New South Wales Supreme Court CITATION : Cross v Qld Newspapers Pty Limited [2006] NSWSC 1340 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 09/10/06, 10/10/06, 11/10/06, 12/10/06, 13/10/06, 16/10/06, 17/10/06, 18/10/06, 19/10/06, 20/10/06, 23/10/06, 24/10/06, 25/10/06, 26/10/06, 27/10/06, 30/10/06, 31/10/06, 01/11/06, 02/11/06, 03/11/06, 06/11/06, 07/11/06, 08/11/06, 09/11/06, 10/11/06, 14/11/06, 15/11/06, 16/11/06,17/11/06 JUDGMENT DATE : 6 December 2006 JURISDICTION : COMMON LAW - Defamation List JUDGMENT OF : Cooper AJ at 1 DECISION : Judgment in favour of the defendant against the plaintiff on each of the imputations sued upon. CATCHWORDS : Substantial truth LEGISLATION CITED : Defamation Act 1974 (NSW) Defamation Act 1889 (QLD) PARTIES : Ronald Malcolm Cross Queensland Newspapers Pty Limited FILE NUMBER(S) : SC 20191/03 Mr C Evatt/ Ms J Rawlings for Plaintiff COUNSEL : Mr J.S. Wheelhouse SC / Mr M Richardson for Defendant Richard Licardy & Co Solicitors & Attorneys-at-law for Plaintiff SOLICITORS : Thynne & Macartney (Brisbane) Kemp Strang (Sydney agents) for Defendant LOWER COURT JURISDICTION : Supreme Court LOWER COURT FILE NUMBER(S) : 20191/03 - 129 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION COOPER AJ WEDNESDAY, 6 DECEMBER 2006 20191/03 RONALD MALCOLM CROSS v QUEENSLAND NEWSPAPERS PTY LTD JUDGMENT Introduction 1 HIS HONOUR: In this action the plaintiff sues to recover damages on the grounds of defamation in respect of articles published in New South Wales and Queensland in the Courier Mail Newspapers in which the defendant is the proprietor. 2 The first article was published on 20 June 2003 and is entitled "Marketeer aims for the South". A copy is annexed and marked "A". The paragraphs have been numbered for convenience. 3 The second article was published on 1 July 2003 and is entitled "Coast Marketeer targeted in raid". A copy is annexed hereto and marked "B". Here again the paragraphs have been numbered for the sake of convenience. 4 On 21 October 2004 the jury found the following imputations to be carried and to be defamatory, namely:- First publication: 1. The plaintiff ripped off Mum and Dad Investors by selling them investment properties at exorbitant prices. 2. The plaintiff is a law breaker who ripped off his employees. Second publication: 3. That the plaintiff is a law breaker. 4. That the plaintiff is a rip off merchant. 5 By way of letter dated 27 September 2006, exhibit 1, the plaintiff's solicitors advised that imputations 2 and 3 would not be pressed. At the commencement of the hearing of this case on 9 October 2006 verdict and judgment was entered in favour of the defendant in respect of those imputations. 6 The defences raised in response to the claim are now set out. 7 The first publication is defensible in New South Wales because:- (a) Imputation 1 is substantially true and relates to a matter of public interest. (Paragraph 9 of Further Amended Defence and s 15 of the Defamation Act 1974). (b) Alternatively, the defence of contextual truth succeeds. (Paragraph 9a of Further Amended Defence and s 16 of the Defamation Act 1974). (c) Alternatively, because the publication was made on an occasion of statutory qualified privilege. (Paragraph 10 of the Further Amended Defence and s 22 of the Defamation Act 1974). (d) Alternatively, the publication amounted to comment. (Paragraph 12 of Further Amended Defence and ss 32 and 33 of the Defamation Act 1974). 8 It is claimed that the first publication is defensible in Queensland because:- (a) Imputation 1 is substantially true and the publication was made for the public benefit. (Paragraph 6(b) of the Further Amended Defence and s 15 of the Defamation Act 1889 (Qld)). (b) Alternatively the defence of qualified protection succeeds. (Paragraph 8 of the Further Amended Defence and ss 16(1)(c), 16 (1)(e) and 16 (1)(h) of the Defamation Act 1889 (Qld)). (c) Alternatively the defence of fair comment succeeds. (Paragraph 7 of the Further Amended Defence and s 14(1)(a), 14(1)(b), 14(1)(c) and 14(1)(h) of the Defamation Act 1889 (Qld)). 9 The second publication it is alleged to be defensible in New South Wales because:- (a) Imputation 2 is substantially true and relates to a matter of public interest. (Paragraph 9 of the Further Amended Defence and s 15 of the Defamation Act 1974). (b) Alternatively because the defence of contextual truth succeeds. (Paragraph 9(b) of the Further Amended Defence and s 16 of the Defamation Act 1974). (c) Alternatively the publication was made on an occasion of statutory qualified privilege. (Paragraph 10 of Further Amended Defence and s 22 of the Defamation Act 1974). (d) Alternatively the publication was a fair protected report. (Paragraph 11(a) of the Further Amended Defence and s 24(2) of the Defamation Act 1974). (e) Alternatively the publication was a fair extract, or fair abstract from, or fair summary of a protected report. (Paragraph 11(b) of the Further Amended Defence and s 24(3) of the Defamation Act 1974). (f) Alternatively the publication amounted to comment. (Paragraph 12 of Further Amended Defence and ss 32 and 33 of the Defamation Act 1974). 10 It is alleged that the second publication is defensible in Queensland because:- (a) Imputation 4 is substantially true and the publication was made for the public benefit. (Paragraph 6(b) of the Further Amended Defence and s 15 of the Defamation Act 1899 (Qld)). (b) Alternatively the defence of qualified protection succeeds. (Paragraph 8 of the Further Amended Defence and ss 16(1)(c), 16 (1)(e) and 16 (1)(h) of the Defamation Act 1889 (Qld)). (c) Alternatively the publication was a fair report. (Paragraph 6(a) of the Further Amended Defence and s 10 of the Parliamentary Privileges Act 1987 (Qld) and s 13(1)(a) and (b) of the Defamation Act 1889 (Qld)). (d) Alternatively the defence of fair comment succeeds. (Paragraph 7 of the Further Amended Defence and s 14(1)(a), 14(1)(b), 14(1)(c) and 14(1)(h) of the Defamation Act 1889 (Qld)). 11 In mitigation of damages the defendant relies on the following in respect of publication in New South Wales:- 1. Should the defence of contextual truth fail in relation to the first matter complained of, the substantial truth of the imputation "the plaintiff is a law breaker who ripped off his employees". 2. Should the defence of contextual truth fail in relation to the second matter, of the substantial truth of the imputation "the plaintiff is a law breaker". 3. The bad reputation of the plaintiff in the sectors of business and employment. 12 In mitigation of damages the plaintiff relies on the following matters for publication in Queensland:- 1. In relation to the first matter complained of, the substantial truth of the imputation "the plaintiff is a law breaker who ripped off his employees". 2. In relation to the second matter complained of the substantial truth of the imputation "the plaintiff is a law breaker". 3. The bad reputation of the plaintiff in the sectors of business and employment. 13 The hearing of this case occupied six weeks. There are 158 exhibits which, with few exceptions, comprise multiple pages. The evidence became something of a royal commission into the business affairs of the plaintiff. Dramatis Personae 14 To better understand the evidence in relation to each of the imputations it is convenient to start off with an explanation of the companies involved and their relationship with the plaintiff. 15 Everest Marketing Corporation Pty Limited. This was the company that employed the telephone marketing people. The plaintiff's sister, Renee Cross, was a director of the company prior to its voluntary administration in 2003. However, Mr Cross agreed, page 523, that he was the one who dealt with the Australian Taxation Office on behalf of this company during October 2003. 16 Exhibit 80 is a letter signed by Mr Cross in his capacity as Managing Director of Park Trent Investments to J E Cains & Associates, his companies' accountants, dated 29 June 2001. Its relevant parts are as follows:- "As discussed with John Koot, when Everest was incorporated, Park Trent Investments indicated to pay any shortfall for Everest's tax liabilities including group tax. Unfortunately, due to the necessity to improve and extend the existing premises, funds were unavailable to meet this commitment, however, Park Trent is now coming into a position where it will be able to meet its commitment to Everest." 17 The place were the activities of this company took place was in the same premises as where the plaintiff had his office as did his New South Wales located companies. 18 Furthermore, the plaintiff agreed that he was the one that settled, if not actually drafted, the script used by the telephone operators when soliciting potential customers on the telephone. 19 Rhymney Pty Limited. The plaintiff agreed that he exercised the day-to-day control over this company during the period June 1999 until 13 March 2003 (page 125). He was also a shareholder of this company during this period. 20 Park Trent Investments Pty Limited [PTI]. In his answers to interrogatories, exhibit 113, the plaintiff admitted that he was a director of Park Trent Investments from May 1989 to April 2004 and that he was responsible for the day to day operations of the company during this period. His evidence was that he was responsible for the overall control of the company (page 164) and that he had been an original shareholder of the company (page 162). 21 As appears from exhibit 85, when Mr Needham resigned the plaintiff was the sole director until the appointment of John Owen on 15 August 2002 (exhibit 13, page 67). 22 Park Trent Real Estate Pty. Ltd. The evidence establishes that the plaintiff was a director of this company from 20 March 2001 at least until the time of the voluntary administration (exhibit 13, page 67). A further director, Mr Fidor Avakian was not appointed until 19 September 2002. He was also the sole shareholder of the company until the date of liquidation (exhibit 13, page 68). 23 Park Trent Properties Group Pty Limited. The evidence establishes that the plaintiff became a director of this company on 23 April 2003 (exhibit 13, page 70). This was the company used as the vehicle to purchase the assets of Park Trent Investments and Everest Marketing after the liquidation. The evidence of the liquidator makes it clear that this company was under the control of the plaintiff who was the person negotiating with the liquidator on this transaction. 24 Cross Country Realty Pty Limited. This was a licensed real estate agent located at Surfers Paradise in Queensland and licensed under Queensland Law. Its activities were carried out by sales persons referred to as runners who met the prospective buyers when they arrived from interstate, took them around to finance consultants, showed them properties and generally sought to achieve a sale of a property being marketed by Park Trent Investments Pty. Ltd. on behalf of a developer. 25 The plaintiff gave evidence that he visited that company's premises approximately once per fortnight, that he gave instructions and training to the runners engaged by that company to show and sell properties marketed by Park Trent Investments. and that he had the right to hire and fire them. 26 It was not until late 2003 that the plaintiff became a director of the company. In the meantime it was his daughter, Kellie who was in charge. 27 The significant degree of control exercised by the plaintiff over the operations of Cross Country Realty Pty Limited is demonstrated in documents. 28 Exhibit 3 is a memo from the plaintiff to Kellie Cross dated 2 October 2000 in the following terms:- "Over the last few weeks the sale results have been unacceptable. There now needs to be some changes in the system, commencing from today's date, Monday, 2 October 2000. Any runner not able to provide a positive result must follow the new system as the old system appears to be inadequate. The runner must bring the clients into Cross Country office, for a meeting with a senior personnel of the Park Trent Group. This is to operate seven days a week and at all times whilst runs are in progress. The above change is only a small one but it will give immediate positive results for the following reasons, 1. We have an excellent prestige office, which adds to the standing of the company. 2. The clients will be impressed and can be interviewed in a relaxed attractive office complex. You can have tea and coffee and even a beer available to help close the deal. I remind you of our past successes, when we had close to 100% closing rate. Now you seem willing to accept 75% as the high point of closing. Well you were right whilst ever you have the runners and the finance people closing the deals. I think you are lucky to get 75% - which you will not obtain this month. I would not have gone to the extra cost to set up the new offices, just to make life better for the staff. These offices must be fully utilised from day to day as a closing tool to improve our overall percentages. Then and only then will be in control of our cash flows and in complete control of our clients. I also stress that you commence immediately to start making arrangements to have Cross Country signage on land/homes throughout your market area and appoint a person to look after external sales. The above directions must be actioned upon receipt of this memo." 29 The next document is exhibit 75 and is a further memo from the plaintiff to Kellie Cross and Maggie Pickett, Cross Country Realty dated 31 January 2003 in the following terms:- "Would you please advise all runners whom currently contact our company's various offices, that it is a condition of operating with our Group that pre run contact be made with the consultant whom has arranged for the Queensland visitation? Also the runners should be reminded of our numerous meetings where I have outlined a number of procedures that they must, as runners, adhere to. I will be monitoring the position with all Queensland runs personally and any runner not following my procedures, their services will not be required." 30 The plaintiff set up a system under which, if a sale looked like falling through, he was to be notified by a document called a "Red Alert". (See exhibit 82). In appropriate cases he would personally contact the customer. 31 Exhibit 19 is a memo to Maggie [Maggie Pickett] and Kellie [Kellie Cross] from the plaintiff dated 26 May 2003 in the following terms:- "All Red Alerts that require my involvement eg. Home visits. The runners' fees are to be reduced by $500 per visit, this is a necessary amount to cover my costs etc. I, at this point would like to remind you that the better and more professional the runner does the run, the less likelihood my involvement becomes necessary. Would you please advise on a monthly basis of how much money involved, so that I can budget the income with my expenses." 32 The foregoing documents with other evidence clearly establishes that it was the plaintiff who had the effective control over the way the runners treated potential purchasers who had flown into the Gold Coast from interstate. It was the plaintiff who set out the guidelines and methods of operations that they were to follow. In particular, as stated in exhibit 3, that they were to be "in complete control of our clients". 33 Collison Finance & Investments Pty Limited (CFI) was a finance broker which, in the early stages and when required, arranged loans for the clients to enable them to purchase properties introduced by Cross Country Realty. 34 The evidence establishes that information received by Park Trent Investments as a result of a home visit to a customer would be sent to Collison Finance & Investments prior to the arrival of the client in Queensland. Exhibit 33, page 49, shows such details sent by Park Trent Investments to CFI relating to the borrowing capacity of Mr and Mrs Stumbles before they visited Queensland. 35 CFI charged the clients a brokerage fee part of which was paid to Park Trent Investments. A letter dated 5 February 2001 from CFI to PTI marked "Attention Mr Ron Cross" describes it as "brokerage split". In other documents in exhibits 115 and 39 it is referred to as a commission. 36 Easy Plan Financial Services Pty Limited was a finance broker which took over from Collison Finance & Investments Pty Limited. The plaintiff conceded at page 149, that this company was conducted in accordance with his directions from time to time and that he was a director from 26 May 1999 until 17 January 2003. 37 Easy Plan Financial Services Pty Limited conducted its business at premises next door to those occupied by Cross Country Realty Pty Limited. 38 The extent to which employees of this company were under the control of the plaintiff and Cross Country Realty is demonstrated by the evidence of Mr Thomas Stevenson called on behalf of the defendant. His statement is exhibit 108. 39 In October 2002 he responded to an advertisement in the Gold Coast Bulletin for a position with Park Trent. He was approached by Kellie Cross to work for Easy Plan Financial Services. 40 Exhibit 109 is a letter dated 10 December 2002 from Cross Country Realty to Mr Stevenson enclosing an employment letter in duplicate and asking him to sign both and to return to the office by the end of trade on 12 December 2002. 41 The enclosed letter confirms an offer to him of an appointment as Finance Broker with the Park Trent Group of companies. The first of the conditions of appointment is that he is responsible to Kellie Cross, Manager in charge of operations. His duties and responsibility will be as directed by the company and may be varied to respond to changes to its requirements. His work will be of a professional nature at all times. 42 His salary package was $40,000.00 plus statutory superannuation contributions. He was to earn $500.00 commission for every successful deal he wrote. For any brokerage fee over 1% he was to receive half the amount over 1%. It states by way of example, that if he charges and receives a fee equivalent to 1.65% he would receive the $500.00 plus 0.325% of the brokerage. 43 The letter is signed on behalf of Cross Country Realty. 44 It is to be noted that Mr Stevenson's work was with Easy Plan Financial Services which was to arrange finance for prospective purchasers. 45 His evidence is that Cross Country Realty Pty Limited and Easy Plan Financial Services operated from the same premises in Surfers Paradise in the Forum in Orchid Avenue. Although each company had its own separate entrance and reception area the two offices had access between them through a door which was always open. Easy Plan's files were taken into Cross Country once the client had been advised and were there stored in the file storage compactus at Cross Country. 46 His statement continues that the plaintiff used to visit the offices regularly and at times instructed him on the preparation of the property investment analysis he was to give to clients. 47 An example of this appears in exhibit 23 which is a property investment analysis of a fictitious potential purchaser relating to a property known as Ipenema Resort. At the foot of the first page Mr Cross has written: "Harold, go through this PIA. Some areas that require a rethink." Backgound Information 48 Before going to the specific imputations it is convenient to set out the particular commercial need which the plaintiff and his companies sought to fulfil. This sets the background upon which the activities of the plaintiff are superimposed and permits of a better appreciation of the factual issues which require resolution 49 It is a notorious fact that for many years Queensland has had the fastest population growth of any State in Australia. 50 This has encouraged real estate developers to purchase land and construct houses, community estates and apartment blocks which they need to sell. 51 The premises which they construct are available not only to home buyers but also to those who may wish to purchase the premises as an investment and thereby provide accommodation for those who are unable or unwilling to buy premises but are able or willing to rent them. 52 The plaintiff and his companies provide a service to developers by exposing their products to a much greater number of potential buyers than the local market and thereby enabled those products to be sold more quickly. 53 The evidence of the plaintiff is that he approaches developers with a view to obtaining the right to market their property at a fee. 54 His evidence is that the selling price is fixed by the developer and is the same whether one purchases through his companies or through a local estate agent. The plaintiff in evidence pointed out that a developer includes within the selling price the costs of advertising, promoting and selling. When a developer engages the plaintiff's company all of these are included in the one fee which is payable if, and only if, he achieves a sale. 55 The evidence of the plaintiff is that although he charges a fee in addition to the fee fixed under Queensland law charged by the real estate agent (known as REIQ) there is no disadvantage to the purchaser because, if the purchaser purchased through a local estate agent he would pay the same price. This evidence was corroborated by further witnesses. 56 Mr Gregory Kahn, a developer, gave evidence that included in his development costs and the ultimate selling price is an amount for marketing. 57 He deals with a number of different marketing companies and testified that when he has a house and land package for sale, he prepares a list of his stock with prices and faxes them to different companies, real estate agents and marketers and the price is always the same. His evidence was that the marketing costs vary between 8% and 10% of the selling price depending on what that price may be. He said that to have different selling prices for the same property, depending on who sold it, would not be fair to anyone. 58 At page 688 he was asked:- "Q: Yes, but in your agreement with marketeers, is there an amount of payment expressed as a percentage of the price or is it expressed as a fixed amount but that fixed amount has been fixed in relation to the price. A: Sometimes they have their fee, right, and then if there is extra marketing costs we pay that extra marketing cost. If a real estate agent sells it, is just what their REIQ is." 59 He said that normally the total package of marketing and REIQ fee comes out at $15,000.00 or $20,000.00. 60 Mr Hutchinson is a developer operating in South-East Queensland who also gave evidence. He was asked how he sold his houses and home units and replied, page 692:- "As a developer you only have two choices; you either set up the infrastructure to have your own sales team and marketing processes, or outsource. So since we chose to use the second source, we'd outsource to companies like Cross Country and other local real estate agents and anybody else out there who showed interest in selling our properties. Q: Properties that you outsourced to Ron Cross and his companies, how did he go selling the unit for you. A: As a developer you got associated holding costs with a timeframe it takes you to sell a property, so you've got to be clear and concise as to who you might assign that responsibility to. That's worth paying for. Ron Cross is very efficient at what he did and the service he could provide." 61 In relation to differential pricing he was asked at the same page:- "Q: When you are selling units or houses, do you have or do you know of a practice of having one price for sales by local real estate agents and another higher price by marketeers? A: Not in my thirty years. Q: Why is that. A: Well because I never came into contact with it personally. It never occurred to me that would be a process that I would need to employ because when you are trying to sell your properties, its got to be – you hand it out to everybody out there that is in the position to be able to sell them for you. It is unfeasible to give different prices to different companies. Say if it is L J Marketing or BRD or whoever, it has to be the same stock list. Once the house and land package is identified at a price, that's it." 62 Mr Hutchinson pointed out that holding costs "are a killer" and added:- "As a developer the holding costs are a killer. If you are going to borrow money to produce the estate you need to get rid of it as quick as you can." 63 The plaintiff also called Mr Richard Winston the director of Bellridge Homes a developer of housing estates. He is also Mr Cross' son-in-law. 64 His evidence is that when he wants to sell properties he places them in the hands of real estate agents and marketers and the selling price is always the same. 65 The contracts he has entered into with Park Trent Investments involves a flat fee consisting in part of REIQ fee and the balance being the marketing fee. 66 The plaintiff also called Mr Bill Kosseris who has worked in the building industry for forty years. From 1980 he worked with Lend Lease Building Services as a cost estimator on developments. From February 2001 until 14 November 2005 he worked for Mancorp Development Company Limited and was involved in over 200 sales of development projects in Queensland. 67 In his statement, exhibit L, he explains that the price eventually asked for a house and land package offered by a developer involves projecting forward the likely growth in the market. Thus for a subdivision started in 2005 you would be calculating the likely market price in 2007 and work forwards to obtain a price for that project. When calculating the projected price one has to take into account a desired profit margin of about 15%, the costs of development and then a contingency for such matters as overruns in construction, rain disrupting construction and delays in approval from council. 68 Also included in the costs are those of identifying a suitable block of land for subdivision, obtaining development approval which typically involves fees of up to $80,000.00 payable to local authorities plus fees to surveyors. It is also necessary to obtain a report called an IDAS report and a Town Planner's report for the subdivision. 69 Once development approval has issued it is then necessary to retain a town planner to start the actual civil works on it. Then the development costs of building the roads, kerbing, guttering, storm water drains etc is incurred. It is not until all these works have been completed that it is possible to start marketing the subdivision as a house and land package. 70 All steps to the point of getting the subdivision to where it can be marketed involves borrowing money typically adding 8% to 12% to the cost of the project. 71 The costs of marketing are typically 10% of the total costs of development and have to be built in to the selling price. These costs are typically the costs of promoting the development to intending purchasers and include press and Internet advertising, brochures and onsite sales persons to show the estate to intending purchasers. In addition to the 10% marketing costs there is the fee payable to estate agents calculated in accordance with the REIQ regulations. 72 If the project is being marketed as finished buildings, there are additional costs involved in the construction of houses with development applications for each building plus further interest costs as well as the 10% marketing cost and REIQ fees. 73 He points out that all of the costs of the development must be recovered if the developer is to make any profit. Each item of cost contributes towards the ultimate selling shed price and it is unrealistic to talk about the marketing costs alone as inflating the purchase price as all of the costs contribute to the eventual price. 74 In evidence he said that these costs were based upon actual homes that were built by the company that he worked for. He said that the projects that he was instrumental in selling were always given for sale at the same price regardless of who sold it and added (p 723):- "A. You can't have – you can't build on one block at one price and Mrs Jones next door at a different price. Q. Why not. A: It's unfair. There's a set – with building companies the builder's have their fees, their rates and then the marketing. There's a 10% figure added onto that which encompasses both the REIQ and marketing fee. With the building company I was – I have a card your Honour from the company that I was with at that stage showing that I was a sales executive. Q: I don't think that's in issue. Do you regard the 10% in cost of a project as being reasonable for marketing? A: Absolutely reasonable. Q: What would happen if there was no marketing? A: Well, the builders would probably have a very short term of life because without the marketing we're not going to achieve the sales." 75 He also added that anywhere between 9% and 12% for REIQ and marketing would be reasonable, (page 723). 76 In an attempt to establish the contrary, the defendant called Mr Owen Howden a real estate agent who initially applied for and was granted a job with Cross Country Realty on the Gold Coast in mid 2002. He was interviewed and appointed by the plaintiff. 77 He attended a training session conducted by Mr Cross. His job was to show people property in the Gold Coast area and to sell it. At that stage he did not have a Real Estate Agent's license. 78 After a short period Mr. Cross invited Mr Howden to work for Cross Country Realty in Victoria where, after two or three weeks, he was appointed to the position of State Manager for Victoria. 79 Mr Howden gave evidence that he received at the office of Cross Country in Victoria a fax, a copy of which is exhibit 92. He gave evidence that his instructions were to calculate the selling price of properties listed on that document. To arrive at the selling price he had to add the selling fee totalling $20,000.00 to the listed price in each case. Accordingly, he wrote to the left of the list of typed figures the selling price inclusive of the selling fee. The agent which gave the instructions to Cross Country Victoria was Carrollyn McKeddie. If this evidence is correct then it would show that the selling fee imposed by Cross Country Real Estate Victoria would have inflated the selling price by $20,000.00. 80 However this is completely contradicted by the letter from Carrollyn McKeddie Real Estate to Cross Country Real Estate Victoria dated 27 August 2003, exhibit P, which makes it quite clear that the prices at which the properties are to be sold were the type written prices on exhibit 92 and adds:- "These prices contain a fee of $20,000.00 per unit inclusive of GST for Cross Country Real Estate. Any sale less than the prices, then the difference will be deducted from the selling fee." 81 It is therefore clear that the alterations in exhibit 92 were unauthorised and mistaken. 82 Mr Howden said that he has been in the real estate business for four years and he sees nothing unusual in a marketing organisation taking a fee of up to $20,000.00 for the sale of units. 83 He also said that about two weeks before giving evidence he saw Mr Cross at the Wollongong head office of Park Trent Real Estate Group when he approached him on behalf of his present employer, PBS Property Group, to market the sale of a unit/townhouse development at Hervey Bay in Queensland. 84 He agreed that he anticipates that, if Mr Cross takes on that particular proposition his marketing scheme would involve seminars, in-homers, flying people up to Queensland all of which he regards as normal business practice. 85 He said that the sixty-one units involved in this development include a percentage in their prices for marketing. This is normal. The properties are a good investment and buyers would not be "ripped off." 86 When asked if his employer felt that he had the right to put up prices if they were selling more quickly than anticipated Mr Howden answered:- "Supply and demand usually works that way, Yes. Question: So if it is starting to sell well you could tell Mr Cross: well we've upped the price. Answer: That's correct." 87 Exhibit 116 is a statement by Peter John McGrath a real estate agent who has been in business since 1983 and has been the Chairman of the Real Estate Institute of Queensland since January 2004. 88 In paragraph 14 he explains that new real estate on the Gold Coast of Queensland is sold in one of two ways. First, where vendor/developers pay marketing fees to marketing companies and the marketing company introduces the purchaser usually through an associated real estate agent. The second or traditional manner is where prospective purchasers approach real estate agencies who market the property in the absence of any marketing agreements with the developer. 89 He argues that the former method involves the payment of a substantial fee to the marketing company which provides marketing seminars, telemarketing, subsidised travel to the Gold Coast and a run whereby the prospective purchasers are shown a number of properties in a short space of time but where all of these properties are located in developments which have built into their listed prices substantial marketing fees. 90 Mr McGrath goes on to say that the effect of the payment of the substantial flat fee/commission by the developer to the marketing company is that the purchase price is increased above the amount which the developer would otherwise seek to receive as income from the sale. This is because the purchase price must cover that additional cost to the developer. 91 As against this one must bear in mind the evidence of the developers, to which reference has already been made, to the effect that it is the activity of the marketeers which allows quicker sales and thereby reduces the impact of the holding costs upon the developer. If developers did not have the advantage of marketing companies to market their products the price could well remain much the same in order to cover the extra holding costs. Mr. McGrath also overlooks the fact that, if a sale is effected through an estate agent only, there will still be not inconsiderable extra costs for advertising and promoting the vendor's product. He overlooks the fact that utilising a marketing company is an outsourcing of the promotion and advertising aspect of a developer's business. He also overlooks the fact that the marketer's fees are payable if, and only if, the marketer achieves a sale. On the other hand, if the developer carries the costs of promotion, those costs are payable whether or not a sale is achieved. 92 It is quite simplistic to say, in the absence of a thorough investigation of each individual transaction, that marketing fees inflate the selling price of a property. 93 In paragraph 19 he says that in his experience probably 50% or slightly more of the real estate agencies in Queensland, not connected to the type of sales conducted in South-East Queensland, do not charge any money for marketing and advertising separate from the normal commission. This comment refers to estate agents throughout the state of Queensland and is probably correct. 94 Mr McGrath also says that the real estate agent may advise the customer that the developer may accept a lesser sum as an offer and that frequently, but not always, the developer will sell to such purchaser at the lower price because the developer is not obliged to pay the marketing fee built into the higher listed price. 95 Again, this is totally simplistic. Even the marketer is under an obligation, if required by the proposed purchaser, to put an offer to the vendor. The vendor may or may not agree to a reduction in the price. 96 Thus, in the case of Hughes which is referred to later, the contract was subject to valuation being not more than 5% below the selling price. The valuation was lower. Negotiations took place and a lower price was accepted by the vendor with the marketer and agent contributing. 97 I now pass to the evidence of Mr Thomas Stevenson called on behalf of the defendant to whom reference has already been made. His statement is exhibit 108. 98 In paragraphs 31 to 33 Mr Stevenson makes some serious allegations against Mr Cross namely:- "31. Ron Cross directed who the Easy Plan consultants were to go to for finance for the clients. I was instructed by Ron Cross that the interest rates being charged by a lender were not to be an issue when determining who to approach for a loan on behalf of a client. Ron Cross insisted on a kickback from the lender for the loans written. Ron Cross stated to me that we were to use whoever would give the best return commission to Easy Plan and Park Trent at the time. This would be up to 1.2% for an income verified loan and 2% return commission for a "low doc" loan, for example where a person is self-employed and has little documentation. This fee was not disclosed to the client, and was in addition to the standard brokerage fee of 1.65% of the loan amount that was disclosed to the client. 32. For this reason while I was employed there we seemed to mostly use Tonto Home Loans, Howard Pacific and the Home Loans Centre. I had four clients with Pacific Mortgage Corporation. Before I left Easy Plan, I had several clients who had received finance approval at an interest rate of 5.44% but the mortgage manager would not pay the fee demanded by Ron Cross. He then took these files away from me and lodged new applications with the same lenders but with different mortgage manager, Howard Pacific, who will pay his fees, but at a higher interest to the borrower of 6.45%. This extra interest adds many thousands of dollars to the average clients mortgage costs in the first year, and is just so that Cross can receive a commission." 99 In paragraph 33 Mr Stevenson goes further:- "I also believe there was deception practised on the deposit bond providers. When Cross Country made a sale, with finance to be arranged by Easy Plan Financial Services, a finance application would be completed and lodged with a lender. The details of the applicant and the security were forwarded to Park Trent in Wollongong who issued a signed letter of finance approval in the name of Howard First Pacific Finance Wollongong office. The approval was for the full loan amount and was subject only to a later valuation, and was then forwarded to the bond issuer by Maggie Pickett at Cross Country Realty in Surfers Paradise with an application for a deposit bond. The bond issuer, usually Royal Sun Alliance trading as Deposit Power or Deposit Access accepted the letter of finance approval from Cross Country and issued the bond, not realising the application had not received approval from Howard First Pacific. In fact the application never went to Howard Pacific, it was just on their letterhead. In this way Cross Country was able to direct the purchaser's solicitor to issue a letter to the developer confirming the contract is unconditional, then being paid a substantial commission from the developer." 100 These allegations are very serious. 101 In evidence in reply Mr Cross denied the allegations saying that they were completely false. He specifically denied that he took away applications for finance which had been previously made and approved through Pacific Mortgage Corporation and that he then lodged fresh applications through another finance funder. 102 In evidence at page 1124 Mr Cross pointed out that if the loans had been approved by one body time was running under the contract. To rip up a finance approval as alleged by Mr Stevenson and then to lodge new applications with a different finance funder would require new valuations and involves further delays beyond the time stipulated in the contract for obtaining finance. Mr Cross said that for this reason alone he could not and did not do such a thing. 103 He agreed there was a standard fee payable by the mortgage broker to Easy Plan for referral plus a trailer which was normal business practice. 104 In relation to the allegation of deceiving Howard First Pacific Finance he pointed out that it is impossible to do. To get the bond issued one has to lodge the application for finance with a funder and then that funder would provide conditional approval. He did not falsely use Howard First Pacific stationery to give an untrue letter of finance approval pointing out that it was impossible. 105 The plaintiff's evidence on this issue was corroborated by Mr John Odewahn who is the Managing Director of Howard Pacific Finance. He explained that if a client was referred to his company for the purpose of raising a mortgage and he raised that mortgage from a lender then he paid Park Trent Group an establishment fee equivalent to 0.4% of the total loan raised. 106 He explained that he is paid by the lender 1% on the amount of business that he writes for it and he shares that with the introducing party. He takes 0.6% for doing the work and the introducing party gets 0.4% for referring the client. This is the normal practice in the finance business. He denied ever having paid Mr Cross a fee of 0.8%. 107 The introduction fee and trailer fees are a normal part of business and are available to all referrers not just to the plaintiff and his companies. 108 In relation to the allegation that Howard Pacific letterhead was improperly used, Mr Odewahn said that Park Trent had application forms but no other stationery including letterheads. 109 He explained that the trailer fee is paid for the life of the loan. It is 0.2% per annum on the balance of the principal amount of the loan (and not including the interest) outstanding from time to time on a monthly in arrears basis. 110 He denied that he charged a client a higher rate of interest than normal so that Mr Cross could get a bigger share pointing out, at page 1250, that it would not be in his interests to be charging a rate that was out of the market. His company relies on referral business and to be charging an interest rate in excess of market just would not be in their commercial interests. 111 In paragraph 45 of his statement Mr Stevenson says that he could not work under this type of deception and four days after a conversation with Mr Cross, on 28 April 2003 he resigned. 112 There is no doubt that he resigned on 28 April 2003. However, the evidence of Mr Cross supported by his diary entries satisfies me that he was not even in Queensland four days before 28 April 2003. 113 Mr Cross gave evidence that, on a number of occasions, he complained to Mr Stevenson that he was not completing documents correctly. This led to a letter being delivered personally to Mr Stevenson on 8 April 2003, exhibit Z, the relevant parts of which state:- "Harold it is with regret that I have to write this letter to you. I am bitterly disappointed that you haven't carried out my specific instructions given to you on several occasions regarding the filling out of the clients application form when the client is with you in the office. Make sure that all information is completed for the same in the future. Please be advised that this is an official warning." 114 Mr Stevenson said that he had not received this letter and had been given no warnings. 115 Having regard to the totality of the evidence I am comfortably satisfied that Mr Stevenson's allegations are quite unreliable and should not be accepted. He struck me as a person who bears a bitter grudge against Mr Cross which has coloured his evidence. 116 The part of his evidence which I do accept, because it is supported by documents, is that he was under the control of Mr Cross and/or Kellie Cross at all times and, as evidenced in exhibit 109, his activities at Easy Plan Financial Services did not involve giving independent advice to the potential purchasers but rather to follow the directions of Park Trent Investments in using the financial advice so as to effect a sale. How did the Plaintiff attract clients to South-East Queensland? 117 Having considered the need of developers in the South-East of Queensland to increase their sales and in particular to have quicker sales at the best possible price, it is now necessary to examine how the plaintiff through his companies satisfied this need. 118 Essentially, the strategy was to increase the number of potential buyers of properties in South-East Queensland by interesting potential buyers from outside of that area, and particularly from interstate, which buyers would not otherwise consider purchasing properties in South-East Queensland. It achieved this by selling properties not as personal dwelling houses or even as holiday houses. Instead it presented properties in South-East Queensland as a tool whereby potential buyers could increase their capital assets or future wealth. 119 The first step in the implementation of this strategy was to attract potential buyers by advertisements on press and radio and also by means of unsolicited telephone calls, also called telemarketing. 120 The telemarketing was done by employees of Everest Marketing Corporation Pty Limited. The script used by persons making phone calls to potential buyers, exhibit 2 is of interest. Its relevant parts are as follows:- "Good evening Mr or Mrs - - - . I am calling from Park Trent, we are one of Australia's largest, and we think the best, national real estate group in Australia. We are currently arranging an information conference in your area in the next couple of weeks. The evening will be extremely informative with regards to property investment, also it will enlighten you to understand, how you can use your personal tax to help purchase investment property. The conference is free. And a light supper will be served. You will find the evening very beneficial with your future retirement planning. Could I check your mailing address to send you the invitation?" 121 If the recipient of the call answers "Yes" then the telemarketer is to say:- "You would like to attend, may I have your partner's name, and I need to check your mailing address for you to receive the invitation." 122 If the recipient of the call answers "No" then the script says:- "Can you tell me why you would pass up this opportunity to enhance your knowledge, which can only help you and your family." 123 The script then goes on to say that Park Trent also provides an in-home service, which is a complete obligation free service where one of its experienced consultants will visit at a suitable time in the comfort of their own home, and:- "During the in-home visit the consultant will explain what property investment can do for you, and your family. He or she will have available a laptop computer to assess your capacity and will be able to advise you what price and most importantly, what type of property fits you and your situation, budget etc. " 124 In addition, Park Trent Investments had a web page, www.parktrent.com.au. The print out of that webpage is exhibit 9. 125 Under the heading of "Who are Park Trent Investments?" appear the words:- "We are marketers of fine properties. We specialise in assisting families who wish to enter the investment property market. We provide individual solutions to all investors, from first timers to those who already possess considerable property portfolios." 126 Under the heading "Why you should invest with Park Trent" is a short history of the company, information that it has offices in Queensland and New South Wales and is therefore perfectly positioned to provide a personalised and professional service to investors, with the added advantage of local knowledge. It also refers to the fact that it presents investment conferences around Australia five to seven nights per week. It also adds:- "Park Trent operating principles are:- · Providing quality information. · Employing professional consultants who are well trained in investment areas and who exceed the Industry standard for best practice. · Providing quality properties in an optimum price range. · Being strongly committed to customer service, and to providing support along all stages of the pathway that leads to the purchase of investment property." 127 Those who attend the seminars are addressed by a speaker who had been trained by Mr Cross and who speaks in general terms of the advantages of investment in real estate as a means of increasing personal capital assets. They also receive a letter and pamphlets of the type included in exhibit 8. 128 That material includes a letter addressed to "Dear Investor" and it thanks them for attending the "positive and negative gearing investment conference". 129 The letter also points out that Park Trent Investments provides discounted airfares and hotel accommodation when required for inspection of the investment properties. It points out that its consultants will be happy to do a personal assessment to determine the person's eligibility. It invites them to make an appointment for such a personal assessment and, if the figures work for the potential customer, then the company will point the way for that person to become part of the 800,000 investor families who "have the key to the door". 130 The pamphlets also include a brief explanation of negative gearing and sets out six rules of property investment as:- · affordability · timing · position · rentability · deductions · and resale 131 A further page of the pamphlets points out that if the investor considers what he or she really wants from the investment he or she will probably come up with a list which includes:- · security · high performance · reliability · tax advantages · and protection from inflation. 132 These are all claimed to be the areas where real estate has major advantages over other investments. 133 A further page contains a pie graph which claims that of the amount invested in superannuation only 20% goes to the investor. 134 The final page reads:- "Park Trent Investments offers a comprehensive range of services which ensures smooth professional service at every stage of the client's progress into tax effective property investment. Property asset planning with Park Trent Investments as your guide to gaining personal wealth and independence, will introduce you, through sound investment in bricks and mortar security, to a new dimension in achieving your goals." 135 A further pamphlet entitled "Make Your Investment Property Your Money Box" is in exhibit 15. Under the heading "Park Trent and You – Partners" it states the following:- "To help you take that first step we offer a free financial analysis. That identifies how much you can afford and no, you don't have to be a millionaire. In fact, you'd be surprised of how little you actually need to get started. What to buy and where to buy is your next consideration. You know the drill – position, position, position. Well you can't underestimate position but that's not all there is to when you're buying an investment property. Growth potential, rental potential. Even eligibility for substantial PAYE, PPS, and/or provisional tax refunds come into play. We provide solid data to advise you so you have the information to make a considered choice. Then we negotiate with the vendor and arrange documentation. We discuss the best finance for purchase and determine, with you, how to structure the loan. We also organise property management and suitable tenants. So you can see that buying an investment property can be as easy as it sounds. Put Park Trent – the experienced property investment company – to work for you." 136 Persons attending the seminars were invited to have a consultant visit their home for the purpose of providing more detailed advice than could be given at the seminar. The consultants who visited the homes were referred to as "in-homers". 137 When an in-homer visited a potential client he or she obtained financial information from the potential investor on such matters as to the real estate which they owned, the extent of equity they may have in their home, their income and general liabilities. 138 The information obtained by the in-homer was then faxed to the finance company that would be arranging the finance for the purchase of a property. Initially, that was Collison Finance and Investments and later Easy Plan Finance. 139 In addition, a client profile of the type shown in exhibit 18 was faxed to Cross Country Real Estate in Surfers Paradise. 140 During the in-home visit a potential investor was invited to travel to Queensland to look at properties and offered subsided fares and accommodation during the stay. If the potential purchaser agreed to visit Queensland to look at properties he was required to pay approximately half the cost the balance being paid by Park Trent Investments. 141 The potential investor was sent a letter enclosing an itinerary. The itinerary in general, involved the potential investor arriving at Coolangatta airport in the early afternoon of one day and leaving that airport for home late the following afternoon. 142 The itinerary also contained a list of "what to bring with you". It included documents of identification such as driver's licence, passport, birth certificate, records of financial status such as bank account statements, loan account statements, details of credit cards and insurance policy on existing house property. Evidence of the potential buyer's earnings such as pay slips or of the last two years tax returns and assessments were likewise required. 143 The letter enclosing the itinerary were in a standard form and commenced with the opening paragraph:- "Congratulations on deciding to join the many investors who are part of the ever expanding Park Trent Family. We are your partners in wealth creation, and are quite aware what an exciting time this is for you." Summary 144 The effect of the foregoing representations to potential buyers may be summarised as follows:- · They were being assisted by Park Trent Investments [PTI] to enter the investment property market · They will be provided with quality information · PTI's consultants exceed industry standard for best practice · PTI provides quality properties in an optimum price range · PTI will introduce them through sound investment in bricks and mortar security to a new dimension in achieving their goals · PTI offers a free financial analysis which identifies how much they can afford · PTI provides solid data to advise them on growth potential, rental potential and eligibility for substantial PAYE, PPS and/or provisional tax refunds so that they have the information to make a considered choice · They are part of the ever expanding Park Trent Family. 145 The effect of the foregoing is that PTI is there to look after the interests of the potential buyers who can trust PTI to achieve the stated goal of "wealth creation". There is no mention that PTI is paid by the vendors of properties or that PTI owes any duty to those vendors. There is no mention of the fact that PTI's duty to vendors may conflict with its duty to purchasers. 146 But, at the same time, it is notorious that values of real estate can increase at a greater rate than inflation and so, can be a means of wealth creation. 147 Accordingly, it is necessary to examine the evidence as to what happened to potential buyers once they landed in South East Queensland to see if this potential conflict of interests resulted in the plaintiff ripping off Mum and Dad investors by selling them investment properties at exorbitant prices. WHAT HAPPENED IN SOUTH EAST QUEENSLAND. 148 The defendant has called four witnesses each of whom was a purchaser of land marketed by Park Trent Investments Pty Limited. It is submitted on behalf of the defendant that the experience of each of these persons was typical of the procedures followed by those companies and persons under the control of the plaintiff, to sell the properties. Mr. And Mrs. Stumbles 149 The first such witness was Mrs Helen Stumbles. 150 She testified that in about November 1999 she received an unsolicited phone call inviting her and her husband to attend an information night at Dapto Leagues Club to talk about investment properties. She and her husband attended and expressed the view that there were at least fifty people there who were of similar ages to herself and her husband. She described them as looking like married, middle-class, middle-aged couples. 151 The speaker introduced himself as acting on behalf of Park Trent and discussed how to increase wealth by investing in property. The speaker described using the equity in their home and claiming tax deductions. 152 The properties described were units and house and land packages. She and her husband invited an in-homer to attend. The in-homer brought a laptop and Park Trent brochures. 153 He explained to them how they could use the equity in their home to secure money to purchase a property. They also revealed to him details of their earnings, savings and the equity in their home. 154 With the aid of his computer he produced figures showing how much he thought they would be able to spend on purchasing a property. 155 Eventually, they decided to visit the Gold Coast to look at properties. 156 They gave the in-homer details of when they would be available to go to Queensland and subsequently they received an itinerary which involved them arriving at Coolangatta Airport at 6:35 pm on Sunday, 26 December 1999 and leaving that airport for Sydney at 6:00 pm on Monday, 27 December 1999. The itinerary and covering letter were in a form similar to that previously described. 157 On arrival at the airport they were met by a car and taken to the Neptune Resort where they stayed the night, had breakfast the next morning and were picked up the next day at about 9:00 am. 158 They were picked up by Mr Peter Waddington who said that he was an agent for Cross Country Realty. 159 He took them directly to Collison Finance where they were introduced to a Mr Andrew Bird. Mr Bird enquired of them details of their bank accounts, savings and income. He then showed them that he could refinance their existing home loan so that there would be two mortgages, one for $60,000.00 and one for $116,000.00 and explained that that was the amount of money they could expend on properties after allowing for fees and expenses. He then produced a spreadsheet which appears at pages 79 and following of exhibit 33. This document is called "Property Investment Analysis Details". 160 This document which is dated 27 December 1999 is based on the assumption of a property value of $160,000.00, rent of $180.00 per week, a capital growth rate of 5% per annum and an interest rate for finance of 7% and taxable income of $42,800.00 per annum. 161 On this basis it projected a value after five years of $204,205.00 and after ten years of $260,623.00. 162 It also calculated that the actual cost to the investor would be $13.00 per week in the first year $28.00 per week in the second year and $25.00 per week in the third, fourth and fifth years. It assessed the market value of the property at the same as the purchase price, namely $160,000.00, and estimates the total purchase cost to be $5,600.00. 163 At the foot of the first page is printed the following:- " Disclaimer: note that the computer projections listed above simply illustrate the outcome calculated from the input values and the assumptions contained in the model. Hence the figures can be varied as required and are in no way intended to be a guarantee of future performance. Although the information is provided in good faith, it is also given on the basis that no person using the information, in whole or in part, shall have any claim against Collison Finance and Investments Pty Limited its servants, employees, or consultants." 164 Mr Bird also told them, without even being asked, that his commissions would come from being a broker and that one of the banks from which he would secure the best loan, would pay Collison's commission. 165 She expected that the main real estate agent, being Peter Waddington, would receive a commission through the house/land package deal that he was setting up. She was asked, at page 798:- "Q: Mrs Stumbles, if you had been advised that marketing commissions were to be paid to Park Trent Investments in the sum of approximately 10% would that have any effect on what you did? A: Yes, very much. Q: Why. A: Because I would have thought that was extravagant. Q: But if the price would have been the same whether or not 10% commission was obtained would that have made any difference? A: Well none of that was disclosed anyway. Yeah, I think I would have wondered why it was so high compared to what I am used to and compared to where I have come from and I would have wondered why they needed to charge such a high commission. Q: So even though it may not have made any difference to the price you would still have had second thoughts? A: I think so, yeah." 166 Her evidence was that Mr Waddington then drove them to a couple of suburbs that were still just pegged out paddocks and showed them plans of units that had not even begun construction. They told him that they did not want to buy off the plan, that they did not want to buy a unit and that they were more interested in a house/land package. He then drove them to Boronia Heights. He then took them to a street where there were a couple of houses already in the course of construction and showed them a number of blocks of land which were going to be developed by Textor Constructions. He explained that he knew from Andrew Bird what they could afford and she added:- "He said this is what you will be able to afford so I would like to take you to Ken Burton Homes and see what value they can get, always emphasising there is no pressure but will go and look anyway." 167 They went to display homes erected by Ken Burton Homes at Boronia and she said that they were shown the plans and pictures and colour schemes that they could choose to go into house of the land/house package they could afford. She said:- "We were really rushed. It was beginning to rain. It was freezing cold and we weren't ready for the weather. We hadn't stopped for anything to eat or drink. There was a sense of urgency all the time with Peter Waddington that we had to hurry up and we also had to catch a flight and we knew time was ticking away so he wanted us to go back and talk to again to Andrew Bird before we left." 168 Mr Waddington then drove them back to see Mr Bird. Mr Waddington rang the solicitor, Mr Robertson, from that office and arranged an appointment. 169 The cost of the house which was $108,000.00 plus the cost of the land brought the total up to about $156,000.00. 170 Mr & Mrs Stumbles were then driven to the solicitor's office (Mr Robertson) who had all the paper work ready. He explained to them all about the property and the purchase. 171 She described her interview with Mr Robertson, page 800 thus:- "Yeah, first of all he told us there was no cooling off. If you sign there will be no cooling off. You understand that: yes, we understand that. This is a really good thing that you are doing. You know that what he said about buying properties, the Gold Coast was really going ahead. He was in the middle of renovating his office and he said you can see there is a lot of movement in the Gold Coast in this area, it is wise to jump in now and get involved with property investing in this area. Certainly buying a house and putting equity into that and then buying again and buying again and so on really, a sensible thing to do." 172 The contract of sale is at page 60 of exhibit 33. 173 It is a purchase from Textor Constructions Pty Limited of vacant land at Lot 21 Elmwood Court, Hillcrest at $49,950.00. A deposit of 10% is to be paid by a deposit bond. Finance is to be provided within thirty-five days on terms and conditions as represented by Collisons for the buyer. 174 There is a separate contract with the builder for construction of the home at a total price of $108,147.00. It is dated 27 December 1999. The total price of the house/land package was therefore $158,097.00. 175 Mrs Stumbles explained that they were not at Mr Robertson's office for very long because they were rushing to catch the plane home. Also Mr Waddington was present in the office when she signed the documents in front of Mr Robertson. 176 Mrs Stumbles said that she and her husband finally decided to go ahead with the purchase while in Mr. Robertson's office. The matters causing them to make up their minds to buy at that point of time were (page 802):- "The convincing of Peter Waddington that we had to hurry up and do something otherwise we would miss an opportunity. The properties were going really quick. They were great value and we would have to come back again and do it all over again at our own expense, much more expense, we'd already paid something be it a small fee, but we have to come up in our own time and secure people to do all this again and go over everything again just for the sake of, you know, waiting, so we should hurry up and do something now. We've seen everything, they have shown us everything, why wait? Do it now. Q: Did the price of the property being offered have anything to do with the decision you made. A: The price seemed really good to us. Q: Did you rely in relation to that assessment on anything any person said to you? A: It just seemed good value compared to where we come from, which properties were a lot more of course, and from everything they'd shown us and all that we had seen. We'd been to several different people. I mean Collison's had done a projection for us and said that this is what – as you see on the projection it says:- This is what the property would be worth, straight away $160,000.00. Waddington never said anything to the contrary. He sounded like everything he was saying, that was really good value. So everything that we had been shown by people with what we thought was legitimate and reputable, it wasn't like it was Peter Waddington taking us to – like he didn't crunch the numbers, it was a financial company that crunched the numbers and then he took us to a place, took us to a developer that didn't' show us anything to the contrary either so it just seemed like so many people were saying the same thing. It wasn't like we were getting conflicting views from anyone." 177 She also said that a further matter of importance to her was that the place was readily rentable once completed at $180.00 per week. 178 The settlement of the purchase of the land took place on 9 March 2000 and the house was completed in late May of that year. 179 Once the house was completed they chose a real estate agent closer to the house to find a tenant. The best rent they could get was $165.00 per week. They did not approach Cross Country Realty to find a tenant. 180 On 28 January 2000, Cross Country Real Estate gave to Mr & Mrs Stumbles a tenant guarantee in the following terms (pages 11 and 12 of exhibit 33):- "Cross Country Realty will guarantee the rental for twelve months from date of settlement for Lot 21 Elmwood Court, Hillcrest at the rental amount of $180.00 per week less 7.5% management fees." 181 In fact, Cross Country Realty honoured this guarantee as appears from a letter dated 27 July 2000 at page 16 of exhibit 33 in the following terms:- "Please find a cheque enclosed for the shortfall amount in the rental guarantee. The current rental amount I feel is too low for your property. Our property management division could obtain the full $180.00 per week rental for you. Our property manager's name is Maggie Pickett and she is renting properties in your area constantly. If you would like to discuss this with Maggie she is available at any time and would be more than happy to answer any questions that you may have. For all our previous clients that have management agreements with other agents we are offering a special deal. When your current agreement runs out please contact Maggie for further information before resigning with Swan Realty." 182 Notwithstanding this letter Mr & Mrs Stumbles did not take their business to Cross Country Realty. 183 In 2001, that is a year after the house was completed, she went to a local real estate agent who expressed the view that the best price they could get if selling at that stage was between $108,000.00 and $114,000.00. 184 Mrs Stumbles agreed in cross-examination that she and her husband now have tenants in the place paying now and that she thought that the current market value of the property was more than $240,000.00. 185 She was then asked:- "Q: What's your highest hope $280,000. A: That would be wonderful. Q: Well it doesn't seem such a bad investment does it? A: Not now. Q: Well its only six years since you bought it. A: Yep." 186 If the market value of the property is now $240,000.00 it would mean that its value has increased approximately 34% in the past six years. 187 The fee paid to Robertson & Robertson for acting on the purchase totalled $1,550.00. Page 21 of exhibit 33. 188 As appears from page 22 the total amount borrowed by Mr & Mrs Stumbles inclusive of costs was $266,000.00. 189 It is common ground that it was never disclosed to the purchasers that a sum in excess of $10,000.00 was to be paid by the vendor from the purchase price to any of the plaintiff's companies. However, the evidence previously referred to comfortably satisfies me that the purchase price would have been the same whether Mr. and Mrs Stumbles had acquired the property through one of the plaintiff's companies or if they had acquired it through a local real estate agent. 190 It is now necessary to consider whether the Stumbles paid an excessive price for the property in terms of the purchase price exceeding the fair market value as at January 2000 and also in the sense that the value of their property failed to have the percentage increase since 2000 enjoyed by other comparable properties. 191 The land is located in the suburbs of Boronia Heights. It is within 350 metres of a bus service and 1.5 kilometres of local shops and schools. 192 The land is rectangle shaped with a frontage of 19 metres and a depth of 34 metres. 193 The house includes a kitchen which is open planned to the lounge, family and dining areas, four bedrooms, a bathroom and ensuite bathroom, walk-in robe, laundry, separate toilet and double lock up garage. 194 In his report to the plaintiff's solicitors Mr Luke Duncan a registered valuer in Queensland points out that the locality of Boronia Heights is an established residential community that has been developed since the early 1970s. Elmwood Court is an infill residential estate that was developed in 1999. It comprises twenty-three residential allotments ranging in size from 601 to 717 square metres. 195 He goes on to describe Boronia Heights at present as characterised by low cost housing developed in the 1970s through to the 1990s. The accommodation, construction, style is considered inferior to new product that is being released in new extensions of residential estates. 196 He goes on to say that the property market as of July 2003 had just experienced a period of almost unprecedented growth in property values within the South-East Queensland property market. Significant statistical growth in property values have seen median values in Boronia Heights record a 15% increase per annum growth in property values in the period from July 2000 to July 2003. This growth cycle ended during the middle of 2004 and since then property values have reached a plateau in most areas. 197 He also explains that there was little growth in property values in 1999 to 2001 and there is evidence of properties selling below contract price with resales in a two-year period after the initial date. Mr Duncan approached the valuation by two methods. 198 He expresses the view that construction costs for residential turnkey building projects fell in the range of $700.00 to $800.00 per square metre in 2000. The contract construction cost of $108,147.00 for the project dwelling equates to a rate per square metre of approximately $695.00 which he said was at the lower end of the range of a dwelling of this nature. He adds that this construction cost includes a component for selling commissions and builder's margins. He also expresses the view that vacant land sales in new estates as at 2000 were selling for $49,950.00 for allotments ranging from 600 to 800 square metres. These calculations support the reasonableness of the total purchase price of $158,097.00. 199 His second method of valuation is to rely upon sales evidence by purchasers who are local people and/or properties which are owner occupied of similar dwellings within a six-month period of the valuation date. He relied upon sales of modern three bedroom dwelling houses in Boronia Heights and four bedroom dwelling houses in the adjacent Regents Park in the absence of comparable four bedroom sales in Boronia Heights. 200 Mr Duncan relies upon the sale of land at 5 Elmwood Street, Boronia Heights on 14 February 2000 at $49,950.00 to achieve the market value of the land in question. This is the same price as Mr & Mrs Stumbles paid. 201 He also refers to a sale at 5 Conferta Place, Boronia Heights on 11 October 1999 of a ground level brick and tile detached dwelling with four bedrooms, two bathrooms and a two-car garage for $151,000.00. On paper this is very similar to the property purchased by Mr & Mrs Stumbles. He describes it as an overall inferior property. Of course the difference of some $7,000 between the sale price of this property and that acquired by Mr & Mrs Stumbles could be accounted for by extras in the finish. 202 He also relies upon the sales of three properties at Regents Park which he says is an adjoining suburb for $145,000.00, $153,500.00 and $174,000.00 occurring in September 1999 and February 2000. He describes the property sold for $174,000.00 as an overall superior property and a larger area of land than that purchased by Mr & Mrs Stumbles. 203 If these Regents Park properties are truly comparable then it would seem to place the market value of that purchased by Mr & Mrs Stumbles as at January 2000 at about $150,000.00 to $153,000.00 and not $158,000.00. 204 To establish the value of the property as at 1 October 2006 Mr Duncan relies upon the sale of 11 Elmwood Court, Boronia Heights on 11 May 2006 for $253,000.00, of 40 Mortlake Court, Boronia Heights on 14 August 2006 at $257,000.00 and on 3 Madigan Court, Boronia Heights on 14 August 2006 at $280,000.00. 205 In addition he refers to two properties at Regents Park sold in June and July 2006 for $300,000.00 and $312,000.000 as overall considered superior to the subject property. He concludes that the market value as at 4 January 2000 was $158,097.00 and as at 5 October 2006 $280,000.00. 206 If Mr Duncan is correct in his valuations then there has been an increase in value over the past six years of approximately 77%. 207 On the other hand Mr Hamilton, a registered valuer in Queensland, reported to the defendant's solicitors that the market value of the subject property as at 27 December 1999 was $127,300.00 – that is $30,797.00 less than the contract price. 208 He reaches this value by comparing it with four other properties at Boronia Heights. 209 The first is at 11 Elmwood Court which was sold in July 2001 for $104,000.00. This property had only three bedrooms, one bathroom, and a single lock up garage and is an older house. I would not regard this as really comparable with the house purchased by Mr & Mrs Stumbles which has four bedrooms and a double lock-up garage. 210 The second is at 21 Mortlake Crescent, Boronia Heights sold in March 2000 for $105,000.00. This is also an older house but does have four bedrooms, two bathrooms and a double lock up garage. 211 The third is at 19 Colburn Court sold in October 1999 for $104,500.00. This has only three bedrooms and is an older house. 212 The fourth is at 12 Maclean Drive, Boronia Heights sold in January 2000 for $125,000.00. This is an older house comprising four bedrooms, only one bathroom and a double lock up garage. 213 As a further check on his values, Mr Hamilton assesses the value of the land at $45,000.00 instead of $49,895.00. He assesses the cost of erecting the dwelling at $475.00 per square metre for 155.4 square metres totalling $73,800.00 adds $8,500.00 for the ground improvements and gets a cost of $82,300.00. Adding these figures together he gets a market value of $127,300.00. 214 The cost of $475.00 per square metre is disputed by the evidence of Mr Kevin Hutchinson a builder and developer of some experience who testified that for this price one would get a building to a "lock up" stage which is a brick veneer skin with no linings, no kitchen, no carpet, no curtains or light fittings or TV antenna and no bathroom fittings. It is basically a shelled house. 215 To bring a dwelling to what he calls a "turnkey package" comprising carpets, light fittings, TV antenna, turf backyard would cost $680 to $700 per square metre. 216 Mr Kosseris, also a long experienced builder and developer, expressed the view that the building cost of $475.00 per square metre used by Mr Hamilton is unrealistic because it does not refer to the cost of building a completed house. A cost of $475.00 per square metre would refer to a bare shell with no concrete slab and no interior fittings. In his view based on his experience over many years a building cost of $475.00 per square metre would miss out significant elements that any purchaser would expect as part of a finished home including bathrooms, kitchens, driveways, fencing or even a building constructed on a proper concrete footing or raft. 217 In his statement he says that, in 1999/2000, costs for building a typical home in New South Wales and South-East Queensland were closer to $650.00 per square metre. He says that he worked on an estate developed and sold in 2001 by Mancorp at Pebble Beach in Queensland where the cost was $678.00 per square metre. He adds that even a bare shell omitting such items as bathrooms, driveway, fencing, landscaping left the building costs of $558.00 to $580.00 per square metre. 218 In evidence he said that these costs were based upon actual homes that were built by the company that he worked for. 219 I shall return to a further analysis of Mr. Hamilton's valuation system later. Summary 220 Mrs. Stumbles did complain of being rushed when at the Gold Copast Looking at properties. But she also conceded that she and her husband were shown properties within their price range before they selected the particular house/land package at Boronia Heights. 221 Her main complaint was that she could not find a tenant at the promised rent of $180.00 per week. But the plaintiff's company had put its money where its promise was and gave Mr. and Mrs. Stumbles a written guarantee for that amount of rent – a guarantee which it duly honoured. 222 Furthermore, Mrs. Stumbles agreed that she still has the house which is tenanted. She is receiving rent and it does not seem now such a bad investment. 223 The rate of increase in value over the past six years is about 77%. Whilst that may be slightly less than the statistical median increase in Boronia Heights, it is not so much less that I could be satisfied on the balance of probabilities that Mr. and Mrs. Stumbles paid an exorbitant price. Mr. and Mrs. Stark 224 Mr and Mrs Stark lived in Canberra. They received a brochure from Park Trent Investments in March 1999 inviting them to attend a seminar to be held at the Tuggeranong Country Comfort Hotel. 225 They attended on about 17 March where the speaker spoke about the opportunities of investment and good returns for properties in Queensland adding that there would be no problems with tenancies and it would be a good financial investment. 226 When asked specifically what was said about increase in values if a property was purchased she answered, page 307, "just in the long term that the property would be good growth over the time period". 227 Her evidence was that they were told they would obtain rents for the property which could cover the mortgage repayments. 228 Mr and Mrs Stark were advised that if they paid $300.00 towards the cost, Park Trent would fly them to Queensland, show them properties within their financial budget and enable them to talk about finance and fix everything up whilst in Queensland. 229 On the basis of these representations they paid the $300.00 and went to Queensland. 230 Exhibit 48 is a letter from Park Trent Investments signed by Mr Cross addressed to Mr and Mrs Stark the relevant parts of which are:- "Thank you for choosing the services of Park Trent Investments and we are pleased to confirm your flight and accommodation details for your upcoming visit to the Gold Coast. You will be greeted by a representative from Cross Country Realty at Coolangatta Airport. (They will have a sign with your name on it). In order for us to provide you with the best possible service, it would help greatly with our recommendation and assessment of your financial needs if the items on the list enclosed could be provided." 231 The itinerary shows them leaving Canberra on Wednesday, 7 April 1999 at 11:30 am and flying to the Gold Coast via Sydney arriving at 2:35 pm. They were booked into the Neptune Resort at Broadbeach and were due to depart on Thursday, 8 April from Coolangatta Airport at 5:00 pm arriving back in Canberra via Sydney at 8:00 pm. 232 Mr and Mrs Stark caught the plane to Coolangatta Airport and were duly met by a lady who said she was from Cross Country Realty. They were driven to their accommodation and arrangements were made for them to be picked up the next morning. 233 On the morning of 8 April they were driven to the office of Collison Finance & Investments Pty Limited where they had a conversation with a Mr Cinnamon. This gentleman obtained their financial details and prepared a computer print out which is exhibit 51. 234 This relates to the purchase of a property having a value of $195,000.00 which over five years was anticipated to reach $237,247.00 and over ten years $288,648.00. The rent was anticipated to be $230.00 per week. 235 This computer print out had a disclaimer clause in the same terms as with Mr. and Mrs. Stumbles. 236 They also signed a brokerage authority which gave Collison Finance & Investments Pty Limited an irrevocable authority to have $1,250.00 deducted from the proceeds of settlement payable to it for its fees. The document also revealed that Collison Finance & Investments Pty Limited may be paid a fee by the lender to process applications on its behalf. 237 Mrs Stark gave evidence that apart from this disclosure in exhibit 50 neither she nor her husband were told that Park Trent Investments would be entitled to receive a commission if they purchased a property. 238 Mrs Stark gave evidence that the lady from the real estate agency then showed them three properties which she described as follows (page 312):- "The first one was a modest house finished on – land and house package. The next one was a bit more up market where it was just an empty block of land and you picked the house to be built onto it. They did not say which company or whether you had to do it, I can't remember now. And then the next one was up at Somerset Views Estate which had houses. Stage 1 was completed and we were shown houses, three houses that were left in Stage 2 and they were nearly completed and we were – had the choice of one of the three houses." 239 Whilst at Somerset Views Mr and Mrs Stark were handed a brochure prepared by the developer, Sunland Group Limited, upon which a representative of Sunland in the presence of the representative of the agent wrote the following words, exhibit 53:- "$196,000.00. Rental approx. $230.00 per week. Bodycorp $31.00 per week." 240 Mrs Stark was asked at page 313:- "Q: Now can you tell us what happened after you had been to the inspection of Somerset Views? A: We were taken somewhere to have coffee or a bit of lunch to decide which of the properties that we liked and whether we wished to go ahead with it. Q: How long did that take? A: We were given about twenty minutes to half an hour to think about it. Q: Were you left alone or were you in the company of the agent. A: No, the agent left us in a takeaway place for that amount of time and then came back and picked us up." 241 In evidence at page 315, Mrs Stark said that nothing was said to them about the fact that Park Trent Investments would receive an advertising fee of $10,000.00 or that Cross Country Realty would receive a commission of $5,325.00. She said that if it had been disclosed to her that would have influenced her in the way that they made a decision. 242 When asked why, she responded (page 315):- "Well, I understood that it would mean those figures would be added onto the amount of money that we would have to fork out on top of whatever the property was worth or valued at. So would have to be attached to the final figure that we would have to pay". 243 She said that she anticipated that some commission would be paid but that it would be about $1,000.00 per group. 244 After they decided which property to buy the real estate lady took them to the office of Collison's where they told Mr Cinnamon their decision. He worked out financially whether that particular property would fit within their financial capacity. 245 It was at this second meeting with Mr. Cinnamon that the alterations appearing on page 2 of exhibit 51, the computer print-out, were made. 246 Whilst with Mr Cinnamon they asked if they could see a valuation of the property at Somerset Views to which he replied that they would get it eventually but he did not have it at the time. At that stage they paid Mr Cinnamon $500.00 to secure a valuation. This was paid by credit card - see exhibit 52. 247 They were then driven to the office of Robertson and Robertson solicitors. This firm was selected by the lady from the real estate agents because of the time factor and availability and they were told that Robertson's was one of the best solicitors. At this office they were taken into a boardroom. Present were Mr Robertson, Mr and Mrs Stark and the real estate lady. She described what happened as follows, page 319:- "My husband and I said to Mr Robertson was there anything in particular we needed to know about the contract because we were not too sure of what questions to ask and he said to us it is a basic contract. He really did not go into anything else with us and at that point he just smiled at the real estate lady and said for us to sign the contract. Question: How long did that take? Answer: I think it was only about fifteen minutes." 248 She said that Mr. Robertson explained that there was no "Cooling Off" period. 249 In the absence of Mr. Robertson they asked if they could think about it but the real estate lady responded that, if they did that, there was no guarantee that the property they looked at and wanted would still be available. 250 They were aware that the security for the loan to buy the property at Somerset Views would be that property plus their own house in Canberra and that the total amount to be borrowed would be between $213,000.00 and $215,000.00. 251 Whilst at the solicitor's office Mr and Mrs Stark signed a number of documents which are comprised in exhibits 54 and 55. 252 The first is a statement to the buyer by the seller in compliance with the requirements of s 170 of the Body Corporate and Community Management Act 1997 and the requirements of s 21 of the Land Sales Act 1964. Under this the buyer is informed that upon the registration of the plan for Stage 1 $89.52 per annum is payable as contribution schedule lot entitlement and upon registration of the plan for Stage 2 the same amount is payable. Mr and Mrs Stark acknowledged having received and read this statement. 253 There was also a power of attorney under which Mr and Mrs Stark authorised the seller to attend and vote in their name at meetings of the Body Corporate or of the Committee of the Body Corporate in respect of certain matters. 254 They also, by a further document, appointed the seller as proxy to vote on their behalf in certain matters. 255 The contract of sale is dated 8 April 1999 and is for the purchase of Lot 58 for $195,000.00. Finance is said to be "as selected by Collison Finance on or before 21 days. Such amount required to complete transaction on terms and conditions as represented and conveyed by Collison for buyers". 256 The land purchased by them was Lot 58 and the house to be built was type D. 257 They went straight from Mr Robertson's office to the airport to catch their plane home. 258 Shortly after 13 April 1999 they received a letter from Collison Finance & Investments Pty Limited requesting home loan statements evidencing the last six months transaction history and enclosing an original and a copy of the "Proposal of Finance" from Queensland State Home Loans. They were asked to peruse the proposals and to return the document signed together with the information requested. A product information brochure further detailing the loan product was enclosed. 259 Under cover of a letter dated 27 May 1999 Collison sent to Mr and Mrs Stark amended originals and copy of the "Proposal of Finance" from Pioneer Mortgage Services and Queensland State Home Loans. They were asked to sign and return them. The copy of a document with that proposal is from Pioneer Mortgage Services Pty Limited advising approval of a loan of $45,000.00 secured over their home in the ACT. The interest rate would be fixed for the first year and the current indicative interest rate is 5.49% per annum. Repayments of interest only were required during the fixed term. At the end of the interest only period the loan, which was for a term of 30 years, reverted to principal and interest payments of $205.88 per month. An application fee of $750.00 was payable and the approval was subject to satisfactory valuation. (See exhibit 58). 260 By letter dated 14 April 1999 Robertson and Robertson wrote to Mr and Mrs Stark enclosing a copy of the Contract and noting that the Contract was subject to obtaining finance by 29 April and that settlement was due to be effected fourteen days after the notice of the registration of the plans. The letter then gives further advice and seeks some information. 261 Exhibit 59 is a copy of a letter sent by Mrs Stark to Robert Cinnamon and Genevieve Lute of Collison Finance & Investments saying:- "We received the forms on 14 April. I phoned and left a message for Genevieve to contact us in regard to this matter, as we have some questions before we sign the forms. According to the letter we have only seven days to return the forms which is up on Tuesday. We have concerns regarding the loan on the property in Queensland. I would like a better explanation of the agreement before we sign." 262 This letter was faxed to Collison Finance. The letter goes on to give contact phone numbers for Mrs Stark. 263 Mrs Stark gave evidence of having difficulty in contacting Mr Cinnamon but must have received some answers because the transaction proceeded. 264 Subsequently, Mr and Mrs Stark received a home loan contract in respect of a loan of $45,000.00 repayable by twelve interest-based repayments of $207.00 each and then $348.00 principal and interest repayments. A total amount of credit fees and charges was $2,463.00. 265 By letter dated 16 August 1999, exhibit 61, Pioneer Mortgage Services Pty Limited advised that settlement of the loan account occurred on that date. There is a loan for $100,000.00 payable by monthly repayments of $569.00 and a current interest rate of 5.49% per annum. The second loan was for $45,000.00 at an interest of 5.49% per annum with monthly repayments of $207.00. 266 On the same date Robertson and Robertson sent a letter to Mr and Mrs Stark advising them of the settlement on that date and also enclosing their cheque for $3,197.83 being settlement moneys. This is explained by the fact that the total amount of money borrowed was $304,534.72. After payment of costs and expenses there was an excess of $3,197.83. 267 In addition, Sunland Group Limited sent to them a tax depreciation schedule, exhibit 62. This set out items on which qualifying capital expenditure had been incurred on eligible capital works in accordance with Division 43 of the Income Tax Assessment Act 1997 and allowed a total annual claim of $1,670.00. 268 After settlement of the purchase on 16 August 1999 problems were experienced in renting it described by Mrs Stark at pages 332 and 333 as follows:- "We tried to rent the property but we did not want to go with the site manager because their terms were more than what we were told the site manager should charge. He had a lot of hidden costs so we went and tried a different company, L.J. Hooker, to see if they could get us a tenant because their management form was much more beneficial to us but they had trouble getting on to the property because of – the property manager wouldn't let people up to have a look at the house unless L.J. Hooker personally accompanied the client and made an actual booking to get on to the site. So L.J. Hooker could not find anyone for us and the ones they did find for us they only wanted to pay $200.00 a week to $210.00 I think was the maximum so eventually we had to go back to the site manager." 269 After some six or eight months they agreed to the terms of the site manager who obtained a tenant very quickly but the most they were able to get was $210.00 per week. This meant that the rent did not clover their mortgage repayments and left a monthly shortfall of about $300.00. 270 On 4 August 2003 Mr and Mrs Stark sold the property for $221,500.00 – an increase of about 13.6% in four years. It is worthy of note that the projections in the computer print-out, exhibit 51 gave a projected value after four years of $228,122.00. 271 On 31 December 2005 the premises were on-sold for $270,000.00 and increase of about 17% in 6½ years. 272 Exhibit 66 shows that Park Trent Investments received a total fee of $14,675.00 in addition to the real estate agency fee paid to Cross Country Realty of $5,325.00. 273 I now pass to the valuations of the property. 274 The first is that prepared on behalf of the plaintiff by Mr Duncan and is part of exhibit V. 275 Mr Duncan defines his basis of valuation:- "The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties each had acted knowledgeably, prudently and without compulsion." 276 He describes Lot 58 as sited on a 340 square metre lot under the Community Title Scheme. The lot is rectangular in shape with a frontage of approximately 13 metres and a depth of approximately 25 metres. 277 The building is described as the ground level attached single duplex with accommodation comprising three bedrooms, bathroom, ensuite, kitchen, lounge, dining room, laundry, single car garage and patio. The single duplex has an approximate floor area comprising 190.7 square metes of living, patio and garage area. 278 Fixtures and fittings in general were considered basic with appointments including carpet and ceramic overlays, built-in robe to bedroom, incandescent lighting, 1.5 bowl stainless steel sink, range hood, electric hot plates, electric wall-oven, bath, two showers, two vanity units, exhaust fan, electric water heater and single laundry tub. 279 Communal site improvements include bitumen internal roads, concrete paths, in-ground pool and water feature, entertainment area, barbeque facilities, landscaping, security access gates and on-site management. 280 Mr Duncan makes some general comments regarding the property market in 1999 and 2003 which require consideration. Namely:- "The property market in the last quarter of 1999 was relatively stable with no significant price improvement of residential property in the South-East Queensland for a prolonged time. The property market in New South Wales is still experiencing significant growth particularly in the Sydney residential market. The locality of Mudgeeraba is an established village with roots stretching back to the 1860s. The Somerset Estate is an emerging residential community. The majority of purchasers of villas within the Somerset Views in 1998/1999 were from interstate purchasers. We have relied upon local purchasers in our sales analysis to avoid any 2 tier markets which may be inherent or perceived to have been in place with interstate purchasers." 281 Mr Duncan goes on to say:- "The property market as of July 2003 has just experienced a period of almost unprecedented growth in property values within the South-East Queensland property market. Significant statistical growth in property values have seen median values in strata titled units in Robina which recorded a 12% increase per annum growth in property values in the period from July 2000 to July 2003. The property market in the northern Gold Coast suburbs of Logan has seen a sharp increase in sales volumes in the same time. South-East Queensland's property growth cycle ended during the middle of 2004 and since then property values have reached a plateau in most areas. Quarterly statistical periods in the past twelve months have seen small 3% increases in property values countered by subsequent declines in statistical median sales prices the following quarterly period." 282 And:- "During 2003 the South-East Queensland locality was still considered a market for investment properties below $300,000.00 for strata titled units. This had more to do with the serviceability of investment loans offset by returns than market values or the costs of developing the investment product and bringing them online. The boom of the stock market (particularly mining stocks) is shifting investment funds away from property and chasing greater than 10% returns. The profitability of villa/townhouses are being tested given the sharp rise in development costs over the past four years. Whilst developers continue to compete strongly for development opportunities the premiums being paid and benchmarks set are not considered sustainable in the short to medium term. Construction costs over the past twelve months are challenging development feasibility in all sectors ultimately undermining the market value of sites." 283 Mr Duncan indicates that he has relied upon the direct comparison method for valuing the subject premises. He relied upon sales evidence of local purchasers and/or owner-occupiers of similar villa/duplexes within the complex and townhouse villa complexes within the Mudgeeraba locality within a six-month period of the valuation dates. 284 He points out that, statistically, there was a spike in property sales in volume and price growth in 1999 which was followed by a decline in property values in 2000 and 2001. Sales within this period of townhouses within the Somerset Views complex sold below contract prices in 1999 and 2000. Sales in this time have tended to be distressed sales (matrimonial settlements etc) and have resulted in the loss of property values within the complex. He adds:- "Over a four to six year period there has been an increase in property values within the complex with average entry prices for townhouses in 1998/1999 being approximately $164,000.00 to $215,000.00 compared to recent sales in 2006 of villas being within the range of $220,000.00 to $290,000.00. 285 Sales in 1999 of villas within the complex were largely to interstate investors. Sales evidence contained in his schedule for 1999 are of two level detached villas that were purchased by non-interstate purchasers. As a consequence all of the sales within the Somerset Views complex were considered superior to the subject premises." 286 The comparable sales for 1999 ruminated by Mr Duncan are:- "1. 10/78 Franklin Drive, Mudgeeraba sold on 26 July 1999 for $164,950.00. This is a two level townhouse complex considered overall inferior to Lot 58. 2. 117/31 Langport Parade, Mudgeeraba sold on 7 April 1999 for $216,000.00. This is a two level townhouse within the Somerset Views complex considered to be overall superior. 3. 74/31 Langport Parade, Mudgeeraba sold on 28 June 1999 for $209,500.00. This is a two level townhouse also considered superior to the subject premises. 4. 96/31 Langport Parade, Mudgeeraba sold on 19 May 1999 for $210,000.00. This is also a two level townhouse considered superior. 5. 57/31 Langport Parade, Mudgeeraba sold on 1 April 1999 for $194,000.00 which is an attached duplex considered superior to the subject premises. 6. 24/45 Swanton Drive, Mudgeeraba sold on 20 August 1999 for $192,000.000. This is a Poinciana Gardens complex villa considered overall superior." 287 Although places considered superior sold for $192,000.00 and $194,000.00 Mr Duncan values the market value of the subject premises at 14 April 1999 at $195,000.00. He values the same property at 5 October 2006 at $285,000.00. 288 A graph showing the house sales cycle in Mudgeeraba attached to Mr. Duncan's report shows a median price of about $200,000 at March 1999 rising to about $400,000 in March 2006. 289 I now pass to the valuation prepared by Mr Hamilton on behalf of the defendant, part of exhibit 107. 290 His definition of market value is substantially the same as that of Mr Duncan including the requirement that the parties had each acted knowledgably, prudently and without compulsion. 291 He also described the property in substantially similar terms to Mr Duncan. 292 He agrees that the most appropriate method of valuation is considered to be by direct comparison with sales evidence in the immediate location. 293 In considering what are direct comparison properties he explains that he had been provided with evidence that Cross County Realty and Park Trent Investments collectively sought and were to receive from the developer a commission for the sale of each property they sold in Somerset Views of $20,000.00 plus GST. He then nominates six such properties sold in Somerset Views between May and October 1999 to interstate buyers at prices between $185,000.00 and $207,000.00. He concludes that each of the sales prices has been distorted as the price paid was inflated in order for the developer to recover the additional commission associated with sales conducted by Cross Country Realty and Park Trent Investments. 294 I would interpolate here that no GST was payable in connection with this 1999 transaction because it did not become payable until after 1 July 2000. 295 He then analysed other sales in Somerset Views of D type units not sold through the plaintiff's companies and nominates ten sales in Stages 1 and 2 between November 1998 and July 1999 at prices ranging between $196,000.00 and $216,000.00. He then sets out a further nine sales of properties in Stage 3 between May 1999 and April 2000 ranging between $196,000.00 and $199,500.00. 296 He then says:- "There is a strong consistency between the prices paid for the properties we have evidence was sold by Cross Country Realty and Park Trent Investments which were subject to non-disclosed excessive commissions and other properties sold at the time. It is reasonable to conclude that all properties sold in Somerset Views at the time were sold subject to the payment of these commissions. The inclusion of these commissions in the sale price of each of the sales detailed above in our opinion renders these sales as an unreliable guide to the market value of the subject property. It is therefore necessary to disregard these sales." 297 Mr Hamilton's conclusion that all properties sold in Somerset Views other than those sold by the plaintiff's companies were sold subject to the payment of the same commission is totally without any basis of evidence or reasonableness. 298 Indeed, the fact the properties were sold other than through the plaintiff's companies at consistent prices indicates that other purchasers considered the sale price to be a reasonable market value. There is no evidence that these other purchasers were not purchasers who acted knowledgably, prudently, and without compulsion. 299 In section 7 of his report Mr Hamilton states:- "For most of the 1990s, the vast majority of new apartments and townhouses were marketed intensively locally nationally and overseas. As well as local real estate agents, marketing was conducted by groups with specific emphasis on investment strategy aspects, resulting in a wide non-local investor market being well established during the 1990s. Developer sales of new apartments: (a) were sold as part of a strategy seeking taxation effectiveness for investment purposes; (b) were extensively sold out of the local market which generated a broader purchaser base; and (c) were conducted by specialist marketing companies that sought and were paid commissions well in excess of REIQ commissions. The existence of these commissions was not often disclosed to the buyers. The influence of the payment of the excessive commissions by the developer to the marketer companies can be demonstrated by the difference in value achieved on a resale. In the majority of cases, resales within a short period of time were at significantly reduced prices. The reduction in price was predominately due to the resale price not being influenced by the payment of excessive commissions to the marketer companies. In most cases the resale property was entering the local market and REIQ commissions were paid. As discussed above in section 6 the price paid for units sold by the marketer companies were distorted by the high level of commissions paid combined with a general lack of soundly based and unbiased market intelligence readily available to the investors." 300 To support this he sets out details of five sales. Two of the properties were in Glenwood Park and were sold in October 1998 and January 1999 for $177,000.00 and $179,000.00 respectively. 301 He then refers to three properties at Robina. The first was sold in October 1998 for $160,000.00. The second was sold in September 1998 for $175,000.00 and resold in March 1999 for $168,000.00. The third was sold in December 1998 for $145,000.00. He then refers to three resales of properties in Langport Parade, Somerset Park. Unit 94 was sold to an absentee investor in February 1998 for $190,000.00 and sold in May 2000 for $165,000.00. 302 Unit 94 was sold in June 1997 to an absentee investor for $193,000.00 and was resold in October 2000 for $154,000.00. 303 Unit 21 was sold to an absentee investor in July 1997 for $198,000.00 and resold in June 2000 for $159,000.00. 304 Mr Hamilton concludes that the market value of the property purchased By Mr. and Mrs. Stark as at April 1999 was $155,000.00. 305 This is $40,000.00 below the price at which Mr and Mrs Stark purchased. The so-called excessive commission could account for only $14,675.00 of this. 306 Mr Hamilton was cross-examined on his opinions at pages 1148 and 1149 as follows:- "Q: If you could just answer this question; what increases the price of the units unreasonably? Is it the fee charged by the marketeer? A: What I believe it does – that contributes. The fee paid to the marketeer allows them to undertake a more sophisticated marketing and promotional exercise. That is, they are able to, they have the value or the money to explore greater markets and introduce people who would not traditionally be Gold Coast residential investors to the Gold Coast and, I guess, the fee paid is compensation for them for that activity, but once the people are on the Gold Coast, the price paid by them is not necessarily done so with the full knowledge of the general market, if I could use that term. The general market being what I consider is the local market. Q: Is what increases the price of the unit beyond reasonable bounds, according to you, the fee paid to the marketeer? A: That's part of it, but also the other part is that they are able to increase the value of the unit above the local market because the buyers are not as knowledgeable as the local market. If they were in a better position having greater knowledge, the prices they would pay would be different to those which they eventually have paid. Q: Are not the prices of the units fixed by the developer? A: Well, I think primarily the developer would fix the price. That would give him his margins and also pay for all his costs. I imagine there would be times when they would do that in consultation with their marketing associates to see what the market can stand. Q: If the developer fixes the price then what increases the price according to you? Is it the marketeer's fees? A: No I think you will find the developer fixes the price to the limit that he thinks the market can stand. So if the market isn't - if you're targeting a market that isn't as well informed as the local market, obviously, you'll fix a price as high as possible. So the marketeer would be compensated for his time and expertise, but the developer is also going to maximise his price. So to maximise his price he seeks to sell these into markets without the higher level of knowledge that the local buyer would have." 307 At pages 1152 and 1153, Mr Hamilton agreed that the price was fixed by the developer and that it was the same price for locals as for interstate people but that he felt that the price was too high. He was then asked:- "Q: The price is too high not because of the marketeer's fee or because of the marketeer's fees? A: Well, it's because the developer has used the marketeers to introduce people who are non-local investors to the property and they are prepared to pay that. Q: The marketeer's fees in this case, $13,000.00 would just be a very small amount reducing the value? A: But its not just the – by paying the marketeer the fee the developer was taking advantage of a much broader market. Q: Yes, but. A: And by actually offering it to that broader market they were able to achieve a much higher price than they would by adopting more traditional techniques of marketing." 308 At page 1153, Mr Hamilton said:- "As I said yesterday, the opportunities that have arisen for builders, developers, electricians, plumbers, real estate agents, leasing agents, managers, the Gold Coast could not be what it is today without the activities of the marketeers. I can see that a lot of people have made an awful lot of money. I guess its business. For me it is a matter of going out and doing valuations. I don't particularly enjoy telling people they paid too much for property but that's part of doing business on the Gold Coast in this market." 309 When cross-examined about the difference between the sale price and his valuations which greatly exceeded the amount payable by way of advertising fees and commission Mr Hamilton agreed that the difference went to the developer. 310 At page 1157, Mr Hamilton agreed that if the developer were marketing only to local investors the project may not be viable. In this case the developer would have to look at the various components. He has no real control on what he pays to the builder but he has control over what he pays for the land. When asked at page 1157:- "Q: You're saying that the developer who has charged $35,000.00 too much? A: No, no, what I'm saying – if you look at the overall project – what I'm saying to you is if he was looking to sell solely into the local market and he realised the local market has a value of $215,000.00 he would have to re-look at the various components that make up the project." 311 Thus, Mr. Hamilton agrees that it is not the fee payable to the marketer which increases the purchase price. It is not the developer charging excessive amounts which increases the purchase price. What increases the price is the introduction of a larger number of potential buyers which brings about the higher price. In short, he agrees that supply and demand control the price. He obviously, feels that, in retrospect, the selling price is too high. But the fact remains that the selling price was, at the time of the sale, the actual market value of the property. I shall have more to say about his erroneous assumptions in reaching his valuations later. Mr. Wilson 312 I now pass to the purchase of property by Mr. Wilson who lives in Wodonga, Victoria. 313 He and his wife saw an advertisement inserted by Park Trent Investments in the Border Mail, their local paper. 314 Following on this they attended a seminar in about August 1998 where they were told about Gold Coast investments and particularly about a property known as the "Director Suites" located at Main Beach. They were given brochures by Park Trent stating the benefits of investing in properties. They were told there would be a rental guarantee and that capital growth on the Gold Coast was high. Mr and Mrs Wilson gave their contact details to the conductor of the Seminar. 315 Shortly afterwards arrangements were made for two representatives of Park Trent, Mr Silk and Mr Needham, to visit their home. 316 During this visit they were provided with details of the units being sold on the Gold Coast together with details of a rent guarantee that would be in place should the Wilsons decide to purchase. They were told that a purchase of property on the Gold Coast would be a sound investment and that the rent guarantee would secure the amount of rent they were to receive. At the home visit they were provided with a property investment analysis (page 16 of exhibit 101) which referred to a purchase price of $246,700.00, rent of $329.00 per week and a loan of $256,345.00. The projection was for a capital growth rate of 6% per annum. The costs connected with the purchase were said to be $7,510.00. 317 The Property Investment Analysis contained a "disclaimer" in the same terms as in the case of Mr. and Mrs. Stumbles. 318 Not long after this visit, Mr Cross visited Mr and Mrs Wilson and they decided to buy a unit off the plan without actually seeing it. 319 During this discussion, Mr Wilson told Mr Cross that they had a mortgage on their house with St George Bank and that a penalty would be payable if the mortgage was transferred to another lender. Mr Cross assured them that a transfer of the mortgage from one bank to another would not result in a penalty payment. 320 Of particular significance to them in buying the property was the guarantee of a 7% return. Mr Wilson described this at page 1008 as "the pinnacle in making my decision". He went on to say:- "As well as the projected growth of the property, yeah, the fact that they were guaranteeing that was – it was very important, it basically made my decision. Q: Was anything said about payment of outgoings in relation to the property? A: Within the rent guarantee they were covering the cost of things like levies and charges from the council and such." 321 At page 1011, Mr Wilson said that if he had been told that a marketing fee in the sum of $12,932.50 would have been earned by Park Trent Investments it probably would have not effected his decision to purchase the property. 322 He was then asked:- "Q: Sorry Mr Wilson, I am cross purposes here. Did you say that if you had been informed that there was a marketing fee of $12,932.50 that would not have effected the decision whether you purchased or didn't purchase. A: No not specifically that wouldn't have effected it as I said, the analysis was the main briber." 323 Early in 1999 Mr and Mrs Wilson made their way to the Gold Coast by car. They called in at Cross Country Realty and saw the block of units. They were offered another one in the same complex at a higher level and at the same price. Accordingly, they decided to buy Unit 38 instead of unit 31. 324 Mr Wilson organised finance in Albury and he questioned the costs of all the fees at that time because they seemed to be more than he had calculated but Kellie Cross assured him that it was just a buffer zone in case of something unexpected occurred. 325 Mr and Mrs Wilson had to discharge the mortgage they had on their home with St George Bank and that cost him a penalty fee of $3,000.00. The total amount borrowed was $312,000.00. After settlement they received a refund of $600.00. 326 The purchase price was $246,700.00. 327 The rent guarantee which was so important to Mr Wilson is in evidence at pages 4 and following of exhibit 101. 328 This is an agreement between Mr Wilson and Bassineau Pty Limited referred to as the guarantor. This company was the developer of the property and is not one of the plaintiff's companies. 329 Under clause 3 of the agreement the guarantor guaranteed that Mr Wilson will receive a return within 21 days of the end of each month equal to 7% per annum based on what Mr Wilson paid for his lot including furniture and fittings. As he paid a total of $246,700.00 for the unit and furniture he was entitled to 7% per annum which is $17,269.00 per annum or $332.00 per week which is $3.00 per week in excess of the amount referred to in the personal investment analysis. 330 In addition, the guarantor was required to pay all local authority rates, all Body Corporate administrative fund levies, advertising and promotion of Director Suites, Main Beach, and repair and maintenance of the furniture, chattels and fittings in the unit. 331 Mr Wilson was required to pay his own expenses associated with ownership of the Lot including land tax, Body Corporate sinking fund levies, insurance on the furniture and chattels, public liability insurance for the Lot, finance charges, costs and personal costs (such as income tax). The guarantee extended for three years. 332 Two loans were obtained to finance the deal. The first was a loan of $50,000.00 for twenty-five years repayable at $321.85 per month. The second was a loan of $246,700.00 repayable in twenty-five years at $1,231.44 per month. 333 Completion of the purchase took place on 26 February 1999. 334 The problem with this transaction was that Bassineau did not honour its guarantee. Not only did it not pay the amount equivalent to 7% per annum to Mr Wilson but it also did not pay the Council and other rates that it was obligated to do. 335 In September 2001, Mr Wilson filed a Summons in the Magistrates Court claiming $14,599.96 against Bassineau for money due and owing under the Guarantee Agreement. He obtained a default judgment but he was unable to enforce the judgment because Bassineau had gone into liquidation. 336 In June 2003 he sold the unit for $238,500.00 – a loss of $8,200.00. 337 The unit was on-sold on 22 June 2005 for $245,000.00 - $1,700.00 below the price paid by Mr. Wilson six years beforehand. 338 I now pass to the valuations. 339 In his report to the plaintiff's solicitors, Mr Duncan repeats many of the matters set out in his report regarding the property purchased by Mr and Mrs Stark. His definition of valuation is the same. He repeats the general comments concerning the property markets which are set out earlier and need not be repeated. 340 The property is located on Pacific Street which is one street back from the beach-front. 341 The block of units is situated on an irregular shaped allotment with an easterly aspect to Pacific Street. Main Beach is one of the premier residential and short-term holiday accommodation localities on the Gold Coast. The unit is located on the sixth level and has easterly views to the ocean which is situated approximately 150 metres to the east. It is close to restaurants and cafes. Surrounding properties comprise a mixture of low rise and high-rise residential unit complexes. 342 The property is a one-bedroom unit situated within the building which is now called the "Maldives" complex. It comprises eighty-six one-bedroom units over fifteen levels with basement car parking. It is a resort style complex with in-ground pool, barbeque and entertainment areas, landscaped gardens and on-site management. It has a mixture of short-term holiday lettings, permanents, owner-occupiers and lockdown units. 343 Mr Duncan relied upon the direct comparison method of valuation. He relied upon sales evidence of local purchases and/or owner-occupiers of similar medium to high-rise unit complexes and units on similar levels within these complexes in the Main Beach locality. He added that there is a lack of comparable sales evidence in the one-bedroom market and so in the main relied upon sales within the "Maldives" complex. He added that there was little growth in property values in 1999 to 2003 and there is evidence of properties selling below contract price with resales in the four-year period after the initial sale. 344 He values the market value at 7 January 1999 at $246,700.00 and at 19 October 2006 at $255,000.00. 345 His comparable sales for 1999 valuation are Lots 37, 35 in the same block of units sold in November and December 1999 for $248,000.00. He also refers to another property at 1013/1 Lennie Avenue, Main Beach which sold for $244,000.00 in December 1999. 346 The graph of unit sales cycles attached to Mr. Duncan's report shows a median price at March 1999 ranging between $200,000.00 and $250,000.00, then dropping in the first half of 2001 to about $200,000 and thereafter fluctuating and rising to a peak in about June 2005 to about $450,000.00. This, of course is a statistical analysis based on all unit sales and not necessarily referrable to single bedroom units. 347 Mr Hamilton valued the property for the defendant as at 7 January 1999 at $160,000.00. His methodology in this valuation is almost identical to that in relation to the property purchase by Mr and Mrs Stark. He compares selling prices of units not sold through the plaintiff's companies, notes that the prices are consistent and therefore assumes that they are an unreliable guide to the market value. 348 He repeats that the developer sales of new apartments were distorted by the influence of the payment of excessive commissions by the developer. He then sets out sale prices at the Sun City Resort located at Surfers Paradise approximately 750 metres north of Caville Mall. This is a resort facility with extensive recreational facilities onsite management security parking and restaurants. He refers to the following sales:- "Lot 20 May 1996 $203,000.00 resold January 1999 for $185,000.00. Lot 97 sold August 1998 for $279,500.00 and resold in May 1999 for $165,000.00. Lot 161 sold August 1998 for $279,500.00 and again in June 1999 for $240,000.00." 349 He then refers to properties in the Crown Towers Resort located at Surfers Paradise approximately 500 metres off Caville Avenue. The sales there are:- "Lot 60 June 1996 for $250,000.00 resold January 1999 for $190,000.00. Lot 89 sold June 1995 for $255,000.00 and resold December 1998 for $210,000.00. Lot 97 sold March 1995 for $275,000.00 and resold September 1998 for $197,500.00. Lot 132 sold May 1996 for $275,000.00 and resold January 1999 for $190,000.00." 350 He then refers to "Phoenician" located at Broadbeach approximately 250 metres northwest of Broadbeach Mall. The Lots in this complex show a similar drop in sale price between 1996 and 1999. He also refers to the "Neptune Resort" at Broadbeach directly opposite Jupiter's Casino and the Pacific Fair shopping centre and these show a similar drop in value between 1996 and 1997 and resale in 1998 and 1999. 351 On this basis he assesses the market value of the subject property at 7 January 1999 as $160,000.00. 352 Of significance is the fact that Mr Hamilton changes the reasons for his conclusions. 353 In his reports he starts by blaming excessive prices upon the excessive fees paid to marketeers which are often undisclosed and which necessarily inflate the prices charged for the land. However, the difference between his valuations and the actual sale prices varies from between $40,000.00 and $70,000.00. On the other hand the amount charged by Mr Cross' companies is about $14,000.00. When this was pointed out he then shifted his blame to the fact that marketeers' have done a good job in increasing interest in land within the South-East Queensland area to interstate investors and that this has created an artificial market. 354 He agrees that the prices charged by the developers are the same whether a marketeer is used in the sale or not. 355 When pressed as to the reason for the difference between his value and the sale price he is asked whether this means that the developers are charging an unreasonable price. 356 He agrees that they are not and that they are probably making a reasonable profit on the development but then places the blame upon the fact that they are paying too much for the land because they cannot have much control over the other costs of developing. Mr. and Mrs. Weir 357 I now pass to the transaction involving Mr and Mrs Weir who live in Victoria. 358 In early November 2002 Mrs Weir received an unsolicited telephone call from Park Trent Investments inviting her to attend a seminar on investments as a way to minimising their taxes and save. As a result they went to the seminar where the talk was about investment properties and the way to minimise taxes and save at the same time by being an owner of investment property. A representative of Park Trent Investments indicated that an advisor could be sent to their house to discuss finer details. They were interested and so arranged for an in-home visit. 359 This took place on 15 November 2002 when they were visited by Mr Alex Donovic who showed them a way to minimise taxes and how housing investment was done. He suggested that they sign up for a trip to the Gold Coast and that they contribute $200.00 towards the expenses of that trip. They paid this money and later received an itinerary. 360 The itinerary had them leaving Melbourne at 7:45 am on Tuesday, 10 December 2002 and arriving at the Gold Coast at 8:45 am. They were booked into the Park Royal at Surfers Paradise with a complimentary breakfast and were due to depart the Gold Coast on Wednesday, 11 December at 5:25 pm. 361 On arrival at the airport they were picked up by Mr Bill Myers from Cross Country Realty Pty Limited who drove around the area explaining that he had been involved in the real estate game for many years. 362 He took them to the office of Easy Plan Financial Services where they met the manager, Kathryn Gray, who explained figures to them and discussed their financial situation. She also told them that Park Trent Investments and her company, Easy Plan, were separate entities and that Park Trent only referred clients from interstate. 363 This discussion lasted about one hour after which she gave Bill Myers a list of available properties for Mr and Mrs Weir to inspect. Those properties were a two storey townhouse at Villa Petros; a townhouse duplex at River Springs Country Club Stage 3, St Andrews; a Pacific Pines house and land package and two units located at Lakeside on Varsity in Robina. They were given pamphlets relating to the Lakeside on Varsity and River Springs Country Club properties. 364 Bill Myers spoke to them about each development and took them first to Lakeside on Varsity where they were introduced to Jason Cunningham, the sales representative at the site, who gave them a guided tour of the development and showed them a finished and occupied low set villa, Lot No 16 at a price of $264,000.00. He also showed them Lot No 86, floor plan B, a two-storey townhouse in Stage 2 which was not completed but was for sale at $261,500.00. 365 Bill Myers then showed them developments at Villa Petros, River Springs Country Club and Pacific Pines, none of which were of interest to Mr and Mrs Weir. 366 They were then shown a semi-completed development at River Springs which did not interest them. 367 They then stopped for lunch at which time Mr Myers said that the finished unit at Lakeside on Varsity would be his preference only because it was finished and occupied. Mr and Mrs Weir agreed that it was their preference too and wanted to have another look at it before making a decision. They returned to see it from the outside because they needed to give twenty-four hours notice to have an internal inspection as it was occupied. 368 That afternoon they returned to Easy Plan where Kathryn Gray told them that they needed to make a decision that day. 369 Mr and Mrs Weir then left the office to have a cup of coffee and discuss the matter between themselves. What happened then is described in detail by Mr Weir in his statement, exhibit 102 at paragraph 12:- "We would like to have had more time but realised that the property on Varsity was a good one close to all amenities, such as the Bond University and the railway to Brisbane, the large shopping centre down the road and public schools close by. These were all the type of things we considered when buying an investment property, and in the end we decided to buy Unit 16 at Lakeside on Varsity, 302 Christine Avenue, Robina." 370 They returned to the Easy Plan office and signed an application for a loan from their Bank, Citibank, and paid a deposit of $1,000.00. 371 In the meantime Myers was making an appointment to see a solicitor the next day. He suggested Mr Donald Dickie and, as Mr and Mrs Weir knew no other local solicitor, they agreed. 372 They left Easy Plan office at about 4:00 pm and went to their accommodation at the Park Royal Hotel where they spent the night. The next morning they were free to do whatever they liked. 373 This is a matter of some significance because it shows that they had the overnight period and the next morning to reconsider their decision. 374 At about 1:40 pm on 11 December they were picked up by Mr Myers and taken to the office of Mr Dickie where they were introduced to the practice manager, Ann Mullins, who had prepared the paperwork for them to sign. 375 These included the Sale Contract, Form 27b with commission structure, a Deposit Power application, statement of the initial fees and a Form 32A Certificate of Independence. In his statement Mr Weir said that although the documentation was explained to both of them they went over them fairly quickly. 376 They were told that they had a Cooling Off period and were given a copy of the documents to take with them so that they would know what was going to happen once the finance had been approved. They then left the premises with Mr Myers who took them back to see Kathryn Gray. At this stage she told them that their own bank, Citibank, had declined their request for finance but did not explain at the time why this was so. She did tell them that she could get $40,000.00 from Citibank and the balance from the Adelaide Bank. The loan from Adelaide Bank would be for $229,500.00 and this was accepted by Mr and Mrs Weir. 377 They were then taken to the airport and left for Melbourne taking with them papers that had been given to them. 378 The contract which they signed appearing at pages 81 and 82 of exhibit 103 has a purchase price of $264,000.00 and requires finance sufficient to complete being effected within twenty-eight days from the date of the contract. 379 This contract differs from the contracts in the case of Stumbles, Stark and Wilson because of the coming into force in the meantime of the Property Agents and Motor Dealers Act 2000 (the PAMD Act). 380 Attached to the contract is a Form 27b entitled Selling Agents Disclosure to Buyer. The form is addressed to the buyer and states:- "The purpose of this form is to make you aware of the relationships that your selling agent has with persons to whom they refer you, and of benefits that your selling agent and other people receive from the sale". 381 On the form appearing at page 73 of exhibit 103 the Selling Agent is described as "Cross Country Realty licence number 2203869". 382 At the bottom of the first page the names of persons to whom the buyer is referred are described as Easy Plan and Don Dickie. The nature of the relationship of those persons with the selling agent is described as "business". The benefit derived by the selling agent, if any, from those persons is described as "NIL". 383 At the top of the second page is the following notation:- "Benefit other than by referral. You must disclose the amount, value or nature of any benefit, to your knowledge, (other than those already disclosed by you in section 3.1) which any person has received, receives, or expects to receive in connection with the sale, or for promoting the sale or for providing a service in connection with the sale". 384 The answer to this is the handwritten words "refer Annexure A". 385 Annexure A is in the following terms:- "Selling Agent 1. Commission of 5% of the first $18,000.00, and 2.5% of the balance of purchase price. 2. The agent has a business relationship with Easy Plan Financial Services. Kellie Cross as Queensland Manager of Cross Country Realty is a director of Easy Plan Financial Services but receives no financial gain. Easy Plan Financial Services offers the following services: Providing tax depreciation schedules. Providing the best finances to suit particular situations. Financial planning. Providing insurance solutions for clients. Developers' consultants: A fee of up to 1.5% of the purchase price with respect to each of the following services: 1. Consultation and advisory services with respect to each of the following services. 2. Assisting with the drafting and preparation of advertising and promotional material; Assisting with the design, structure and implementation of ongoing advertising and marketing programmes. 3. Assisting with the coordination and supervision of service providers with respect to sales and marketing, including advertising and public relations providers; provision of reports to the developer with respect to matters the subject of this agreement. 4. Consultation services with respect to project marketing the development; provision of sales information centre/s; conducting and staffing sales information centres. 5. Liaising with real estate agents to introduce buyers to the project; undertaking promotional activities with respect to the development including: property exhibitions, database marketing and mail-outs, letter box drops etc. 6. Provision of and access to and use of database/s. 7. The payment of expenses including advertisements, printing and stationery, postage and sign writing and general expenses." 386 The description of the commission payable to the real estate agents sets out the formula provided under Queensland law. 387 The second section under the heading of "Developers Consultants" does not mention Park Trent Investments Pty Limited by name. Nor does it set out the amount which is due to that company as a fee. Instead it sets out in general terms "a fee of up to 1.5% of the purchase price with respect to each of the following services". There are six such services which would mean a fee of up to 9% of the purchase price. 388 It is submitted on behalf of the defendant that not only does Annexure A fail to comply with the provisions of the PAMD Act but that it is deliberately ambiguous in respect of the "Developers Consultants" fees so as to confuse buyers and further that this form was one for which Mr Cross is personally responsible. 389 As appears from the irrevocable authority at page 2 of exhibit, 103 Cross Country Realty was aware that the total commission due to it was $7,050.00 plus GST. 390 Furthermore as appears from the irrevocable authority at page 3 of exhibit 103 Cross Country Realty was also aware that the total amount of administration levy payable to Park Tent Investments was a further $12,950.00. These two documents have a fax print out at the top indicating that they were sent by Cross Country Realty to Narson Pty Limited, the developers. 391 In the notes to completing sections 3.1 and 3.2 on Form 27b appears the following:- "You must provide the amount, value or nature of the benefit as accurately as is possible at the time of the disclosure. You should express the benefit as follows:- 1. An amount ($). If you cannot do this, then - 2. A value (%). If you cannot do this, then - 3. Describe the nature of the benefit. You should only do this if the benefit cannot be described as an amount or value." 392 On behalf of the defendant it is submitted that Cross Country Realty was well aware of the amount of the respective fees and therefore should have inserted those amounts and not a value in terms of percentage. Accordingly, it is submitted that Cross Country Realty was in breach of the PAMD Act. 393 The relevant section of that Act is s 138 which, in its material parts, is as follows:- "(1) A residential property agent for the sale of residential property must disclose the following to any prospective buyer of the property - (c) The amount value or nature of any benefit any person has received, receives, or expects to receive in connection with the sale, or for promoting the sale, or for providing a service in connection with the sale of the property, Maximum penalty 200 penalty units. (2) The disclosure is effective for sub-section (1) only if it is - (a) given to the prospective buyer in the approved form, and (b) acknowledged by the prospective buyer in writing on the approved form, and (c) given and acknowledged before a contract for the sale of the residential property is entered into. (3) Also, for sub-section (1)(c), disclosure in compliance with the approved form is sufficient." 394 It is worthy of note that paragraph (c) of sub-section (1) does not provide that the dollar amount must be inserted if it is known. It merely states that "the amount, value or nature of any benefit" must be set out. In other words it gives the option to the agent to express the benefit in any one of three forms. Whilst sub-section (3) provides that disclosure in compliance with the approved form is sufficient, it does not mean that disclosure not in compliance with the explanatory notes to that form is insufficient. 395 The total fee of $12,950.00 inclusive of GST receivable by Park Trent Investents is well within 9% of the purchase price of $264,000.00.. 396 However, the agent failed to disclose that Easy Plan could be expected to receive a fee as finance broker. In fact it charged the Weirs $5,276.75. See page 93 of exhibit 103. 397 In addition it failed to disclose the fact that Easy Plan, as a finance referrer, could receive a referral fee from the lender. There is no evidence in this particular case that it did receive such a fee. 398 Amongst the documents which Mr and Mrs Weir took back home with them was a PAMD Form 30B. This is headed in big black letters "WARNING" and goes on to say in big letters:- "YOU SHOULD OBTAIN: Independent legal advice and an independent valuation of the property". 399 They were aware that they had a "Cooling Off" period of five days in which they could cancel the arrangements. They were warned to obtain an independent valuation of the property. They did not do so. 400 The document at page 113 of exhibit 103 reveals that on 19 December 2002 Citibank sought a full valuation from Hely & Associates of the property being purchased. It gave as the contact "Cross Country Realty phone 07 558853600". 401 On 23 December 2002 Citibank sent a fax to Kathryn Gray of Easy Plan Finance in the following terms (page 114 of exhibit 103):- "I had the valuer contact me regarding the purchase property in Queensland and he advised that his colleague valued an identical unit and was valued at $205,000.00. Valuer advised that they would not be even close to the purchase contract price. Customer would not be able to purchase this property due to the value of the valuation. Please advise customer and next course of action." 402 A further fax was sent by Citibank to Kathryn Gray on 24 December 2002 (page 115 of exhibit 103) in the following terms:- "I have spoken with the valuation manager and he has advised that he is satisfied with the valuer's decision. He has already had other valuers make an assessment on this development and is not willing to use other valuers." 403 Notwithstanding the request contained in the fax from Citibank of 23 December 2002, this information was not disclosed to Mr or Mrs Weir. 404 By letter dated 28 January 2003 Mr and Mrs Weir were advised that Home Loans Centre Management Pty Limited had approved finance for $229,500.00. 405 Settlement was completed on 19 February 2003. 406 Some time later Mr Weir tried to amalgamate the two loans and contacted Citibank. He was informed that the valuation for the property had come in at $240,000.00 instead of $264,000.00 which was the purchase price. 407 He later contacted real estate agents in the Robina area and was advised that if he put the property on the market it would fetch between $270,000.00 and $280,000.00. 408 In evidence Mr Weir said that he understood the Annexure A relating to the Agent's commission but thought that, in relation to the "developers consultants" the payment would be 1.5% overall and not for each of the six individual items. 409 He gave evidence, page 302 and 303, that he was aware of the five day Cooling Off period and that he read the documents at his home within that period. He saw nothing wrong with them because he regarded Mr Dickie as an independent solicitor looking after his interests. Mr Dickie was looking after his legal interests but not the question of whether the value of the property being purchased was equal to the purchase price. 410 He subsequently sold the property for $280,000.00. 411 At page 1035 he agreed that he was receiving rent from the property which was paid straight into his account and that it was equal to the amount of his monthly mortgage payments. 412 According to exhibit 120 the property was purchased on 23 December 2002 for $264,000.00 and sold on 19 November 2004 for $280,000.00. This represents an average increase in value of 3.17% per annum. 413 I now pass to the evidence of valuations. 414 In his report to the plaintiff's solicitor, Mr Duncan sets out his standard definition of valuation which is described earlier. He also explains that the locality of Robina/Varsity Lakes has been expanding by approximately 1,000 every year over the past eleven years. 415 He describes the premises as a single level townhouse/attached villa with accommodation comprising three bedrooms with bathroom, ensuite, kitchen, lounge, dining room, laundry, single car garage and attached gated car area. It has an approximate floor area of 148 square metres of living and garage area. Communal site improvements include concrete driveways, landscaped garden paths, in-ground pool and water feature, entertainment area, barbeque facilities, landscaping, security access gates and onsite management. 416 Mr Duncan points out that the property market in the last quarter of 2002 had seen significant increases in property values for all types of residential property in the Gold Coast and greater South-East Queensland property market. The locality of Robina/Varsity Lakes is an emerging integrated residential commercial community. The master plan for the area has Robina as a commercial hub within the Gold Coast city town plan. The community is expected to have a threshold population of over 30,000 before 2008. 417 He also says that the majority of purchasers of townhouses in the complex in 2002/2003 were from interstate. Accordingly, he has relied upon local purchasers in his sales analysis to avoid any two-tier markets which may be inherent or perceived to have been in place with interstate purchasers. 418 He goes on to say that significant statistical growth of property values have seen median values in strata titled units in Robina which recorded a 12% increase per annum growth in property values in the period from July 2000 to July 2003. He then goes on to describe the general situation with the property market in that area which has already been set out in relation to other valuations. 419 He has relied upon the direct comparison method of valuation with sales of strata titled units/townhouses/villas compared on the basis of characteristics including location, land area, building size, age of improvements, design of improvements, amenities, style and conditions of improvement. 420 He states that the majority of sales in 2006 have been to local investors or owner-occupiers for two level townhouses and ground level brick and tile villas under $300,000.00. He points out that older townhouses, villas, residential units in adjoining localities have traditionally sold for 10% to 15% discount below that of newly developed townhouses. 421 At the time of purchase of the subject property in December 2002 prices were nearing the high point in the property cycle particularly for strata titled properties in Varsity Lakes/Robina. No discernable differential in property values could be extracted by reviewing sales in July 2003 from the contract price in December 2002. Resales of townhouses within twelve months of the settlement date of the original purchase from the developer or off the plan purchases can result in the sales outcome below the original contract sale. 422 He cites six comparable sales all at Varsity Lakes. All occurred between October and December of 2002 and the sale prices ranged from $255,350.00 up to $289,000.00. Accordingly, he assesses the market value at 23 December 2002 at $264,000.00. He values the present market value at 5 October 2006 at $300,000.00. Interestingly his valuation as at 1 July 2003 was $265,000.00 which is below the price at which Mr and Mrs Weir sold the property in November 2003 at $280,000.00. 423 In his report to the defendant's solicitors Mr Hamilton values the property at December 2002 at $215,000.00. 424 His methodology follows the same pattern as in his other reports; namely to look at sales effected by Cross Country Realty and Park Trent Investments, at sales effected by others, noting that there is a strong consistency between the two and then concluding that those not sold through Cross Country or Park Trent are an unreliable guide. He then looks at units in other complexes where the prices have ranged from $155,000.00 up to $202,000.00 and concludes:- "An investor fully cognisant of the Gold Coast real estate market, acting without compulsion, would not be prepared to pay the asking price of $264,000.00 for Lot 16. A more reasoned approach would be to acquire a similar property available as a resale thus achieving a considerable discount on the cost of the initial investment. I consider an investor acting knowledgably would be prepared to pay $215,000.00 for Lot 16 in November/December 2002." 425 This conclusion is not an opinion as to the market value of Unit 16. It is a statement that as at November/December 2002 one could have purchased a different, similar but older property at a lower price. 426 Furthermore, there is no evidence from him that the other property would have yielded a greater increase in value over the years to 2006 than did the subject property. Mr. and Mrs Harriden 427 I now pass to the matter of Harriden. 428 In about August 2002 Mrs Harriden received an unsolicited telephone call from Park Trent Investments asking if she was interested in investing in her future. As she and her husband had already invested in a property at Carrara on the Gold Coast through Park Trent Investments she knew of the potential and was interested in doing so again. She was aware that they could use the equity in properties they already had to invest in another property. 429 Although they were offered subsided air fares to attend the Gold Coast to meet with a representative and inspect other properties, they decided to drive to Queensland and made their own arrangements for accommodation. They did however arrange a time and date to meet with a representative of Cross Country Realty. 430 They left Queanbeyan by car on 21 November 2002 and arrived at the Gold Coast on the afternoon of Friday, 22 November. They then went straight to their motel. 431 The next morning they were collected by Mr Warren Evans who took them to offices at Surfers Paradise where they met with a financial consultant from Easy Plan Financial Services. They gave her their financial statements, tax returns and the consultant worked out a few options for them. 432 At this stage Mr and Mrs Harriden wanted to obtain a new loan to cover all of their properties, including anything they may buy as a result of this visit and also they wanted the loan to cover their existing car loan. 433 After leaving the financial consultant they were taken by Warren Evans to the Robina area which was described to them as a real growth area with close proximity to shops, transport, education and medical facilities. 434 They were taken to Lakeside on Varsity where they were shown a display unit and some plans which they found impressive. On the basis of this they purchased a land and house package at Lot 66, Lakeside on Varsity for $248,500.00. 435 Although the house was not yet built on the land and they understood that they would be buying from the plan, they were assured that it would be completed and ready for tenants by Easter of 2003. They also understood that the blocks would be sold before the construction commenced and that no rent return could be received before completion. 436 They were then taken to a solicitor, Mike Eden where they signed contracts and other documents and paid a deposit of $1,000.00. They were advised to seek independent legal advice but did not. As the purchase of a property in 2001 in Carrara had proceeded smoothly with no problems they assumed that this transaction would be the same. 437 Mrs. Harriden recalled receiving and signing documents called a Contract for Sale, a PAMD Form 30b, and a PAMD Form 27b. She recalled that this had an annexure detailing commission payments but could not recall whether it was explained to her. 438 After the paperwork was completed Warren Evans drove them back to their motel and they then drove back home to Queanbeyan. 439 When Mr and Mrs Harriden were speaking to the financial consultant at Easy Plan they asked her to approach their current bank, Tonto, to attempt to have the new loan added on to the current loan. Later they were informed that Tonto had refused to approve this new loan. 440 Easy Plan had apparently lost their documents so they were then in contact with a third consultant who sent them a new set of papers. 441 One Saturday afternoon Mr Cross arrived at their home in Queanbeyan unannounced, informed them that he was the owner of Cross Country Real Estate and Easy Plan Financial Services and said that he needed a copy of their driver's licences and further documents signed. 442 He assured them that everything was in order. They particularly remembered him because accidentally he took their licences with him when he left. They phoned him and he returned within an hour with the licences. 443 He told them that the loan was approved and awaiting settlement with quite a sizable residual and that the value of the new property had increased by about $50,000.00. 444 Subsequently they were told there were problems with lawyers and further documents and settlement dates were postponed repeatedly. The matter did not settle until October 2003. 445 After settlement they were alerted by Easy Plan that two solicitors had to be used because one property given as security for their loan (their home) was in New South Wales whilst the other was in Queensland. 446 The finance company used to purchase their car contacted them to tell them they were behind in payments. They thought that this vehicle had been paid out as part of the refinancing. It had not. 447 In evidence Mrs Harriden said that if she had been told that a marketing fee of $13,337.50 would be paid to Park Trent Real Estate in connection with her purchase she would have withdrawn from the transaction because she would have thought that one commission is enough and that she should not have to pay a further fee to Park Trent. 448 She was then asked:- "Q: Would that have been the case if the price that you paid was unaffected by the fact that there was a second commission at that amount. A: I would have thought very long and hard about it before I would have signed the document and we would have returned home and then thought a little longer and then made another decision." 449 When referred to PAMD Form 27b she said that she interpreted it as meaning a payment to the "Developers Consultants" of up to 1.5% of the purchase price for all and not for each of the six enumerated services. 450 She and her husband had been introduced to Park Trent by a phone call and then a seminar followed by a home visit and then a subsidised trip to Queensland in 2000 when they purchased the property at Carrara. That property was rented out quite successfully. There were no problems with it. 451 She said of the property they purchased at Lakeside on Varsity that she thought it had real potential. They were not shown any other property because they did not ask to be shown further properties. She said that she had been told that the value of the property was now around $280,000.00. She added that rental has been done through the onsite agents and rent has been received regularly. The property is constantly tenanted. 452 The house at Carrara had been bought for $90,000.00 and was sold by Mr and Mrs Harriden to a family member for $184,000.00. The Harridens paid all the fees and there was no commission payable. 453 The vendor/developer, of the subject property was Narson Pty Limited. It entered into an agreement with Park Trent Investments Pty Limited to pay a total marketing fee of $20,000.00 plus GST from which would be paid the REIQ to Cross Country Realty. 454 The PAMD Forms 27b and 30B are in the same form as their counterparts in the matter of Weir. There are the same warnings and cooling off period. 455 By letter dated 6 June 2003 Mr and Mrs Harriden were advised that a loan of $220,000.00 has been formerly approved. 456 By a further letter dated 18 June 2003 they were advised that a loan of $260,000.00 has now been approved. 457 By letter dated 17 October 2003 they were advised that the matter had been settled on 17 October 2003. 458 In his valuation report to the plaintiff's solicitors, Mr Duncan sets out the same preliminary comments as he made in the report regarding Mr Weir. This property is in the same development as that purchased by Mr Weir. 459 The property purchased by Mr and Mrs Harriden is at Lot 66 and is described as a two level attached townhouse comprising three bedrooms with bathroom, ensuite, kitchen, lounge, dining room, laundry, single car garage and attached gated car area. It has an approximate floor area comprising 150 square metres of living and garage area. 460 His valuation is done on the basis of direct comparable sales within the Varsity Lakes development between August 2002 and December 2002 at prices ranging from $255,350.00 up to $283,000.00. 461 The only one he describes as comparable is a sale in August 2002 at $255,300.00. The other properties are considered superior. He places a market value on the subject property at November 2002 at $248,500.00 and a current market value at $285,000.00. 462 Mr Hamilton in his valuation report to the defendant's solicitors values Lot 66 at November 2002 at $200,000.00. 463 His reasoning follows that set out in his earlier reports and he uses the same comparable sales as he does in relation to Lot 16 purchased by Mr and Mrs Weir. He concludes:- "An investor fully cognisant of the Gold Coast real estate market, acting without compulsion, would not be prepared to pay the asking price of $248,500.00 for Lot 66 in late 2002. A more reasoned approach would be to acquire a similar property available as a resale thus achieving a considerable discount on the cost of the initial investment. I consider an investor acting knowledgeably would be prepared to pay $200,000.00 for Lot 66 in November/December 2002. Failing to acquire the properties at these prices the investor would seek to acquire alternative properties." 464 Here again, Mr. Hamilton reaches a conclusion which is not an opinion as to the market value of the property. Instead it is a statement that, as at November 2002, one could have purchased a different, similar but older property at a lower price. 465 Furthermore, there is no evidence from him that the other property would have yielded a greater increase in value over the years to 2006 than did the subject property. 466 The Harridens' Form 27b did not make mention of the fact that Easy Plan Financial Services were to receive a referral fee from Howard Pacific Finance Pty Limited. This may well have not been known at the time and therefore could not have been included. However, exhibit 47 reveals that Easy Plan received from Howard Pacific an up front referral fee of $1,980.00 plus $640.74 in trailers. Mr. and Mrs. Hughes 467 I now pass to the Hughes transaction. Neither of them gave evidence. 468 Mr and Mrs Hughes agreed to go to Queensland and ultimately entered into a contract in June 1999 to purchase from Big Arrow Enterprises Pty Limited Lot 11 on SP 110856 Community Title Scheme 26103 for $140,000.00. 469 The contract contained the following clause in handwriting:- "This contract is subject to and conditional upon the finance broker Collison obtaining within fourteen work days from the date hereof an independent valuation for mortgagee purposes in favour of the buyers to establish that the value is within 5% of the contract price." 470 The valuation came in below that limit. 471 On 3 August 1999 Collison Finance & Investments Pty Limited wrote to Park Trent Investments referring to recent discussions and confirmed that Cross Country Realty will contribute $7,000.00 towards the cost and purchases of the property by Mr and Mrs Hughes of Lot 11, Martin Place Villas, Nerang. 472 On the same day Robertson & Robertson the solicitors for Mr and Mrs Hughes wrote to Kellie Cross asking for a letter to be forwarded to their office confirming that the purchase price was to be reduced at settlement to $133,000.00 as their clients wished to see such a letter. On 4 August Cross Country Realty sent a fax to Robertson & Robertson stating that the contract price had been reduced to $133,000.00. 473 On 10 August 1999 the solicitors for the vendors confirmed that their client agreed to the reduction of the purchase price. 474 These confirm that the difference of $7,000.00 came out of the commissions payable to Park Trent. 475 It should be noted that this contract predated the 2000 amendments to PAMD Act. 476 In his valuation report to the plaintiff's solicitors Mr Duncan describes the subject property as a two level townhouse with accommodation comprising three bedrooms with bathroom, ensuite, kitchen, lounge, dining room, laundry, single car garage and attached gated area with an approximate floor area of 125 square metres of living and garaged areas. 477 He makes similar comments concerning the property market in 1999, 2003 and 2006 as he made in the other reports. 478 He relies upon the direct comparison method of valuation and sales evidence of local purchases and/or owner-occupiers of similar townhouses within the complex and complexes within the Nerang locality within a six months period of each of the three valuation dates. He adds that there was little growth in property values in 1999 to 2001 and there is evidence of properties selling below contract price with resales in a two-year period after the initial sale. Property values increased after July 2003 particularly in the last two quarters of 2003 and early 2004 with a lack of available properties below $250,000.00 for townhouses/villas. 479 Mr Duncan takes 3 comparable properties in Nerang sold between January 1999 and June 1999 at prices between $127,000.00 and $150,000.00 and assesses the market value at 22 June 1999 at $133,000.00. 480 He also assesses the market value at 5 October 2006 at $225,000.00. 481 Mr Duncan's estimate does have the support from the fact that a valuation made prior to the conclusion of the sale caused Mr Hughes to be satisfied with a purchase price of $133,000.00. 482 It should be noted that no valuation report was tendered on behalf of the defendant. Francesca Marifioti 483 In its particulars of justification filed on 15 March 2005 the defendant nominated a number of additional sales in support of its allegations. It is proposed to deal with each in turn. 484 Francesca Marifioti purchased Unit 18, 78 Franklin Drive, Mudgeeraba on 10 November 1999 for $164,950.00. 485 As appears from exhibit 120 she sold this property on 6 May 2002 for $145,000.00 and it was on sold on 8 April 2006 for $225,000.00. 486 Mr Duncan reported to the plaintiff's solicitors that in his view the market value as at 10 November 1999 was $164,950.00 and as at 19 October 2006 was $225,000.00. There is no valuation in evidence from the defendant. Grazia Marifioti 487 Grazia Marifioti purchased Lot 17, 78 Franklin Drive, Mudgeeraba on 1 December 1999 for $164,950.00 and sold it on 3 April 2002 for $143,000.00. The property was on sold on 9 March 2004 for $246,000.00. 488 Mr Duncan valued the property as at 1 December 1999 at $146,950.00 and as at 19 October 2006 at $235,000.00. 489 Exhibit 120 provides the only evidence that the above two properties were sold in April 2002 at a loss. At page 1333 Mr Evatt on behalf of the plaintiff pointed out that evidence is available that the Marifioti had to sell these properties in a "fire sale" for a specific reason. I have no hesitation in accepting this explanation in view of the substantial increase in selling price when these two properties were on sold. There is no valuation on behalf of the defendant in evidence in respect of Unit 17. Domenic Marifioti 490 Domenic Marifioti purchased Unit 4 in the Capistrano Bay complex at Broad Street, Labrador on 1 December 1999 for $172,950.00. He still owns this property. 491 Mr Duncan assesses the market value as at 1 December 1999 at $172,950.00 and as at 5 October 2006 at $205,000.00. There is no evidence of valuation tendered on behalf of the defendant in relation to this property. Mr and Mrs Santiago 492 Mr and Mrs Santiago purchased Lot 95, Somerset Views, located at 31 Langport Parade, Mudgeeraba on 19 August 1999 for $185,000.00. They still own it. 493 In his valuation report to the plaintiff's solicitors Mr Duncan describes the property as a ground level detached villa with accommodation comprising three bedrooms with bathroom, ensuite, kitchen, lounge, dining room, laundry, single car garage and patio. The villa has approximate floor area comprising 166.8 square metres of living, patio and garage area. 494 He assesses its market value at 19 August 1999 at $185,000.00 and as at 5 October 2006 at $275,000.00. 495 In his report to the defendant's solicitors Mr Hamilton says that the market value as at 7 April 1999 was $155,000.00. 496 It is instructive to look at his reasoning in reaching this decision. In section 6.3 he states that he has been provided with evidence that Cross Country Realty and Park Trent Investments collectively sought and were to receive from the developer a commission for the sale of each property they sold of $20,000.00 plus GST. He points out that this is well in excess of the REIQ commission. He then sets out the sales achieved by these two companies between April 1999 and October 1999 at prices ranging from $185,000.00 up to $207,000.00 497 He then goes on to say:- "The sale price of each property detailed above has been distorted as the price paid was inflated in order for the developer to recover the additional commissions associated with sales conducted by Cross Country Realty and Park Trent Investments. On this basis we consider the price paid for the properties listed above to be an unreliable guide to the market value of the subject property and they have therefore been disregarded. As part of our investigations we have analysed other sales in Somerset Views in order to ascertain the prices paid were consistent with those properties we have evidence had their sale price inflated by the additional commissions paid. The subject property is a D type unit and therefore sales about the date of valuation of similar D type units were analysed." 498 He then sets out sales in Stages 1 and 2 occurring between November 1998 and July 1999. Except for one at $216,000.00 the others are all priced at between $196,000.00 and $198,000.00. 499 He then sets out details of sales in Stage 3 between May 1999 and April 2000 at prices between $196,000.00 and $199,500.00. 500 Thereafter he says:- "There is a strong consistency between the prices paid for the properties we have evidence was sold by Cross Country Realty and Park Trent Investments which were subject to non disclosed excessive commissions and other properties sold at the time. It is reasonable to conclude that all properties sold in Somerset Views at the time was sold subject to the payment of these commissions. The inclusion of these commissions in the sale price of each of the sales detailed above in our opinion renders these sales as unreliable guide to the market value of the subject property. It is therefore necessary to disregard these sales." 501 He then selects properties as comparable at Glenwood Park and Robina with sales between September 1998 and January 1999 at prices between $145,000.00 and $179,000.00. He also points out sales in Somerset Park where resales were made shortly afterwards at a loss. 502 He concludes:- "It is demonstrated by the sales above that an investor fully cognisant of the Gold Coast real estate market and acting without compulsion would not be prepared to pay the asking price of $195,000.00 for the subject property. A more reasoned approach would be to acquire a similar property available as a resale thus achieving a considerable discount on the cost of the initial investment." 503 According to exhibit 120 the price paid by Mr and Mrs Santiago for this property was not $195,000.00 but $185,000.00. 504 The views of Mr Hamilton have to be considered in the light of documents contained in exhibit X. 505 The first is a valuation dated 26 February 1999 from Finch Freeman Consultancy resulting from a request for initial investigation of the proposed "La Hacienda" townhouse development. In this report type C and F are described as three bedroom single level residences. The letter continues:- "In assessing a market value for the proposed units the most comparable sales evidence in Robina would be the recently completed "Chateau Martinique" development close to the subject property. That development is also of a high standard. However the subject is expected to surpass the Chateau Martinique project. A number of sales in Chateau Martinique went to local purchasers, both for owner-occupation and for investment. Sales prices there range from $199,900.00 to $245,900.00." 506 The author of the letter goes on to assess the market value as at that date for type C at $245,000.00 and type F at $215,000.00. 507 The second document is a valuation from none other than Mr Hamilton dated 25 February 1999. Whilst no D type are included the other types range in value according to him between $195,000.00 and $230,000.00. These are well in excess of his valuation of the subject property at $155,000.00 contained in his report to the defendant's solicitors, part of exhibit 107. 508 The next document is a further valuation from Finch Freeman Consultancy which values all types between $200,000.00 and $275,000.00. 509 These are further reasons for not accepting Mr Hamilton's valuations as reliable. 510 Mr and Mrs Santiago also bought Lot 33, 206 Cheltenham Drive, Robina on 6 July 1999 for $226,000.00. They still own it. 511 There is no valuation of this property tendered on behalf of the defendant. 512 Mr Duncan valued the property at the date of purchase at $226,000.00 and as at 5 October 2006 at $290,000.00. 513 Exhibit 120 shows that those who purchased units in La Hacienda generally did very well. 514 Of the fourteen purchases named all have retained the property except for three. 515 One purchased in July 1999 for $225,000.00 and sold in June 2006 for $295,000.00. The second purchased in October 1999 for $235,000.00 and sold in December 2004 for $284,500.00. The third purchased in July 1999 for $216,000.00 and sold in April 2003 for $215,000.00. Cassidy 516 The next transaction particularised in the document filed on 15 March 2005 is a sale to people by the name of Cassidy. I recall no oral evidence called on this particular transaction other than a report of valuation by Mr Duncan which places the value at $144,000.00 at the date of purchase and $250,000.00 at 5 October 2006. I draw no inferences from this information. Mr. and Mrs. Lombardo 517 The next transaction particularised is a purchase by Mr and Mrs Lombardo of Lot 147, Directors Suites purchased on 27 November 1998 for $253,700.00. They still own it according to exhibit 120. This is the same block of units involved in Mr. Wilson's purchase. 518 This is a block of units situated in Pacific Street, Main Beach. The particular unit is on the 9th level and comprises one bedroom with bathroom, kitchen, combined lounge dining room, balcony and single car accommodation in the basement car park. It has a floor area of approximately 62 square metres with an 11 square metre balcony. 519 Mr Duncan in his report to the plaintiff's solicitors assesses the market value at 4 November 1999 at the contract price which included a furniture package. He assesses its market value at 1 July 2003 at $220,000.00 but by 4 October 2006 its market value had increased to $265,000.00. 520 In his report to the defendant's solicitors, Mr Hamilton repeats the line of reasoning contained in other reports and concludes that its value at 27 November 1998 was $167,000.00. 521 I have no evidence to indicate that whether this purchaser had the same problems with the management as Mr Wilson did. I can draw no inferences adverse to the plaintiff from this evidence. B and J C Bonefski 522 The next transaction particularised is that of B and J C Bonefski. I have no evidence from these people nor are any details of the transaction included in exhibit 120. The only evidence I have is that the market value at 13 June 1999 was $189,200.00, the contract price, as contained in a report from Mr Duncan. J and J F Beaton 523 The next transaction particularised is a purchase by J and J F Beaton of Lot 17, Pacific Pines, Maui Crescent, Oxenford. There is no reference to this in exhibit 120. 524 In his report to the plaintiff's solicitors, Mr Duncan describes this dwelling as comprising four bedrooms with bathroom, ensuite, kitchen, lounge, dining room, laundry, two-car garage and attached undercover area. It has an approximate floor area comprising 165 square metres of living and garage area. 525 He assesses its market value at 16 August 1999 at the contract price of $191,747.00 as at 1 July 2003 at $250,000.00 and as at 5 October 2006 at $340,000.00. 526 In his report to the defendant's solicitors, Mr Hamilton assesses the market value of this property at $160,000.00 at 7 August 1999. 527 In this report he does not seek to blame inflation of the price by reason of excessive commissions. Instead he adopts the methodology of direct comparable sales. He selects two properties in Oxenford sold in March and April 1999 for $148,000.00 and $165,000.00 respectively. 528 He then goes on to say:- "We have been instructed the total consideration for the house and land package was $191,747.00. The land was purchased from the estate developer for $62,000.00. The balance of the purchase ie. $129,747.00 would have been apportioned to the improvements. The ground improvements would have cost about $8,500.00 therefore the dwelling had a cost apportionment of $121,247.00 which equates to $642.00 per square metre of building area." 529 He then refers to a property at 25 Maui Crescent, Oxenford where the cost of the dwelling was $85,000.00 to build equating to $467.00 per square metre. He then allows in respect of the subject property, $62,000.00 for the land, $89,500.00 for the building, $8,500.00 for the ground improvement making a total market value of $160,000.00. 530 The difficulty with accepting the figure of $475.00 per square metre for building costs is that there is direct evidence to the contrary. Indeed, there is evidence of building costs being in the vicinity of $650.00 per square metre. This has already been referred to. Nathan Kirby and Laura Appleby 531 The next transaction particularised is the purchase by Nathan Kirby and Laura Appleby of Lot 8, Waverley Apartments, on 6 September 1999 for $209,000.00. According to exhibit 120 they sold it on 25 July 2003 for $206,500.00. 532 There is no evidence before me as to the circumstances under which they came to sell it. All I have is a report from Mr Duncan who, on the basis of direct comparable sales, assesses the market value of the property at 6 September 1999 at $209,000.00, at 1 July 2003, $215,000.00 and at 5 October 2006 at $265,000.00. Stoddart 533 The next transaction particularised is the sale to people by the name of Stoddart of Unit 81, 4 University Drive, Robina on 23 July 2002 for $305,00.00. According to exhibit 120 they still own it. 534 In his report to the plaintiff's solicitors, Mr Duncan describes the property as an internal townhouse within the Varsity Shores complex. It is a two level townhouse comprising four bedrooms with bathroom, ensuite, kitchen, lounge, dining room, laundry, single car garage and attached gated car area. It has an approximate floor area comprising 155 square metres of living and garage area. 535 Mr Duncan points out that resales within the complex have tended to bounce around with selling prices occurring with a differential up to $20,000.00. He adds that while the overall market in the area for all types of residences has increase in capital growth, townhouses within Robina/Varsity Lakes have remained stable. Townhouses have increased in market value from $300,000.00 to $370,000.00 for four bedroom townhouses which reflect a rate per square metre of analysed sales between $1,900.00 to $2,200.00. 536 He values the market value at 23 July 2002 at $305,000.00, at 1 July 2003 at $330,000.00 and at 5 October 2006 at $360,000.00. 537 On the other hand, Mr Hamilton in his report to the defendant's solicitors values the property at 18 July 2002 at $250,000.00. 538 He adds that other improvements to the area are secured gated area, landscaping, two pools and onsite management. 539 His method of valuing is to exclude all sales which he considers have been distorted so the developer can recover the additional commissions associated with sales conducted by Cross Country Realty and Everest Marketing. He also looked at sales not affected by these two companies and notes that they are consistent with those sold by these two companies. He then looks at other properties sold at Robina and Varsity Lakes between January and November 2002 at prices between $179,000.00 and $315,000.00. He also points out that units in Chateau Martinique sold by the developer between June and October 1998 at prices of $245,900.00, $214,900.00 and $245,900.00 were on-sold in November 2002 for $210,000.00, $185,000.00 and $202,500.00. Mr. and Mrs. Barry 540 I now pass to the transaction involving Mr and Mrs Barry which led to the publication of the first matter complained of. 541 Mr Stolz whose name appears in the bye line of the publication gave evidence that on or about 12 June 2003 he received a telephone call from Mr Tim O'Dwyer a solicitor in Brisbane who was active in campaigning against marketeering. The terms of the conversation are set out in paragraph 11 of his statement, exhibit T as follows:- "Tim O'Dwyer: Ron Cross is still operating on the Coast despite the new legislation against marketeering. I have been contacted by a couple called the Barrys who are dealing with Cross. They were telephoned and invited to a seminar by Park Trent Investments which is one of Cross' companies. They are due up on the Gold Coast next week. They want to come up and do a story with A Current Affair. Are you interested in having a look at this? Mr Stolz: Yes Mr O'Dwyer: I will send you some information." 542 It is worthy of note that, in this initial conversation, it is not said that they want to come up to look at properties but rather "they want to come up and do a story with A Current Affair." 543 Subsequently, Mr Stolz received a fax from Mr O'Dwyer, exhibit 96, headed "Subject: Marketeering Sting". It is addressed to Mr Stolz and Mr D Margan of Channel Nine. 544 This email included an email received by Mr O'Dwyer from Mr Barry sent on 12 August 2003. 545 The email from Mr Barry reads as follows:- "Here are our travel arrangements for the Gold Coast trip. I spoke to my wife about some people following us and she is OK with it. Give me a call if you want me to do anything else for you." 546 Here again it is clear that Mr and Mrs Barry appreciated that they were going to be followed, presumably by representatives of A Current Affair, and offers to do "anything else" for Mr O'Dwyer. 547 Mr Barry's email also forwards an email he had received on 11 June 2003 from Park Trent which attaches travel arrangements as well as a check list of documents and information that Easy Plan Financial Services Pty Limited asked him to bring. 548 The itinerary is said to be for "Mr R Barry, Mrs J Barry and baby Jessica". They were due to leave Melbourne on 13 June at 9:15 am and arrive at the Gold Coast at 11:10 am. They were booked into the Crowne Plaza, Surfers Paradise, for that night and were due to depart the Gold Coast on 14 June at 2:15 pm. 549 Also attached to the email from Park Trent Investments is a copy of a letter dated 11 June 2003 from Park Trent to Mr and Mrs Barry enclosing the details of the itinerary and commencing with the familiar paragraph:- "Congratulations on deciding to join the many investors who are part of the ever expanding Park Trent family of property investors, we look forward to becoming your partners in wealth creation." 550 This letter sets out contact names and telephone numbers including "National Coordinator Ron Cross 0411 135 875". 551 On about 12 or 13 June 2003 Mr Stolz telephoned Mr Barry and asked his concerns to which he replied (paragraph 16 of exhibit T):- "We got a call from Park Trent Investments and then went to a seminar. We then spoke to a Park Trent rep. We are now supposed to come up and see some property. I am worried about the possibility of being ripped off. I got in contact with Neil Jenman because I heard he was involved in campaigning against these sort of schemes. He referred me to Tim O'Dwyer." 552 Mr Barry told Mr Stolz that they were coming up on the following Monday. 553 Mr Jenman is a real estate agent involved in campaigning against marketeers. 554 On about 13 June 2006 Mr Stolz again spoke to Mr Barry who told him that the property that Park Trent had shown them was at a development called River Springs Country Club. The price was $250,000.00. They paid a $1,000.00 deposit but had not yet signed a contract. The solicitor, Donald Dickie, was going to send them the paper work. They want to check it out with Tim O'Dwyer. 555 On 15 June 2003 Mr Stolz received an email addressed to API Magazine, Mr Stolz and Mr D Margan of Channel Nine headed "Subject: Ross and Jenny Barry's Little Adventure". 556 It read:- "Sally Pritchette (a Jenman agent) of Nerang Real Estate (557840000 – 0411616162) is happy to assist. She will be checking out the property at Nerang that has been 'sold' to the Barry's to assess its real value." 557 On about 16 or 17 June 2003 Mr Stolz telephoned Sally Pritchette and obtained from her the name of Ian Brosnan, a valuer. 558 On about 17 June 2003 Mr Stolz phoned Mr Brosnan gave him details of the property and was told that a price of $249,000.00 "is a good $50,000.00 off the mark. It is too high". 559 Mr and Mrs Barry never signed the contract whilst at the Gold Coast. 560 Exhibit 78 is a letter from Donald W Dickie Solicitors to Mr and Mrs Barry enclosing the contract in duplicate, disclosure statement in duplicate, Form 27b, Form 32a and a deposit bond application. It asks for the documents to be signed where indicated and returned in the enclosed express post envelope. They are asked to retain one copy of the disclosure statement and the Form 32a. 561 The enclosed form of contract is for Lot 40, River Springs, Country Club, Nerang at a price of $249,000.00. 562 Needless to say the contract has never been signed. 563 However, the agent was Cross Country Real Estate and the runner who signed the 27b Form is Glenn M Mendes. 564 Mr Cross' explanation for this transaction is quite revealing. 565 His evidence was that the River Springs development was achieved in stages and sold well. The developer put the prices up at every stage. By June 2003 the developer increased the price from $199,000.00 to $249,000.00. 566 It was the view of Mr Cross that this increased price had "outstripped the market". 567 Mr Cross' evidence continued that he had had a meeting with Mr. Abedian, the Managing Director of Sunland, the developer, at which he complained about this increase in price. Mr. Abedian had responded that there were venture partners involved, that the product was selling quite well and they refused to vary the price. 568 Mr Cross said that he had told the Mr. Abedian that his company would not be selling the product from that point of time. 569 When asked his reason for withdrawing from the sales of that development, he said (page 56):- "We aim to find properties that would perform for our clients and when prices increased, which we were involved on this all the time, we sell it to the price increase. We don't get involved after the price increases. All developers if their rate of sales are vast and high, they move their prices upwards very quickly to take advantage of extra profits. We only stay in the product until they move the prices. If they move the prices, we stop selling them immediately. Q: That's what happened in the Nerang estate. A: Definitely." 570 Mr Cross reinforced this view in his evidence at page 442 where he said:- "I'll go back over it. We spent a great deal of money and time marketing this product because it was a large product. It had been in the market place for about five years from stage 1 to 13 or 14 stages. The initial release price was about $170,000.00 and they progressively increased the prices over the five years from $179,000.00 to $200,000.00 to $230,000.00, $249,000.00. So they went from $199,000.00 to $249,000.00, which was a $50,000.00 increase and I believe it took the edge off it for our clients, and there were better products available in the market place. And we actually had clients at that time that had shown an interest in that product at the original price of $199,000.00 at that time, and when the new prices came out at $249, we just didn't proceed with those sales and I made that clear on my visit to the – ". 571 Here we have Mr. Cross conceding that he knew before mid June 2003 that the new price of the property would not "perform for our clients" and that and he believed that the new price "took the edge off it for our clients, and there were better products available in the market place". Yet he still offered one of those properties for sale to Mr and Mrs Barry in mid June 2003. 572 At page 447 Mr Cross was asked:- "Q: Indeed, Mr Cross, I suggest that on 13 June 2003, Cross Country Realty offered for sale a lot in River Springs to Mr and Mrs Barry at the new price of $249,000.00. A: As with every development we have, the agents have the flexibility to show all the products available, and the agents may have showed them that product. I'm not aware of that sale" 573 To describe this property as a "product available" is inconsistent with the evidence of the plaintiff that his companies had withdrawn from selling these products because it would not "perform for our clients" and that "there were better products in the market place" as he had said earlier. 574 When asked the date when he had approached Mr Abedian, the director of Sunland, and advised him that he was no longer handling the River Springs Estate, he responded that he was not sure, but it was on one of his visits to Queensland. He thought that it would have been early May or late April. After looking at his diary he said it would have had to be on April 2 or April 3. 575 It was put to Mr Cross in cross-examination that the documents in exhibit 78 made it plain that as at 16 June 2003 Cross Country Realty was selling lots in River Springs for Sunland's new price of $249,000.00. To this he responded:- "I'm not aware of that. The clients might have requested to look at that product. I don't know whether that sale proceeded to a sale. I wasn't on the Gold Coast. It might have been requested to look at it. My indication was that it was withdrawn from sale. The clients might have requested it." 576 It is highly improbable that Mr and Mrs Barry would have requested to have a look at the River Springs property. How would they have known about it? If it had been withdrawn from the list of items for sale through Cross Country Realty then how would the runner, Mr Mendes, know about it and know to show it to Mr. and Mrs. Barry? 577 It is clear from the signature of Mr Mendes, the runner, appearing on the Selling Agent's Declaration, that he took Mr and Mrs Barry to the property at River Springs and then to the office of Mr Dickie. The letter from Mr Dickie refers to his meeting with Mr and Mrs Barry on Saturday, 14 June. It is clear, therefore, that Cross Country Realty was marketing the property on that day in circumstances when Mr Cross knew, for the reasons he stated in his evidence, that it was not appropriate for his company's clients. 578 It is also noted that no one from Cross Country Real Estate (such as Mr. Mendes, Kellie Cross or Maggie Pickett) was called to give evidence of the circumstances which led to Mr. and Mrs. Barry being shown this property. No explanation was given in evidence as to why at least one of them was not called. From this, I infer that their evidence would not have added to the plaintiff's case. 579 It may well be that Mr. and Mrs. Barry went to the Gold Coast, not with the intention of buying real estate, but with the intention of setting a trap the results of which would form the basis of an expose by "A Current Affair". But, if their intent was to set a trap, Mr. Cross fell into it. 580 On his own admission, his organisation had offered them a property for sale at a price which he described had "outstripped the market", would not "perform for our clients" and which he believed had taken "the edge off it for our clients, and there were better products available in the market place". 581 This is clearly a case where the plaintiff offered to Mum and Dad Investors a property which was exorbitantly overpriced. The Red Alerts 582 The Red Alerts in exhibit 82 are instructive of the problems created by the contract price being higher than the then current valuations. 583 Exhibit 82 consists of a number of "Red Alerts" - a system instituted by Mr Cross whereby he became informed immediately if any of the proposed purchases was in jeopardy of not continuing to conclusion. 584 At page 3 is a Red Alert dated 17 December 2002 advising that the problem is with low valuations creating a $25,000.00 shortfall. 585 At page 6 an alert dated 10 January 2003 reads as follows:- "Kathryn has notified Maggie this morning that the loan for the above clients has been declined. The reason Easy Plan Financial Services is no longer accredited with Citibank. Because of this fact Citibank took it upon themselves to speak to the clients direct and they informed our clients that the valuation was $29K under the required amount. The clients advised Kathryn by phone this morning that they no longer wanted to proceed with this sale. The clients are currently holidaying." 586 A Red Alert dated 21 March 2003 at page 27 refers to a valuation for the property coming in at $23K under. It asks Mr Cross if he would be able to sign up the mortgage documents. 587 A Red Alert dated 8 May 2003 at page 46 advises that the client is doing his own finance and has terminated the agreement as the valuations came in very low. 588 At page 48 is a Red Alert dated 16 May 2003 advising that the clients were doing their own finance, that the valuation was low and the clients want to terminate this contract. 589 At page 56 of exhibit 82 are five Red Alerts dated 12 June 2003. One relates to clients by the name of Godfrey who were obtaining their own finance. These clients were advised by two solicitors not to proceed because the apartment was very much overpriced at $430,000.00. The clients used the Cooling Off period to terminate. 590 The next dated 13 June 2003 relates to clients by the name of Ivory and Humphreys who explained that they had appointments with two different accountants and were advised not to proceed. They terminated using the Cooling Off period. 591 The next are clients by the name of Tomlins and Pruen who were obtaining their own finance. Both had sent termination letters because of low valuations. 592 A Red Alert dated 16 June 2003 at page 59 refers to the client wishing to terminate because of a bad valuation. Easy Plan sent them copies of valuations completed by other reputable valuers. The clients obtained a further valuation confirming the first one they had. Other Low Valuations 593 Exhibit 91 is a fax from Easy Plan to Jenny Cross at the head office of Park Trent Investments listing all current clients with low valuations as at 28 March 2003. There are eleven and the purchase prices and valuation results are set out below:- "Purchase Price $169,950.00 Valuation $165,000.00 Purchase Price $192,500.00 Valuation $182,500.00 Purchase Price $192,000.00 Valuation $185,000.00 Purchase Price $268,000.00 Valuations at $240,000.00 and $245,000.00 Purchase Price: $199,000.00 Valuation $185,000.00 Purchase Price: $229,000.00 Valuation $220,000.00 Purchase Price: $325.000.00 Valuation $295,000.00 Purchase Price: $185,000.00 Valuation $165,000.00 Purchase Price: $180,000.00 Valuation $173,000.00 Purchase Price: $237,000.00 Valuation $215,000.00 Purchase Price: $216,000.00 Valuation $205,000.00" IS THE FIRST IMPUTATION SUBSTANTIALLY TRUE? 594 As mentioned earlier, the first imputation sued upon is that the plaintiff "ripped off Mum and Dad Investors by selling them investment properties at exorbitant prices". 595 The first ground of defence to this is, in New South Wales, that the imputation is substantially true and relates to a matter of public interest. 596 The defence to this imputation in relation to Queensland is that it is substantially true and the publication was made for the public benefit. 597 It is conceded on behalf of the plaintiff that if the imputation is substantially true it does relate to a matter of public interest or for the public benefit. 598 This issue, then, is whether the defendant has satisfied the court on the balance of probabilities that this imputation is substantially true. What does it mean? 599 It is first necessary to define the imputation. 600 To my mind the phrase "Mum and Dad Investors" fits the description given by Mrs Stumbles of those who attended a Park Trent seminar as middle-class, middle-aged couples who are interested in buying real estate as an investment in order to increase the capital value of their assets. 601 The term "ripped off" means "cheated" or "swindled or "taken advantage of". 602 My interpretation of the imputation is that "the plaintiff cheated ordinary middle-class, middle-aged customers who wanted to invest in real estate as a means of increasing their capital assets by selling them investment properties at exorbitant prices". Submissions 603 I have had the benefit of extensive submissions from both parties. Those on behalf of the plaintiff are recorded in the transcript. Those on behalf of the defendant are both written and recorded. To summarise them would not do them justice. 604 Suffice it to say that I have given careful consideration to all of them before reaching my conclusions. Considerations 605 The evidence clearly establishes that the advice given to intending purchasers on behalf of the plaintiff's companies in the form of seminar talks, in-home visits and pamphlets prior to the visit to Queensland made a number of representations that they were providing a means for increasing the capital wealth of the proposed purchasers. There is also no doubt that at that stage the intending purchasers were given to understand that Park Trent's interests were their interests. 606 There is also no doubt that the prospective purchasers may have been familiar with property values in the areas in which they lived but they had no knowledge of property values on the Gold Coast. There is also no doubt that Park Trent Investments, Cross Country Realty and the finance provider, Easy Plan Finance were under the control of Mr Cross. 607 Accordingly, the stage was set whereby these intending purchasers could be ripped off by charging them exorbitant prices for the real estate they were to be sold. 608 The question however is whether they were in fact ripped off by being charged exorbitant prices for their real estate. 609 In support of a positive answer to this question the defendant called four purchasers whose experiences, it submitted, were typical of the experiences of other purchasers. 610 The first was Mrs Stumbles. 611 She and her husband entered into contracts for the purchase of a block of land and for the construction of a house on it, in December 1999, at a total price of $158,097.00. They were told that a rent of $180.00 per week could be expected for the property. They were unable to obtain a tenant at this price. 612 However, Cross Country Realty had given a written guarantee to make up the difference between what they received and $180.00 per week. Mr and Mrs Stumbles claimed on this guarantee and recovered the difference from Cross Country Realty. 613 They still own the house, have tenants in it paying rent, and Mrs. Stumbles agreed that it "was not such a bad investment" now. 614 The valuer called on behalf of the plaintiff expressed the opinion that the price paid by Mr and Mrs Stumbles was the market price. On the other hand, Mr Hamilton a valuer engaged on behalf of the defendant said that the market value then was only $127,300.00. For reasons already set out I do not accept Mr Hamilton's valuation. 615 The next purchaser called was Mrs Stark. She and her husband went to the Gold Coast in April 1999 and purchased a property for $195,000.00. 616 They had been led to believe by a representative of Collison Finance and Investments Pty. Ltd. that a rent of $230.00 per week could be expected and that this would cover the mortgage repayments. 617 However, when they tried to rent the property they were able to obtain only $210.00 per week which did not cover their repayments. 618 They sold the property for $221,500.00 on 4 August 2003. The property was on-sold on 31 December 2005 for $270,000.00. 619 Mr Duncan valued the market value as at the date of purchase at $195,000.00 but Mr Hamilton assesses the market value at that date at $155,000.00. 620 It is Mr Hamilton's position that vendors were able to increase the price of the unit above the local market value because the buyers were not as knowledgeable as was the local market. He says that if they were in a better position having greater knowledge the price they would have paid would differ from those which they in fact paid. 621 He also says that if they wanted to invest they could have invested in other properties at a lower price. However, he does not give any evidence that those other properties would have increased in value to any greater extent than the subject property did. 622 The problem with both valuations is that they are valuing retrospectively with the benefit of hindsight. 623 It is clear that because they were unable to obtain the anticipated rent they were out of pocket even though they were able to sell the property at a price $26,500.00 greater than that for which they purchased it. 624 The next witness was Mr Wilson who purchased a one bedroom home unit including furniture for a total price of $246,700.00 in February 1999. 625 He had the benefit of an agreement with the developer, Bassineau Pty Limited, a company not connected with Mr Cross, pursuant to which he was to receive a return within twenty-one days of the end of each month equivalent to 7% per annum on the price paid for the unit including furniture and fittings. In addition Bassineau Pty. Ltd. was required to pay all local authority rates, all body corporate administrative fund levies, advertising and promotion and repair and maintenance of the furniture, chattels and fittings in the unit. 626 On this basis the deal looked quite attractive. 627 The problem was that Bassineau did not honour its guarantee. When Mr Wilson obtained judgment against Bassineau for $14,590.96 he was unable to enforce it because it went into liquidation. 628 Mr Wilson was therefore very much out of pocket. 629 He sold the unit in June 2003 at a loss for $238,500.00. The unit was on- sold in June 2005 for $245,000.00 which still represents a substantial drop from the original purchase price. 630 Clearly, this was an unsatisfactory investment. 631 The next transaction involved Mr and Mrs Weir. 632 While in Queensland they were shown a number of properties and finally agreed to buy a property at Lakeside on Varsity. They were impressed by this property because it was close to all amenities such as the Bond University, the railway to Brisbane, the large shopping centre down the road and public schools close by. 633 Before signing any contract they were on their own from about 4:00 pm on the first day until about 1:40 pm on the next day during which they had ample time to consider whether they would proceed with the purchase. 634 The form of contract which they entered into was governed by the new provisions of the PAMD Act. They were told that they had a cooling off period of five days. Amongst the documents which they took home with them was the PAMD Form 30b which contained a warning that they should obtain independent legal advice and an independent valuation of the property. 635 It is submitted that the Form 27b was not in accordance with s 138 of the PAMD Act. For reasons already given I am satisfied that it did comply with that section. 636 What is of significance is the evidence that Citibank obtained a valuation of the property at $205,000.00 and asked Easy Plan to advise the customer. This was not done. 637 This contemporary valuation was $59,000.00 below the purchase price. 638 Mr and Mrs Weir sold the property on 19 November 2004 for $280,000.00. 639 Mr Hamilton assessed the market value at the date of purchase at $215,000.00. 640 This evidence clearly establishes that Mr and Mrs Weir were sold a property at a very high price and one which was well above the market value as valued at that time. What is even more significant is that this valuation was not disclosed to them notwithstanding the request of Citibank. 641 The next purchasers were Mr and Mrs Harriden. 642 In 2001 they had purchased a property at Carrara through Park Trent and were very satisfied with it. 643 Consequently when they received an unsolicited telephone call from Park Trent in about August 2002 offering properties they were interested. 644 They made their own way up to the Gold Coast in November 2002 and whilst there purchased a property at Lakeside on Varsity for $248,500.00. 645 Because of their prior experience, Mr and Mrs Harriden were somewhat more aware of the Gold Coast property market than other purchasers. 646 She said that they were not shown any properties other than the one they purchased because they did not ask to be shown them. 647 Problems arose because Easy Plan Finance did not arrange the type of loan covering all properties and their car as they had requested. 648 They still own the property. 649 Mr Duncan assessed the market value at the date of purchase at the same figure as the contract price. He assesses its current value at $285,000.00. 650 Mr Hamilton placed the market value at the date of purchase at $200,000.00. He concludes that an investor acting knowledgeably would be prepared to pay only $200,000.00 for the subject property in November/December 2002 and failing to acquire the property at that price he would seek to acquire alternative properties. 651 Although Mr Hamilton argues that, as at November 2002, one could have purchased a different similar but older property at a lower price, he provides no evidence that such an alternative property would have experienced a growth in value to the present day any different from that achieved by the subject property. 652 The evidence does not satisfy me on the probabilities that Mr and Mrs Harriden were ripped off by being charged an exorbitant price. 653 The next transaction relied upon is that involving Mr and Mrs Hughes neither of whom gave evidence. 654 In June 1999 they entered into a contract to purchase a property for $140,000.00. 655 However, they had a clause inserted in the contract which was conditional upon obtaining an independent valuation to establish that the value was within 5% of the contract price. The valuation came in below that limit. 656 Subsequently, Mr and Mrs Hughes were able to negotiate a reduction of the purchase price down to $133,000.00. 657 I am not satisfied that Mr and Mrs Hughes were being charged an exorbitant price. 658 As set out earlier the evidence relating to the other transactions to which reference has been made is such that I can draw no conclusions adverse to the plaintiff on them. Findings 659 For reasons already stated I am satisfied on the balance of probabilities that the plaintiff was the person in effective control of all companies involved in the marketing of properties. 660 I am further so satisfied that the effect of representations made to potential purchasers at seminars, in-home visits, in pamphlets, in letters and in the Personal Investment Analysis is to assure them that Park Trent Investments is there to look after their interests and that they can trust Park Trent Investments to achieve the stated goal of "wealth creation". There is no mention that Park Trent Investments is paid by the vendors of properties or that Park Trent Investments owes any duty to those vendors. There is no mention of the fact that Park Trent Investments' duty to vendors may conflict with its duty to purchasers. 661 But, at the same time, it is notorious that values of real estate can increase at a greater rate than inflation and so, can be a means of wealth creation. 662 The evidence as a whole, to which I have already referred, satisfies me on the balance of probabilities that, once they landed on the Gold Coast, potential purchasers were effectively controlled by representatives of either Cross Country Realty and/or Easy Plan Finance. They were shown only the properties in respect of which the plaintiff's companies had the benefit of agreements with the vendors. The combined representations of representatives of these two companies were designed to sell the properties as good investments. Easy Plan Finance was not an independent financial adviser. It was a further means of reinforcing the representations that had been made before the intending purchaser arrived in Queensland. 663 It follows that the only knowledge of local real estate market values which an intending purchaser had, was what he or she was told by the representatives of one or more of the plaintiff's companies. 664 Not all of the purchasers were sold real estate at exorbitant prices but I am satisfied that Mr. and Mrs Weir were and Mr. Wilson was. 665 However, when one looks to the evidence of events occurring between December 2002 and June 2003 a picture begins to emerge. 666 As set out earlier in more detail, the Red Alerts in exhibit 82 reveal some nine transactions in which the valuations came in lower than the purchase price thereby causing the contract to be terminated. 667 In addition there is exhibit 91 which shows that, as at 28 March 2003, there were no less than eleven transactions pending in which the valuation was substantially lower than the purchase price. 668 What is significant about them is that these are valuations made contemporaneously with the transaction to which they refer. In this regard they are more reliable than the retrospective valuations made by Mr Duncan and Mr Hamilton. 669 Finally, there is the transaction involving Mr and Mrs Barry to which I have already referred, in which there was a clear attempt on the part of Mr Cross' companies to sell a property which he agreed was at a price which had outstripped the market, would not perform for his clients and where there were better products available in the market place. 670 It may be that there were other transactions in this period which proceeded to conclusion. But what is significant about the transactions just mentioned is that the proposed purchasers had received advice independently of that given by Park Trent Investments and/or Cross Country Realty and/or Easy Plan Finance, or they were organising finance themselves and, consequently, obtained independent valuations which made them aware of the true market value of the property they were about to buy. 671 It is the combination of all of these considerations that satisfies me on the probabilities that the plaintiff was in fact ripping off Mum and Dad Investors by selling them investment properties at exorbitant prices. 672 Accordingly, I find the first defence to the first imputation established both under New South Wales and Queensland law. THE SECOND PUBLICATION 673 I now pass to the second publication, Annexure B, published on 1 July 2003. 674 The imputation found by the jury to exist and to be defamatory is:- "That the plaintiff is a rip off merchant." What does it mean? 675 It is first necessary to determine the meaning of this imputation. It has been held in Greek Herald v Nikolopoulos (2002) 54 NSWLR 165 at 172 and 173 that an imputation must be interpreted in its context and cannot be divorced from the surrounding words. 676 On behalf of the defendant it is submitted that this imputation derives from paragraph 5 of the article which is in the following terms:- "Cross Country Realty and Easy Plan are associated with Wollongong business man, Ron Cross, who was condemned last month in Federal Parliament as a law breaker and rip off merchant." 677 It is further submitted that this subject is returned to in paragraphs 16 to 19 of the publication which refer to Mr Cross being named in Parliament after the collapse and subsequent revival of two of his property marketing companies, Park Trent Investments and Everest Marketing. 678 Paragraph 17 says:- "Park Trent and Everest were placed in voluntary administration in March with debts of more than $2 million, including hundreds of thousands of dollars in superannuation and entitlements owed to employees." 679 To my mind the context in which the imputation appears is much wider than this. The headline is "Coast Marketeer Targeted In Raid". Paragraphs 3 and 4 refer to the Office of Fair Trading investigators having raided the office of Cross Country Realty and Easy Plan Financial Services. 680 Paragraph 4 reads:- "Investigators from the Office of Fair Trading's Anti-marketeering Squad raided the Surfers Paradise office of Cross Country Realty last week and seized documents as part of an investigation into the activities of the firm and an associated financial planning company, Easy Plan Financial Services." 681 It is also in this context that paragraph 5 says:- "Cross Country Realty and Easy Plan are associated with Wollongong business man, Ron Cross who was condemned last month in Federal Parliament as a law breaker and rip off merchant." 682 In my view this imputation is to be interpreted as an allegation that the plaintiff cheats people both in the course of his conduct of his marketing activities and in the course of his conduct towards employees. 683 I have already found that the plaintiff ripped off Mum and Dad Investors by selling them investment properties at exorbitant prices. Accordingly, there is no need for me to examine this aspect of the plaintiff's business activities any further. 684 I do not regard the word "merchant" as having its normal meaning of a person engaged in the business of selling. To my mind the phrase "rip off merchant" is an idiomatic expression meaning a person who cheats. Thus, in the context of a poker game to say of a player that he is a rip off merchant means that he cheats in playing poker. In the current context it means that he is a person who cheats or acts dishonestly in relation to the conduct of his business and the treatment of his employees. 685 A considerable amount of oral evidence was given on this issue. However, the documentary evidence provides a clearer picture than the oral evidence. Non Payment of Superannuation 686 I shall deal first with the actions of the plaintiff's companies for which he was responsible in relation to the payment of superannuation for the benefit of his employees. 687 Since 1 July 1992 an employer has been obliged by law to pay into an approved fund an amount calculated as a percentage (varying from year to year) of an employee's gross wages to provide for that employee a capital sum available to him or her on obtaining the statutory age. 688 If such payments were not made to an approved fund then, under the Superannuation Guarantee Scheme, that amount of superannuation is payable to the Australian Taxation Office. 689 The plaintiff's companies did not pay superannuation to an approved fund on behalf of each employee. Accordingly, an equivalent amount plus charges became payable to the Australian Taxation Office by way of Superannuation Guarantee Charge. 690 The documents in exhibit 84 establish that, at least from mid 2001, substantial sums of money were owing by Park Trent Investments Pty Limited and Everest Marketing Pty Limited to the Australian Taxation Office in respect of unpaid superannuation guarantee amounts. 691 Some payments were made from 2002 but they were inadequate to cover the amount owing. 692 By letter dated 31 August 2001 the Australian Taxation Office advised Park Trent Investments that it was conducting a Superannuation Guarantee Audit to ensure compliance under the Superannuation Guarantee (Administration) Act 1992. The letter included an audit questionnaire. 693 On 5 September 2002 the Australian Taxation Office sent to Park Trent Investments a further notification of superannuation guarantee audit with a covering form. 694 By facsimile dated 9 December 2002 the ATO sent copies of the letter previously sent on 5 September 2002 to which no response had been received and asking for the information to be supplied by 23 December 2002. 695 On 6 March 2003 the ATO wrote a further letter regarding the current review of Park Trent Investments Superannuation Guarantee obligations for the years ending 30 June 1998, 1999, 2000, 2001 and 2002 and pointing out that there had been no response to its letters of 25 March 2002, 10 July 2002 and 5 September 2002. 696 At that stage the balance due was said to be $267,741.93. 697 The Australian Taxation Office ultimately conducted an audit and as appears at pages 64 and following of exhibit 84, the shortfall in payments of superannuation guarantee for the financial year ending 30 June 1998 was $12,632.94, for the year ending 30 June 1999 was $45,689.98, for the year ending 30 June 2000 was $35,679.91. 698 The shortfall in Superannuation Guarantee payments for Park Trent Investments Pty Limited for the year ending 30 June 1999 was approximately $7,500.00 and for the year ending 30 June 2001 was $71,253.60. For the year ending 30 June 2002 it was $64,763.52. 699 Assessments from the ATO to Everest Marketing Corporation appearing at pages 92 and following of exhibit 84 show amounts outstanding in respect of PAYE payments deducted from employees' salaries which should have been paid to the ATO. 700 Similarly further documents in exhibit 84 show that substantial sums were owing by way of superannuation guarantee charges in respect of employees of Everest Marketing Pty Limited. 701 The plaintiff gave evidence that during 2002 his companies were experiencing cash flow problems because of the failure on the part of his client companies to pay due to their cash flow problems. 702 In view of the plaintiff's practice of securing payment of his fees by obtaining an irrevocable authority from the developer/client to pay the moneys out of settlement moneys paid for the developer on settlement of a conveyance I find this difficult to accept. 703 However, even if it be true, it would not explain the shortfalls in payments of superannuation guarantee moneys and PAYE sums to the Taxation department during 1998, 1999 and 2000. 704 From about mid 2002 until March 2003 Park Trent Investments paid substantial sums to the ATO in reduction of its liabilities but by 14 March 2003 some $2 million remained owing. 705 On 24 June 2002 the ATO served Director's Penalty Notices on Mr Cross which made him personally liable for the taxation liabilities of Park Trent Investments. On 12 July 2002 the plaintiff wrote to the ATO proposing a repayment plan for "our companies" taxation liabilities, see page 160 of exhibit 84. 706 On 8 October 2002 the plaintiff wrote a further letter making further proposals. 707 At page 149 of exhibit 84 is a letter from Park Trent Investments signed by the plaintiff stating that when Everest was incorporated Park Trent Investments undertook to pay any shortfall for Everest's tax liabilities including group tax. 708 The plaintiff testified that payments made during this period were intended by him to cover only the superannuation liability. However, in his letter of 8 October 2002 (pages 161 and 162 of exhibit 84) he added:- "Please also note that current g/tax, GST and sgc has been considerably reduced since our restructuring, and therefore could not escalate at the rate it did over the previous twelve months." 709 It is clear that he is here referring to group tax, goods and services tax and superannuation guarantee contributions and not limiting the payments to the last mentioned. 710 At page 46 of exhibit 13 the liquidator, Mr Cvitanovic reports that the shortfall of superannuation guarantee payments in respect of Park Trent Investments was $171,472.22 and for Everest Marketing Corporation was $108,344.71 making a total of $279,816.93. To this were added interest and penalties totalling $106,113.10. 711 The payment to the ATO in respect of employee creditors was made as a priority. As a result the Australian Taxation Office received a dividend of 13.83 cents in the dollar in respect of employees of Park Trent Investments and 49.43 cents in the dollar in respect of employees of Everest Marketing Corporation. 712 Mr Cross is still paying moneys due to the ATO in respect of past taxation liabilities. These however relate to the general liabilities of Park Trent Investments and Everest Marketing Corporation for tax and are against him in his personal capacity as a director of those companies. The moneys paid do not relate to superannuation guarantee amounts. 713 I am comfortably satisfied that the plaintiff's failure to make payments of superannuation into an approved fund for the benefit of his employees followed by his failure to make such payments to the Australian Taxation Office pursuant to the Superannuation Guarantee Scheme constitutes a ripping off of his employees and that in that context he was a rip off merchant. The Administration and Liquidation 714 Park Trent Investments and Everest Marketing Corporation went into voluntary administration on 14 March 2003. Mr. Cvitanovic was appointed Administrator. On 10 April 2003, the companies went into liquidation and Mr. Cvitanovic was appointed liquidator. 715 There is a further aspect of the plaintiff's activities leading up to the voluntary administration and liquidation which requires examination. 716 A number of marketing agreements between Park Trent Investments and developers are in evidence. See exhibit 14. Notwithstanding this a number of the irrevocable authorities which the plaintiff had the same developers sign were in favour of Park Trent Real Estate. 717 The plaintiff gave evidence that in each case a new agreement had been signed between the developer and Part Trent Real Estate. With the exception of agreements with Deena Investments on 13 March 2003, exhibit 11, and with Howard and Thomas on 29 April 2003 at page 73 of exhibit 14 no other such new agreements have been produced.. 718 The evidence comfortably satisfies me that by this means the plaintiff diverted funds due to Park Trent Investments into Park Trent Real Estate. 719 The plaintiff said that he had new agreements made because he was aware that Park Trent Investments was in financial difficulties, he wanted to delete the word "investments" from the company's name as there were problems with getting insurance for an investment company. 720 He also said that if developers got word that Park Trent Investments was in financial difficulties they would not pay whereas they would pay another company controlled by him which was not going into administration or liquidation. 721 Regardless of his stated motives the fact is that Mr Cross quite improperly diverted funds which should have been available to the administrator/liquidator for the benefit of creditors including the Superannuation Guarantee Scheme.. 722 Mr Cross said that the moneys received by his other companies were in fact paid to the liquidator. This is only partially correct. 723 At the request of Mr Cross the liquidator agreed to carry on the businesses of Park Trent Investments and Everest Marketing Corporation during the administration and liquidation. However, this agreement was obtained on the basis that Mr Cross provided funds to enable those businesses to carry on. Mr Cross did provide funds for that purpose from other sources. Those sources included money received from developers by Park Trent Real Estate. 724 The plaintiff gave evidence that, as at the date of the voluntary administration all debts of Park Trent Investments and Everest Marketing had been paid except for amounts owing to Telstra and the ATO. He had arranged with Telstra to pay off the amount owing by instalments. 725 He agreed that he did not tell the liquidator that any moneys were owing to Park Trent Investments from developers because, as he claimed, no such moneys were owing. This claim was not true. 726 The fact that moneys were diverted from Park Trent Investments into other companies was not revealed to Mr Cvitanovic who described this conduct, (correctly in my view) regardless of the motivation, as a breach of duty as a director and as a form of larceny. 727 Furthermore, Mr Cross failed to reveal to the liquidator that moneys were due to Park Trent Investments from finance providers for fees by way of referral fee and trailers. Whilst it may be the case that from approximately 2001 after Easy Plan Financial Services was set up it became the recipient of trailers, prior to this time the recipient was PTI. See exhibit 45. 728 On 15 May 2003 a Deed of Sale was entered into pursuant to which Park Trent Properties Group Pty. Ltd. purchased the business of Park Trent Investments Pty. Ltd. (in liquidation) for a total price of $250,000.00. 729 On the same day a further Deed of Sale was executed whereby Park Trent Properties Group Pty. Ltd. purchased the business of Everest Marketing Corporation Pty. Ltd. (in liquidation) for a total price of $250,000.00. 730 Under clause 8 of the Deeds, Park Trent Properties Group Pty. Ltd. was obliged to offer employment to the current employees of both Park Trent Investments and Everest Marketing Corporation on the same or substantially the same as their pre-existing terms. 731 Those who accepted employment would be paid by the purchaser all outstanding benefits due to them – but not past superannuation benefits. Those who did not accept employment had to look to the liquidator for such matters. 732 Both Mr Cross and Mr Cvitanovic agreed that most, if not all, existing employees did accept employment from Park Trent Properties Group Pty. Ltd. 733 In addition Deeds of Release were executed under which a further $90,000.00 was paid to the liquidator. 734 The effect of all of this was that the business was kept going and the jobs of over 100 employees were preserved. 735 But there is a touch of irony in the evidence of Mr. Cvitanovic at page 981:- Q. Why didn't you fix the price at $500,000.00 and not, say, at $730,000.00? A. Because when I went looking for cash flow to trade this business on the only certainty I was going to have of paying my fees and out-of-pocket expenses and fee entitlements as I was trading on was to know there would be a certain price Mr Ron cross was going to pay for the business which, if I had not struck a deal with him for half a million dollars and shut down, would have walked into the businesses and picked them up for nothing. Q. You would not have been paid? A. That is right. 736 There is also an allegation that Park Trent Investments and Everest Marketing had been insolvent since about March or April of 1999. It is not necessary for me to make any finding upon this issue. 737 The fact is that by failing to pay superannuation for his employees, by failing to pass on the PAYE tax deducted from employees to the Australian Taxation Office, by diverting funds from Park Trent Investments which should have gone to the liquidator for the benefit of creditors, the plaintiff was involved in dishonest conduct which had the effect of ripping off his employees, ripping off the liquidator and ripping off the creditors. 738 The defendant has, therefore, satisfied me on the balance of probabilities of the substantial truth of the imputation that the plaintiff is a rip off merchant. 739 Under these circumstances it follows that there will be judgment in favour of the defendant against the plaintiff on each of the imputations sued upon. 740 I invite submissions as to costs. ********** 07/03/2008 - Addition of a single omitted paragraph - Paragraph(s) 670 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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