tell me what in the hell is going on ……" A Fraudulent Amendment to Facilitate the Grant 111 On about 30 March 2000, Mr Tucker spoke to Mr Harvey and explained to him that the relevant Commonwealth officer, Mr Moroney, was denying falsely that an application had been made. Mr Tucker explained that a hitch had arisen in that it had been suggested that a conflict of interest existed by reference to Ms Ingram and that the problem could be overcome by substituting the term "philanthropic agency" for "Jariah Productions" in the relevant documentation. Mr Harvey was cross-examined concerning this issue (T78-79, 9 June 2005): "Q. Mr Tucker, around about 30 March in the year 2000, told you, didn't he, that there had been a complaint to the department about a conflict of interest, or undue influence, or something of that nature, involving Miss Ingram? A. Yes. Q. And he said, he decided then, he, Mr Tucker, that the problem was easily solved because by this time Mr Tucker was telling you that the application was at the Federal Government body, the CDC? A. It had been approved, yes. Q. Well, it hadn't been approved, had it, because there was a problem, he'd told you, and the problem was the issue of the conflict of interest? A. Yes. Q. The one that you had flagged back on 12 August 1999 that popped up and was rearing its ugly head, wasn't it? A. That's what he said. Q. And he said to you, 'Don't you worry about that', I am paraphrasing him, 'because Mr Moroney', who was the Federal Government officer, 'will let it go straight through if we deleted Miss Ingram's name and put in a reference to a Philanthropic agency? A. Yes. Q. And he said, 'Don't bother to speak to Mr Moroney about it because he will deny it'? A. Yes. Q. So what you were being told was that he, Mr Tucker, was involved with some sort of chicanery with Mr Moroney in the Federal Government department? A. Yes. OBJECTION. QUESTION WITHDRAWN Q. What Mr Tucker was telling you was that he was involved with Mr Moroney in the Federal Government department whereby if the reference to Miss Ingram was excised, or taken out, the proposal would go through? A. Yes. Without major change, yes. Q. But it meant there had to be a reference to a Philanthropic agency? A. Yes. Q. Which was a creature of Mr Tucker's creative imagination; right? A. I wasn't to know that at the time. Q. What did you think it was? A. I thought it was part of the industry, the way they handled business. Q. What do you mean by that? A. Well, I was in the hands of the executives and the bureaucrats of the Department of Aboriginal Affairs, and if he told me that Moroney could get this thing through without a total restructure, just by altering the format of the application to a Philanthropic agency, and deleting Jariah, that that's what would happen. I just said, 'Well, go for your life. Let's get it done'. Q. You knew full well that there was no Philanthropic agency; it was that Jariah was still going to be there but not in name. That is what you understood was happening? A. They had to provide the $30 million worth of art and framing, yes." 112 Mr Harvey denied that he was prepared to be involved in fraudulent conduct by agreeing with Mr Tucker's suggestion that the term "philanthropic entity" should be substituted for the name of Ms Ingram's company (T86, 9 June 2005). Mr Harvey was asked in cross-examination (T87, 9 June 2005): "Q. … The simple fact of the matter is at that time you didn't believe he [Tucker] was lying, you tell us, so what you were doing was just shutting your eyes to what should have been plain before you that Mr Tucker was committing a fraud of some kind; isn't that the case? A. I will go to my grave trying to work it out. Q. You couldn't possibly believe that the conduct that is described in these passages that we've just been talking about, by Mr Tucker, was authorised by anybody in the government? A. By this stage I was very worried. Q. You didn't believe that Mr Tucker had the authority to behave the way that has been described here, did you? A. I relied on the government documentation and the assurances I got. Q. You didn't believe Mr Tucker was acting within his authority, did you? A. I did. Q. You were desperate to have your plan approved and you were prepared to see Mr Tucker do whatever was necessary to get you the money; isn't that right? A. I wanted the systematic process to occur as it was put to the department and, in the initial discussions, that's all I ever wanted. The Olympics were drawing near. Desperate is a word; it's pretty close." Events After June 2000 113 On 19 June 2000, a meeting occurred in Canberra attended by Mr Harvey, Mr Herb Grant and Ms Flo Grant (for the Wiradjuri people), Mr Geoff Scott (ATSIC) and Mr Ian Myers (Indigenous Business Australia - CDC). At that time, Mr Myers was Deputy General Manager of Indigenous Business Australia and his role included examining incoming proposals, testing for commercial viability, assessing the credentials of proposed business partners and then assessing whether the business being proposed is suitable for the involvement of proposed indigenous people. Mr Myers has testified that the normal financial model is a joint venture structure where the non-indigenous partner owns 50 per cent, Indigenous Business Australia would then take a 25 per cent equity position and seek to introduce an appropriate indigenous group to also own 25 per cent of the proposed project. 114 At the meeting with Mr Harvey and others on 19 June 2000, Mr Myers stated that Indigenous Business Australia was a Commonwealth statutory body engaged in commercial activities, but which did not provide grant funding. Mr Myers indicated a willingness to assess the proposal treating the Wiradjuri people as Indigenous Business Australia's clients. 115 Having undertaken that task, Mr Myers wrote to Mr Grant on 26 June 2000 stating that CDC had examined the proposal against the criteria of commercial prospects and the value of the investment for the Wiradjuri people. Mr Myers raised a number of issues concerning the commercial prospects of the Hill End project. Turning to the value of the investment for the Wiradjuri people, Mr Myers observed that, whilst the proposal may have attractions from a potential profit viewpoint, CDC did not believe that the proposal, as presented, represented a sensible investment for the Wiradjuri people. He pointed out that, in essence, the Wiradjuri people were being asked to accept a very high risk by providing 100 per cent funding to meet all of the joint venture costs and that, based on CDC's considerable experience, this was not a fair or equitable division of associated risk. Mr Myers emphasised that, in reality, he did not believe that an independent assessor would value the Trust, at that point in time, at $6 million. He noted further, with emphasis, that Enterprises would not be contributing any funds to the project. Although recognising a potential to make profits, Mr Myers advised "that the proposal as presented to you is not equitable from the Wiradjuri viewpoint". 116 Mr Myers was contacted by Mr Harvey on a number of occasions in June and July 2000, with Mr Harvey sending Mr Myers a lengthy email on 10 July 2000 attempting to persuade him to take a different position to that reflected in the letter of 26 June 2000. 117 Mr Harvey submitted a revised proposal to the CDC leading to a further meeting on 25 August 2000 in Canberra attending by Mr Harvey, Mr Forrest, Mr Hargraves (a former Indigenous Business Australia employee), Mr Myers and a further person who accompanied Mr Harvey. Mr Harvey's revised proposal sought funding for a project involving a different group within the Wiradjuri people, the Ngarru Wiradjuri (with which Mr Amatto was involved). 118 Following that meeting, Mr Myers wrote to Mr Harvey on 4 September 2000 setting out a number of concerns which the CDC had concerning the revised proposal. These concerns included the fact that no consideration had been given to Wiradjuri intellectual property rights that were, in the eyes of CDC, "the cornerstone of the commercial venture". Further, CDC had difficulty that potential shareholders were to be treated differently in the purchasing price of units. 119 Mr Myers observed, in that letter, that CDC's concerns on financial aspects were highlighted by the fact that the proposed product had not been independently market tested and this was considered to be "a fundamental prerequisite for any investment proposal". It was observed that, based on the information provided, Enterprises stood to make $3.3 million profit before any business activity was undertaken (that is, sale of 750 units at $6,000.00 equals $4.5 million less a loan of $1.2 million to the Trust). More importantly, Mr Myers observed that the Wiradjuri people "will be taking significant risks by providing a large percentage of the start up capital through exposure to a loan on full commercial terms". 120 Mr Myers concluded the letter in the following way: "In summary, the proposal seeks to raise funds for a very high-risk venture with no independent assessment of, or demonstration of, marketability of the product. As a consequence, the CDC is not in a position to support the loan request. I will write separately to Mr Anthony Amatto to explain the CDC's decision to decline the loan request." 121 Between July and December 2000, Mr Harvey and/or Mr Forrest made contact, from time to time, with Mr Gavin Bartier, then the Duty Legal Officer at the Department of Lands. Discussion ensued from time to time concerning the mechanism for the issue of Certificates of Title in the names of individuals who purchased a share in the Land at Hill End as tenants in common. In the course of a meeting on 9 October 2000, Mr Harvey told Mr Bartier that he thought there had been a fraud in the execution of the transfer. Mr Bartier responded that, if there had been fraud, the NSW Police Service should be contacted and Mr Harvey should obtain legal advice. 122 It was the Plaintiffs' case that, in and after June 2000, he was introduced to Mr Robin Glass, a South African investor, by a financier, Mr Michael Wilson. Mr Harvey believed that funding for the project was available from Mr Glass, but could not be advanced because of issues concerning the transfer of the Land. 123 Mr Harvey did not proceed with the Hill End project. There was no production or marketing of framed items comprising Aboriginal art and Certificates of Title. Employment of Mr Tucker at the DAA 124 It is appropriate, at this point, to turn to the functions of the DAA and Mr Tucker's employment in that Department. 125 In 1999-2000, the DAA was comprised of eight units, of which the Policy and Research Unit was one. The responsibilities of the Policy and Research Unit included development of policy and advice to the whole of the New South Wales public sector and the Unit was also responsible for administering the DAA's grants program. Evidence of Ms Burney 126 Ms Burney's affidavit of 1 March 2005 reveals that the only discretionary money which the DAA had was through its grants program. It was not a large grants program, and was certainly not for individual or private enterprises. During 1999-2000, grants were either major grants (up to amounts of $45,000.00) or smaller discretionary grants (up to $5,000.00). The total budget for all grants in the financial year 1999-2000, was approximately $1 million. 127 Ms Burney recalled that, when she was Director General of the DAA, she had approval to sign off grants for $2,000.00, with anything above that requiring approval by the Minister. 128 In February 1999, Mr Tucker was employed as a policy officer grade 7/8 in the Policy and Research Unit and then a policy officer grade 9/10. The position statements for these grades are in evidence, and neither reveals a project funding function. 129 According to Ms Burney, the DAA worked like any government department in that, if Mr Tucker produced a briefing note or any correspondence, it had to go through the chain of command to his immediate superiors, being his supervisor, the Deputy Director General and the Director General. Mr Tucker had no sign-off authority on any correspondence and certainly not on cabinet minutes or briefing notes. Ms Burney states that there were very clear procedural processes in place at DAA in relation to sign-offs. Any correspondence committing DAA to any action were signed off by the Deputy Director General or Director General, depending on its nature and breadth. 130 With reference to correspondence generated by Mr Tucker concerning Mr Harvey's project, Ms Burney states that Mr Tucker's actions reflected in that correspondence were done without her knowledge and without the authority of the DAA. 131 Ms Burney denied Mr Betts' allegation that on an occasion in the first half of September 1999, she had been introduced to Mr Betts and Mr Harvey in the DAA offices near a photocopying machine and she denied the claim of Mr Betts that she had said on that occasion "Adrian has advised me of the project. It has a lot of interest for the indigenous people". I prefer the evidence of Ms Burney in this respect. Mr Betts was an unsatisfactory witness in a number of respects as he grappled, in an unconvincing way, to explain the manner in which he approached his billing relationship with Mr Harvey, and his approach to preparation of a memorandum of fees which the Plaintiffs seek to recover, as part of their damages, in this case. Further, in my view, it is inconsistent with the objective probabilities that Ms Burney was aware of the activities of Mr Tucker, let alone that she approved of them in 1999 and 2000. 132 Ms Burney had become a director of Jariah Productions Pty Limited in 1995 at the request of her cousin, Ms Ingram. She had no involvement in the day-to-day operations of the company and resigned from it on 21 May 1999. There is no evidence that Ms Burney had acquired any knowledge of the Hill End project from Ms Ingram, or as a result of her past association with Jariah Productions Pty Limited. 133 Ms Burney gave her evidence in a direct and forthcoming fashion. I accept her evidence generally and, in particular, where there is any conflict with that of Mr Harvey or Mr Betts. 134 Ms Burney stated that she was second cousin of Ms Ingram (T469, 6 December 2005). She knew Mr Tucker, who was employed by the Board of Studies at a time when Ms Burney was a member of the Board of Studies (T470, 6 December 2005). Ms Burney was aware that Mr Tucker had left the Board of Studies under a cloud but Mr Tucker "was subsequently cleared of whatever the issues were there" which, she believed, related to distribution of video tapes (T470, 6 December 2005). 135 Ms Burney said that she was unaware that Mr Tucker had met with Mr Harvey at the DAA office in about August 1999 (T474, 6 December 2005). She said that she was aware that there was something untoward going on with Mr Tucker by May 2000, and was later involved in the process of his dismissal for inappropriate behaviour (T474-5, 6 December 2005). Ms Burney said that the DAA was not an "entrepreneurial agency" (T477, 6 December 2005). 136 Ms Burney learned for the first time that Mr Tucker had told Mr Harvey that Jariah Productions Pty Limited would carry out framing and provide art for a fee, in relation to the Hill End project, only during the course of the investigation by Mr Griffin (T481, 6 December 2005). It was only at that time that Ms Burney learned that Ms Ingram undertook to become trust manager of the Trust (T481, 6 December 2005). 137 Ms Burney learned in about May 2000 that Mr Tucker had been writing letters on DAA letterhead. She considered that the use of letterhead indicated a person "who blatantly misused government property". With respect to the adequacy of supervision of Mr Tucker, Ms Burney emphasised that a degree of trust was needed in the context of a government agency (T483, 6 December 2005). 138 Ms Burney emphasised that Mr Tucker was dismissed for misconduct, including his use of DAA stationery for correspondence with Mr Harvey and others concerning the Hill End project (T485, 6 December 2005). Ms Burney rejected suggestions that the activities of Mr Tucker between August 1999 and May 2000 demonstrated poor reporting requirements and ineffective file management within the DAA (T485, 6 December 2005). 139 Ms Burney explained that the Aboriginal community's development program (concerning infrastructure) and the grants program were entirely different to Mr Harvey's project with which Mr Tucker had become involved (T490-492, 6 December 2005). 140 Ms Burney explained that Mr Tucker was dismissed "because he undertook very dishonest, very unprofessional and very dangerous activities using departmental resources in a very dishonest way" (T494.42, 6 December 2005). Evidence of Mr Steadman 141 Warren Steadman was the Manager, Research and Policy Unit in the DAA from September 1998 to September 2000. In the course of that employment, he was required to supervise Mr Tucker who was appointed to the Public Service on 22 February 1999. Mr Tucker was promoted to Clerk Grade 9/10 commencing on 17 February 2000. 142 According to Mr Steadman, Mr Tucker's responsibilities, in both positions, were to undertake research and policy in various areas. When work came into the Unit, Mr Steadman would decide if the tasks were suitable for Mr Tucker to undertake. Tasks were given to him based on his responsibilities. To Mr Steadman's knowledge, Mr Tucker's responsibilities were as follows: (a) undertaking strategy development; (b) commenting on other departments' policies in relation to Aboriginal Affairs; (c) responding to documents for the Minister for Aboriginal Affairs Office; (d) responding to Cabinet minutes in relation to the manner in which they impacted on Aboriginal policy; (e) dealing with reconciliation issues; (f) dealing with the response of the State of New South Wales to the Stolen Generation debate. 143 Mr Steadman states that the seeking out of grants to undertake the type of project that Mr Harvey was wishing to carry out, was simply not part of Mr Tucker's responsibilities, nor did it form part of his job description. Mr Steadman states that he never gave Mr Tucker such work and did not ever see him perform such work. 144 Mr Steadman states that Mr Tucker did not come to him with Mr Harvey's project as his supervisor within the DAA. Had Mr Tucker come to him with the project, Mr Steadman states that he would have directed Mr Tucker to forward the proposal to a higher level, being the Deputy Director General or Director General of the DAA, or possibly even the Minster himself. Mr Steadman states that, if he had seen any correspondence concerning the Hill End project, he would have told Mr Harvey that his proposal should be dealt with by the Minster's office, and that the Unit was not the appropriate area for the proposal to be considered. 145 Mr Steadman states that the DAA did not have any role in this sort of project or funding. Mr Tucker's job description was such that there would be no reason for him to have contact with the general public, and Mr Steadman said that he did not observe him doing so. 146 It was Mr Steadman's evidence, which I accept, that he had a conversation with Mr Tucker concerning Mr Harvey's project in or about mid-to-late 1999 or early 2000 to the following effect: "Tucker: I've had an approach from someone in relating to a project involving the sale of land at Hill End and some sort of artwork or certificate potentially valued in the $million range. I think my partner and I will do this as part of our business. Myself: Is this anything to do with the department? Tucker: No, this is something that we'll do as part of our business." 147 I accept Mr Steadman's evidence to this effect. As I have observed elsewhere in this judgment, the approach expressed by Mr Tucker to Mr Steadman appears to be broadly consistent with the contents of his correspondence. Nowhere in that correspondence does Mr Tucker assert that the DAA is involved. The tenor of the conversation is that Mr Tucker and Ms Ingram are taking certain steps with the CDC and Commonwealth officers. The correspondence tends to support Mr Tucker's statement to Mr Steadman that he (Mr Tucker) and Ms Ingram would be carrying on their own business in their dealings with Mr Harvey. Of course, unbeknownst to Ms Burney and Mr Steadman, Mr Tucker was corresponding on DAA letterhead in his dealings with Mr Harvey and others. 148 Mr Steadman was cross-examined by reference to notes made during Mr Griffin's investigation (Exhibit N, pages 327H, 327J). I accept Mr Steadman's evidence with respect to comments attributed to him in those notes (T377ff, 29 November 2005). Mr Steadman said that he was very surprised when he learned that Mr Tucker had been using DAA letterhead in 1999 and 2000 in his correspondence with Mr Harvey and those concerning the Hill End project (T384, 29 November 2005). 149 Mr Steadman was the convenor of the selection committee which considered Mr Tucker at the time of his employment by the DAA in 1999 (T385, 6 December 2005). Conclusions Concerning the DAA and Mr Tucker 150 Having considered the evidence relating to Mr Tucker's employment in the DAA and submissions made concerning that topic, I make the following findings: (a) although Ms Burney was aware that there had been some question concerning Mr Tucker's previous employment with the Board of Studies, she understood that those questions had been resolved in Mr Tucker's favour - in these circumstances, this issue provides no real support to the Plaintiffs' case of alleged negligence surrounding the selection of Mr Tucker to work in the DAA in February 1999; (b) the position occupied by Mr Tucker as a policy officer within the DAA did not involve the assessment or approval of project funding by the DAA; (c) the fact that the receptionist at the DAA referred Mr Harvey to Mr Tucker provides little or no assistance to the Plaintiffs' claim; (d) if Mr Tucker had followed appropriate DAA practice, any approach to him by Mr Harvey should have been referred on to the Deputy Director General or Director General of the DAA; (e) Mr Tucker informed Mr Steadman of the approach to him concerning the Hill End project, but said that it was a matter that he would take up at a personal level with Ms Ingram, and not in a manner involving the DAA; (f) Mr Tucker was not authorised nor entitled to use DAA letterhead in his correspondence with Mr Harvey and his associates concerning the Hill End project - Mr Steadman was unaware that DAA letterhead was being used by Mr Tucker and was surprised to learn in May 2000 that it had been; (g) given the manner in which Mr Tucker engaged in correspondence with Mr Harvey and others by facsimile and email, it could not be reasonably expected that the DAA office system would detect Mr Tucker's unauthorised use of DAA stationery; (h) I accept the evidence of Ms Burney over that of Mr Betts and Mr Harvey, and thus accept that she did not meet Mr Betts and Mr Harvey in the DAA office, and certainly did not tell Mr Betts that she was aware of Mr Tucker's involvement in the Hill End project; (i) I am not satisfied that there was any negligent failure to supervise Mr Tucker. Was the DAA Carrying on a Business for the Purpose of the Fair Trading Act 1987? 151 Mr Titus submits that the Plaintiffs have established that the DAA was carrying on business for the purpose of the Fair Trading Act 1987. He submits that the DAA was responsible for the Aboriginal Communities Development Program (Exhibit O), which involved provision of funds of over $200 million over a number of years associated with infrastructure and capital construction and upgrade. Whilst the detail and supervision was dealt with by the Department of Public Works, the funding for the program came through the DAA. 152 He submits that the business conducted by the DAA was for the purpose of promoting the activities of the DAA, involving funding of substantial sums of money. 153 Mr Titus submits that the conduct in question does not have to be conducted in connection with one's own business and that it would be sufficient if the conduct engaged in was for the purpose of promoting the business of some other person or corporation: Meadow Gem Pty Limited v ANZ Executors and Trustee Company Limited (Supreme Court of Victoria, Hedigan J, 18 May 1994, BC9401058 at pages 33-35); (1994) ATPR (Digest) 46-130. 154 He submits that the activities of the DAA in this endeavour, and also in the purported activities of Mr Tucker in making representations relating to funding of $2 million to $3 million to be provided to the Elders by the CDC, fits within the concept of promotion in Meadow Gem, and encompasses conduct encouraging the continuation of investment in a trading corporation. 155 Mr Titus submits that the fact that the DAA does not charge a fee for its services is not decisive of the question whether it carries on a business. He submits that the Court should find that the DAA was carrying on a business and that the Fair Trading Act 1987 applies to it. 156 Mr Menzies QC submits that the DAA was neither carrying on a business nor acting in trade or commerce. It is not a separate legal person or some form of State corporation, it is a department with no separate legal status. He submits that the only evidence is that it carried on activities for the benefit of the Aboriginal people. Using the words of Sheller JA in Falls at 9 [47], Mr Menzies QC submits that the activity of the DAA "so obviously relates to the execution of the government function which is in the interest of the community, it does not have the characteristics of carrying on a business". 157 Mr Menzies QC submits that the Defendant can only be liable under the Fair Trading Act 1987 assuming the existence of agency (an issue to which I will return later) if it was carrying on a business. Applying the test used by Hodgson JA in Falls at 34 [131], Mr Menzies QC submits that, even if a government agency may carry on business by activities which form a small part of activities of the department considered as a whole, it is essential that the activities in question be sufficiently systematic and regular and sufficiently similar to commercial activities that private persons might engage in to justify being characterised as a business. 158 Mr Menzies QC submits that it is necessary to consider, with some particularity, just what it is that the Plaintiffs assert was the activity of the Defendant through the DAA which could be characterised as "carrying on a business". That activity, he submits, must presumably be the representations by Mr Tucker and the assertions that he would facilitate the obtaining by the Wiradjuri people of a grant from the relevant Commonwealth government department, the CDC. He submits that there is nothing about that activity which could reasonably be characterised as "carrying on business". It does not involve the payment of a fee or charge and it is not, on the evidence, part of some systematic activity. 159 Mr Menzies QC submits that the DAA is doing more than pursuing its functions as described in the evidence of Ms Burney. To the extent that the Plaintiffs submit that the Capital Works Grants Program might possibly be characterised as carrying on business, Mr Menzies QC submits that the activity which Mr Tucker was promoting was not part of that activity. 160 Mr Menzies QC submits that the appropriate conclusion is that no foundation is established by the Plaintiffs for a finding that the Defendant was carrying on business for the purpose of the Fair Trading Act 1987 and, accordingly, even if ostensible authority was established, the Plaintiffs' claims under that Act ought be rejected. 161 I accept the Defendant's submissions on this issue. At its highest, the evidence discloses representations by Mr Tucker that funding might be obtained from the CDC, a Commonwealth government entity, with respect to the project. The evidence does not reveal that the functions of the DAA extended to activities of this type. 162 To the extent that the DAA fulfilled a funding function, it was restricted to capital works and infrastructure projects and small grants entirely unrelated to that proposed by Mr Tucker. I am satisfied that the activities of the DAA relate to the execution of government functions, in the interests of the community, and do not have the characteristics of carrying on a business. 163 In my view, the activities of the DAA do not possess the degree of system and regularity required for the organisation's activities to be characterised as a business: Paramedical Services Pty Ltd v Ambulance Service of NSW at [86]; Falls at 34 [131]. 164 I do not consider that Meadow Gem assists the Plaintiffs' case on this issue. 165 I am not satisfied that the DAA was carrying on business and, for similar reasons, Mr Tucker's representations were not made in trade or commerce. Accordingly, the Plaintiffs' claim under the Fair Trading Act 1987 cannot succeed. Conclusions Concerning Ostensible Authority and Mr Tucker 166 Given my conclusion concerning the element of carrying on business, it is not strictly necessary to determine the ostensible authority issue. The matter was fully argued, however, and I will make findings on this question. 167 Mr Titus submits that ostensible authority is established by the Plaintiffs by reference to the following aspects of evidence: (a) the fact that Mr Harvey was directed, by the DAA receptionist, to Mr Tucker as the appropriate contact person for the purpose of the project, with Mr Harvey meeting Mr Tucker for the first time on 12 August 1999 to discuss the project; (b) the fact that further informal meetings took place between 13 and 31 August 1999 between Mr Harvey and Mr Tucker after work hours to discuss the project; (c) the fact that letters were forwarded by Mr Tucker on DAA letterhead to Mr Harvey by facsimile on 31 August 1999, 26 October 1999, 24 December 1999 and 24 January 2000 with letters from Mr Tucker to Mr Kelly dated 7 February 2000 and 15 March 2000; (d) an email from Mr Tucker to Mr Harvey dated 24 September 1999; (e) the content of the correspondence on DAA letterhead which, the Plaintiffs submit, represented, and were intended to represent, that the DAA had been taking, and was continuing to take, steps to ensure that the necessary funding from the CDC for the Indigenous Investment Fund had been made and was likely to be approved; (f) the evidence of Mr Betts that he had been introduced to Ms Burney in the DAA offices by Mr Tucker, thereby reinforcing apparent DAA authority for Mr Tucker to deal with Mr Harvey; (g) entries in Mr Griffin's notes (Exhibit N) which, so it was submitted, support a conclusion that Mr Tucker occupied "a middle management position" (Exhibit N, page 327B) and that Mr Steadman had heard of the Hill End project from Mr Tucker (Exhibit N, page 327H). 168 Mr Menzies QC submits that a finding of ostensible authority ought not be made. The Defendant submits that nothing turns upon the circumstances of the initial referral of Mr Harvey to Mr Tucker given that Mr Harvey was directed by a telephonist to speak to Mr Tucker. Beyond that, Mr Menzies QC notes that the Plaintiffs' case on ostensible authority depends almost entirely upon actions taken by Mr Tucker himself in letters or emails written or statements made orally. Each of these contacts had it origin in Mr Tucker himself. 169 Mr Menzies QC submits that there is no conduct of the DAA from which it could be reasonably inferred that it was conferring on Mr Tucker the authority to make the representations alleged. There is no evidence to which the Plaintiffs can point to support a finding that the Defendant held out to Mr Harvey that Mr Tucker was clothed with the requisite authority. 170 Insofar as Mr Betts asserted that he had met Ms Burney at the photocopier within the DAA office, Mr Menzies QC submits that Mr Betts was an unsatisfactory witness whose evidence to this effect should not be accepted. In any event, Mr Menzies QC submits that the mere acknowledgement of Mr Betts' presence in the DAA offices cannot be elevated to a form of holding out by the Defendant of authority in Mr Tucker to make the representations which he made. The conduct of DAA officers, the Defendant submits, is consistent with Mr Tucker being held out as having the authority of the DAA to perform his limited duties as a policy officer. 171 Mr Menzies QC emphasises that all representations, oral and written, emanated from Mr Tucker. At no time were there oral or written communications with other DAA officers which purported to endorse, directly or indirectly, the course of action of Mr Tucker. 172 Mr Menzies QC submitted that the use of DAA letterhead by Mr Tucker did not support a finding of ostensible authority. There was no issue that Mr Tucker worked as a policy officer within the DAA. The mere fact that he had access, in that capacity, to DAA stationery did not elevate his use of the stationery, for an unauthorised and extraneous purpose, to a foundation for a finding of ostensible authority. 173 In resolving these competing submissions, it is necessary to assess the evidence which bears upon the question of ostensible authority. The bare assertions of Mr Tucker cannot give rise to ostensible authority. His statements may be taken into account together with other evidence, but it is the acts or omissions of the DAA which must provide a foundation for a finding of ostensible authority. 174 I accept the evidence of Mr Steadman that, when he discussed with Mr Tucker the Hill End project, Mr Tucker told him that this was a private matter to be attended to by himself, his partner, Suzanne Ingram. No act or omission of Mr Steadman, as a senior DAA officer, assists the Plaintiffs on the ostensible authority issue. 175 I accept the evidence of Ms Burney over that of Mr Betts on the question whether there was any introduction to Ms Burney of Mr Betts in the DAA office. Mr Betts was a highly unsatisfactory witness with respect to a range of issues concerning accountancy services and his involvement with Mr Harvey generally. 176 The fact that Mr Tucker had access to, and used, DAA stationery for the purpose of corresponding with Mr Harvey and others does not provide substantial assistance to the Plaintiffs' case. The position may be distinguished from the supply of a blank order form which, when signed, would bear the hallmark of authenticity (Pacific Carriers Limited v BNP Paribas at 467 [38] cited at paragraph 61 above). Mr Tucker was not a salesman or representative who was provided with a certain title, status and facilities by his commercial employer which clothed him with ostensible authority to act in the way he did. Mr Tucker was an administrative officer working in the policy area in a government department. In that capacity, he had access to DAA stationery. In my view, these circumstances are far removed from scenarios where ostensible authority arises from access to, and use of, business stationery. 177 It is, to say the least, regrettable that Mr Tucker conducted himself in the manner in which he did towards Mr Harvey over a period of months in 1999 and 2000. Mr Tucker and Ms Ingram were not called as witnesses at the hearing before me. It would be speculative to consider why Mr Tucker acted in the way he did in his dealings with Mr Harvey. It is clear that ostensible authority cannot be established by reliance upon the conduct of Mr Tucker alone. In my view, the Plaintiffs are left essentially with the conduct of Mr Tucker as being the foundation for their claim of ostensible authority. The additional aspects to which they can point do not, in my view, establish ostensible authority. 178 A consequence of this finding is that the Plaintiffs cannot succeed against the Defendant with respect to the claims dependent on s.70 Fair Trading Act 1987, nor claims under the general law in relation to which ostensible authority was a necessary element. Was Mr Harvey Put on Inquiry So As to Render Reliance Upon Mr Tucker's Representations Unreasonable? 179 Even if the Plaintiffs established ostensible authority, however, I am more than satisfied that this is a case where the Plaintiffs were put on inquiry as a result of acts and statements of Mr Tucker in and after August 1999 and that the Plaintiffs acted in an entirely unreasonable way in not checking with any DAA officers about Mr Tucker. 180 Mr Menzies QC submitted that the circumstances of Mr Harvey's contact with Mr Tucker were such that he was, or should have been, put on notice that he ought make independent inquiry to satisfy himself as to the authority of Mr Tucker. In this respect, Mr Menzies QC, in written submissions, pointed to the following features: "a) Mr Harvey was coming from an experience where a prominent NGO, after much deliberation had rejected the proposal, obviously because of ethical considerations. He ought to have been on notice that a government department, charged with the responsibility for the welfare of aborigines and presumably astute to not involve itself in any thing which could smack of exploitation of aborigines, might, similarly to the NGO, look askance at the project. Mr Harvey's project required the state to advance $3 million dollars, effectively as to 50% to Mr Harvey, with him making no financial contribution at all. The scheme, obviously, reeked of the carpet bag. When no questions were even asked on those issues, indeed they were circumvented by Mr Tucker, he ought to have been alert to something untoward going on. b) The fact that Mr Tucker was promising that there would be a substantial grant of taxpayers money in circumstances where it had to be apparent there was no 'due diligence' inquiry being conducted; in other words where there appeared none of the usual prudential inquiries that Mr Harvey, as a sophisticated entrepreneur and business man would have taken for granted would be performed Mr Harvey accepted that was happening was 'not the sort of thing one would have expected if one went to a Government Department seeking that Government Department's assistance'. [T75.15, 9 June 2005] c) The involvement of Mr Tucker's girlfriend in the project, raising in his own mind a question of conflict. [T63ff, 9 June 2005] d) The fact that Mr Tucker didn't want Mr Harvey's advisor, Mr Betts, to be involved. [T73.1, 9 June 2005] e) Mr Tuckers explanation that things were done differently where aboriginal groups were involved. [T64.15-30, 9 June 2005] f) The fact that meetings frequently occurred away from Mr Tucker's office, at restaurants and coffee shops. [T68.40ff, 9 June 2005] g) Mr Tucker involving himself in discussions with financial advisers, such as Mr Rivkin, in circumstances where it might reasonably be thought, Mr Tucker had no interest. [T74.5ff, 9 June 2005; Affidavit of Mr Harvey sworn 6 March 2003, paragraph 35] h) The warning expressed by Mr Betts that all was not right, that there was 'something fishy' going on. [T70.5, 9 June 2005] i) Tucker was a beneficiary of a $14.5 million trust [T73, 9 June 2005] and that if all else failed he would fund the project himself. [T73.50, 9 June 2005] j) Despite his apparent wealth Mr Tucker sought and obtained two personal loans from Mr Harvey. [T74.15, 9 June 2005] k) Mr Harvey thought the whole scheme and the involvement of the Aboriginal community was far fetched or weird. What Mr Harvey found unusual or weird was Mr Tucker's behaviour. [T74-75, 9 June 2005] l) He was told that tucker was accusing him of offering bribes. [T75.40, 9 June 2005] m) Mr Harvey ought to have been aware of fraud relating to Mr Moroney and Jariah Productions (see above)." 181 Mr Menzies QC submitted that Mr Harvey was so desperate to have his scheme brought to fruition, that he suspended all his critical features to accept what was, on the face of it, a "cock and bull story" (T72.55, 9 June 2005). Under those circumstances, the Defendant submits that the proposition that he was clothed with any ostensible authority ought be rejected. 182 The Defendant submits that it is for the Plaintiffs to establish, on the balance of probabilities, that it was reasonable for Mr Harvey to rely upon the representations of Mr Tucker. In this regard, the Defendant submits that Mr Harvey was put on inquiry from his first dealings with Mr Tucker in August 1999 that there were unusual, if not irregular, features of Mr Tucker's actions. The Defendant submits that these matters are relevant to the question whether the Plaintiffs prove, on the balance of probabilities, that the Defendant held Mr Tucker out as having ostensible authority. 183 Mr Titus submits that the circumstances were not such that the Plaintiffs were put on inquiry in a manner which would operate to defeat their claim that Mr Tucker was clothed with ostensible authority. In this respect, the Plaintiffs make the following submissions: (a) Mr Harvey had explained that he thought things were done differently with indigenous people with "protocols" which meant that he acted differently than if he had been dealing with another government department; (b) Mr Harvey engaged an indigenous solicitor, Mr Tjakamarra Forrest, to act on his behalf in October 1999 because he thought it would be of assistance to him in the project; (c) although Mr Harvey thought it was "a bit weird" that Mr Tucker talked of being a beneficiary of a $14.5 million trust, Mr Tucker was an employee of the DAA and appeared to be well connected with Aboriginal groups so that Mr Harvey thought he was required to go along with what Mr Tucker said; (d) it was not until 30 March 2000 when Mr Forrest, acting on behalf of Mr Harvey, ascertained that the CDC knew nothing about the funding application that Mr Harvey was put on notice about Mr Tucker; (e) Mr Harvey did not make enquiry of Mr Tucker's superiors after 30 March 2000 although he was worried about the matter, but "formed the view there was little else that I could do" ; (f) Mr Harvey went to the Elders' meeting in Bathurst with Mr Forrest on 8 April 2000 at which Mr Tucker and Ms Ingram were present; (g) from 8 April until 1 May 2000, when Ms Coe advised that Mr McAvoy was dealing with the matter, it was still reasonable for Mr Harvey to await an outcome and not to approach Mr Tucker's superiors in the DAA. 184 I have given careful consideration to the submissions made for the Plaintiffs and the Defendant concerning this aspect. Strictly speaking, it is not necessary for me to determine this question as I am not satisfied that the Plaintiffs have established ostensible authority at the threshold. Nevertheless, it is appropriate that I express my conclusions on this point as it was fully argued at the hearing and is a significant alternative basis upon which the Plaintiffs' claims ought fail. 185 I accept the submissions of the Defendant on this issue. In particular, I note that: (a) throughout Mr Harvey's dealings with Mr Tucker between August 1999 and June 2000, no other officer of the DAA was involved - on the Plaintiffs' case, there was a passing introduction of Mr Harvey to Ms Burney and Mr Steadman, but no meetings or other contact between Mr Harvey and other DAA officers - this is unusual and ought to have appeared unusual to Mr Harvey in dealings with a government department; (b) throughout the period of his involvement with Mr Tucker, Mr Harvey only dealt with Mr Tucker via telephone, email or fax - there was no letter posted or delivered to the DAA of a type which would have evidenced a formal bureaucratic relationship between Mr Harvey and Mr Tucker so as to generate the need for a file to be created or otherwise alerted Mr Tucker's superiors to the existence of an official departmental relationship with Mr Harvey, as opposed to an unofficial relationship where Mr Tucker was dealing with Mr Harvey, in effect on behalf of his partner, Suzanne Ingram, and Jariah Productions in a private capacity; (c) Mr Harvey came to meet Mr Tucker via a telephone call to the Minister's office which merely directed him to the DAA and by a discussion with a receptionist which led him to Mr Tucker - there was no formal approach which led Mr Harvey to believe, or could lead a reasonable person to believe, that Mr Tucker was the person in the DAA to assess grant applications; (d) the day after meeting Mr Tucker, on 12 August 1999, Mr Tucker was raising with Mr Harvey the involvement of Suzanne Ingram and Jariah Productions - this provoked an inquiry by Mr Harvey as to whether a conflict of interest was involved - despite Mr Tucker's claim that all was well, an amber light was flashing at the very beginning concerning Mr Harvey's dealings with Mr Tucker and whether there was impropriety or any official DAA process involved, or merely whether Mr Tucker was using his position with the DAA to advance the private interests of Ms Ingram and Jariah Productions; (e) on and after his introduction to Mr Tucker on 12 August 1999, Mr Harvey, at no stage provided a written brief to Mr Tucker in support of the project, nor was he asked to do so - this is an unusual omission and must have been regarded by Mr Harvey as a curious approach to the receipt and processing of an application for a substantial sum of money from a government entity - it is a significant additional factor to be accumulated with a variety of other factors against the Plaintiffs on this aspect of their claim; (f) by early December 1999, Mr Tucker was telling Mr Harvey that Mr Harvey's accountant, Mr Betts, ought be kept out of the process - Mr Betts told Mr Harvey that "something fishy" appeared to be going on with Mr Tucker - despite this amber/red light flashing, Mr Harvey pressed on upon the basis of what was said to be "protocols" and unusual procedures that appeared to operate in dealings with Aboriginal groups and interests - this does not appear to have been a reasonable response to a clearly dubious stance taken by Mr Tucker; (g) in letters written on 24 December 1999 and March 2000, Mr Tucker was asserting to Mr Harvey that contact had been made with the CDC in Canberra which was assessing the application - in March 2000, Mr Forrest, Mr Harvey's solicitor, contacted the CDC and was told that they had never heard of the Hill End Project or Mr Harvey - this ought to have caused a serious red light to flash in Mr Harvey's face, and certainly in the mind of a reasonable person confronted with such a state of affairs - Mr Tucker told Mr Harvey that Mr Moroney from the CDC would deny that contact had occurred and that the CDC, in truth, knew of the proposal but that it could not be approved unless reference to Jariah Productions was removed from the proposal and, in its place, reference was made to a "philanthropic entity" - by this stage, it ought to have been apparent to Mr Harvey, and to a reasonable person, that fraudulent conduct was being proposed by Mr Tucker to Mr Harvey as a means of progressing a proposal which the CDC denied knowledge of. 186 All of these steps provide strong support for the Defendant's submission that Mr Harvey, blinded by an element of financial desperation, was prepared to take any step to try and advance the project which he had been advancing for some years, unsuccessfully, through World Vision Australia and other bodies. 187 On this analysis, although Mr Tucker was telling clear untruths to Mr Harvey and this was being done on DAA letterhead and whilst Mr Tucker was in employment with the DAA, reasonable reliance could not be placed on what Mr Tucker was saying so that the Plaintiffs are not entitled to recover upon the basis of such representations. This applies to both a claim based on negligent misstatement and a claim under the Fair Trading Act 1987. 188 I do not have difficulty in accepting Mr Harvey's evidence with respect to a number of primary issues concerning his dealings with Mr Tucker and the things which Mr Tucker was saying to him. After all, Mr Tucker was saying these things in writing in facsimiles and emails. 189 A key area where Mr Harvey's evidence strains credulity is where he seeks to explain his actions in pressing on with the project despite clear danger signals emanating from Mr Tucker's conduct. I am conscious that I have the advantage of viewing events through the prism of hindsight: Rosenberg v Percival (2001) 205 CLR 434 at 441 [16]. In examining the evidence, I have approached events in chronological order with a view to examining the reasonableness of Mr Harvey's response to events which, I accept, placed him on inquiry. 190 On the face of it, this was a substantial grant application where Mr Harvey's point of contact was an officer within a State government department. I do not consider to be persuasive explanations based upon so-called "protocols" in dealing with the indigenous community. Certainly, I do not think this explanation, to the extent that it is available at all, operates to assist Mr Harvey. 191 The absence of any meetings with Mr Tucker's superiors, or regular meetings at the DAA offices, and the approach taken by Mr Tucker without a detailed brief being provided to him by Mr Harvey all sound warning bells in the mind of the reasonable person. Added to this was Mr Tucker's early declaration that his partner, Suzanne Ingram, and her company, Jariah Productions Pty Limited, would have an interest in the process. The reasonable person would be concerned with respect to conflict of interest and that concern would not be quelled by a form of oral assurance from Mr Tucker. 192 Added to this, were the curious features of Mr Tucker whereby, on the one hand, he claimed to be the beneficiary of a $14.5 million trust whilst, at the same time, obtaining small loans from Mr Harvey. By this stage, the reasonable person may well consider that there was something of a "Walter Mitty" flavour to Mr Tucker. 193 To be added to this was Mr Tucker's direction to Mr Harvey that Mr Betts, Mr Harvey's accountant, ought be excluded from the process. The reasonable person would agree with Mr Betts' characterisation that there was "something fishy" about this development. If all was above board, there would be no need for Mr Tucker to advise Mr Harvey to exclude his own financial advisor who was asking questions concerning the arrangement. 194 An examination of the ongoing communications between Mr Tucker and Mr Harvey reveals actual doubts and concerns experienced along the way by Mr Harvey, supported by his own accounting advisor, Mr Betts. Mr Harvey entertained concerns about conflict of interest and Mr Tucker's desire to exclude Mr Betts from the process. The explanation offered by Mr Harvey for the latter step, being a "protocol" or way in which indigenous groups conduct business, is objectively unconvincing. 195 In my opinion, the combination of factors which had commenced to accumulate in August 1999 and certainly those present by December 1999, would have led any reasonable person to conclude that Mr Tucker's conduct did not appear to be proper and above board, and that further enquiry and investigation would be necessary before any reasonable person would consider that Mr Tucker was acting, in some way, on behalf of the DAA and the State of New South Wales. 196 In short, Mr Tucker's actions appeared to be too good to be true. I am satisfied that Mr Harvey pressed on without making any inquiry or check, in the desperate hope that all would work out well in the end. 197 It is noteworthy that Mr Tucker's letters did not state that the DAA was involved in the process. Rather, it was stated that Mr Tucker and Ms Ingram had communicated with the Elders. It was stated that it was intended that an application would be made to the CDC, a Commonwealth entity, and later that such an application had been made. It was stated that the CDC and Commonwealth officers were actively considering and had approved the application. At no point, was it said that an officer of the DAA, or the DAA itself, had approved the process or was involved in it. 198 In reality, the only link with the DAA arose from Mr Tucker's use of DAA letterhead for his correspondence and a limited number of meetings at the DAA office. Even then, most meetings appear to have taken place in restaurants and coffee shops away from the DAA premises. 199 An accumulation of these objective factors, taken with the actual concerns harboured by Mr Harvey and Mr Betts, undermines fundamentally the Plaintiffs' claims in these proceedings. 200 I am satisfied that a reasonable person would have been put on inquiry in such a way that sole reliance upon Mr Tucker would be neither wise nor appropriate. I conclude that Mr Harvey did not act reasonably in pressing on with the project discussions with Mr Tucker despite a series of amber, if not red, lights flashing clearly in his face. 201 Applying the test in Northside Developments Pty Limited v Registrar General referred to earlier (at paragraph 57), the Plaintiffs' claim based upon ostensible authority is rejected on the ground that the circumstances of the case are such as to put the party who makes the claim on inquiry to ascertain the actual state of affairs. 202 If the Plaintiffs had demonstrated the element of ostensible or apparent authority with respect to Mr Tucker, I would have rejected this part of their claim in any event upon the basis that Mr Harvey did not act reasonably in the face of objective circumstances which clearly placed him on inquiry with respect to his dealings with Mr Tucker. Credit of Mr Harvey 203 Mr Menzies QC submits that the evidence of Mr Harvey should only be accepted if there is independent corroboration of his testimony. He submits that Mr Harvey will say whatever he thinks will promote his interests, regardless of the truth of the statement. A number of submissions were advanced in support of this proposition. 204 Firstly, the Defendant submits that Mr Harvey did not tell the truth about the funding of the initial start-up of the venture. He asserted that he would fund the initial start-up out of his own successful company, but his "successful" company went into voluntary administration on 7 August 1997 (T27-29, 8 June 2005). 205 Secondly, the Defendant submits that Mr Harvey gave deliberately misleading evidence that Ms Burney was involved in the subject transaction as a director of Jariah Productions Pty Limited, when he had no knowledge at all that Ms Burney was a director until he was told of that well after the arrangements had broken down (T53, 8 June 2005). When Mr Harvey was cross-examined on the issue of whether Ms Ingram's involvement might be a conflict of interest, he responded "I asked the question of the executives running the place and they assured me it wasn't" (T66, 8 June 2005). Mr Menzies QC points to the fact that the only person of whom Mr Harvey asked the question was Mr Tucker who could not seriously be described as one of the "executives running the place" (T67, 9 June 2005). 206 Thirdly, the Defendant submits that Mr Harvey's explanation about how BH Engineering Pty Limited went into administration, namely that its problems arose out of a mistake made by an employed engineer, was false (T33, 8 June 2005). 207 Fourthly, the Defendant submits that Mr Harvey was prepared to lie to protect his position with respect to security for costs and that he admitted lying in this respect (T91, 7 June 2005). 208 Fifthly, the Defendant submits that Mr Harvey had a criminal history for dishonesty stretching back to 1959 and 1961, involving convictions for house breaking, receiving and false pretences (T91-92, 7 June 2005). Ordinarily, such a record of offences more than 40 years ago would have, at best, marginal relevance - the passage of more than 40 years without a blemish would appear to affect the probative value of such evidence: R v Watkins [2005] NSWCCA 164 at [36]. However, under cross-examination, it was suggested to Mr Harvey that he had given a false date of birth (4 July 1947) in his affidavit of 6 March 2003 when his real date of birth was 4 July 1937 (T98-99, 7 June 2005). It was put to Mr Harvey (and denied) that a reason for providing a false date of birth was to reduce the prospect of his criminal record being detected because he thought it may operate against his interests if his record was known. 209 Sixthly, the Defendant submits that Mr Harvey composed letters which other persons were supposed to have written and that this displayed an element of connivance on his part (T98-99, 7 June 2005). 210 Seventhly, and significantly, the Defendant points to Mr Harvey's preparedness, despite his denial, to lend himself to fraudulent activity in agreeing with Mr Tucker that the term "philanthropic agency" should be substituted for "Jariah Productions" in relevant documentation (T80, 9 June 2005). 211 Mr Titus submits that a number of these matters do not operate adversely to Mr Harvey's credit as a witness. He submitted that Mr Harvey was a persistent entrepreneur, who believed in the project, and who spent his own time and money in attempting to progress it. It was submitted that his criminal history was decades ago when he was a young man and had no bearing upon his present credit as a witness. 212 In my view, it is necessary to approach Mr Harvey's evidence with caution. The matters relied upon by the Defendant concerning his credit are significant, especially when viewed cumulatively. At times, Mr Harvey was an advocate in his own cause. He sought, at every opportunity, to emphasise features which he thought would extend liability to the Defendant for Mr Tucker's wrongdoing, even when his answers were not responsive to the questions asked. 213 In areas where he sought to involve other DAA persons, including Ms Burney, I am not prepared to accept Mr Harvey's evidence without independent corroboration. I do not consider Mr Betts' testimony to constitute independent corroboration. Mr Betts' evidence was entirely unconvincing with respect to his charging practices with Mr Harvey and the fees which he asserted were owing to him, which would be paid if the Plaintiffs succeed in this litigation and damages include those sums. Mr Harvey and Mr Betts are not at arm's length and independent corroboration of both is required where they give evidence on contentious matters. Have the Plaintiffs Established the Representations Alleged in the FASC? 214 Having regard to my findings concerning the ostensible authority issue and the question whether the Defendant carried on a business, the Plaintiffs' claims under the Fair Trading Act 1987 and in negligent misstatement must fail. I should note, however, that difficulties exist with respect to a number of the representations alleged in the FASC to ground these causes of action. I will deal shortly with these issues in the light of my other findings. The First Representations 215 Mr Titus conceded that there was no evidence that Mr Tucker said what is alleged in paragraph 14 of the FASC as being the first representation. Accordingly, these representations may be placed to one side. The Second and Third Representations 216 Mr Titus submits that the representation of 31 August 1999 was that the matter would require formal proposals to be developed and submitted to the CDC. It was a lead-in to the representation of 24 September 1999 that Ms Ingram had met with the Elders who had initiated a form of due diligence, and begun the application of the submission/investment application. 217 The Defendant submits that there is no evidence to support the allegation with respect to the second representations that Mr Tucker had no reasonable grounds to make the representations. There was nothing to suggest that what was contained in those representations were misleading. 218 With respect to the third representations, the Defendant submits that, if they were made at all, they were made by Ms Ingram and that this supports the Defendant's argument that Mr Tucker was engaged in a frolic of his own, together with Ms Ingram and Jariah Productions Pty Limited. The Defendant submits that the representations in the email of 24 September 1999 was not that the Elders would "complete and submit an investment application to the CDC in respect of the project". The representation from Ms Ingram was the Council had initiated a company search and land title search "for their own peace of mind" and would begin the development of the submission/investment application. The completion was contingent on the company and land title search and was no more than an expectation. 219 I accept the Defendant's submissions that the second and third alleged representations, as pleaded, are not borne out by the evidence. The Fourth Representations 220 Mr Titus submits that the representation of 26 October 1999 was that a verbal response from the CDC would be forthcoming, subject to their reviewing procedures. He submits that this indicated that there was due diligence being undertaken. 221 Mr Menzies QC submits that the letter of 26 October 1999 did not say that the Elders would forthwith be seeking funds from the CDC. The letter did say that a verbal response from the CDC should be forthcoming by the end of next week "subject to their reviewing procedures". The Defendant submitted that the representations were note representations because Mr Harvey approved of letters before they were sent. It was submitted that, arguably, the letter of 26 October 1999 was a representation to Sir Barry Jowett who is not a party to the proceedings. In any event, the letter did not support the fourth representations as pleaded in the FASC. 222 I accept the Defendant's submission that the fourth representations, as pleaded, are not supported by the evidence. The Fifth Representations 223 The Defendant submits that the fifth representations as pleaded are not supported by the evidence. I am inclined to agree with this submission. The Sixth and Seventh Representations 224 The Defendant concedes that the sixth and seventh representations, as pleaded, are supported by the letters of 24 September 1999 and 24 January 2000. 225 Mr Titus submits that the sixth representations made on 24 September 1999 were that Mr Tucker had been verbally notified by the CDC that the investment application had been approved, and that it was sufficient to ensure that the land and intellectual property was purchased with suitable funding for the project. The Plaintiffs submit, with respect to the seventh representations in the letter of 24 January 2000, that Mr Tucker represents that he had been verbally notified that the Elders had been successful and will be receiving a government grant in excess of $2 million. They were awaiting the formal paperwork to be approved by the Commonwealth Minister of Finance. He submits that this could be seen as a body aligned to the CDC. 226 These representations appear to constitute the high-water mark of the Plaintiffs' case with respect to representations made by Mr Tucker. The Eight and Ninth Representations 227 Mr Menzies QC submits that the eighth and ninth representations were not made to the Plaintiffs, and that there is no evidence to support the allegations that the letters of 7 February 2000 and 15 March 2000 were forwarded to Mr Harvey. 228 Mr Titus submits that the sixth representations made in the letter of 7 February 2000 from Mr Kelly to Mr Forrest refers to a telephone conversation which Sir Barry Jowett had with Mr Tucker, and a conversation of a similar tenor between Mr Kelly and Mr Forrest. He submits that it could be reasonably inferred that either the letter of 7 February 2000, or its contents, were relayed to Mr Harvey. 229 With respect to the seventh representations made in the letter of 15 March 2000, Mr Titus submits that it was Mr Harvey's evidence that Mr Kelly kept in contact with him about the matter and that the Court should infer that this meant that either the content of the letter, or a copy of a letter, was provided by Mr Kelly to Mr Harvey or Mr Forrest. 230 Mr Titus submits that these two letters to Mr Kelly were to the effect that a letter of offer would be released, after the legal aspects of the funding grant were finalised, and that this would occur within 48 hours. 231 I am not prepared, without more, to infer that these letters or their contents came to the attention of Mr Harvey. An evidentiary foundation for the eighth and ninth representations does not appear to exist. Reliance by the Plaintiffs Upon Representations 232 Mr Titus submits that it is clear that Mr Harvey relied upon the representations that were made to him. He entered into a contract for the purchase of land and intellectual property, and paid money pursuant to those contracts. He arranged to settle on the purchase of the land on 6 April 2000, and did not take steps until on or after 2 June 2000 to speak to other financiers or joint venture parties in relation to the matter. 233 Mr Titus submits that the fact that Mr Harvey still wished to proceed with the project, despite the news on 30 March 2000, should be seen as supportive of his enthusiasm for the project rather than an indication that he did not rely upon the representations that had been made. 234 The Defendant submits that a finding ought not be made that Mr Harvey relied on any of the representations. Even if he did, however, the Defendant submits that a finding ought not be made that it was reasonable to rely upon the representations. 235 This issue is linked to the topic already addressed concerning the reasonableness of Mr Harvey's carrying on with Mr Tucker despite being put on inquiry with respect to features of those dealings. 236 In my view, the more accurate characterisation of Mr Harvey's approach is not so much reliance upon representations, but Mr Harvey's desperate hope, despite misgivings which he entertained, that something may come of his arrangement with Mr Tucker and Ms Ingram. I accept that there was, in truth, a mix of hope and desperation which saw Mr Harvey continue down the pathway of his dealings with Mr Tucker despite clear danger signs. Was the Defendant Vicariously Liable for Any of the Acts or Omissions of Mr Tucker? 237 Mr Menzies QC submits that Mr Tucker was not performing, in an unauthorised way, functions which he was authorised to perform. It was not part of his duty to make any promises at all as to the giving of grants or the provision of funding. It was the evidence of Mr Steadman that Mr Tucker said that what he was doing with the Hill End project concerned his personal interest and not that of the DAA. 238 The Defendant submits that, Mr Tucker was truly engaged on a frolic of his own, and that his conduct is not something for which the Defendant ought be found vicariously liable either as a consequence of the operation of the Law Reform (Vicarious Liability) Act 1983 or the Fair Trading Act 1987. 239 I accept the Defendant's submission, founded upon the evidence of Ms Burney and Mr Steadman (which I also accept), that this is not a case of a person carrying out an authorised function in an unauthorised way. Mr Tucker performed unauthorised acts in an unauthorised way. He engaged in clear misconduct for which he was, in due course, dismissed from his employment. 240 Having regard to the findings which I have already made concerning the activities of Mr Tucker, I am satisfied that his conduct may be truly characterised as being on a "frolic of his own" in the sense understood by the law: State of New South Wales v Lepore. In these circumstances, I am satisfied that the Defendant is not vicariously liable for the acts and omissions of Mr Tucker. Direct Liability of Defendant in Negligence Concerning Selection and Supervision of Mr Tucker 241 In support of the claim for negligence, Mr Titus submits that the evidence reveals that Ms Burney knew Mr Tucker very well having worked collaboratively with him at the Board of Studies (Exhibit N, page 327B). He submits that Ms Burney knew that Mr Tucker's departure from the Board of Studies was unhappy, and that she was the Deputy Director General of the DAA at the time when he applied for his position there. It was submitted that the "cloud" over Mr Tucker with respect to the Board of Studies should have put Ms Burney, and the DAA, on notice so as to give rise to a requirement to properly assess his application for employment and, if he was selected, to properly supervise him in the course of his employment. 242 Mr Titus submits that the DAA permitted Mr Tucker to carry out a number of activities in the course of his employment with the Department, and that the fact that no file was created with respect to the Hill End project, and that there is no record of any relevant paperwork in that regard, indicates a lack of supervision. He contends that the actions of Mr Tucker, and the absence of any documentation, point to a failure to properly supervise him in his activities and that the Defendant ought be held liable in negligence accordingly. 243 Mr Menzies QC submits that the Plaintiffs have adduced no evidence of any alternative system of supervision that would be efficacious in the circumstances of this case. In the absence of such evidence of an alternative, the Defendant submits that there is no evidence of the practicability or cost of instituting such a system. The Plaintiff bears the onus of demonstrating the existence of an alternative system and, in the absence of any evidence, the Defendant submits that such allegations must fail: Neill v NSW Fresh Food & Ice Pty Limited (1963) 108 CLR 362 at 364, 369-370; Vozza v Tooth & Co Limited (1964) 112 CLR 316 at 319; Kingshott v Goodyear Tyre & Rubber Co Australia Limited (No. 2) (1987) 8 NSWLR 707 at 725. 244 Mr Menzies QC submits that, apart from a suggestion that Mr Tucker left the Board of Studies "under a cloud", a suggestion which was refuted by Mr Burney (T470.25, 6 December 2005), there was no evidence that Mr Tucker was employed in any way other than regularly. The evidence of Mr Scott supports this submission for the Defendant (T460.15, 6 December 2005). 245 The Defendant submits that, to succeed on a claim of negligence with respect to his employment, even assuming the existence of a duty of care, the Plaintiffs would need to show that it was reasonably foreseeable that having appointed Mr Tucker, he might behave in the general manner in which he did behave. The Defendant submits that there is no evidence at all to support such a proposition and that this claim must fail. 246 The Defendant submits that there were no systemic failures identified in the evidence. Mr Tucker was subject to supervision, he told his supervisor (Mr Steadman) that his interest in the Hill End project was a private matter and did not involve the DAA. No witness called by the Defendant accepted the proposition that there was anything untoward about Mr Tucker doing what he told Mr Steadman he was doing. The evidence was that Mr Tucker had no power to sign other than the most routine correspondence and he was required to submit correspondence, with respect to significant matters, to his supervisor. 247 Plainly, the Defendant submits, Mr Tucker ignored these obligations and acted deceitfully. The Defendant submits that there is no evidence to suggest what steps ought to have been taken to ensure the detection of such deceitful conduct. It is submitted that there is no evidence at all of any negligence in the employer with respect to the systems of work. Apart from this, the Defendant submits that the failure to adduce any evidence of an alternative practical system which would have avoided what occurred is fatal to the claim by the Plaintiffs in this respect. 248 The Plaintiffs' claim in negligence with respect to the selection and supervision of Mr Tucker is based on a narrow body of evidence. It is said that Ms Burney's knowledge that Mr Tucker had been "under a cloud" in his prior employment with the Board of Studies was such that the Defendant was put on inquiry with respect to his selection and, if employed, his supervision within the DAA. The difficulty for the Plaintiffs with this submission is that Ms Burney's evidence (which I accept) is that she understood that the cloud over Mr Tucker at the Board of Studies had been resolved. The Plaintiffs have failed to establish liability based upon the allegation of negligent selection of Mr Tucker. 249 With respect to the claim based upon negligent supervision of Mr Tucker, the Defendant has adduced no evidence concerning alternative steps which could or ought to have been taken. 250 According to the evidence, there were restrictions upon correspondence which could be signed by an officer of the level of Mr Tucker. I infer that Mr Tucker knowingly breached these rules in his conduct and course of correspondence with Mr Harvey and others. In this respect, I note that Mr Tucker appears to have used facsimile and email as the means of communication. Any correspondence in reply took similar forms. 251 The failure of Mr Tucker to use ordinary mail, with a corresponding failure of others to respond by the same medium, meant that there was no incoming mail passing through the hands of third parties within the DAA in the mailroom or elsewhere. 252 There was no file created by Mr Tucker, and the means of correspondence adopted by him minimised the prospect that others within the DAA would become aware of his correspondence. 253 I accept the Defendant's submissions on this issue. I am not satisfied that the very fact that these events occurred bespeaks an actionable case of negligence based upon a systemic failure to supervise Mr Tucker. 254 I am not satisfied that the Plaintiffs have established a cause of action in negligence against the Defendant arising from the selection and supervision of Mr Tucker within the DAA. Damages 255 As I have rejected the Plaintiffs' claims on all causes of action, it is not strictly necessary to consider the issue of damages. As the issue was fully argued, I should set out my conclusions relatively briefly, in the event of an appeal. The Plaintiffs' Case of Damages 256 Mr Titus submits that, in the event that liability is established, the Plaintiffs are entitled to recover their out-of-pocket expenses and such amount as the Court considers appropriate in relation to loss of chance. Even if the Court found against the Plaintiffs on the loss of chance claim, he submitted that the Court should order payment of damages by way of out-of-pocket expenses. 257 The out-of-pocket expenses claim including the following elements: (a) the sum of $59,688.00 being the purchase price and interest together with stamp duty of $765.00, paid between 8 October 1999 and 6 April 2000; (b) expenses incurred for a period exceeding a year whilst attempts were made to get the Hill End project off the ground, in respect of which monies were borrowed from the St George Bank leading to a claimed sum of $80,000.00; (c) Mr Harvey personally spent one year of his time attempting to get the project off the ground - if he had worked as an engineer, he would have earned the sum of $250,000.00, and that sum is claimed; (d) a claim is made for Mr Betts' professional costs - despite the inadequate records kept at the time, a sum of $30,000.00 ought be allowed under this heading. 258 Mr Titus submits that damages for loss of a chance ought be awarded in accordance with the principles in Sellars v Adelaide Petroleum NL and Others (1992-1994) 179 CLR 332 and Malec v JC Hutton Pty Limited (1990) 169 CLR 638. In written submissions dated 8 December 2005, Mr Titus outlined the basis upon which damages should be awarded under this heading. Based upon the evidence of Mr McDonald and calculations by Mr Humphreys, including sale of shares in the Trust, Mr Titus submits that the sale of between 20,000 and 30,000 framed items at a sale price of $1,000.00 each, in 2000 and 2001, would have resulted in a nett profit within the range $3,031,806.00 to $4,846,924.00. 259 With respect to the claim for negligence, Mr Titus submits that an award of damages ought be made in the same sums in the event that the claims under the Fair Trading Act 1987 failed. The Defendant's Approach to Damages 260 Mr Menzies QC submits that, if Mr Harvey was an agent for Sir Barry Jowett as an undisclosed principal, the only damages recoverable by the Plaintiffs are damages for actual expenses and no award should be made with respect to loss of opportunity. 261 Mr Menzies QC submits that the project was bound to fail, even had funding been available, and funding would have been completely lost. In this respect, the Defendant points to the expert evidence adduced on behalf of the Defendant and the unsatisfactory nature of the evidence of the Plaintiffs' expert, Mr McDonald. If any damages were quantified on the basis of a loss of a chance, then the Defendant submits that the chance must have been close to zero. 262 With respect to the claim for out-of-pocket expenses, the Defendant accepts that the sum of $59,680.00 was paid as the purchase price of the Land and the sum of $765.00 as stamp duty on the purchase. However, the Defendant submits that the failure to complete the purchase arose out of the asserted misconduct of Mr Kelly, and not out of any failures on behalf of the Defendant. Had the purchase been completed, the Plaintiffs would have obtained value for the money expended and, accordingly, they suffered no loss. 263 With respect to the claim for $80,000.00 arising from a loan from the St George Bank, the Defendant submits that there is no evidence identifying how this sum was expended and how it was said to relate to the Hill End project. Further, the Defendant submits that it has not been demonstrated that this sum was expended in the period between August 1999 and May 2000 when Mr Harvey was dealing with Mr Tucker. The Defendant submits that this sum should not be allowed. 264 With respect to the claim of $250,000.00 by way of lost income which Mr Harvey could have earned as an engineer, the Defendant submits that no attempt has been made to break up the time allegedly spent in areas unrelated to the Hill End project. Further, it was submitted that, even if some allowance could be made in this respect, it ought be confined to the period August 1999 to March 2000. 265 With respect to the claim arising from Mr Betts' professional costs, the Defendant submits that he was a most unsatisfactory witness with no satisfactory records. Mr Menzies QC submits that the claim smacks of reconstruction and opportunism. It was submitted that Mr Betts was unable to justify any of the elements of his account by any record and was unable to separate those parts of his account which would in any event by unrelated to any claim made with respect to the Defendant, for example, work done by Mr Harvey with respect to the failed attempt to involve World Vision Australia in the project. 266 The Defendant submits that, if liability had been established, a modest award of damages at best could have been expected in the Plaintiffs' favour. The Expert Evidence Concerning Damages 267 The Plaintiffs' evidence with respect to the loss of an opportunity to make a substantial profit was itself shaky, comprising Mr Harvey's hopes and unimpressive expert evidence from Mr McDonald, Ms Zamora and Mr Amatto. A strong body of expert evidence has been adduced by the Defendant which undermines the Plaintiffs' case on damages with respect to loss of opportunity to make profits from the marketing of the items. 268 Mr Neville James Moses gave expert evidence on conveyancing issues for the Defendant. He identified practical and legal difficulties with the documentation prepared as part of the Hill End project. Under cross-examination, he agreed with the suggestion that it appeared that the documentation had been prepared by a non-lawyer (T399). When asked under cross-examination, he said that he would not personally have paid $1,000.00 for the framed item of Aboriginal art and Certificate of Title (Exhibit A) (T397-398). 269 Mr John Colquhoun gave expert evidence concerning the art market. Mr Harvey had spoken to Mr Colquhoun in late 1999 about the project, but Mr Colquhoun was not interested because he was "sceptical of the scheme as it seemed like a 'get rich quick scheme'". He felt it was "too complicated and they would not sell well enough to the general public". He agreed that Exhibit A was a "novelty", but did not constitute an example of "traditional Aboriginal art". 270 Mr Colquhoun considered that the Certificate of Title detracted from the integrity of the painting in Exhibit A (T403). He said that marketing of such objects would be undertaken by him at no more than a gross price of $A550.00 per item (T406-407). He did not note any increase in interest by buyers of Aboriginal art as a result of the National Day of Reconciliation in May 2000 (T406). 271 Mr Gavin Bartier said that the Registrar General would probably have been bound to issue 100,000 duplicate Certificates of Title with respect to the Hill End project upon payment of the requisite fee. That fee would have been about $50.00 per Certificate of Title ($500,000.00) and $60.00 as the request fee (T412). 272 The Defendant called Mr John Moore to give evidence. Mr Moore had played a significant role with SOCOG in 1999 and 2000. He did not consider that the Hill End project would have received SOCOG approval. He did not consider Exhibit A would have been especially marketable in 2000, especially at a price of $1,000.00 per item (T416). 273 Dr Margaret Craig-Lees was called by the Defendant. She was a marketing expert who had provided reports with respect to the Hill End project for the Defendant. Dr Craig-Lees did not consider that the items would have been especially marketable, being far too expensive, at $A1,000.00 per item (T427). From research she had undertaken, the sale of Aboriginal artefacts did not really gain from the Sydney Olympics in 2000 (T431). Assessment of Claim 274 This group of witnesses called by the Defendant provided a strong body of evidence pointing to the fanciful nature of the Plaintiffs' project. A number of steps would have been required, in the ordinary course of business, to advance the Hill End project further. Most of those steps had not been taken by Mr Harvey. Even if the Plaintiffs had received funding for the project so that the framed items were created, it is speculative in the extreme to determine any level of success in the project. The strong probability is that a limited number of items, measured in the hundreds and not the thousands, would have been sold. 275 If this project was ever to get off the ground, it would have been necessary for the Plaintiffs to do a number of things: (a) a team of artists would have been required to paint the pictures; (b) transport would have been required from country areas to Sydney for paintings to be framed; (c) premises would have been needed in the Sydney area to construct the pictures and provide a business centre for arranging distribution; (d) an elaborate organisation would have been required to arrange for registration of Certificates of Title in the name of buyers with a short turnaround time; (e) payment to the Registrar General would have been required for each registration of a transfer; (f) competent framers would have been required to construct the framed painting and Certificate of Title, together with any mounted plaque to be inserted on it; (g) a network of sale outlets would have been required to enable the marketing of the paintings – something far more developed than internet marketing would have been required; (h) premises for posting and shipping to Australian and overseas destinations would have been required, together with personnel to carry out these functions. 276 All of the steps referred to in the preceding paragraph would have required an elaborate, costly and sophisticated business plan if an efficient marketing system was to be established. 277 All of this goes to the question of whether this was a realistic proposal which could be put into effect. 278 Significantly, the evidence does not demonstrate that there was a past successful market for similar items. The "Lord Edward Trust" marketing experience does not assist the Plaintiffs. Tellingly, the marketing concept has not been taken up since by any person, although it would have been open to an entrepreneur to do so if he or she saw fit. A powerful barometer to assess the chance of profiting from this scheme is that no person had profited from a similar scheme in the past and no one was prepared to undertake such a project since then. 279 If the point had been reached in the proceedings where the Plaintiffs demonstrated liability so that there was an entitlement to damages, a modest verdict would have resulted comprising of the following elements: (a) I would have allowed the sums of $59,688.00 as the purchase price for land and $765.00 as stamp duty on that purchase price; (b) I would not have allowed any part of the claimed sum of $80,000.00 said to arise from the St George Bank loan - I am not satisfied that the Plaintiffs have established that this sum, or part of it, is recoverable as damages in this action; (c) I would have allowed a modest sum for Mr Betts' professional services, not exceeding $5,000.00; (d) I would have allowed part of the claim by Mr Harvey for lost income which could have been earned by him as an engineer, but this sum would not have exceeded $50,000.00 having regard to the period of time to which it could relate and be claimable in this action; (e) interest would have been allowed on the sums permitted above; (f) on the state of the evidence, I would not have awarded damages with respect to the loss of chance claim - the evidence satisfies me that the concept was fanciful and, even if the Plaintiffs had managed to produce and market the framed items, the project would have been a significant financial failure productive of loss, and not profit. Conclusion 280 I have concluded that the Plaintiffs have failed to establish their cause of action against the Defendant under the Fair Trading Act 1987. I am not satisfied that the Plaintiffs have established the element of ostensible authority with respect to Mr Tucker. Nor am I satisfied that the Plaintiffs have established that the DAA was carrying on business in a sense which could attract the provisions of the Fair Trading Act 1987. 281 I am satisfied that the activities of Mr Tucker with respect to Mr Harvey may be appropriately characterised as Mr Tucker being engaged in a "frolic of his own" in the sense recognised by the law, so that the Defendant is not vicariously liable for Mr Tucker's false and misleading statements or, for the purpose of one aspect of the negligence claim, his negligent misstatements. 282 Even if the Plaintiffs had demonstrated ostensible authority with respect to Mr Tucker, I am satisfied that Mr Harvey acted entirely unreasonably when he was put on inquiry with respect to Mr Tucker on 12 August 1999 and when subsequent events only served to fortify the need to take reasonable steps to verify Mr Tucker's activities. Far from taking these steps, I am satisfied that Mr Harvey turned a blind eye to the problems and moved forward in his association with Mr Tucker motivated by a mix of hope and financial desperation. 283 The Plaintiffs have failed to establish their cause of action in negligence arising from the selection and supervision of Mr Tucker within the DAA. 284 Even if the Plaintiffs had demonstrated liability with respect to one or more of their causes of action, I would not have been satisfied that any award of damages ought extend beyond some of the out-of-pocket expenses claimed by the Plaintiffs. On the evidence, the loss of chance claim was speculative in the extreme with the strong probability of a loss being suffered if the project had even been implemented. 285 The Plaintiffs have failed entirely in their claims. Although costs are discretionary, costs would ordinarily follow the event: Part 42 r 42.1 UCPR. I have considered whether there are features of this case which ought see no costs order made against the Plaintiffs. It is the undoubted fact that Mr Harvey had the misfortune to meet Mr Tucker and then deal with him in and after August 1999. It is clear that Mr Tucker conducted himself in a fashion which was detrimental to the Plaintiffs. However, the Plaintiffs do not sue Mr Tucker in these proceedings. They seek to make the State of New South Wales liable for Mr Tucker's wrongdoings. They have failed. Further, I have found that Mr Harvey was clearly on notice, from an early time, that all was not right with Mr Tucker, but pressed on regardless, motivated by hope and financial desperation. In the exercise of discretion, I am satisfied that the appropriate order is that the Plaintiffs pay the Defendant's costs of the proceedings. 286 With respect to each of the causes of action pleaded in the FASC, there will be a verdict and judgment for the Defendant. The Plaintiffs are ordered the pay the Defendant's costs of the proceedings. ********** 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.