Supreme Court New South Wales Medium Neutral Citation: Tomasetti v Brailey [2011] NSWSC 1446 Hearing dates: 8-12, 15-18, 22-24 November 2010, 31 January 2011, 1-4, 10 February 2011 Decision date: 17 November 2011 Jurisdiction: Common Law Before: R A Hulme J Decision: Judgment and verdict for the defendants. Plaintiffs to pay the defendants' costs as agreed or assessed. Catchwords: TRADE AND COMMERCE - other regulation of trade or commerce - statutory regulation of particular matters - Fair Trading Act 1987 - misleading or deceptive conduct - representations by financial adviser as to present and future matters - nature and performance of investments - whether reliance by investors upon advice TORTS - negligence - professional advice concerning investments in agricultural managed investment schemes - breach of duty - whether financial adviser failed to carry out adequate assessment of investments - whether investments were "sound, prudent and sensible" having regard to investors' instructions and risk profile - contributory negligence - apportionment of responsibility and damages CONTRACTS - general contractual principles - discharge, breach and defences to action for breach - whether breach of retainer by accountants and financial advisers in relation to investment advice EQUITY - general principles - fiduciary relationships - financial adviser - conflict of interest arising from commission entitlement in respect of finance borrowings for investments - whether breach of fiduciary duty - whether financial adviser failed to eschew conflict of interest CORPORATIONS - financial services and markets - financial services providers - advice to retail clients - whether statements of advice provided - whether statements of advice defective - liability of financial services licensee and authorised representative - whether loss or damage suffered because of failure of provide statement of advice or because statement of advice defective DAMAGES - general principles - valuation of failed agricultural managed investment scheme investments - effect of investments on plaintiffs' post-tax cashflow - application of consumer price index to reflect present value - application of Supreme Court rates to reflect loss of opportunity to earn interest DAMAGES - general principles - incidence of taxation as affecting damages - "grossing up" of damages for taxation - expenditure relating to tax-deductible investments - ordinary income - whether damages to "fill the hole" in assessable income - statutory income - whether assessable recoupment - whether assessable recoupment ascertainable from award of damages LIMITATION OF ACTIONS - contracts, torts and personal actions - when time begins to run on claims - failed investments - question as to when loss occurred PARTNERSHIP - generally - what constitutes partnership - whether directors of a corporate partner were partners themselves - conduct of corporate directors consistent with them being partners as individuals - construction of partnership agreement PARTNERSHIP - actions by and against partners - actions and proceedings against firms and individual partners - whether chartered accountancy firm liable for conduct of related financial planning business Legislation Cited: Civil Liability Act 2002 Corporations Act 2001 (Cth) Corporations Law Evidence Act 1995 Fair Trading Act 1987 Income Tax Assessment Act 1936 (Cth) Income Tax Assessment Act 1997 (Cth) Limitation Act 1969 Partnership Act 1892 Trade Practices Act 1974 (Cth) Cases Cited: Allsop v Federal Commissioner of Taxation [1965] HCA 48; (1965) 113 CLR 341 Amcus Pty Ltd v Hurst Rentals Pty Ltd [2009] NSWSC 1016 Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9; (1968) 122 CLR 649 Australian Securities and Investments Commission v Vines [2003] NSWSC 1095; (2003) 48 ACSR 291 Brodie v Singleton Shire Council [2001] HCA 29; (2001) 206 CLR 512 Brooker v Friend & Brooker [2006] NSWCA 385 Burmah Steamship Co v Inland Revenue Commissioners [1931] SC 156; 16 TC 67 Californian Oil Products Ltd (In Liq) v Federal Commissioner of Taxation [1934] HCA 35; (1934) 52 CLR 28 Christie v Purves [2007] NSWCA 182; (2007) Aust Torts Reports 81-899 Commissioner of Taxation v CSR Ltd [2000] FCA 1513; (2000) 104 FCR 44 Commissioners of Taxation (NSW) v Meeks (Public Officer of the Sulphide Corporation Limited) [1915] HCA 34; (1915) 19 CLR 568 Commissioner of Taxes (Vic) v Phillips [1936] HCA 11; (1936) 55 CLR 144 Daly v The Sydney Stock Exchange Limited [1986] HCA 25; (1986) 160 CLR 371 Federal Commissioner of Taxation v Rowe [1997] HCA 16; (1997) 187 CLR 266 Federal Commissioner of Taxation v Wade [1951] HCA 66; (1951) 84 CLR 105 Forster v Outred & Co [1982] 1 WLR 86; [1982] 2 All ER 753 Goldsbrough Mort & Co Ltd v Federal Commissioner of Taxation (1976) 14 SASR 591 GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25; (1990) 170 CLR 124 Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540 Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 HTW Valuers v Astonland [2004] HCA 54; (2004) 217 CLR 640 Jobbins v Capel Court Corporation Ltd (1989) 25 FCR 226 Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 Lloyds Bank v Bundy [1975] QB 326 M Young Legal Associates Ltd v Zahid [2006] EWCA Civ 613; [2006] 1 WLR 2562 Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 McLaurin v Federal Commissioner of Taxation [1961] HCA 9; (1961) 104 CLR 381 Melbourne Saw Manufacturing Co Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VR 394 Metropolitan Gas Co v Melbourne Corporation [1924] HCA 46; (1924) 35 CLR 186 Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388 National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21; (1986) 160 CLR 251 Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 Salib v Gakas [2010] NSWSC 505 Seiwa Australia Pty Ltd v Beard [2009] NSWCA 240; (2009) 75 NSWLR 74 Sweetman v Bradfield Management Services Pty Ltd [1993] FCA 598; (1994) ATPR 41-290 Sydney Refractive Surgery Centre Pty Ltd v Commissioner of Taxation [2007] FCA 1544; (2008) 172 FCR 557 Wardley Australia Limited v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 Watson v Foxman (1995) 49 NSWLR 315 Whitaker v Commissioner of Taxation (1996) 63 FCR 1 Williamson v Commissioner for Railways [1960] SR (NSW) 252 Wilson v Rigg [2002] NSWCA 246; (2002) 36 MVR 451 Texts Cited: Keith L Fletcher, The Law of Partnership in Australia, 9th ed (2007) Lawbook Co R C I'Anson Banks, Lindley & Banks on Partnership, 18th ed (2002) Sweet & Maxwell Category: Principal judgment Parties: Peter Charles Tomasetti (First plaintiff) Sandra Cordony (Second plaintiff) Tomasetti Investments Pty Limited as trustee for the Tomasetti Superannuation Fund (Third plaintiff) Edmund Francis Brailey (First defendant) John Clifford Fenton (Second defendant) Christopher Campbell Lane (Third defendant) TJC Financial Planning Pty Limited (Fourth defendant) Representation: Counsel: Mr AH Slater QC, Mr ID Faulkner SC and Mr A Maroya (Plaintiffs) Mr TGR Parker SC, Mr JB Conomy and Mr C Carroll (Defendants) Solicitors: Heckenberg & Koops (Plaintiffs) Holman Webb Lawyers (Defendants) File Number(s): 2009/297599 Judgment Contents Paragraph Subject 1 Introduction 8 Overview of investments 23 The plaintiffs 27 Relationship between Mr Tomasetti and Mr Brailey 56 Review of evidence concerning investments 57 - 2000 investments 120 - 2001 investments 143 - 2002 investments 158 - 2003 investments 208 - 2004 investments 255 - 2005 investments 316 Fair Trading Act claim - pleadings 327 - accuracy and reliability of plaintiffs' evidence 379 - conclusions concerning plaintiff's evidence 391 - determination of Fair Trading Act claim 414 Negligence 417 - evidence of Mr Geoffrey Wall 456 - plaintiffs' submissions 498 - defendants' submissions 516 - conclusions on negligence 532 Breach of contract 534 Statutory breaches 543 Fiduciary duty 560 Other issues 561 Partnership 567 - were Messrs Brailey and Fenton partners in Brailey Fenton Lane & Co? 597 - were members of a partnership firm liable for the conduct of Mr Brailey? 695 Limitations 725 Taxation 804 Quantum 813 Contributory negligence and apportionment 824 Costs Introduction 1HIS HONOUR: On 15 June 2009, Mr Peter Charles Tomasetti, his wife, Ms Sandra ("Sassi") Cordony, and Mr Tomasetti's superannuation fund commenced proceedings against their accountants, in which damages are sought, in respect of certain investments they made in various agricultural managed investment schemes in 2000 to 2005. Generally speaking, it is claimed that the professional advice they received about entering into the investments was deficient in various respects. 2The plaintiffs claim that liability arises in negligence; breach of contract; breach of s 42 of the Fair Trading Act 1987; breach of a number of provisions of the Corporations Act 2001 (Cth); and breach of a fiduciary duty. 3The first three defendants are Mr Edmund (Ted) Brailey, Mr John Fenton and Mr Christopher Lane. They worked together in the accountancy firm, Brailey Fenton Lane & Co. The practice was subsequently acquired by Commercial Associates Accountants & Advisors Pty Limited. The fourth defendant is TJC Financial Planning Pty Limited, formerly known as BFL Financial Planning Pty Limited. It was a financial planning / brokerage business set up by Messrs Brailey, Fenton and Lane. 4The liability of each of the four defendants is not contended to be on an equal basis. Mr Brailey was the person who advised the plaintiffs about the investments in question. One of the substantial issues in the case is whether the advice the plaintiffs received, or should have received, was the responsibility of the partners of the firm Brailey Fenton Lane and Co, chartered accountants and, if so, whether Mr Brailey and the second defendant, Mr John Fenton, were partners in that firm. The alternative proposition is that such advice was provided by Mr Brailey and a business entity which was operated independently from the accountancy firm. 5Other issues raised in the proceedings include whether any of the plaintiffs' action is barred by limitation provisions. There are also issues of concurrent liability and contributory negligence. 6The quantum of damages that should be awarded is in issue, including a claim by the plaintiffs that damages should be "grossed up" to take into account that they will be regarded as assessable income so as to be taxable upon receipt. 7The hearing of the matter proceeded over two and a half weeks last November, and resumed at the beginning of this year for six days of closing submissions. The investments 8A useful overview of the investments made by the plaintiffs was provided in written submissions for the defendants (DWS at [76] ff), largely from which I have drawn the following. 9The plaintiffs' first investments, which were made by Mr Tomasetti in the financial year concluding 2000, related to timber plantations known as "woodlots" or "timberlots". Further investments in timber plantations were made in financial years 2001, 2002 and 2003. Each project was constituted as a managed investment scheme. 10Each scheme had a similar structure. The investor ("grower") would be granted a lease (or sublease) by the promoter of a specified parcel of land per timberlot. The grower would also enter into a management agreement with the promoter whereby the promoter would establish, maintain and ultimately harvest and sell the timber. The proceeds of sale would be pooled and distributed to the growers. 11There were to be no returns in respect of the timber plantations until the trees were at sufficient maturity to be harvested. For example, the Timbercorp Eucalypts 2000 prospectus suggested a harvest at least 8 years after planting. The Gunns Woodlot 2002 product disclosure statement ("PDS") spoke of 13 years. 12Under the management agreement, an initial fee was payable to cover the cost of establishing the plantation and for initial rent of the land. There were ongoing expenses for the grower. Depending upon the project, these comprised rent, maintenance, licence fees, insurance, and pruning services. 13Each of the promoters of the schemes in question also offered (on a subject to approval basis) finance for the initial payment and, in some cases, later payments. To obtain finance, the grower would enter into a separate loan agreement with the promoter (or associate) under which the grower would agree to repay the amount financed according to a particular loan schedule, paying interest on the outstanding balance in the meantime. In some schemes, a choice of repayment periods (at different rates of interest) was available. 14Under this structure, the grower himself or herself would be carrying on a timber plantation business on his or her timberlots. The grower was entitled to a tax deduction for the amounts of the initial payment and ongoing rent and management expenses, together with interest on any associated borrowings. Each of the schemes had the benefit of product rulings from the Australian Taxation Office ("ATO") which, if they were complied with, confirmed the grower's entitlements to such deductions. Of course, any net income ultimately derived from the harvest and sale of the timber would be treated as assessable income of the grower. 15The promoters of each of the schemes published a prospectus or PDS in accordance with the laws governing managed investment schemes. Investment was effected by signing an application (provided as part of the prospectus) in the form of a power of attorney which required the promoter thereafter to execute the sublease and management agreement on the grower's behalf. The application would be accompanied by a cheque or credit card authorisation for the amount of the initial payment which was not being financed; a separate application would also have to be made for the finance requested. 16If the application was accepted, the promoter would present the cheque or process the credit card authority, as the case might be, for the initial cash payment, and establish the loan account for the balance. 17In financial year 2003, investments were also made in schemes which involved the cultivation of orchard land for the purpose of growing almonds ("almondlots"). The almondlot scheme was structurally similar to the timberlot schemes but there were two significant differences. First, although the lots were identified as specific orchard areas, the grower did not hold a lease over the land in question, but rather a licence and joint venture agreement with a company which owned the land called "Almond Land Pty Limited". Secondly, the almonds required more intensive management and the management agreement provided that after the first year (in which the cost was fixed) the grower was required to pay the actual cost of managing the relevant lots, whatever it was. This was unlike the timberlots where, in general, the ongoing costs were either fixed or indexed to inflation. As against this, the almond trees were expected to produce crops, the sale of which could then be used to defray the costs, within 5 or 6 years of plantation rather than the longer periods of time associated with the timberlots. 18Further almondlot investments were made in 2004. In 2005, investments similar to the almondlot investments were made by Ms Cordony in the growing of citrus fruit ("citruslots") and grapes ("grapelots"). 19The Tomasetti Superannuation Fund ("TSF") was involved in investments in timberlots in 2001 and almondlots in 2004 in joint ventures with Mr Tomasetti. 20In all, the plaintiffs made the following investments: Financial Year Investor Project Initial investment 2000 Tomasetti Norgard Clohessy Australian Blue Gum 2000 $25,750 2000 Tomasetti Timbercorp Eucalypts 2000 $196,000 2000 Tomasetti Great Southern Blue Gum Plantations 2000 $51,000 2001 Tomasetti / TSF ITC Solidwood 2001 $48,863 2002 Tomasetti Gunns Woodlot 2002 $108,625 2003 Tomasetti Timbercorp Early Almond 2003 $218,340 2003 Tomasetti Gunns Woodlot 2003 $96,800 2004 Tomasetti Timbercorp Almond - Post June 2003 $97,040 2004 Tomasetti / TSF Timbercorp Early Almond 2004 $407,500 2005 Cordony Timbercorp Citrus 2005 $49,000 2005 Cordony Gunns Winegrape 2005 $34,650 21Each of the investments involved borrowings ranging from 75 per cent to 100 per cent of the initial investment, most commonly 90 per cent. In addition to the repayments of these loans there were further costs to be paid. The Timbercorp Early Almond projects and the Timbercorp Citrus project involved payments for subsequent stages which totalled many hundreds of thousands of dollars. In all, the plaintiffs' claim for past loss exceeds $4 million. 22A number of affidavits were sworn by each of Mr Tomasetti, Ms Cordony and Mr Brailey. In the following review of the evidence, reference will be to their primary affidavit unless otherwise indicated. The Plaintiffs 23Peter Tomasetti was admitted to practice as a barrister in 1979. He was appointed senior counsel in 2007. His principal area of practice has been in the Land and Environment Court. He described himself as a "specialist environmental lawyer and compulsory acquisition lawyer" (T340.11). He also said that he had expertise in property, equity and commercial law (T397.15). 24Mr Tomasetti derived very substantial income from his work. In the period in which the investments were made (2000 - 2005), he generated an average of $954,000 in professional fees per year. Expenses, and the arrangement of his financial affairs generally, resulted in him paying an average of $91,000 in tax (and Medicare levy) per year. It is unnecessary to delve into the detail of how this was achieved except to note that the payment of substantial costs in relation to the agribusiness investments was a significant part of the explanation for Mr Tomasetti's liability for tax being so relatively low. 25Ms Cordony has been in a permanent relationship with Mr Tomasetti since 1993. They married in 2003. She commenced working part-time for him as his personal assistant in about May 2002, taking over this role from Ms Janet Sucur. From that time, she became familiar with his financial affairs. Although Mr Tomasetti had a very busy practice, it was Ms Cordony's evidence that he was "incredibly self-sufficient" in terms of typing and office administration. She said that he would prepare his own advices and letters and that when she was absent he would sort through correspondence and take whatever action was required or leave it out for filing (T594). 26The third plaintiff is Tomasetti Investments Pty Limited as trustee for the Tomasetti Superannuation Fund. This was a self-managed superannuation fund established upon the advice of Mr Brailey in about 2000. The relationship between Mr Tomasetti and Mr Brailey 27Mr Tomasetti said that he was always extremely busy and worked long hours. When he had time away from work he was not enthusiastic about attending to his financial affairs. He claimed that he had always been "risk averse" regarding personal financial investments ([9]). His investments were confined to property and shares. He purchased homes with the assistance of bank finance and then paid the mortgage off sufficiently to permit the purchase of better homes. He contributed to superannuation as and when he could. He had established a fund with the AMP Society in the early 1980's. He purchased a small farm in the late 1980's, which he improved over a relatively short time before selling it. However, a property settlement following divorce in 1994 left him with no assets. 28Mr Tomasetti became dissatisfied with his previous accountants. Edmund Brailey was recommended to him in the latter half of 1998. He said that his first contact with Mr Brailey was by telephone ([16]). 29Mr Brailey's evidence was that this conversation took place on 4 September 1998 (EB1 at p146). There was a further conversation on 15 September 1998 during which Mr Brailey obtained some basic information which he recorded on an "Initial Interview Form" (EB1 at p147). Mr Tomasetti forwarded copies of documents relating to his financial affairs to Mr Brailey on 16 October 1998 (EB1 tab 36). Mr Brailey obtained possession of records from the former accountants in early 1999 (EB1 tab 39). 30Mr Tomasetti's evidence (at [16]) was that in the initial telephone conversation he told Mr Brailey that he wanted an accountant who would prepare his taxation returns in ample time for him to make plans for any taxation payments he had to make. He also said, " Any advice that you can give me along the way would be appreciated, tax planning and things of that nature " . He explained how he had been left with only debt after his divorce, but that he hoped to regain his position over time. He told Mr Brailey: "I just need to make sure that in the future I do things on good advice and that I don't expose myself to too much risk. I have some shares. I have in mind investing in blue-chip shares in the main however I would be open to consider some small level of speculation on advice with a small part of that portfolio. It is very important having got to this position that I do things carefully and properly from this point on." 31Their first face-to-face meeting was in Mr Tomasetti's chambers in Phillip Street in December 1998 ([18]). It is common ground that Mr Brailey took notes and Mr Tomasetti did not. 32Mr Tomasetti said that in the course of this meeting he told Mr Brailey of his assets and liabilities, including shares owned, either personally or by his superannuation fund. They discussed his sickness, accident and life insurance policies. Mr Tomasetti said that his income fluctuated from month to month but that he was earning professional fees of around $700,000 per annum. 33Mr Tomasetti explained that he had four young children, three of whom were in private school. He was paying off a mortgage in respect of a house purchased for his former wife and his children to live in after the separation. He was also committed to paying a significant sum by way of maintenance to his former wife. He explained that he was living with his current partner, Ms Cordony, in a unit he had purchased in Mosman. He told Mr Brailey that Ms Cordony worked full-time as a barristers' clerk but suffered significant ill-health which involved regular hospital admissions. 34Mr Brailey asked what his goals were and Mr Tomasetti said that he replied: "Well, I want to continue to work hard. I would like to be able to invest in things that give me modest capital growth and that are tax effective and that are secure. Having gone through my divorce and given up everything, I don't want to risk my capital ." (Emphasis added) 35Mr Brailey asked if there were any types of investments that he did not want to be in and he replied: " I don't want anything risky Ted . My farming experience was good fun and the kids enjoyed it but it was very costly. I want nothing speculative . I'd like to increase my share portfolio if I am able to and I want to reinvest the dividends. I want a blue chip portfolio but I might be prepared to consider a small section of that pie for what I think they call 'green chips'." (Emphasis added) 36Mr Brailey told him that his superannuation fund should have a diversification of assets to minimise the risk. He spoke of investments in property and shares, the latter primarily in blue chip stock but with a small proportion in shares that might offer better capital growth. He also suggested having some cash invested to earn interest. 37According to Mr Tomasetti, he concluded the conversation by telling Mr Brailey: "Hopefully, once the kids are off my hands and provided that my health is ok, I am sure that I'll be ok but you can see what my plan is and I will be relying on you to work with me." 38Mr Brailey made notes on a "Personal Financial Profile" questionnaire booklet (EB1 at pp. 159-170). He recorded cursory details of Mr Tomasetti's assets, liabilities, income and expenditure. A schedule of existing investments indicated a tendency to invest conservatively in blue chip shares. 39In a section of the booklet headed "Investment Objectives" it was noted that Mr Tomasetti was interested in capital growth at a moderate level, tax minimisation and security of capital. The "time horizon" was noted to be "long term (over 5 years)." 40In another section of the booklet against a question, "Are there any types of investments you wish to avoid?", Mr Brailey recorded: "Farm was fun but costly" CGT loss??? Nothing speculative." 41Against the next question - "Are there any particular types of investment you wish to have in your portfolio?" - Mr Brailey recorded: "Increase share portfolio. 100 - 200 K pa. Reinvest dividends". 42Mr Brailey's account of the meeting was in accordance with his notes. He confirmed that Mr Tomasetti had said, "I wouldn't want to do anything speculative" ([78]). He added he did not complete certain parts of the booklet because he was only being instructed by Mr Tomasetti "in relation to his accountancy work and not with respect to any potential investment advice ([76] and [79]). 43Mr Tomasetti said that Mr Brailey thereafter acted as his accountant. He also acted in this capacity for Ms Cordony and for Mr Tomasetti's superannuation fund. The retainer came to an end shortly before the present proceedings were commenced in June 2009 ([20]). 44Mr Brailey attended Mr Tomasetti's chambers each year and presented him with a set of financial statements and taxation returns ([22]). These were personal accounts as well as accounts for the superannuation fund, Tomasetti Investments Pty Ltd and Tomasetti Holdings Pty Ltd. Mr Tomasetti's evidence was that he did not read these documents closely but "flicked through the bundle" to see what documents were there and asked Mr Brailey to identify the page which would indicate what his net asset position was. Mr Tomasetti signed the documents and returned them to Mr Brailey. A copy was retained which Mr Tomasetti filed away. 45Mr Brailey said ([86]) that a constant theme in discussions with Mr Tomasetti, up to and including when he attended upon him in about March 1999 for the signing of tax returns, was Mr Tomasetti complaining about paying too much tax. Mr Brailey claimed that he generally responded with a number of suggestions about how his tax liability could be reduced, including by offsetting income with deductions from activities such as primary production. Mr Tomasetti denied that such conversations occurred ([28]). 46Mr Tomasetti gave evidence about another conversation with Mr Brailey concerning his attitude to investment ([29] - [30]). He said it was in about 1999 or 2000. It was in the context of a discussion about investments to be made in shares by the superannuation fund, which Mr Brailey advised should be a self-managed fund. Mr Brailey arranged for a stockbroking firm (Morgans) to recommend shares to invest in. When Mr Tomasetti received the recommendations, he spoke to Mr Brailey and said: "I am happy with these investments. I don't want to invest in risky investments. I had this superannuation fund running for years. AMP were hopeless. The fund was experiencing negative returns after payment of their commissions. I don't think the fund has ever returned very well with AMP but I don't want to go and risk whatever's left. I am happy to invest a little bit in something a bit more speculative but basically I'd like to invest in blue chip shares and not sell them. My understanding in the business of stockbroking is that there are blue chip shares and then shares which are more speculative. I want the majority of my share investments in the blue chip category as I have no intention of selling them. They would be a long-term hold providing a dividend and capital growth." 47Mr Brailey replied: "That's fine". 48Mr Tomasetti made some investments on Mr Brailey's recommendation in about 2000 to 2001 that are unrelated to the present proceedings ([31]ff). The TSF invested $100,000 in Cromwell debentures and $20,000 in Argus Solutions Pty Limited. The latter was lost completely but there is no suggestion that there were any recriminations or that it caused Mr Tomasetti to question Mr Brailey's advice. 49There was an occasion in about September 2003 when Mr Tomasetti and Ms Cordony attended a meeting with Mr Brailey at his office on a Saturday for the purpose of discussing a financial plan ([35]). They told Mr Brailey of their hopes and aspirations in transitioning towards retirement. Mr Tomasetti wanted to start reducing his workload by his mid-50's. Ms Cordony's health was mentioned as a concern. The purchase of a farm in the Southern Highlands was a goal. Mr Tomasetti hoped to be debt free and have enough income from superannuation to live on with possibly some supplementary investment. He wanted a plan to work to. In this context, he said to Mr Brailey: "The AMP Society didn't do a good enough job. I had superannuation with them they managed it but after management fees I was often showing no positive return in the superannuation fund. This happened year after year. I changed accountants to get some proactive assistance and in these matters I have to rely totally on your professional skill in accounting wealth management and planning." 50Mr Brailey made notes on a whiteboard during the course of this meeting. At the end he said that he would need to work on it and that they would then have a further meeting. However, notwithstanding subsequent requests by Mr Tomasetti as to when the further meeting would be held, nothing appears to have happened. 51Ms Cordony mentioned that she attended this meeting but could not recall what was discussed ([13]). 52Mr Tomasetti claimed that after "each meeting" he had with Mr Brailey he told him at the conclusion something to this effect ([37]): "Ted. Thank you so much for your help. You know I have no time to do this and you know how much Sassi and I rely on you and how grateful we are for your help." 53Mr Tomasetti said that "I came to trust and rely on Mr Brailey completely. He had access to all my personal details and financial affairs" ([39]). 54Mr Brailey's also gave an account of this meeting ([250] - [253]; T977 - 981). There was a discussion about various aspects of Mr Tomasetti's and Ms Cordony's financial affairs. Mr Brailey was able to say that it occurred on (Saturday) 9 August 2003 as he made notes on the day (EB1 at p.1308 - 1309). Notes he made on a whiteboard were transcribed by a personal assistant on the Monday (EB1 at p.1310). He described what he had recorded as their "wish list" or "dream" in terms of financial planning (T981). 55Contrary to Mr Tomasetti's evidence, Mr Brailey said that he had agreed to a further meeting but it did not occur because Mr Tomasetti always proved to be unavailable ([513]). He did, in fact, send a facsimile to Mr Tomasetti on 11 August 2003 proposing a further meeting on 14 September 2003 but that did not eventuate (EB1 at p.1970). The Agribusiness Investments 56There was substantial dispute as to the terms of the conversations Mr Brailey had with Mr Tomasetti and Ms Cordony on almost every occasion the investments were discussed. Given the time that has elapsed, it cannot be expected that any party would be able to recall the precise terms of the conversations. It is expected that, at best, the evidence would be an account of the substance or effect of what was said. However, there was a significant issue as to the ability of each of them to accurately recall, or to recall at all, the latter. Suggestions were frequently made in the course of cross-examination that an account of a conversation was a reconstruction and not the product of a true memory at all. There are other considerations involved in the assessment of the evidence which will be mentioned later. 2000 investments 57Three investments were made by Mr Tomasetti in financial year 2000: Norgard Clohessy Australian Blue Gum 2000, Timbercorp Eucalypts 2000 and Great Southern Blue Gum Plantations 2000. Documents 58The following are some of the documents relating to these three investments with some relevant matters noted. Norgard Clohessy Australian Blue Gum 2000 Prospectus (PCT1 at pp. 8 - 98): Page 1 under the heading "Important Notes & Statements": "Participation in Australian Blue Gum 2000 and subscription for options in Norgard Clohessy Equity is considered to be speculative". Page 29 under the heading "Investment Risks - Australian Blue Gum Management": "The Project is a long-term venture and, as with all long-term commercial agricultural projects, is subject to:" There follows 14 bullet points which refer to matters such as "physical risks such as drought, fire, other acts of God, insect infestation (grasshoppers, beetles, etc) and disease (for example, fungal disease)"; movements in prices; fluctuations in international currency rates; "the ability of the Responsible Entity and Financier to meet their obligations"; and "any adverse change or collapse in world markets for woodchips". Page 29 under the heading "Secondary market for Timberlots": "Growers should be aware that, due to the lack of a formal secondary market, the timberlots are not likely to be liquid. ... Participation in Australian Blue Gum 2000 should be viewed as being made for a fixed term commencing on the date of investment and expiring not later than 31 December 2013". Application forms (PCT1 at pp. 120 - 127) Application for 5 timberlots for a total cost of $25,000. Finance of $24,900 sought. Signing page of application form (PCT1 p.126): Signed by Mr Tomasetti and witnessed by Ms Janet Sucur. Dated 27 April 2000. Bullet point list of acknowledgements by the applicant, including "that neither the Project nor any particular return is guaranteed by any organisation and that a subscription in the Project is considered to be speculative"; and "that the Prospectus has been read and understood in its entirety". Signing page of finance application form (PCT1 p.122): Signed by Mr Tomasetti and witnessed by Ms Sucur. Dated 27 April 2000. List of declarations by the borrower include that it is understood that it the application was for a full recourse loan that must be repaid in full with accrued interest irrespective of the success or otherwise of the investment for which the loan is utilised. Great Southern Blue Gum Plantations 2000 Prospectus (PCT1 at pp. 343 - 413) Introductory page (PCT1 at p.345): "Participation in the Project is considered speculative and prospective Growers should read the Prospectus in its entirety and seek professional advice that an investment of this type is appropriate for their particular circumstances. The Projects are for a fixed term, likely to be 10 years from the year of planting. GSMAL has no obligation to purchase Growers' interests in the Project." Page 21 under the heading "Risks" (PCT1 at p.366): "Participation in the Projects is intended to be of a long term nature in commercial forestry and is therefore subject to attendant risks and should be considered as speculative. These risks include fire, drought, other acts of God, disease, pests, technological advances, failure to achieve expected timber yields, reduced demand for hardwood woodchips, failure to achieve economic prices because of supply and other issues, changes in prices and costs particularly adverse price movements for the costs of harvesting, chipping, transport and ship loading, currency movements, government imposts and regulations and general economic and international issues" Page 22 under the heading "Buyback and Secondary Market" (PCT1 at p.367): Reference is made to there being no secondary market currently in existence. Page 28 under the heading "Projected Returns" (PCT1 at p.373): "As the Projects are of medium term duration and there are a high number of variables involved in the calculation of returns to Growers, the ability to project returns is extremely limited. Fluctuations in demand for woodchips, changes in woodchip selling prices, fluctuations in the costs of harvesting, chipping, transport and ship loading and variations in prevailing inflation, exchange and taxation rates as well as fluctuating growth rates will affect returns. Incorporated on pages 21 and 40 are further details on some of the risks inherent in the Projects." Application form (PCT1 at pp. 446 - 447): Application for 17 leased areas for a total cost of $51,000. Finance of $45,900 sought. Signed by Mr Tomasetti and witnessed by Ms Sucur. Undated (Although the associated Direct Debit Request form (PCT1 at p.544) was signed by Mr Tomasetti and dated 27 April 2000). On the page where provision is made for the applicant's details to be inserted and for the applicant to sign: "IMPORTANT Before signing the Application Form, Applicants should read the Prospectus ..." Declarations and Signature(s) By signing this Application form, I/We acknowledge and agree to be bound by the statements on the reverse side of this Application." On the reverse: "By signing the Application form on the reverse of this page of this Prospectus, I/We hereby acknowledge and accept: ... 6. The Project is intended to be of a long term nature in commercial forestry and I/we acknowledge the risks of the project, as set out on page 21 of the Prospectus." Great Southern Blue Gum Plantations - Authority to Proceed (Exhibit 4): Signed by Mr Tomasetti as applicant and by Mr Tony Snape as "Adviser". Dated 22 May 2000. The contents of this document are reviewed later. Timbercorp Eucalypts 2000 Prospectus (PCT1 at pp. 586 - 647): Front cover (and repeated inside the front cover) (PCT1 at pp. 586 - 587): "This is not intended to be a short term venture and will be subject to the risks generally associated with commercial plantation forestry." Supplementary prospectus (and page 10 of the prospectus itself) (PCT1 at pp. 588 and 598): Projected net sales proceeds per woodlot are calculated by deducting, inter alia, "Land rental ($3,692)" and "Forest maintenance ($989)", with rent and maintenance payable annually, commencing 31 October 2000. [Mr Tomasetti applied for 56 woodlots, so the projected total of annual payments for rent and maintenance was in the order of $260,000]. Overview on page 4 under heading "How much will it cost?" (PCT1 at p. 592): Annual maintenance fee of $75 per woodlot and annual rent of $270 per woodlot, both indexed from 30 June 2000, payable on 31 October each year. [56 woodlots x $345 per annum = $19,320]. "Your other ongoing costs will be insurance, if you choose to insure, and interest, if you choose to borrow". "Project risks and safeguards" on page 25 (PCT1 at p.613): "General risks of plantation forestry The risks associated with plantation forestry are similar to those in any farming venture which is subject to seasonal and climatic conditions. Eucalypt plantations are variously susceptible to such risks as drought, pestilence, vermin, disease, fire, flood and wind as well as poor silvicultural management, including preparation, weed control, seedling stocks, planting techniques, fertiliser application, fire control and general management. ... Financial risks The financial success of the Project will depend on the growth rates achieved on each Woodlot and the prevailing market conditions at the time of Harvest. ... The financial success of the Project may also be affected by a downturn in overseas markets or oversupply caused by competition from other woodchip sources around the world or from substitute products. ... The Independent Forester has noted in his report that anticipated returns will depend on the value of woodchips on the international market, the exchange rate of the Australian dollar, the volume of wood which is being placed on the market at the time, and the prevailing costs for timber harvest and delivery at the time of timber harvest." Application and Power of Attorney Form (Exhibit 3): Application for 56 Woodlots for a total cost of $196,000. Finance of $145,600 sought. Signed by Mr Tomasetti and witnessed by Mr Brailey. Dated 19 April 2000. Underneath the above heading of the form: "Please read the back of this form before signing it". On the back of the form (PCT1 at p.642): "Declarations By signing the front of this application form you make the following declarations: that you have read the prospectus dated 8 March 2000 to which this application form relates. ..." Mr Tomasetti's evidence concern the 2000 investments 59Mr Tomasetti's affidavit evidence ([45]) was that the first discussion with Mr Brailey about agribusiness investments occurred when he came to chambers "in approximately April 2000" with "the first tax returns that he did for me" which were "for the year ended 30 June 1999". At the commencement of his oral evidence he made corrections to this paragraph so that it read that it was "approximately April 1999" and that the returns were for the year ended "30 June 1998" (T82). Neither the original nor amended form of this paragraph in the affidavit made sense. The first tax returns prepared by Mr Brailey for Mr Tomasetti were for the 1997/98 year and were presented to Mr Tomasetti in about March 1999 (EB1 at p.174), whereas the first agribusiness investment was made in 2000. 60Mr Tomasetti said in cross-examination that these amendments were made after careful consideration and reviewing of material that had been served (T244). The obvious fact that a conversation about entering into forestry projects in the year ended 30 June 2000 could not have occurred in 1999 was drawn to his attention. He maintained that the conversation to which he had deposed did occur before entering into the first forestry scheme, but that it was not at a time when Mr Brailey had prepared his first tax returns and it was not when Mr Brailey brought financial statements and tax returns for the year ended 30 June 1998. He was not sure if Mr Brailey brought any tax returns for signature - "I may be mistaken" (T245). 61The conversation that Mr Tomasetti said took place at this meeting included the following (affidavit at [45]): EB:"I want you to invest in forestry projects. I want you to do it this year before 30 June 2000. These are agricultural investments which will provide you income in a lump sum when the forests mature and an immediate tax deduction in the year of investment. In other words if you invest this year you will be able to get a deduction when I do your next tax returns". PT:"What do you mean? I am completely unfamiliar with this form of investment". Mr Brailey then explained some aspects of the proposed investment. Then: PT:"And what sort of return will there be on the investment?" EB:"You'll get 10 per cent per annum". PT:"Is that compounding?" EB:"Yes". PT:"And what about fire? A fire could come through and wipe out the forest". EB:"You can insure against that risk". PT:"How long will it take before the forest is harvested?" EB:"About 10 years". PT:"That's a long-term investment. What if you want to get out of it?" EB:"The expectation is that there will be a secondary market which will enable you to trade your forestry entitlements. As the timber matures and it begins to have value it is expected that you will be able to sell your entitlements on the secondary market". Mr Tomasetti asked how much it would cost and Mr Brailey told him that it would be $320,000. He reiterated that it was tax deductible. He also told him that they would share the commission "50/50". Then: PT:"Well Ted, I know nothing about these products, I've never heard of them before and I can only rely on you. Do you think these are sound, prudent, sensible investments as I know nothing about them?" EB:"Well I think they are. That's obviously why I'm recommending them to you. I think they are going to be really big in the future. These are the prospectuses and I can leave them with you to read through if you like". Mr Tomasetti said that Mr Brailey then handed him a compendious bundle of documents. He responded: PT:"Ted, I have no time to read this documentation and I expect you to be thoroughly familiar with it so that you can make a proper recommendation to me. I am assuming that you have read it all and that having read it all you're content with the investment that you are recommending that we make. You know my financial position now. You know my cash flows and how my practice works. If you think that it is a sound and sensible investment and that we can afford it, then I am prepared to go with your advice. He then said something about the way he worked as a barrister and continued: PT:"If this is your expert advice then I am prepared to accept it". EB:"Well this is my advice. You'll get an immediate taxation advantage. If you don't pay the money for the investment, you will only have to pay the taxation office. This way you will invest in a project where there will be income down the track. Once you have paid tax the money does not come back to you. The product is fully supported by a tax ruling by the tax office. I myself am also investing in the projects; that is how good I think that they are. You will get a lump sum at the end of the project and by that time you may not be practising as a barrister but we can worry about that at the time". PT:"When I receive the lump sum I will have to pay tax won't I? And how will I fund the investment?" 62Mr Brailey confirmed that he would have to pay tax on the lump sum upon receipt. He reiterated that he would obtain an immediate tax advantage. He advised that he would have to pay a minimum of 10 per cent of the investment but could borrow the rest from the project manager. He advised that the tax deduction would be for 100 per cent of the investment. The loan repayments were not tax-deductible but any interest component was. Mr Tomasetti responded, " Well if that's your recommendation I am prepared to give it a go " . 63Mr Tomasetti said (at [46]) that Mr Brailey then gave him application forms and finance forms which he signed and that was the end of the meeting. He did not read any of the documentation but simply signed in the places where Mr Brailey indicated. Mr Brailey took the forms away; although it was "probable" that he left Mr Tomasetti with a copy of the prospectus for each project ([48]). 64The cross-examination of Mr Tomasetti concerning the 2000 investments will be reviewed later but it is worth observing at this point what he said on the topic of when the documents were signed. 65Forms that Mr Tomasetti signed relating to the Timbercorp Eucalypts 2000 investment are dated 19 April 2000 and they bear a stamp indicating receipt by Timbercorp on 26 April 2000 (Exhibit 3). Forms relating to the Great Southern Blue Gum Plantations 2000 and the Norgard Clohessy Australian Blue Gum 2000 investments are dated 27 April 2000 (PCT1 at p.541ff; EB1 at pp. 721 and 732; DTB 242-245). 66Mr Tomasetti's attention was invited to the Timbercorp forms dated 19 April 2000. His signature had been witnessed by Mr Brailey. He thought it unlikely that Mr Brailey would have done so if he was not present when Mr Tomasetti had signed. His personal assistant, Ms Sucur, witnessed his signature on the Great Southern Blue Gum Plantations 2000 application where the associated Direct Debit Request form is dated 27 April 2000. It was possible that on occasions the forms would be signed by him whilst Mr Brailey was present but someone else would sign as witness (T279.1). He also allowed for the possibility that there was a discussion with Mr Brailey and the forms were sent later, although that was not his recollection (T278.44; 279.13). In the latter situation, however, he maintained that he would not have read the documents in their entirety. He also maintained that when he swore his affidavit of 17 November 2009, his recollection was that the forms were signed in Mr Brailey's presence and Mr Brailey took them away (T279.40). 67Mr Tomasetti's attention was taken to the Norgard Clohessy Australian Blue Gum 2000 forms (PCT1 at pp. 121 - 127), which are dated 27 April 2000. He was reminded that his affidavit version of events was that there was a single meeting with Mr Brailey in April 2000 which concluded with him signing the application forms and finance forms. Mr Tomasetti indicated that he needed to make a correction to paragraph 46. He said that he thought the finance forms may have been signed later (T313.22). His attention was drawn to the dates on the forms relating to the Timbercorp investment. Both the application and the finance forms are dated 19 April 2000 (T313 - 314). He was then taken back to the Norgard Clohessy finance form dated 27 April 2000: "Q. So that was obviously signed on a different occasion, wasn't it? A. Not necessarily. I can't - I can see the date on the document. I see my signature and Janet's [Ms Sucur] signature. I see Mr Brailey's handwriting dated signing. That's what I can see. And I'm - beyond that, I'm reluctant to say that it was exactly on that day or not. Q. It obviously wasn't signed on the 19 th ? A. No, I didn't say that. Q. It must have been signed on or after the 27 th , correct? A. It could have been signed a day or two before and the date put on later. I'm not prepared to say. It's a long time ago. My recollection it was, when I swore my affidavit, that these documents were produced to me at the meeting, the substance of them was explained, as I've said, and they were signed. That was my recollection. Q. There are only two possibilities: one is that for some reason the person who has dated this document has put the wrong date on it; and the other is that your recollection is incorrect? A. That is entirely possible. Q. That is the real explanation, isn't it? A. It's entirely possible." (T314 - 315). 68However, Mr Tomasetti maintained that he had not reconstructed the conversation with Mr Brailey and said that he had done his best to relate the substance of it (T315). He was prepared to accept, however, that he had been incorrect to state in his affidavit (at [46]) that he had signed all the application and finance forms during the meeting and in the presence of Mr Brailey (T316.3; 320.37). 69Mr Tomasetti ultimately came to say that he did not maintain that all the documents were signed in a single meeting and allowed for the possibility that there might have been more than one meeting. He remained of the view, however, that there was a single meeting in which the proposed investments were discussed in the way set out in his affidavit. But there "could well have been more than one meeting" (T321.27). 70Mr Tomasetti said (at [55]) that at the end of his conversation with Mr Brailey, and based upon what he had been told, he understood that he was purchasing a seedling forest which would grow to maturity and when mature in about 10 years would be harvested. The timber would be reduced to woodchip and sold by export. He understood that he would have to pay the purchase price for the investment and insurance premiums for fire. He expected to receive approximately 10 per cent per annum on his initial investment "compounding in effect as the forest grew". He would be able to claim a tax deduction equivalent to the amount of the investment. He also understood that tax would be payable on the proceeds of the harvested forest in the year of receipt of that income; that he would have to borrow money to pay for the investment; and that the interest on the loan would be deductible. He claimed that he was not told that there would be any ongoing costs, including rental or maintenance, apart from the loan liability and the insurance premiums. 71Mr Tomasetti also said (at [57]) that it was Mr Brailey who made the decisions as to the quantum of the investment; with whom the investment would be placed; and the amount that he should pay personally and the amount that would be borrowed. He assumed that Mr Brailey had done this after a careful consideration of his financial affairs, with particular regard to cashflow, future financial goals and liabilities. He assumed that Mr Brailey had researched the product and had made a considered decision about the amount that Mr Tomasetti should "prudently invest". He also assumed that Mr Brailey was satisfied that the investments were affordable at all stages of their life. 72Mr Tomasetti said (at [59]) that several months after the initial investment in the Timbercorp Eucalypts 2000 project, his secretary received documentation in the mail in relation to further payments to be made by 31 October 2000. He said that she showed him the mail and he gave it back to her, telling her to speak with Mr Brailey about it. He also said: "I did not read the documentation at the time but again assumed that the documentation was in accordance with the plan that Mr Brailey had for me in respect of these investments, and I signed them and returned them to Mr Brailey. The further ongoing payments were dealt with upon that understanding including where it was necessary, to borrow further monies to meet the ongoing obligations. I did not telephone Mr Brailey or otherwise question him about the documentation." Mr Brailey's evidence concerning the 2000 investments 73By way of background to the making of agribusiness investments, Mr Brailey referred (at [90]ff) to investments made in the two preceding years by Mr Tomasetti in infrastructure bonds. He was able to claim a deduction of $307,127 in 1998 and $308,908 in 1999. The relevant provisions of the Income Tax Assessment Act 1936 (Cth) were repealed such that investment in these bonds was not available in the 2000 financial year and beyond. 74Mr Brailey said that by April 2000 he had noticed that Mr Tomasetti did not have sufficient deductions in his returns for his tax liability to be reduced and he was concerned to discuss this with him ([117]). He attended upon Mr Tomasetti in his chambers on about 17 April. Mr Brailey's account of the conversation (at [118]ff) was somewhat different to Mr Tomasetti's recollection of it. 75Mr Brailey commenced by informing Mr Tomasetti that the deductions he had been able to claim for the investments in infrastructure bonds in previous years were no longer available. He told him that he had seen various forestry projects which would provide the same tax deduction as the bonds, but they were different in nature. He told Mr Tomasetti that he had brought prospectuses for four different projects for him to consider. He said: EB:"They are all supported by a favourable tax ruling from the ATO. If you take them up the saving in income tax will subsidise the investment by about 50%. The 50% that remains is an investment you have made with a loan of 90% which has to be repaid". 76Mr Brailey said that he then handed the four prospectuses to Mr Tomasetti, together with documents relating to the provision of finance for investment in the schemes. He continued: EB:"These are all listed public companies which gives me and should give you some confidence in their sustainability. However even listed companies hit turbulence at times. Some survive and some fail. I think investment in these companies is preferable however to entering into projects with start up or private companies. Although there is some risk attached to investments in the agribusiness companies, as there is with any sort of investment, this risk is offset to a large extent by the upfront tax savings." 77Mr Brailey then explained the workings of the investment, including that they involved paying a deposit of around 10 per cent and borrowing the balance from the promoter. He then said: EB:"I have been to visit some of these projects and they appear to me to be viable. You will have to pay insurance after the first year and there are ongoing rent and maintenance costs in relation to some of the projects". 78Mr Brailey claimed that he then directed Mr Tomasetti to the provisions in the prospectuses relating to the ongoing rent and maintenance costs. He told Mr Tomasetti about some other aspects of the scheme which included that at the time the trees are planted, a contract is signed between the project manager and the ultimate buyer of the wood chips, " so that you have a guaranteed sale of your wood chips " . Mr Brailey continued: EB:"Peter the good part for you of course is that you get a tax deduction for 100% of the cost of the investment. When you get the revenue from the project in say ten years time you pay tax on this revenue. I should also tell you Peter we may receive a commission. However it is our policy to rebate 50% of the upfront commission received to our client. Taking into account the rebate of the commission, the tax deduction of the investments will on one view initially be cash positive before you start having to make loan repayments. You will of course need to fund the repayments for the loans in the future". 79Mr Brailey said that Mr Tomasetti had the prospectuses while he was explaining the projects to him and appeared to be leafing through them. He continued: EB:"Peter, the approximate rate of return predicted by the prospectus is around 10% per annum but each investment will have its own return which will depend on many variables. Also, forestry is similar to all types of farming and there are many things which can go wrong including the failure of the plantation. There is the danger of fire for example but you can insure against that risk. Also the exact value of the crop when it's harvested is largely unknown. Because you are selling to a Japanese buyer the value of the Australian dollar is also a risk." 80Mr Brailey said that at various times during his explanation of the projects, he made direct reference to the relevant prospectus. He also said: EB:"You should read the whole prospectus before you make any decision. You should especially read the section on risk which expands on the matters I have been speaking about today. If you are to take advantage of the tax deduction for this financial year you will need to put the application in before 30 June. There is also a fair bit of demand for these investments. I have faith in the projects and am investing in them myself." 81Mr Brailey said that Mr Tomasetti replied, "I will have a think about it " . 82Mr Brailey claimed (at [127]) that at the end of the meeting, he left the prospectuses and the finance documents with Mr Tomasetti for him to read. He denied that the application forms were signed there and then by Mr Tomasetti. 83Mr Brailey made notes during the course of the meeting (EB1 at p.716). They are dated 17 April 2000. They indicate that a wide range of matters concerning Mr Tomasetti's financial affairs were discussed. 84A little later in his affidavit (at [130]), Mr Brailey said that he could not recall the exact circumstances surrounding the execution of the relevant documents. He said, " I think I left these documents at Mr Tomasetti's chambers or that I posted them to him for him to sign " . He then referred to a handwritten note " which I placed with these some of these [sic] documents at the time they were delivered or sent to Mr Tomasetti " . This note (EB1 at p.717) is headed "Great Southern" and is consistent with Mr Brailey having left documents with Mr Tomasetti to sign at a later time. In numbered points, it indicates that two signatures were required; one to be witnessed; and that a cheque was required to be made out to "GSMAL 2000 Applic. Trust A/c" in the amount of $5,100. These points are consistent with the application for finance forms relating to the Great Southern Blue Gum Plantations 2000 investment (EB1 at pp. 718 - 723). 85Mr Brailey claimed (at [132]) that Mr Tomasetti asked him in around April or May 2000 what he thought was a reasonable amount for an investment. Mr Brailey told him that the idea was to replace the infrastructure bond deductions which were about $300,000 for the previous year. He advised putting more into the Timbercorp project than the others. He asked Mr Tomasetti how much he wished to invest personally and how much he wanted to borrow. Mr Tomasetti replied that he did not have any cash and so he would put in the minimum and borrow the rest. Mr Tomasetti's evidence in reply 86In his affidavit of 14 July 2010 (at [73] ff), Mr Tomasetti denied in large part the account given by Mr Brailey in his affidavit. In particular, he denied that Mr Brailey spoke about the risks attached to the investments, rent and maintenance costs, and the difficulty in valuing the investments. He denied that Mr Brailey had said that he should read the prospectuses, particular the sections concerning risk. Cross-examination of Mr Tomasetti 87Mr Tomasetti's application in respect of the Timbercorp Eucalypts 2000 investment became Exhibit 3 (T241ff). It was signed by Mr Tomasetti and witnessed by Mr Brailey. It is dated 19 April 2000. He said that he had signed it "as a result of a face-to-face consultation" (T243.13) but that it was possible that the prospectus had been left with him (T243.30). 88At this point, Mr Tomasetti realised that the correction that he had made to paragraph 45 of his primary affidavit changing the meeting with Mr Brailey concerning the first agribusiness investments from April 2000 to April 1999 was incorrect. He maintained a belief that Mr Brailey had brought tax returns with him, but had become unsure about that (T245). 89Mr Tomasetti said that his understanding, based on the discussions he had with Mr Brailey, was that for the projects entered into in 2000, he would have to make an "upfront payment" and then not be required to pay anything more until the trees were eventually cut down and he received a return. Although there is nothing in his affidavit account of the conversation with Mr Brailey to this effect, he maintained that this was part of Mr Brailey's explanation (T249). He was not told that there would be ongoing maintenance costs (T250.45). Later, he said that his understanding in April 2000 was that he was required to make an "upfront payment", and pay for insurance "along the way", and that at the end of the project he would receive a lump sum after deduction of expenses and costs (T331.20). The latter included rent in respect of the land for which he was a lessee (T331.30). He derived that understanding from his discussions with Mr Brailey (T331.42). He did not, however, recall Mr Brailey telling him about deferral of rent payments (T332.10). 90As to risks relating to forestry projects, Mr Tomasetti was aware of fire, and asked Mr Brailey about it (T251). He was aware of drought but did not appreciate that it could be a risk to the trees developing to their full potential. He was not aware of any risk that plantation timbers could get diseases of any kind (T252). He did not turn his mind to there being any risk from drought, disease, pests or changes in pricing (T261). 91Mr Tomasetti maintained that in relation to some of the forestry projects, Mr Brailey had said that the ultimate sale price of wood chips had been agreed (T254.45), although he was not sure whether that was said in relation to Timbercorp (T255.4). Even if the price was fixed, he did not know that what the ultimate purchaser actually paid would depend upon how much wood was available to sell. He thought that harvesting would not occur until the trees had reached optimum size. He did not know that the time it would take for that to occur would depend upon climatic conditions (T256). 92Mr Tomasetti had an understanding that Mr Brailey had experience and had carried out research that went beyond a reading of the prospectus. He based this upon the things Mr Brailey said about the projects as well as him saying that he had been investing in them himself (T257). He believed that Mr Brailey claimed to have experience in forestry, as distinct from investing in forestry projects (T260). 93Whilst he appreciated that Timbercorp were not guaranteeing any particular level of return (T261.48), he thought the level of return Mr Brailey spoke of was "approximate" and that the risk he was taking was that it could be "slightly more, slightly less" (T262.8). He was interested to insure against a catastrophic loss to him in the event of fire (T262.43), but he never turned his mind to other risks (T263). If there had been a "substantial risk" that he would not get his money back he would not have invested (T264.37). He was not interested in investing in these projects unless they fitted with the instructions he had given to Mr Brailey (T264.48) and they had been presented to him as conforming to those instructions (T265.3). 94Mr Tomasetti accepted that neither Timbercorp nor Mr Brailey warranted the outcome of the projects (T265). Mr Brailey, however, was saying that "they were prudent, sensible investments" (T265.18). 95Mr Tomasetti understood that the investments involved him borrowing money and being obligated to pay it back at a later time. He understood he would be paying interest and that the interest would be tax deductible. He claimed that he did not turn his mind to the tax deduction being "favourable" (T265.50). 96A fourth point in the note made by Mr Brailey during the meeting at which the 2000 investments were discussed (EB1 at p. 717) includes "Tony Snape will contact you". It was suggested to Mr Tomasetti that Mr Snape visited him three weeks later, but he said that he had never met a Mr Snape (T272.5). 97Exhibit 4 is a document headed "Great Southern Blue Gum Plantations Authority to Proceed". Mr Tomasetti agreed that he had signed this document as the "applicant" (T273.15). The signature appears in a box headed "Applicant(s)". Within that box, above the signature, are three paragraphs, the first of which is, "I/We have read and understood the above and confirm I/We wish to proceed with my/our investment in the Great Southern Blue Gum Plantations 2000 Project" . The "above" comprises 10 acknowledgements. The first is: "I/We understand that Tony Snape is the holder of a Proper Authority with Hampton Securities Pty Limited and that Hampton Securities Pty limited is the holder of Dealers Licence Number 14327 issued on 14 January 1988. I/We understand that the advice that can be provided by the adviser is restricted to the Great Southern Blue Gum Plantations projects". 98The second acknowledgment is to the effect that "I/We" have read and retained a copy of the prospectus. The third is that the project had been explained to "me/us". The fourth is that participation in the project was considered to be speculative. It lists the "risks" as including fire, drought, acts of God, disease, pests, technological advances, changes in prices and costs, currency movements, Government regulation, and general economic and international issues. The fifth acknowledgment is that participation in the project was a long term investment and that redemption from the project before harvest may not be possible. The sixth is that the ability to project returns was extremely limited; it was not possible to predict with certainty the likely returns; and that there was no guarantee in respect of possible returns. 99The document also has a box headed "Adviser" where the name "Tony Snape" has been typed in and there appears a signature that looks like "A Snape" and the date "22/5/00". Mr Tomasetti claimed, however, that he had never heard of Hampton Securities; he recalled no meeting with Mr Snape; and he did not recall signing the document (T273.33). He maintained that he had no dealings with anybody else regarding agricultural investments other than Mr Brailey (T276.18). He agreed that he would not have signed the document if it was not true, but suggested that he might have signed it by mistake. To his recollection, the first time he had ever seen the document was when shown it during the course of cross-examination (T273.40). 100Something that supports the contention that Mr Snape did attend upon Mr Tomasetti on the day that he signed this document is a note dated 19 May 2000 from Mr Brailey to Ms Sucur (PCT1 at p.991; EB1 at p.753) - "Tony Snape will come in Monday for Great Southern". The document bears the date 22 May 2000, a Monday. I bear in mind that it was received as an exhibit upon the basis that there was no evidence as to when the signatures were placed on it (T273.2). The inference that Mr Snape attended upon Mr Tomasetti can be drawn from Mr Brailey's notes; Mr Snape's name appearing on the document; and Mr Tomasetti's acceptance that he signed it and that he would not have done so if it was not true. 101A number of forms relating to the Norgard Clohessy Australian Blue Gum 2000 project were part of the evidence in the plaintiffs' case (PCT1 at pp. 120 - 127). They are dated 27 April 2000. Mr Tomasetti's signatures were witnessed by Ms Sucur. On the page of the application form that was signed by Mr Tomasetti there are a number of acknowledgements. He agreed that when he signed it he appreciated that it was an application form; that it involved himself making commitments and representations that would be relied upon by those to whom the application was to be submitted. He did not, however, turn his mind to ensuring that the representations were truthful (T322). He agreed that he "would have wished to be satisfied that the statements that [he] was making ... were correct" (T323.18). He did not, however, read it. He simply signed where he was required to sign (T323.22). He explained that he relied upon Mr Brailey having completed the forms accurately (T323.30). 102Mr Tomasetti agreed, first, that he would have read the form sufficiently to see what it was that he was committing himself to (T323.45). "Q. And second that any representations that you were making were accurate? A. Being made on my behalf, yes." (T323.48) 103One of the acknowledgements was that the prospectus had been read and understood in its entirety: "Q. So you made that representation, signed it to be true and it was not true, is that what you say? A. Yes." (T324.5) 104Mr Tomasetti then said that he "did not read all the application forms". He would have scanned them, but did not read them in detail. However, he would have seen that this particular document contained a series of acknowledgements (T324.20). He did not, however, read and consciously advert to points such as that the project was not guaranteed and that it was speculative (T325.20). The following gives the flavour of Mr Tomasetti's responses: "Q. You also understood that a subscription in the project was considered speculative? A. No, I did not. Q. You in fact acknowledge that very thing in the fourth dot point? A. No. Q. The reason why you signed this form and you were happy having scanned this form and read it sufficiently for your purposes to sign that because it was true? A. No. Q. You knew very well that this project was speculative? A. Well, it certainly wasn't guaranteed. There was certainly risk as we've discussed attached to it. Q. Would you mind dealing with the word "speculative". Did you or did you not know when you entered into this project that it was speculative? A. I regard it as speculative on the advice that I was given. Q. Why didn't you when presented with this form to sign which contained an acknowledge[ment] which was speculative say something to Mr Brailey? A. Because I did not read anywhere in the form that it was speculative." (T326) 105At an earlier stage in the cross-examination, Mr Tomasetti denied knowing that the investments were speculative. He was asked whether he knew they were "less safe than investing in blue chip shares" and replied that he knew nothing about them. Then: "Q. Are you saying that you made these investments having no idea of their relative safety compared with blue chip shares? Is that seriously your evidence? A. That's my answer, yes." (T290.40) 106He did, however, appreciate that there was risk associated with forestry projects, although not a "substantial risk". He appreciated that they were not "a 100% safe project" and also understood that they were for 10 years or more (T294). Then, contrary to his earlier answer (at T290): "Q. And in particular even after you had spoken to Mr Brailey you appreciated that the investment that you were considering was one which was less safe than investing in blue chip shares? A. Yes, that's correct, that's correct. I was clearly aware of the risk of fire." (T295.22) 107Towards the end of the cross-examination he confirmed an awareness that the investments (generally) carried a degree of speculation and risk: "Q. In fact you had been well aware at the time you had entered into these particular transactions that the investments were ones which were not as safe as other investments? A. I've agreed with that. Q. And I suggest you were well aware at the time you entered into the transaction that the investments were speculative? A. Speculative, yes. Speculative no. I have difficulty with that. These investments are highly speculative, high risk, high danger investments. I had no knowledge of those matters but of course in the matters that we've discussed with the attendant risks that applied there were of course some degree of speculation, but nothing of the kind that I understood." (T567.34) 108Mr Tomasetti was asked (at T296) about the advantages he saw in making the investments. He mentioned diversification was one advantage and forced saving was another. A third was that they provided an opportunity for him to receive money in 10 or so years time when he might not be working as intensively. He could not, at that moment, think of any other advantages. Mr Parker prompted him: "Q. Well, I'm going to suggest there's an elephant in the room and it has three letters? A. What's that? Q. Tax? A. Yes. There was an advantage too. Q. You do remember that now? A. Well yes, I do remember that now." (T296.24) 109His understanding in 2000 was that he would obtain an immediate tax deduction for the full amount of the investment. He was told that this would make a very significant reduction in the tax he would pay for the 2000 financial year; he would get an immediate cash tax benefit (T300). He saw an advantage in this, but said that it was not the primary consideration (T301). 110In the 2000 tax year, Mr Tomasetti paid tax of some $70,000 against gross professional fees in the order of $850,000. He declared a loss on primary production from his investment in forestry schemes of $328,000. He had paid out a sum significantly less than the tax credit he received because the balance of his obligation had been deferred by substantial borrowings (T307 - 309). 111It was a general claim made by Mr Tomasetti that he never read any prospectus or PDS in relation to any of the projects in which he invested. In his affidavit of 14 July 2010, Mr Tomasetti replied to various matters included in Mr Brailey's primary affidavit. In that affidavit, Mr Brailey had said (at [124]) that at the meeting in Mr Tomasetti's chambers in April 2000 when agribusiness investments were first discussed, " Mr Tomasetti had the prospectuses while I was giving him this explanation of the project and appeared to be leafing through the pages while I was talking " . In replying to this, Mr Tomasetti deposed (at [81]): "I deny that I leafed through the pages of the prospectuses referred to whilst Mr Brailey was talking." 112In cross-examination, he said that he deliberately and consciously made a decision never to read prospectuses (T343.16). He added, while maintaining that he never read them, " I'm not denying that I would have leafed through the documents from time to time " (T343.25). But then, in contrast to his affidavit evidence about the first meeting in April 2000: "Q. ... But you do accept, don't you, that you did read bits of them? A. Yes, I accept that. Of course I did. Not all of them. And I can't say - don't ask me now which bits or of what prospectuses, but while Mr Brailey came to see me - for instance, in our first meeting when he had documents like that, I would have flicked through. I had never seen these things before. I was completely unfamiliar with the product. So it's highly likely that I would have picked one of them up and leafed through it while he spoke to me." (T344.1) 113Mr Tomasetti was taken to his application form in relation to the investment in Great Southern Blue Gum Plantations 2000 (PCT1 at p.446). It has been noted earlier that it included the cautionary note, "Before signing the Application Form, Applicants should read the Prospectus ...". Mr Tomasetti could not say whether he had read that form when he signed it. It was possible that it was signed when Mr Brailey was not present and that he had a quick look to make sure that it was in accordance with what they had previously discussed (T398). Eventually he conceded that he could not say with certainty that he recollected what happened on the day that he signed this form. He could not recall whether he scanned the form, or read the form, or how much time he spent looking at the form (T400.33). 114Almost immediately after, he said that "in these matters, without exception" he was of the view that Mr Brailey was reading "these documents" for him. He was paying him for that task. Accordingly, he saw no need to read them himself, and made a deliberate decision not to do so (T401.25). However, he then conceded: "Q. Are you prepared to say you never ever read any part of any of the application forms-- A. No, I'm not prepared to say that. Q. --that you signed? A. No, I'm not prepared to say that. I undoubtedly would have. I would have been able to scan quickly something when I was signing it. That would have involved me in reading parts of the documents without doubt." (T402.7) 115As earlier set out, one of the acknowledgements purportedly made on the application form for the Great Southern Blue Gum Plantations 2000 investment was: "6. The Project is intended to be of a long term nature in commercial forestry and I/we acknowledge the risks of the project, as set out on page 21 of the Prospectus." 116When taken to this, Mr Tomasetti gave the following evidence: "Q. Please go to page 447 in the bundle in front of you and read paragraph 6 to yourself and, having done so, will you acknowledge that, having signed this document, you made an acknowledgment that [you] understood that the project was intended to be of a long-term nature in the nature of commercial forestry and was subject to risks? A. Yes, I think I've acknowledged these things already. Q. Now you knew, when you signed this document, that the document was of that character, didn't you? A. Which document? Q. That the project was of that character? A. I knew the project was a long-term project. I knew it was in commercial forestry and I knew there were obvious - there were risks which were attached by the project. Q. Yes. A. Yes, that's true. Q. Investment risks and financial risks? A. What do you mean by that, specifically? I mean, there were risks inherent in the project such as those that you mentioned, fire and drought and things of that nature. I certainly considered fire. I did not consider drought. And if you're asking me about financial risks - that's the risk of borrowing - I didn't turn my mind to that either. But yes, I knew of those three things." (T404.42) Cross-examination of Mr Brailey 117Mr Faulkner took Mr Brailey through a large part of Mr Tomasetti's version in his primary affidavit of the conversation at their meeting when the agribusiness investments were first discussed (T880 ff). He agreed to many aspects where he had a recollection. He did not recall a number of aspects, sometimes allowing for the possibility that they were said. 118He denied having said "I want you to invest in forestry projects" and "I want you to do it this year before 30 June 2000" (T881.15). He did not say, "You will get 10 per cent per annum" but said "You will get approximately 10 per cent per annum" (T882.5). When Mr Tomasetti asked how long it would take before the forest is harvested, he did not say "About ten years" but thought he said "ten to thirteen years" (T882.23). He denied, doubted or did not recall that Mr Tomasetti had said, "Ted, I have got no time to read this document [prospectus] and I expect you to be thoroughly familiar with it so that you can make a proper recommendation to me" (T883.34). He denied that he said to Mr Tomasetti, "Well, this is my advice. You'll get an immediate tax advantage. If you don't pay the money for the investment, you will only have to pay the taxation office" (T884.26). He did not think that Mr Tomasetti said at the end of the conversation, "Well, if that is your recommendation, I'm prepared to give it a go". He did not think that a decision was made at the meeting, although he did not positively rule it out (T885). 119Mr Brailey maintained that the application forms were not already filled out, ready to sign, when he came to the meeting. He also maintained that his memory was that he did take Mr Tomasetti through the prospectuses. He did that for the purpose of telling him "what the investment was ... what the risks were and what the project was" (T886). He agreed that he did not take Mr Tomasetti to pages concerned with "risk" that indicated that the investment was "speculative" (T887). 2001 investment 120There was a single investment made in 2001 and it was in the ITC Solidwood 2001 project. This was a joint venture investment by Mr Tomasetti and his superannuation fund. Documents Prospectus (EB1 at p.818ff) The table of contents page includes notes to the following effect: - the prospectus should be read in its entirety; - prospective growers who are not experienced with investments of this type should consult a professional adviser; - participation is for a fixed term, likely to be for a minimum of 10 to 17 years; - growers' interests and shares are likely to be illiquid because it is unlikely there will be an active secondary market; - certain growers [such as Mr Tomasetti] will have an obligation to make annual payments in respect of their Management Agreement and Land Agreement; and - the projects are subject to risks of climate, pest and disease associated with agricultural activities and future markets for woodchips and timber. On pages 24 to 25 there is a section headed "6.16 Risks". Immediately below that heading it is stated: "The Projects are long-term ventures and are speculative. They are exposed to agricultural risks inherent in growing a crop and the commercial risks of long-term projects." This is followed by a page of text under the headings, "Growing Risks", "Commercial Risks", "Specific Regional Risks" and "General Risks". Key risks are highlighted in bullet point lists. Application form (Exhibit 7) Application for 22 plantation units for a total cost of $48,400. Financed with BankWest for $48,863. Signed by Mr Tomasetti and witnessed by Mr Brailey. Dated 4 June 2001. The stated use of the form is for: Solidwood Annual Payment Method Joint Venture The first page requires details to be completed for each joint venture applicant. The form was completed with the details for both "Peter Tomasetti" as joint venture applicant 1 and "Tomasetti Investments P/L Superfund" as joint venture applicant 2. On the signing page, under the heading "Executed by the Joint Venture Applicants as a Deed", Mr Tomasetti signed once as "Joint Venture Applicant 1" and again as "Sole Director" of "Corporate Applicant 1". Immediately above that heading, there is a paragraph headed "Declaration" which is immediately followed by the words: "By signing this Application Form we declare that we have read the ITC Solidwood Project 2001 Prospectus ... " Evidence of Mr Tomasetti concerning 2001 investment 121Mr Tomasetti said that in about April or May 2001, Mr Brailey came to his chambers with completed tax returns and financial statements ([62]). He claimed that the following conversation occurred: EB:"We are going to do the same thing as we did last year with the forestry. It is all going well. I have been (or am going) to visit these projects". PT:"Are the projects all performing as you thought they would Ted? Is the likely income still as you expected?" EB:"Yes it is all going very well. They are planting and the forests are going well. It looks really good". PT:"How much are you proposing that I invest this year?" EB:"$50,000." 122He said that Mr Brailey had the forms with him and gave them to him to sign. Mr Tomasetti signed the forms and Mr Brailey then said, "Don't worry I'll fill these out later" . 123Mr Tomasetti said that he did not recall being made aware that this investment was being acquired through his superannuation fund. He was not told that there would be costs incurred for pruning services during the life of the project. However, on 1 November 2004, he received a tax invoice from ITC that included an amount of $26,515.46 for pruning (PCT1 at p.1044). 124Mr Tomasetti also said in relation to this investment that he did not select the amount (at [65]). He did not have any foreknowledge that Mr Brailey was going to recommend that he again make an investment in a managed investment scheme. He assumed that Mr Brailey had carefully considered his financial position and had a plan that he was working to with respect to his bests interests. He did not question Mr Brailey on the amount of the investment, or who it was placed with. Mr Brailey's evidence concerning 2001 investment 125Mr Brailey had a different recollection as to how the 2001 investment came to be made. He said that he spoke with Mr Tomasetti in about April 2001 about the tax saving that he achieved from his investment in agribusiness the previous year; told him that he expected there would be another heavy tax liability in respect of the current year; and asked if he wanted to invest "in it" again ([141]). He said that, due to the passage of time and the absence of file notes, he could not recall Mr Tomasetti's response, or any further discussion they had in relation to the 2001 investment. He did claim to recall, however, that Mr Tomasetti instructed him to provide further application forms in order for he and his super fund to invest in the ITC Hardwood Timber Project 2001. 126There had been a proposal to invest in an ITC project in 2000 but it did not proceed. Mr Brailey said that the 2001 project was the same in all material respects and that he had explained it to Mr Tomasetti in their meeting on 17 April 2000. 127In contrast to Mr Tomasetti's recollection that Mr Brailey had the forms with him during a meeting in chambers, and that they were signed and taken away, Mr Brailey's recollection was that he forwarded the forms to Mr Tomasetti on or about 31 May 2001. Mr Brailey's recollection is supported by documents. In the exhibit to his primary affidavit (EB1 at p.813), there is a "with compliments" slip with handwriting that includes: "31 May 2001 To: Peter Tomasetti Please complete attached applications, keep a copy for your records, and forward originals directly to: ITC Project Management & ITC Timberlands Ltd PO Box 3180 Nedlands WA 6009" 128Mr Brailey said that his conversation with Mr Tomasetti about this potential investment must have been prior to 9 May 2001 because within his files there was a telephone message dated that day, indicating that Mr Tomasetti had phoned. The message was: "If you are going over to WA to look at the trees he would like to go with you". 129The ITC project was in Western Australia. This tends to confirm one aspect of Mr Tomasetti's recollection; that is that Mr Brailey had made mention of making a visit to "the projects". 130Also in relation to this investment, Mr Brailey said that although he did not recall all of the conversation with Mr Tomasetti about it, it was his practice to provide a copy of the relevant prospectus to any of his clients who had an interest in any of the forestry projects. Cross-examination of Mr Tomasetti 131When being cross-examined about an unrelated topic, Mr Tomasetti volunteered that he had no knowledge of a joint venture investment until a 2004 investment in almonds (T348.28). He was then asked specifically in relation to the 2001 investment, whether he was aware that it was a joint venture with the TSF. "Q. Are you seriously saying that you were not aware that in addition to you making an investment personally in 2001, the trustee company was making an investment on behalf of the superannuation fund? Are you saying that or not? Yes or no? A. I can't say that, sir. I can't say that I was not aware at the time. But I have no recollection now that I was so aware. That's all I can say. I thought the first time a joint venture was discussed and implemented was in the 2004 year, and I may well be mistaken about that. Q. That's another respect in which your memory is defective? A. I do the best I can, Mr Parker. Q. Because you now know quite clearly that you did in fact sign application forms in 2001 for investments, including as trustee or as the officer of the trustee Tomasetti Investments Pty Limited; correct? A. Yes, I did. I signed forms which I believe were prepared by Mr Brailey which set that arrangement out. Q. You read them when you signed them, didn't you? A. I would have read them - I wouldn't have read them thoroughly, no. Q. You would have read them sufficiently to know what you were committing yourself or the superannuation fund to; that's right, isn't it? A. No." (T349) 132Mr Tomasetti said that he had some recollection of the occasion on which he came to sign the application for this investment (T411). It was that Mr Brailey came to his chambers and said words to the effect, " I want you to enter into another one of the forestry projects " . He conceded, however, that he could not say with "absolute certainty" that Mr Brailey came to his chambers (T412.12). His recollection was that "the documents generally speaking were signed in my meetings with Mr Brailey" (T412.39). He maintained that there was a discussion concerning the previous year's investments (T412.45). 133Mr Tomasetti's attention was taken to the application form, particularly where he had signed on behalf of himself and his superannuation fund as joint venturers. He was asked whether he appreciated that he was entering into this investment in a joint venture and he replied, " No, I didn't know that " (T414.1). He sought to explain that the document had been completed by someone else and it was marked where he should sign with a cross. The crosses are in fact printed on the form, indicating where the signatures should be placed by each of two joint venture applicants and each of two corporate applicants. It is not the case that Mr Tomasetti signed wherever crosses appeared. 134Mr Tomasetti was not prepared to swear that he did not scan the document to see in general terms what it was about before he signed (T415.2). He agreed that if he had scanned the document, he would have appreciated that he was making the declaration (that he had read the prospectus) and that he was entering into a joint venture agreement (T415.7). He asserted that he was not a person who would make a declaration that he did not believe to be true, or make a declaration being reckless as to whether it was true or false (T415.24); but then said that he would do that from time to time (T415.28). 135It was put to him that "reckless" meant making a statement and not knowing whether it is true and not caring, and he replied, " No, I wouldn't make a reckless declaration like that ever " (T415.41). But then he said that on other occasions he would sign a declaration in circumstances where on its face the declaration is not necessarily correct, and gave as an example signing a declaration that he had read a mortgage document. He had done that on many occasions and had never read the mortgage document from cover to cover. He likened that to the present situation. Mr Brailey had presented him with the documents; they were filled in; and he asked Mr Tomasetti to sign where marked. He signed, without reading the documents word for word, relying upon Mr Brailey that it was appropriate. He paid Mr Brailey to read these documents in the way described in his affidavit. He concluded this long answer by saying, " If it's reckless well it's reckless " (T416.10). 136Mr Tomasetti asserted that he did not read the prospectus. He could not swear that he did not flick through it as Mr Brailey was speaking to him, as he had earlier agreed he had sometimes done on other occasions (T416.30). 137Mr Tomasetti maintained: "I did not understand that I had entered into any joint venture with the superannuation fund until the almond lots came around in 2004. That was the first time that I believed that there was going to be a joint venture doing the best I could." (T417.50) 138This suggested to him that he did not read the application form, but he immediately conceded, " It's equally consistent with that, that I've forgotten " (T418.8). He accepted that he had in fact signed the form in two places, including on behalf of Tomasetti Investments Pty Limited, and he would have "undoubtedly appreciated" that he was signing on behalf of himself and on behalf of the company (T418.30). 139Mr Tomasetti was taken to the account he gave in his affidavit (at [62]), particularly where he had said that, in essence, he had signed the form in blank and Mr Brailey filled it out later (T423.47). That was his recollection at the time he swore his affidavit, but he could no longer recall (T424.29). He believed what he had said in the affidavit was "what probably occurred" (T424.45); he "would have had a basis for saying it", but then added, "I just can't recall what it was" (T425.5). Cross-examination of Mr Brailey 140Mr Brailey was cross-examined about the conversation that took place concerning the 2001 investment (T923 ff). He was obviously hampered by having said in his affidavit that he had little recollection of it. He maintained, however, that he did not say, " We are going to do the same thing as we did last year with the forestry. It is all going well " . 141He may have said that he had visited, or was going to visit, the projects. He denied that Mr Tomasetti responded by asking whether the projects were performing as he thought they would, and whether the income was still as he expected. He denied replying, " Yes it is all going very well. They are planting and the forests are going well. It looks really good " . Even though he had little recollection of the conversation, he was sure that was not said because it was only a year after Mr Tomasetti had invested in forestry projects and it was too early to tell (T923 - 924). 142Mr Brailey agreed that Mr Tomasetti asked, " How much are you proposing that I invest this year ?" and he may have replied, " $50,000 " (T924.45). 2002 investments 143There was a single investment made in 2002 and it was in the Gunns Woodlot 2002 project. This was an investment entered into by Mr Tomasetti alone. Documents Prospectus (PCT1 at p.1187 - 1275). The table of contents includes reference to section 13 - "Risks and Safeguards". That section commences at page 34. It includes a discussion of "General risks of forestry plantations" and mentions fire, wind, disease, pests, drought, wood prices and foreign currency movements. It is said that, "As a result there is a risk that the prices obtained for your trees might be less than anticipated". On page 35 under a heading "Assignment of your interest" it is stated that "[t]here is currently no active secondary market for interests in the Project". Application forms (PCT1 at pp.1304 - 1311) Application for 25 woodlots for a total cost of $108,625. Financed with Gunns Finance Pty Ltd for $97,762.50. Signed by Mr Tomasetti and witnessed by Mr Brailey. Dated 26 June 2002. At the foot of the signing page of the Application and Power of Attorney Form there is reference to the prospectus, and it is stated, "[Y]ou should read it in its entirety before deciding to invest". Evidence of Mr Tomasetti concerning 2002 investment 144Mr Tomasetti said (at [68]) that on about 21 June 2002, Mr Brailey came to his chambers with financial statements and tax returns. The following conversation occurred: EB:"This year I want you take an investment in forestry again." PT:"Are you sure about this? We have a number of investments already." EB:"Yes, for all the reasons that I have described last year. This is what you should do. These projects are doing very well and are being supported by the federal Government. I think I have already mentioned that they are building a huge wood chipping export facility in Western Australia so as to cope with the expected production. You get the immediate taxation benefit, this means you are not paying money to Canberra now and the money is going to work for you instead. I began investing in these projects well before you so I am hoping that I will receive proceeds of harvest a few years before you. We will have to pay tax on what you receive but we can worry about that at the time. The company is more than willing to lend you money to complete the investment all you have to find is 10 per cent of the up front cost. The commissions are shared as before." PT:"Are you happy that I can afford to pay for this?" EB:"Yes." 145He said that Mr Brailey presented him with a "thick document relating to a number of forestry woodlot projects". PT:"Ted I don't have the time to read through all this and understand the nature of the project. This is what I am employing you to do for me and we are relying on you. You know that. I have masses of documents to read every day and I just can't take this home and study it and understand it. Just look around my chambers. I am assuming that you are fully familiar with the form of investment and that you know what you are doing. How much are you proposing that I invest this year?" EB:"$100,000." 146Mr Tomasetti did not read the prospectus and pushed it back across the desk to Mr Brailey. He signed the relevant documentation which Mr Brailey took away. 147Mr Tomasetti said that the documentation had been prepared in advance of the meeting and presented to him for signature. The application included a statement of income and expenditure (PCT1 at p.1305). Having perused it, he was satisfied that Mr Brailey appeared to have analysed his financial circumstances. He was of the view that in recommending his entry into this project, Mr Brailey had satisfied himself that Mr Tomasetti was able to meet the commitment as and when it fell due, along with his previous commitments for previous MIS projects. He also took the view that Mr Brailey's opinion was that entry into this project was financially sensible and that it met with Mr Brailey's financial plan for Mr Tomasetti and his family. Evidence of Mr Brailey concerning 2002 investment 148Once again, Mr Brailey's account ([175] ff) of the circumstances leading to the making of the investment in 2002 differed from that of Mr Tomasetti. 149He attended upon Mr Tomasetti in his chambers on 21 June 2002. There was a two hour meeting (EB1 at p.1064 is Mr Brailey's diary entry for the day). The purpose of the meeting was to discuss Mr Tomasetti's potential further investment in forestry and the financial aspects of his practice in that financial year. 150Mr Brailey recounted the following conversation: EB:"It looks like another good year for the practice. And on top of that you have a taxable capital gain from the sale of Lovett Bay. So it looks like you will have a big tax bill for this year. Do you want to invest in more forestry to defer this tax along way [sic] into the future? I have brought with me some forestry prospectuses including one from Gunns which grows a different strain of Eucalyptus in Tasmania. Gunns is a large listed public company with diversified interests but based around the timber industry. I have been to inspect their operations and they are on a par or better than Timbercorp forestry projects. They are very professional and are operating on a very large scale. They have been in the timber industry for over thirty years. I will leave these with you and you can let me know if you are interested but bear in mind that we are only a week from the 30 th of June so you don't have the luxury of taking your time to make the decision." PT:"I'll have a look at these and get back to you as soon as I can." 151Mr Brailey said that he left a copy of the prospectus with Mr Tomasetti. 152Shortly after this meeting, Mr Tomasetti telephoned and said, " I'd like to do about $100,000 with Gunns. When can you come and set that up ?" They arranged to meet on 26 June 2002. 153Mr Brailey said that he met with Mr Tomasetti again on about 26 June 2002. He took Mr Tomasetti through the Gunns prospectus and explained key features to him. Mr Brailey said that he completed the application for finance in the company of Mr Tomasetti and on his instructions. There were various options as to the term of the loan. The option selected was a term of 5 years which required a balloon payment of 20 per cent of the application fee by 30 September 2002. (Given that the Application and Power of Attorney Form was dated the same day, and was witnessed by Mr Brailey, it seems safe to assume that it was completed and signed at the same meeting). 154Mr Brailey said that in deciding to "recommend" the investment in the 2002 Gunns project, he had regard to the fact that Mr Tomasetti's fee income for that financial year was likely to be more than in the two preceding years. He claimed to have been told by Mr Tomasetti earlier that year that he expected a substantial increase in his income from the $800,000 he had earned the previous year. 155Mr Brailey said that the 2002 investment was "primarily directed towards reducing Mr Tomasetti's exposure to tax for the 2002 financial year" (at [183]). He did not think that it was appropriate to advise Mr Tomasetti to diversify his investments into other areas because he understood that minimisation of taxation was his first priority. In any event, Mr Tomasetti did not have sufficient free capital to make a worthwhile investment in other products ([184]). Evidence of Mr Tomasetti in reply 156In his affidavit of 14 July 2010 (at [103] ff), Mr Tomasetti denied Mr Brailey's account of the meeting on 21 June 2002, including that he said that he would look over the prospectuses and get back to Mr Brailey. He denied that he had telephoned Mr Brailey and had the conversation Mr Brailey claimed. Mr Tomasetti was not the one who made the decision as to the amount to be invested. Mr Brailey did not take him through a prospectus at a subsequent meeting. He denied having told Mr Brailey that he expected his income to increase "substantially". The Gunns Woodlot 2002 investment was not "primarily directed towards reducing my exposure to tax" ([113]). Cross-examination of Mr Brailey 157Mr Brailey denied that he said to Mr Tomasetti, " This year I want you to take an investment in forestry again " . Mr Tomasetti may have said, " But we've got a number of investments already " . He denied saying to Mr Tomasetti that the projects were all doing well. It was too early in the life of the projects to say such a thing. He allowed for the possibility that Mr Tomasetti had asked, " Are you happy that I can afford to pay for this ?" because Mr Brailey was satisfied that he could afford it (T927). That was the extent of the cross-examination in terms of Mr Tomasetti's version being put to Mr Brailey. 2003 investments 158Investments were made in two projects by Mr Tomasetti in the 2003 financial year: Timbercorp Early Almond 2003 (in two applications) and Gunns Woodlot 2003. Documents Timbercorp Early Almond 2003 Prospectus (PCT1 at pp. 1423 - 1488) Inside the front cover there is text beneath a "Corporate Directory". The text commences, "This document is important and should be read in its entirety". There is a disclaimer to the effect that no-one associated with the issue of the prospectus guarantees, warrants or underwrites the performance of the project or any particular return. There is mention as well that the venture was subject to the risks generally associated with commercial almond orchard plantations. Page 4 is headed "How Much Will It Cost?". There set out are the initial fees and costs and then "Ongoing fees and costs". It is stated that on 31 October of each year, the grower will be required to pay an annual licence fee, the estimated annual operating costs, and a management fee. The estimated annual operating costs will be adjusted by the amount by which the previous year's estimate differed from the actual costs. Page 5 refers to risks associated with the project being set out in Section 9 of the prospectus. Under the heading "Returns" there is caution expressed about the ability to forecast returns to growers over the life of a 20 year agribusiness project with certainty. The text on this page concludes with a statement that before deciding whether to participate, a person should read the whole of the prospectus. Section 9, commencing on page 28, is headed "Risk Analysis". It commences with a statement that the project "is a long-term commercial horticultural project and like any agricultural venture involves risks". The reader is told to carefully consider the risks detailed below. There follows two pages of text under headings of "Project Specific Risks" (e.g. rainfall, storms, water supply, soil type variations, pestilence, vermin, disease, frost, wind and poor horticultural practices); "Revenue and Financial Risks" (e.g. fluctuation in almond prices, international currencies, yield rates and prevailing market conditions); and "Other Risks" (e.g. changes in the law, consumer demand, changes in technology, local competition and default by growers). Under the latter heading, there is specific mention that the project should be regarded as being for a fixed term of approximately 20 years and that interests issued under the prospectus will be relatively illiquid. Application and Power of Attorney Form (Exhibits 8 and 15) Application for 16 almondlots at a total cost of $97,040, $87,336 of which was to be financed with Timbercorp Finance Pty Limited. Signed by Mr Tomasetti and witnessed by Mr Justin Clynes. Dated 23 May 2003. Underneath the title of the form there is a note: "Please read the back of this form before signing it". The reverse side of the form (read in association with PCT1 at pp. 1484 - 1485) contains a number of declarations including that the applicant has read the prospectus. Section 12 of the form, headed "What completing and signing this form achieves", includes "You ... make the acknowledgments in section 13". Section 13, headed "Important acknowledgements" commences with the statement, "by signing this document you ... acknowledge and confirm the following". There follows a number bullet points which include that the applicant had read and understood the prospectus and that the applicant was aware that an investment in the project is speculative "and any borrowing to fund that investment is therefore subject to risk". Application and Power of Attorney Form (Exhibit 23 at p.562) Application for 20 almondlots at a total cost of $121,300, $120,300 of which was to be financed by Timbercorp Finance Pty Limited. Signed by Mr Tomasetti and witnessed by Ms Cordony. Dated 30 June 2003. This application was by use of the same form as the above. Gunns Woodlot 2003 PDS (EB1 at pp. 1167 - 1242) The Contents page includes that Section 6 is concerned with "Risks and Safeguards". Page 2, under the heading "Corporate Directory" includes statements that the PDS is important and should be read in its entirety and that no-one associated with its issue guarantees, warrants or underwrites the performance of the investment, or any particular return. Section 6, "Risks and Safeguards", sets out risks on page 13, including "General risks of forestry plantations" and "Market risks". There is also a statement under "Assignment of your interest" that "there is currently no active secondary market for interests in the Project". Application and Power of Attorney Form (Exhibit 9) Application for 22 woodlots at a total cost of $96,800, $77,440 of which was to be financed by Gunns Finance Pty Limited. Signed by Mr Tomasetti and witnessed by Mr Clynes. There is a statement on the signing page advising that the applicant should read the PDS in its entirety before deciding to invest. Application for finance (Exhibit 9) Signed by Mr Tomasetti and witnessed by Mr Clynes. Associated direct debit authorities were also signed by Mr Tomasetti and are dated "3/6/05" (sic) and "3/6/03" Mr Tomasetti's evidence concerning the 2003 investments 159Mr Tomasetti gave an account of a meeting in his chambers with Mr Brailey in June 2003 ([72] ff). Mr Brailey brought Mr Tomasetti's tax returns and financial statements and the following conversation occurred: EB:"The current forestry projects are all going really well and as I expected. This year however I have a new product that I think is even better. I want you to do basically the same thing as last year, except this year I also want you to invest in an almond project. Timbercorp are offering Almondlots. This is something new that Timbercorp are doing and have an advantage over forestry investments. I think they are better than forestry as they produce an income stream instead of a lump sum at the end of the project. The income stream begins within the first 3-4 years of the commencement of the project so you don't have to wait until the end of the project to get your return. You buy Almondlots which are planted with seedling almond trees. After time, Timbercorp harvest the almonds each year from the project and sell them and you get the income from the harvest. After about four years the project should break even. I mean that your costs then are covered by your income after that from the proceeds of the sale of the almonds. Thereafter the cash flow is positive and the income should be substantial in relation to your investment." PT:"Well I know nothing about almonds Ted I didn't even know that we grew them here. This is all very foreign to me." EB:"There is in fact a worldwide shortage of almonds. I am advising our other clients to invest in these projects. I am also investing in them." PT:"How does the cash flow get positive again?" EB:"As the trees mature the production increases so proceeds of sale will break even and then go on to exceed costs. This is the way to go. As I say, I am even buying them too. I have the prospectuses here for you." PT:"You know I rely on you Ted to read these documents for me. This is what I'm expecting that you have done already and that you have fully researched this. I assume you would not be recommending this to me unless you were fully familiar with the projects." EB:"The beauty of these almond projects is that they produce income Peter. After the first few years they are cash-flow positive. You get an income which should increase as the years to by. Timbercorp have plans to be the biggest almond producers in the southern hemisphere and second only to California. You'll have to pay tax on the income but we don't have to worry about that now." PT:"Well Ted if you are sure about this. I have no experience in these types of projects. Sassi and I are relying on you very heavily. If you think they are the right thing to do and if you think that I can afford them then I am prepared to go with your recommendation." EB:"Peter I can only repeat what I've said before. These agricultural investments we think are good investments but I think these almond projects are in fact even better than forestry. The trouble with forestry is you have to wait so long for a return. This project produces a return very quickly. The investment is fully tax-deductible, you will have to pay income tax on any return but we can address that in that year, we will again be sharing all our commission with you and that the company is more than willing to fund a 90 per cent of the investment." 160Mr Tomasetti said that he signed applications in the prospectus and possibly the loan documentation which had been prepared by Mr Brailey. It was possible, however, that he signed the loan documentation some weeks later. Mr Brailey took the signed applications and the prospectus documents away with him. Mr Tomasetti said that he did not read the prospectus for either investment. 161Mr Tomasetti said (at [74]) in relation to the almonds investment that his understanding, based upon what Mr Brailey had told him, was that there would be costs of planting and maintaining the almond trees and there would be no income in the first two years. Thereafter, the trees would begin to produce nuts which would be sold and the income distributed to him. The amount produced would increase such that after about four years the income would exceed the annual maintenance costs. 162Mr Tomasetti assumed that Mr Brailey had carefully reviewed his financial affairs ([75]). He further assumed that Mr Brailey had carefully developed in his own mind a financial plan and had decided on the suitability of the investments and that they were consistent with Mr Tomasetti's financial goals. He assumed that Mr Brailey was aware of all of the costs that Mr Tomasetti would incur and was satisfied that they were affordable. He expected that if Mr Brailey was unsure about any of these matters, he would have told Mr Tomasetti and warned him ([76]). 163Mr Tomasetti said that Mr Brailey did not explain that there would be an initial capital contribution required and thereafter further contributions for the project over many years. Mr Tomasetti understood that he was making a one-off payment for the capital costs of the almond lots. There had been no mention of further stages in the project which would require him to make further contributions. Further, Mr Brailey did not explain that the almond trees would need to be irrigated and that there would be an additional cost that Mr Tomasetti would have to meet for this. He said that the cost of watering the trees was to later reach $80,000 in a single year. ([77]). 164Mr Brailey also said during this meeting: EB:"I also want you to continue with forestry and this year I have selected Gunns again." 165Mr Tomasetti said that he understood that he would be acquiring an interest in specific allotments to grow trees managed by Gunns in Tasmania; that the trees would be harvested in about 10 years time; and that he would receive a lump sum payment at the end of the project. He assumed that the terms of this project were much the same as the project in the previous year. 166Mr Tomasetti said that during this meeting there was also a conversation about putting some money into superannuation. He told Mr Brailey that he did not have enough money left over to contribute to superannuation ([78]). 167Concluding on this topic in his affidavit, Mr Tomasetti said (at [79]): "In the course of the meeting with Mr Brailey I said words to the following effect: 'Ted, you know that we are totally reliant on you in these matters. I hope you never retire whilst I am still working because I don't know how I am going to get other people to understand all of this.' He said: 'Don't worry about that. I have no intention of retiring and I am here to look after you.' As we parted at the end of the meeting I said to him: "Ted, Sassi and I have our total trust in you." Mr Brailey's evidence concerning the 2003 investments 168In contrast to Mr Tomasetti's evidence as to the 2003 investments being discussed and forms being signed in a single meeting in June 2003, Mr Brailey gave the following account of how it was that they came to have been made ([207] ff). 169Either on or before 9 May 2003, there was a meeting in Mr Brailey's office in Gladesville. Mr Brailey's handwritten notes of this meeting are in the exhibit to his affidavit (EB1 at p.1166). There was a discussion concerning the amount of tax that was payable for the 2002 financial year (approximately $200,000) and Mr Tomasetti's outstanding tax liability for the 2001 year (approximately $50,000). They discussed strategies to address the current and potential 2003 tax liability as well as Mr Tomasetti's financial affairs generally. Mr Brailey told him that he would have a further tax liability for 2003 unless he did something to reduce his taxable income significantly. 170A discussion ensued about almond projects. Mr Brailey told him that they entailed income being received after the third harvest. He said there were costs every year. The initial costs and those in the first two years were fixed according to the PDS. He opened a copy of the PDS and continued with an explanation of the management and licence fees of $6,065 per lot being payable upon application. Thereafter $2,735 per lot was payable in the following two Octobers. In the years after that, the operating costs were adjusted to reflect the actual operating costs. According to the PDS, by the fifth harvest the revenue should equal the costs, and after the eighth harvest the outgoings up to that point should have been recouped. Mr Brailey mentioned that it was a 20 year project and that Mr Tomasetti should be generating a cashflow from the ninth to the twentieth harvest. 171Mr Brailey indicated that he was impressed with the project and that he intended to invest himself. 172Mr Brailey mentioned the tax ruling which he said would ensure that a tax deduction would be available for the full amount invested. He added: "You can still do the Gunns as well but bear in mind that the only ongoing costs with that are the loan repayments and insurance". 173Mr Tomasetti replied, "This sounds very good. I will have a look at it and let you know ". 174Mr Brailey could not recall other details of the discussion because of the passage of time. He confirmed, however, his "usual practice" of providing to a client the relevant prospectus and ensuring that the client retained a copy in order that it could be reviewed later at the client's leisure. When providing Mr Tomasetti with the Timbercorp prospectus, he also provided him with a cashflow projection from Timbercorp (EB1 at pp. 1154-1155) and research from Lonsec Agribusiness Research Group relating to the 2001 Timbercorp Almond Project, as well as that relating to the 2003 project. At around this time, he also provided Mr Tomasetti with other research from this organisation. 175Other aspects of Mr Tomasetti's financial affairs were discussed at this meeting ([217], [219]). Mr Tomasetti asked for advice as to how much he currently owed the ATO. Mr Brailey subsequently responded and told him that it would be $334,000 as at 30 June 2003. 176Mr Brailey made the same claim in relation to the 2003 investments as he had made in respect of the 2002 investment. He had regard to Mr Tomasetti's fee income being significantly more than in preceding years; the projects were primarily directed to reducing his tax exposure; and that diversification into other areas was not viable as Mr Tomasetti did not have sufficient free capital to make a worthwhile investment in other products ([226] - [228]). 177There was a further meeting with Mr Tomasetti, together with Mr Cordony, in chambers on 15 May 2003 ([229] - [231]). Mr Brailey's notes of this meeting are part of the exhibit to his affidavit (EB1 at p.1293). They indicate that a range of topics were discussed. The meeting included the following: PT:"I am concerned about the amount of income tax that I am paying and I note the contribution that the forestry investments have made to reduce that tax. I like the idea of the Almond investment, because the revenue from the investment starts a lot earlier than it does with forestry. In addition you get income every year after you first start getting income following the third year. I also like the idea of Gunns because there is very little ongoing expense and you are impressed with the management of their forestry assets." EB:"Yes, that's how it works in accordance with the prospectus. It's a very impressive project and on a very large scale" [He then went on to relate some aspects he had observed on recent inspection] PT:"Look Ted, I want to invest in tax effective investments to defer tax on my income and to get GST credits which I can use to offset the GST I collect in my fees. But I will only be able to do this based on taking Timbercorp's and Gunns' offer of long term finance, even though the interest rate is expensive. Hopefully I will have enough cash available to make the maximum superannuation contributions available". EB:"You have sufficient cash flow to fund these investments with borrowed funds but you must manage your cash flow and consumption expenditure in order to get the benefit of these investments. We also have to bear in mind that superannuation surcharge may be payable on those contributions. Also Peter as I have told you before, our policy at BFL in relation to commissions is to rebate 50% of the upfront commission paid to us." 178Mr Brailey's notes include, "keep a tight control on discretionary spending". He said that this referred to the following conversation: EB:"Peter, I have been concerned about your discretionary spending. Although this is perhaps in proportion to your income the amount you are spending is on any view very high. I think you need to keep it tightly under control. You have a major problem paying tax assessments. You've now taken on a debt to keep your future taxes down. So in the future you should be okay as long as your income is maintained but to be sure about it and if you are to afford the initial expense of these agribusiness projects you need to control this discretionary expenditure." 179Another matter discussed at this meeting was Ms Cordony's superannuation ([231]). She said that she had about $40,000 with AMP but was not impressed with the performance of the fund. Mr Brailey said she might transfer it into the TSF. She said she would give it some thought. Mr Tomasetti's evidence in reply 180In his affidavit of 14 July 2010 ([125] ff), Mr Tomasetti disputed a number of aspects of Mr Brailey's account. He did not recall any meeting taking place on 9 May 2003. He denied receiving any documentation to be reviewed later at his leisure. He said that Mr Brailey had not expressed the reasons underlying his recommendation of the two investments in 2003. He denied the conversation that Mr Brailey asserted took place at a meeting on 15 May 2003. He did not dispute that Mr Brailey had told him to keep discretionary spending tightly under control, but he denied that he had said, " You have a major problem paying tax assessments " , or that he had said that Mr Tomasetti had taken on debt to " keep future taxes down " . In relation to the subject of discretionary spending, Mr Tomasetti said that he asked Mr Brailey to provide him with a breakdown of it so he could analyse it. Although Mr Brailey undertook to do so, he never did. In relation to an asserted conversation concerning Ms Cordony's superannuation, Mr Tomasetti's recollection was that it was Mr Brailey who raised the subject, saying that he would like her to close her account with AMP and transfer the funds into the TSF. Cross-examination of Mr Tomasetti 181Mr Tomasetti gave evidence of difficulties that he and Ms Cordony were experiencing keeping up with various demands on their financial resources. He said that as at mid-2002, " I believe we had some problems, but we were managing " (T353.46). He went on to say that it was manageable, with effort, some accommodation and some stress (T353.50). It " wasn't too bad at that stage " and he thought that he was acquiring something and was prepared to do it (T354.8). He did not, however, want to increase the stress any further (T354.12). 182Mr Tomasetti committed to investments of over $300,000 at the end of the 2003 financial year. He was asked about why he made that commitment in light of the above concerns: "Q. And of course the existing projects that you had were a source of continuing liability which was going to continue whether or not you entered into new projects? A. That's right. Q. Why enter into new projects and increase the stress? A. Because the person giving me the financial planning advice was telling me this is what I should do. That's the only reason I did it. Q. We know that when he did that in '04 you said no more? A. That's right. Q. If you were really under all this stress why didn't you say that earlier? A. Because I wasn't under as much stress in '03 as '04. Q. You're the client, you didn't have to get on this tread mill? A. You're absolutely right about that. Q. Why did you? A. Because he advised me to and I accepted his advice. Q. You didn't have to accept his advice? A. No, I didn't." (T355) 183Mr Tomasetti explained that he had complete trust and confidence in Mr Brailey at that time (T355.49). 184Mr Tomasetti was asked about the meeting that Mr Brailey had said occurred on 15 May 2003 (T356 ff). He agreed, or did not dispute, that most of the items that Mr Brailey said had been discussed had been the subject of conversation at least at some point in time. He agreed that Mr Brailey had spoken of Mr Tomasetti investing in agricultural schemes because they would provide an offset for GST and income tax (T359). Mr Tomasetti was aware at this time of there being an ongoing obligation to pay costs in relation to the forestry schemes and he was aware of a requirement to pay maintenance costs in relation to almond projects for the life of the scheme (T361). He added in relation to the latter, " I wasn't aware of their quantum " . (I note in that respect that the promoter did not warrant that the costs could be known in advance (see the note above concerning page 4 of the Timbercorp Early Almond 2003 prospect)). 185Mr Tomasetti acknowledged that despite the advantage of the almond project offering an income stream, there was an element of risk (T362.26). He agreed that entering into further agricultural schemes as well as taking on more borrowing in relation to his interest in his former wife's home was a " recipe for further debt being taken on ... and further expenditure in later years " (T362.40). He added that Mr Brailey had also said that there were tax deductions available which were advantageous (T362.42). The latter, however, was " not important " (T362.50). " The tax incentive was not [his] incentive for going into these arrangements " (T363.27). 186Mr Tomasetti was taken to the application for the Timbercorp Early Almond 2003 investment (Exhibit 8). He said that at the time he swore his affidavit (17 November 2009), his recollection was that he had signed this form on the occasion when he had the discussion with Mr Brailey about almondlots (T430.40). At the time of giving his evidence (12 November 2010) he did not recall. 187In his primary affidavit, Mr Tomasetti said that he had signed the applications in the prospectus and that Mr Brailey had taken them and the prospectus documents away with him. When pressed for his actual recollection of this aspect of the meeting, he said: "Doing the best I can, I recollect that Mr Brailey had documentation with him, with respect to these projects and that we completed them and he took them away" (T432.26). 188However, when asked whether Mr Brailey left the prospectus with him, he could not remember (T432.39). 189Mr Tomasetti could not recall anything other than one application for an investment in almondlots in that year (T434.23). (There were, of course, two applications). 190Mr Tomasetti was asked whether he had invested in any other project, apart from almonds, in 2003. He said, " I think I did " . When asked if he could recall what it was, he said, " I think, if it wasn't almonds, it was forestry " (T433.22). He could not recall who the promoter was; he believed that he had a conversation with Mr Brailey about forestry investment in that year but he could not recall what it was; and he could not recall anything about the forestry investment at all in that year (T433.39). At the time of swearing his primary affidavit, however, he gave an account of a conversation with Mr Brailey about investing in a Gunns forestry project (see above). 191Mr Parker showed Mr Tomasetti the application papers in relation to the Gunns Woodlot 2003 investment (Exhibit 9). He agreed that he had signed it and that it was dated 3 June 2003 (T435). However, he had no recollection of signing it (T436.2). When asked if he could recall anything about conversations which might have led to the making of this investment, he said that he recalled Mr Brailey having said, " This year I want you to invest as well in almond lots " or words to that effect (T436.12). He was taken to his affidavit where a similar statement is recorded ([72] on p.46). His attention was invited to paragraph 77 where he had attributed to Mr Brailey, " I also want you to continue with forestry and this year I have selected Gunns again " . He said that there were other discussions, but the substance and effect of the material discussion was what he had put in the affidavit (T437.1). 192It is to be recalled that Mr Tomasetti's account in his affidavit was that there was a discussion in his chambers in June 2003 when forestry and almond projects were discussed. Forms were signed and Mr Brailey took them away. Mr Tomasetti was shown the various application forms. He agreed that there was an application signed by him and witnessed by Mr Clynes dated 23 May 2003 in respect of almonds (16 almondlots - Exhibit 8); an application signed by him and witnessed by Mr Clynes dated 3 June 2003 (Gunns Woodlot - Exhibit 9); and another application signed by him and witnessed by Ms Cordony dated 30 June 2003 (for 20 almondlots - Exhibit 10). Mr Tomasetti maintained that what he had said in his affidavit reflected what he believed to be correct at that time. He denied that he had "reconstructed" everything as a single conversation and single occasion on which he had signed application forms (T440.20). 193Mention has been made above to the projections that there would be costs only in respect of the almond project in the initial years, then a period in which the costs would be partly defrayed by income, followed by a period in which income exceeded costs. Mr Tomasetti agreed that he was aware that these were not projections that Mr Brailey had prepared himself (T441.48). He understood that the source of the projections was Timbercorp (T442.50) and accepted that they were "quite possibly" in the prospectus (T442.3). However, he claimed that he did not understand that Mr Brailey was simply passing them on: " I thought he'd studied it, considered it and was giving me advice in relation to it " (T442.43). He also claimed to have asked Mr Brailey whether he had " thoroughly researched the product " (T443.4). 194As to the quantum of the maintenance costs, Mr Tomasetti said: "My understanding was that the significant cost for me as a grower would be the amount of money that Mr Brailey mentioned and that maintenance costs would be trivial" (T444.49). 195He agreed that he understood he was going to have to pay the maintenance costs, "whatever they were", but thought that they were trivial (T445.10). He was asked how he came to the belief that they would be trivial. He said it was from the answer that Mr Brailey gave him when he asked Mr Brailey how much he was intending that he invest. Mr Parker sought clarification of that and Mr Tomasetti gave some rather perplexing evidence. It is necessary to set it out at length in order to appreciate the context. "Q. That was a question of how much you were investing that particular financial year, wasn't it? A. No, it was not. It was a question. I said to him "How much are you planning that I invest". Q. Over 20 years? A. That's the question that I asked. Q. You actually remember the precise terms of the question? A. Yes, I do. I do remember. May I start that answer again. I can remember the substance and effect of the question because I remember with absolute certainty the answer and the question was a simple one, but I can't say whether it was exactly this word or that word Mr Parker, but I said to him in 2003 "How much are you planning that I invest" and he gave me an answer and he said the same in 2004. Q. What was the figure? A. The answer that he gave me in relation to 2003 doing the best I can was the amount of the contract and I'm not entirely sure of that, but in 2004 he said $400,000. Q. Let's just concentrate on 2003 for the moment. The figure he gave you in answer to that question was the figure that you were paying in the 2003 year, wasn't it? A. It was the figure that I committed to in the 2003-year, yes. Q. No, it was the figure that you were paying in the 2003 year in connection with the initial application, that's right isn't it? A. As it turned out, yes. Q. He never gave you any figure for what the almond lots that you were buying were likely to cost you in terms of ongoing management costs in the later years in 2003, did he? A. I believe he did. Q. What was that figure then? A. It was - the answer was derived from the figure he said I was going to be investing. I didn't say to him as I've told you Mr Parker "How much am I investing this year and how much is maintenance going to cost in subsequent years". I did not ask that question. I said "How much are you planning that I invest" and he gave me a figure and that led me to the view that that was the figure and in subsequent years I remained at the same understanding. Q. Forget the subsequent years for the moment. You say he gave you a figure but I thought you agreed with me that that figure was the same figure that you were actually getting a tax deduction for in the '03 financial year? A. Well, tax deduction or otherwise I asked him a figure and he gave me the figure and I think the figure was $160,000 or $190,000. I just can't be absolutely sure as I sit here at this moment. I've given the figure in my affidavit and I stand by that figure, but that's the figure that he gave me and that's what I deduced would be my investment. Q. For the whole of the 20 years life of the project? A. Yes, that would be my substantial investment for the whole of the life of the project. Q. Mr Tomasetti, you know the way these schemes work is one pays an initial fee or amount for which one claims a tax deduction in the first year and therefore one pays management costs for as long as the project lasts which are deductible hopefully in consequent years. That's the way it works, isn't it? A. I know that now. Q. And you knew that then, that is before you made the commitment in 2003? A. I knew that there would be management costs. I understood the management costs would be trivial and nothing Mr Brailey said alerted me led me otherwise so I maintained that belief sir until 2009, 2008/2009. Q. He may or may not have done that but what I'm seeking to get your agreement to was the proposition Mr Brailey never whether by calculation or otherwise gave you a figure for the future years management costs for these projects in the years in which you first entered into them? A. I've already agreed with that. There's no issue. I agree . Q. If you've already agreed with that then you can't possibly say, can you, that you had any expectation from Mr Brailey that the costs for the future would be trivial because if you'd agreed with that you've agreed with the proposition that he didn't tell you what the costs would be, he didn't attempt to forecast them that's right isn't it? A. No, I've given you the answer to that question. I've told you what he said. I've told you what my belief as a result of what he said was and I can't add any further to it. Q. We're going round in circles? A. No, we're not. Q. Can I just be completely clear about this. Did he or did he not, before you made a commitment in '03 to purchase these almond lots, give you any estimate of what your likely future running costs or management costs for those lots would be, that is in the years after the '03 financial year? A. What he said is what he said. I told you what he said. Q. Would you mind just answering my question. Did he or did he not give you know [sic] such forecast in '03? A. My answer is yes. Q. How much was the forecast? A. My answer is he said what he said sir. I've told you what my belief was. Q. Humour me and just tell me-- A. I have no intention of humouring you. HIS HONOUR Q. Mr Tomasetti, out of fairness to you I'm having difficulty understanding the logic of what you're saying? A. Yes. Q. If I understand you correctly you've said that Mr Brailey did not say a single word about ongoing maintenance costs when you spoke to him about these almond schemes in 2003? A. Yes. Q. You've also said you were given to understand that the ongoing maintenance costs were not fixed but whatever they were they were trivial. I don't understand from what it was that you gained that impression as to the nature of the ongoing maintenance costs? A. All I can say is what he said me and I can tell your Honour what I believe from that. What I said to Mr Brailey is "How much are you planning that I invest in these schemes" and in both those years he gave me a figure. He did not say "Well look I'm planning that you invest this year but you realise with this particular project unlike previous projects you're going to have to continue in subsequent years to make additional contributions and they will be substantial" and that's what I'm trying to convey. Q. Do I understand you then to be saying that whilst you were aware that there were ongoing maintenance costs the fact that Mr Brailey did not mention what they would be led you to believe that they wouldn't be anything significant, in other words they would be trivial? A. That's right. He never made any specific mention of maintenance costs and therefore that's the view that I formed yes, your Honour exactly . PARKER Q. I'm sorry Mr Tomasetti but he did mention the maintenance costs because you understood that this was a project which would take time to become a cash flow positive didn't you? A. Yes, I did understand that. Q. And the reason why it would take time to go cash flow positive was because one started off with expenses one would incur in managing the trees whether or not they were producing any almonds? Q. The reason they were to become cash flow positive was because I had to invest a sum of money in the beginning of the project and I then had to pay off that commitment and my outgoings in paying off that commitment would take time and as I paid off those commitments there would start to be income coming from the trees as they grow and as nuts were harvested. So that's the sense that I understood it and if you go to the spread sheets that he sent me on 4 November 2005 you'll see what I mean by that. Q. Let me just put this to you. I suggest to you that contrary to what you've just said Mr Brailey said to you that there would be costs and it would take time for those costs to be covered by the income which would not be generated for several years? A. Well, he certainly - I certainly understood that I would be up for some maintenance costs. I did not understand that they would be significant. I understood they would be taken into account in the statement about when the projects would become productive and then produce a positive income that included the capital amount that I was paying and the cost for maintenance. I agree but my belief was, and I can say no more than what my belief was, that the maintenance costs would not be significant. Q. Now, contrary to what you said to his Honour a little while ago, the fact is that Mr Brailey did tell you that there would be costs in the future years; that's right, isn't it? A. It was - yes, he must have said that, because I understood that there would be maintenance costs, but I didn't understand that they'd be significant. Q. So you do agree with me, don't you, that is not what you said to his Honour a little while ago? A. No, I don't agree with that. Q. Well, the transcript will tell us. But, for clarity, you do accept now, don't you, that Mr Brailey told you that there would be costs? A. Yes, I understood there would be costs. Q. Did you ask him how much? And, please, only answer from recollection? A. I don't believe I did, no." (T445 - 449) (Emphasis added) 196Mr Tomasetti said in his affidavit that he understood there would be no income from almonds for the first two years; then some income which would not exceed the annual maintenance costs for about two years; then "after about four years the income produced would exceed the annual maintenance costs" (at [74]). Earlier in the cross-examination, he agreed that he knew when he invested in 2001 that he was signing up for obligations which would continue into the future until the trees were harvested, or, in the case of the almonds, until the almonds produced enough to defray the costs (T335). He also agreed that he was aware by the second half of 2002 that the ongoing expenses for some of the projects were at least a significant burden (T336.35). If that was his understanding, it is rather difficult to reconcile with his claim in the above passage of evidence that he thought that the maintenance costs would be "trivial". 197Mr Tomasetti agreed that there was a potential for climatic events and other natural phenomena to affect the income that he would ultimate receive from the almond project (T444.45). He acknowledged that the timing of when the investment became profitable depended upon at least some factors over which he had no control. He appreciated that the weather could not be predicted. Neither could the price of almonds in 20 years (T450.40). He accepted that to that extent, the grower was at risk (T450.45). For this reason, the returns could have been higher than projected, or lower, but not nothing at all (T451.5). It was acknowledged that Mr Brailey did not give any "ironclad guarantee" as to returns, but he did give a guarantee by saying that the investments were prudent, sensible and appropriate for Mr Tomasetti and his family: " That's what he said " (T451.30). 198Mr Tomasetti accepted that the total amount invested in 2003 was in the order of $300,000 (T459.10). However, he said that when he made the decisions to go ahead with these investments, he did not recognise that if he did not make them, he would be paying an additional $150,000 in tax (T459.18). Despite that answer, he came to the point of agreeing with the proposition (T459.37). This tax benefit, however, seemed to be of little significance: "Q. What part did that play in your decision to invest in these projects? A. It played a part, but not a major part. Q. Is that a serious answer? A. It is an absolute serious answer, your Honour, on my oath, as a barrister of 32 years." (T460.8) 199Later in the cross-examination, Mr Tomasetti was taken to some bills that he had been sent in October 2003 in respect of the Timbercorp Early Almond 2003 investment. They were both dated 1 October 2003 and payable by 31 October 2003. One of them (PCT1 at p.1905) related to the 16 almondlot investment and was for $43,760 ($13,840 licence fee and $29,920 management fee). The other (PCT1 at p.1906) related to the 20 almondlot investment and was for $54,700 ($17,300 licence fee and $37,400 management fee). First, it was pointed out to Mr Tomasetti that he had made two separate investments in the 2003 financial year: " I wouldn't know sir " (T502.48). Next it was put that when these bills were received, Mr Tomasetti would have realised, if he had not already, that there were substantial ongoing costs associated with the almond investments. He responded by doubting that he had ever seen these bills, although he did not go so far as to deny having seen them (T503.5). He maintained, however, that he did not become aware that there were substantial ongoing costs until after June 2004 (T503.19). 200Mr Tomasetti applied to Timbercorp for finance to meet a substantial proportion ($54,249.05) of the second of these two bills (the loan application is Exhibit 13). The choice to borrow, rather than paying cash, was a result of following Mr Brailey's instructions (T504.37). He did not, however, recall Mr Brailey coming to see him about these bills (T504.49). He did not read the loan application; he did not recall signing it; he did not recall any of the circumstances surrounding his signing it (T505.17). He was able to say, however, that he did not read it: " Because I never read these documents " (T505.20). 201The significance of this is that the document contains "Important Acknowledgements". One is that the applicant had read and understood the prospectus. Another is that the applicant was aware that any investment was speculative and that any borrowing to fund that investment is therefore subject to risk. Mr Tomasetti did not read these acknowledgements (T507.25). 202Mr Tomasetti said that it was Mr Brailey's job to read these types of application forms and to tell him if there was anything important in them (T505.30). In relation to application forms generally, Mr Tomasetti's attitude seems to have been encapsulated in the following evidence: "Q. Can you now tell us if it is your evidence that you did in fact ask Mr Brailey to read one or more application forms for you when you did that? A. Yes. I didn't say to him Mr Parker "Ted read this application form". What I said to him I've deposed to in my affidavit in substance and effect and that was "I'm not going to read these documents Ted, I'm paying you to do it" and I pushed it back to him. I didn't say "prospectus finance application, application, covering letter". I said "I know nothing about these things" and I pushed them back at him. I said "I expect you to do this for me, that's why I am paying you" and I said that to him throughout our relationships with respect to these projects and there weren't that many of those meetings. There was only meetings from 2000 to 2004 with respect to these new projects. I remember each of those occasions Mr Parker, some better than others I confess, but that's what I did and that's what I did expressly and I did it deliberately and he knew why - sorry I withdraw that. I won't speculate about what he knew." (T506.13). 203In relation to this particular application form (Exhibit 13), Mr Tomasetti said that whilst he did not recall discussing it with Mr Brailey, he signed it with the belief that Mr Brailey had examined his financial resources and was satisfied that it was a prudent, sensible and reasonable course to take (T512.10). 204I note in relation to this form that it appears to have accompanied the invoice from Timbercorp (PCT1 at p.1906). The invoice is addressed to Mr Tomasetti at his chambers. There is a statement at the foot of the invoice: "You are entitled to borrow a portion of the total amount owing as set out in the attached loan document". The loan application has the detail (in terms of the number of almondlots and various dollar amounts) pre-printed. Mr Tomasetti's name and contact details are also pre-printed. Information that only he and Mr Brailey would be aware of in a "statement of financial position" has not been completed at all. The signing page has been completed by Ms Cordony and Mr Tomasetti's signature was witnessed by her. These features show no sign of the document having been through Mr Brailey's office and there is no evidence that Mr Tomasetti was aware that Mr Brailey had seen it. 205Ms Cordony's evidence supported the latter proposition. The effect of it was that the decision to borrow money to pay the bills that came in from Timbercorp in October 2003 was one made without recourse to Mr Brailey (T612.45; 613.5). Further, she spoke of a practice of submitting documents such as loan applications to Mr Tomasetti for him to sign. She could not recall whether they had a discussion about the nature of the documents. Sometimes she would not provide him with any explanation of them. She could not recall a discussion on this particular occasion. (T614). 206I note that Mr Tomasetti also sought and received finance from Timbercorp Finance in relation to the October 2003 invoice concerning the 16 almondlot investment. He paid $4,376 and financed the balance of $39,484. The application form (Exhibit 24 at pp. 5 - 12) was in the same form, and contained the same acknowledgements, as that which concerned the 20 almondlot investment. Cross-examination of Mr Brailey 207Mr Brailey agreed with some but not all of the parts of Mr Tomasetti's version of the conversation concerning the 2003 investments that were put to him. He denied that he had said, " I want you to do basically the same thing as last year, except this year I also want you to invest in an almond project " (T974.50). In speaking of the almond project, he doubted that he said, " This is the way to go " (T975.39). He denied that Mr Tomasetti said, " You know I rely on you Ted to read these documents for me. This is what I'm expecting that you have done already and that you have fully researched this " (T975.43). Similarly, he denied that Mr Tomasetti said, " Ted, you know that we are totally reliant on you in these matters " (T976.50) and " Ted, Sassi and I have our total trust in you " (T977.12). 2004 investments 208Two investments were made in the 2004 financial year. Mr Tomasetti invested in the Timbercorp Almond - Post June 2003 project and he and the TSF made a joint venture investment in the Timbercorp Early Almond 2004 project. As they were made at distinctly different times (October 2003 and June 2004), they will be dealt with individually. Timbercorp Almond - Post June 2003 Documents Prospectus (PCT1 at pp. 1423 - 1488) See notes above. Timbercorp Almond - Post June 2003 Letter from BFL Financial Planning (signed by Mr Clynes) to Mr Tomasetti, 21 October 2003 (Exhibit 14) Refers to "enclosed prospectus, application form and loan application form for the investment in an additional 16 lots (or $97,040) of the Timbercorp 2003 Almond Project". Advises Mr Tomasetti to check that the details are correct, sign where indicated and return the application forms to BFL Financial Planning. Application form (Exhibit 24 at p.142A) Application for 16 almondlots at a total cost of $97,040, $96,290 of which was to be financed with Timbercorp Finance Pty Limited. Signed by Mr Tomasetti and witnessed by Mr Clynes. Dated 23 October 2003. Loan application forms (Exhibit 15) Application for loan of $96,290 signed by Mr Tomasetti and witnessed by Mr Clynes, dated 23 October 2003. Section 12 of the form ("What completing and signing this form achieves") includes, "You ... make the acknowledgments in section 13". Section 13 of the form ("Important acknowledgements") includes that the applicant acknowledges having read and understood the prospectus and also that the applicant is aware that investment in the project is speculative and any borrowing to fund it is therefore subject to risk. Mr Tomasetti's evidence concerning the Timbercorp Almond - Post June 2003 project 209It is difficult to separate Mr Tomasetti's evidence concerning his entering into this investment from his evidence which concerned payments which were made for rent and management fees for the earlier almond project, as both occurred in October 2003 and he does not appear to have made any differentiation. 210Mr Tomasetti said (at [80] ff) that in about October 2003, Ms Cordony spoke to him about having "large accounts to pay for Timbercorp". She told him they concerned "tens of thousands of dollars" and there was no money to pay for them. He told her to ring Mr Brailey. 211In essence, this evidence is consistent with that of Ms Cordony ([14]). She later told him that she had spoken to Mr Brailey who had said he was going to speak to Timbercorp and arrange finance. (I note that evidence of these conversations was the subject of a s.136 Evidence Act 1995 limitation that it did not go to the truth of the facts asserted). A short time later, Ms Cordony gave Mr Tomasetti a bundle of documents which were tagged for his signature. He asked what they were and she told him that they were the Timbercorp loan documents that she had spoken to Mr Brailey about. She added, " You have to sign where indicated " . Mr Tomasetti signed them and gave them back to Ms Cordony without reading them. I interpolate the comment that, if taken literally, it is extraordinary that anyone with even a modest level of intelligence would sign loan documents without bothering to read how much they were applying to borrow. 212Mr Tomasetti referred (at [85]) to his first conversation with Mr Brailey about investing in an almond project. He said that Mr Brailey did not describe or differentiate between "Early Almond Projects" and "Post June Almond Projects". It was only after he examined in 2009 the tax invoices received from Timbercorp after 30 June 2003 that he realised that he had committed to 36 almondlots in June 2003 and a further 16 almondlots in October 2003. He said, "I do not recall signing any documents in respect of the 2003 Almond Project - Post June and I cannot explain how it was that I became registered on 31 October 2003 for a further 16 Almond lots at an initial cost of $97,040 " . It was only in 2009 that he became aware of the true dimension of the costs associated with the 2003 almond projects ([86]). He was not previously aware that all monies paid in respect of them were unsecured and that regardless of whether any income was received from the sale of almonds, he was committed to making annual payments to Timbercorp until he was aged 67 ([88]). Mr Brailey's evidence concerning the Timbercorp Almond - Post June 2003 project 213Mr Brailey did not have much of a recollection of the circumstances in which Mr Tomasetti entered into this investment either. In his primary affidavit, he simply referred (at [265]) to the letter dated 21 October 2003 sent by Mr Clynes to Mr Tomasetti which enclosed the prospectus, application form and loan application form. He also mentioned that he did not have much contact with Mr Tomasetti in October 2003. Mr Clynes' evidence concerning the Timbercorp Almond - Post June 2003 project 214In his affidavit of 25 August 2010, Mr Clynes referred to the letter of 21 October 2003 (Exhibit 14). He said that his recollection was that the additional 16 lots in this project were purchased by Mr Tomasetti as a result of BFL Financial Planning being informed by Ms Sherin Ibrahim of Timbercorp that there were additional lots available. Mr Brailey had said to him words to the effect, "Sherin has told me there are further lots available in the 2003 Almond Project. Can you fill out an application form for Mr Tomasetti and send it to him for his signature". Mr Clynes said that he complied with Mr Brailey's request. Cross-examination of Mr Tomasetti 215Mr Tomasetti was shown the letter from Mr Clynes (Exhibit 14) but said he had no recollection of receiving it (T513). Even though it was addressed to himself, he would not necessarily have read it. He did not recall any conversation that led to the letter and its enclosures being sent. He did not recall receiving the prospectus but could not deny that he did. He positively denied having any discussion with Mr Brailey about this investment. 216Mr Clynes is the witness to Mr Tomasetti's signature on the loan application (Exhibit 15). Mr Tomasetti had no recollection of meeting him prior to 2010 (T516.28). He allowed for the possibility that he may have had some dealings with him (T516.35). 217Mr Tomasetti maintained that he had no recollection of any events surrounding a decision to buy further almonds in September or October 2003, but that if such a decision had been made, he "would definitely remember it" (T518.9). He agreed, however, that he was not obliged to sign the documents simply because Mr Clynes had sent them to him (T518.29). 218Mr Tomasetti denied that he was aware in October 2003 that the almond projects were a significant source of obligation, not only in relation to finance, but also in relation to management expenses and the like (T518.40). That evidence must be considered in the context of Mr Tomasetti signing up for a further 16 almondlots on 23 October 2003, two days after the date of his applications for finance in respect of close to $100,000 in licence and management fees for the almond project investments that were made four months previously. Timbercorp Early Almond 2004 Documents Timbercorp Early Almond 2004 PDS (PCT1 at pp. 1489 - 1575) On the cover page there is a statement that "this is not intended to be a short term venture and will be subject to the risks generally associated with horticultural operations". Inside the front cover beside a corporate directory there are two columns of text which commence: "This document is important and should be read in its entirety". The fourth paragraph, in essence, repeats the caution noted on the cover. Section 1 contains an "Overview of the 2004 Project". On page 6 (PCT1 p.1497) under the heading "How Much Will It Cost" it is clearly stated that upon application, a sum of $4,075 per almondlot is payable. Thereafter, annual management fees and rent are payable each October; a fixed amount of $3,000 per almondlot for the first two years and an uncapped amount thereafter. Section 4 is headed "Factors Affecting Project Returns". It contains a discussion of a variety of factors said to have the potential to impact financial performance, including fluctuations in almond prices; exchange rates; possible impact of a free trade agreement with the United States of America and general global conditions and governmental actions. There is also a discussion of the variability of yield rates and costs. Section 8 is headed "Project Risks and Safeguards". Under a sub-heading "Project Specific Risks" there is a discussion of a variety of topics including yields, pests, diseases and water supply. Other matters discussed are "Revenue and Financial Risks" and "Other Risks". Under the latter there is mention of the investment not intended to be short-term and that interests issued under the PDS are expected to be relatively illiquid because of the unlikelihood of a formal secondary market. Page 74 (PCT1 at p.1565) is headed "How to Apply". The first sentence indicates that the reader should read the whole of the PDS before signing an application. Application and Power of Attorney Form (EB1 at p.1365) Application for 100 Almondlots at a total cost of $407,500, $366,750 of which was to be financed with Timbercorp Finance Pty Limited. Signed by Mr Tomasetti and witnessed by Mr Brailey. Dated 3 June 2004. Under the heading of the form there is the statement, "Please read the back of this form before signing it". On the back of the form are some declarations, including that the applicant had read the PDS. Application for finance (EB1 at pp.1368 - 1377) Signed by Mr Tomasetti and witnessed by Mr Brailey. Dated 3 June 2004. Section 12 of the form ("What completing and signing this form achieves") includes that the applicant makes the acknowledgments in section 13. Section 13 of the form ("Important acknowledgements") includes acknowledgements that the applicant had read and understood the PDS and also that the applicant was aware that any investment in the project is speculative and that any borrowing to fund that investment is therefore subject to risk. Statement of Advice (PCT1 at pp. 1577 - 1596) Date of issue: 14 June 2004 Stated to have been "Prepared by Ted Brailey, Representative, BFL Financial Planning". There are numerous representations about both the investment and Mr Brailey's understanding of Mr Tomasetti's risk profile. Under the heading "Recommended Action" it is stated, "We recommend that you purchase 100 Almond lots in the 2004 Timbercorp Almond Project in a joint venture with Tomasetti Super Fund". Under "How to implement our recommendations", the reader is advised to "please read the 2004 Timbercorp Almond Project PDS". Mr Tomasetti is described as having the following investor profile: "You are an assertive investor, probably earning sufficient income to invest most funds for capital growth. You are prepared to accept higher volatility and your primary concern is to accumulate assets over the medium to long term, with a preference for regular income. You require a balanced portfolio, although more aggressive or speculative investments may be included where they offer the prospect of good returns and diversification. You are comfortable with a moderate level of gearing... If you feel this profile does not suit you, then we should have further discussions before you implement your investment plan." The most notable aspect of this document is that it post-dates the actual making of the investment. Mr Tomasetti's evidence concerning the Timbercorp Early Almond 2004 project 219Mr Tomasetti said that on about 3 June 2004, Mr Brailey came to his chambers with agribusiness documents for him to sign ([95]). This sentence in his affidavit originally said it was on or about 14 June 2004 and that Mr Brailey came with 'financial statements and prepared tax returns" for him to sign. It was corrected at the beginning of his oral evidence (T82) and brought his evidence into line with that of Mr Brailey in terms of the date and the document. 220Mr Tomasetti said that the following conversation took place: EB:"I want you to invest in almonds again. The almond projects are definitely the way to go because they produce an annual income and you will be breaking even and have an income by the fourth or fifth year of the project. This is much better than forestry because as I've previously explained that is such a long-term project and you have to wait for any return for the end of the forestry project. The almonds are really terrific because you get tax deductions and you'll have an income before long which will enable you to pay back what you have invested. The projects run for 20 years and will fit in well with our plan. Australia is set to become one of the biggest almond producers in the world." PT:"We are struggling Ted. Are you sure about all this? These costs are considerable and we are always short of money. I know it is distressing Sassi as she is always telling me that we have no money in the barristers' business account. I am working as hard as I can - head down, tail up, but I never seem to be getting ahead." EB:"Yes I am sure." PT:"How much this year then?" EB:"$400,000." PT:"But that is a huge amount. Are you absolutely sure?" EB:"The beauty of this is that the income will exceed your costs in the fourth or fifth year. The 2003 Almond Projects are looking really good. It is a good tax deduction this year. I think you may even begin to get income from the 2003 Project soon - maybe even next year. Finance is available. We have a number of other clients investing in these projects." PT:"Well, as I have said before, I can only rely on you Ted. I still don't understand these projects, and Sassi and I are being entirely guided by you on this. If you say that is the right thing to do, then I have to be guided by you. You know that we have been struggling with these payments from time to time. You are thoroughly familiar with all our finances. Are you absolutely sure about this Ted?" EB:"Yes. Now the government has brought in some new procedures which I have to comply with. I have to give you this document." 221Mr Tomasetti said that at this point Mr Brailey handed him a document headed "Financial Services Guide". This was following another correction made at the beginning of Mr Tomasetti's evidence (T82). He had originally said that the document was the "Statement of Advice" referred to above. The conversation continued: PT:"Well, what is it all about?" EB:"We have to give you this document as financial planners". PT:"Do I need to read it?" EB:"No. It is just a formality." 222Mr Tomasetti said that he "flicked through the document" as Mr Brailey continued to talk. He recalled seeing a spreadsheet headed "2004 Timbercorp Almond Project" and he recalled looking at the "cash-flow after tax" line. (He originally said that this was "attached to the document", that is, the Statement of Advice, but this was deleted (T83)). Mr Tomasetti's account of the conversation continued: PT:"What is this spreadsheet Ted?" EB:"Well you can see from the spreadsheet that the project produces a loss at first but then it goes into profit and you receive substantial sums up until 2025." 223Mr Tomasetti said that he "ran [his] eyes across the row" and saw that the spreadsheet showed what appeared to be a reasonable return. EB:"This is how the project works. You get a tax deduction up front, you'll have to borrow to purchase into the project but after a few years it all becomes cash-flow positive and you'll actually be making money. I am going to have you do a joint venture with the Superfund. That way when you get the income it will be paid out to you from the Superfund as a pension at a reduced rate of tax. The super fund can fund its share of the joint venture investment." PT:"All I can say is Ted, it is too complicated for me to understand and this is what I'm paying you for." EB:"Well, Peter, it works like this. If you have a joint venture with your Superfund then the income that is paid can be paid to the Superfund and there will be no or little tax payable and then tax will only be paid when the Superfund pays out distributions and even then it will be at a lower rate of tax so this is a good thing." 224Mr Tomasetti understood that he entered into a further almond project at a cost of $407,000 as a joint venture with the TSF. He understood that he was liable personally for the capital contribution, but that the management costs, the quantum of which he was unaware, would be shared evenly. 225A further correction was made to the affidavit (at [98]) be deleting reference to him signing tax returns at this meeting. Mr Tomasetti left in an assertion that he looked through the financial statements to find the balance sheet which showed him that his capital position "looked healthy enough". That, of course, could not have occurred with his earlier correction that Mr Brailey did not bring financial statements (and tax returns) to the meeting. 226Mr Tomasetti received a number of invoices from Timbercorp in relation to almond project investments in October 2004 (PCT1 at pp. 1910 - 1914). They amounted to $150,000 for the TSF and close to $300,000 for himself. He claimed (at [100]) that Mr Brailey had not told him that the joint venture could only proceed upon the basis that the TSF would have to sell shares it had accumulated over time. He also did not advise the quantum of future amounts that would have to be paid after the initial subscription. 227Mr Tomasetti claimed (at [102]) that Mr Brailey had not explained that the 2004 almond project would involve irrigation and that he would have to pay for the water. Further, he did not say that the cost of this water could not be calculated at the time of entering into the investment and was impossible to ascertain. Reference was made to invoices within the exhibit to his affidavit (PCT1 at pp. 1969 - 1976). Mr Brailey's evidence concerning the Timbercorp Early Almond 2004 project 228Mr Brailey said (at [277] ff) that he attended a meeting in Mr Tomasetti's chambers on or about 3 June 2004. He used his file note (EB1 at pp.1378) to refresh his memory of what occurred. He recalled that he said: "Peter, this Almonds project is similar to the 2003 Almonds Project. The amount on application for this one is $4,075 per lot. Then in October this year, you will be called upon for another $3,000 of which you can borrow 90%. The following October there will be $3,000 per lot payable, $1,500 of which will be payable by the super fund. They are the fixed amounts. After that there are costs every year for the twenty years of the project but they revert to actual costs which are assessed by Timbercorp in the same way as with the 2003 project." 229Mr Tomasetti signed an application form for investment in this project on or about 3 June 2004. Mr Tomasetti's share was 70 per cent and the TSF's was 30 per cent. 230Mr Brailey also recalled some conversation about payment of the deposit of $40,000 with a credit card and that he undertook to speak with a person at the bank about his concern that this might exceed Mr Tomasetti's credit limit. (The file note includes, "Speak to Neil re $40000 on NAB Mastercard"). 231The only other conversation Mr Brailey could recall around this time was an occasion when he reminded Mr Tomasetti that the projects required an ongoing financial commitment. He told him that he could afford it so long as he controlled his discretionary spending. Mr Tomasetti noted his concern but asked " what specifically are you referring to ?" Mr Brailey replied, " Things like the boat for instance " . (This was a reference to a boat that was being built for Mr Tomasetti at a cost of some $800,000). 232Although he could not recall other conversations, Mr Brailey said that it was his "usual practice" to provide investors, including Mr Tomasetti, with a copy of the relevant prospectus and to briefly outline its content, including the risks associated with the investment. He also provided Mr Tomasetti with a projected cashflow analysis prepared by Timbercorp (EB1 at pp. 1481 - 1484). He also said that around this time he provided Mr Tomasetti with a copy of independent research conducted by Australian Agribusiness Group (EB1 at pp. 1465 - 1480). 233Mr Brailey acknowledged (at [285]) that the Statement of Advice, although dated 14 June 2004, was probably not prepared on that day because it was a public holiday. However, he accepted that it was prepared after the meeting on 3 June 2004. A little later in his affidavit (at [293]), Mr Brailey described a system within BFL Financial Planning of receiving applications for investment from clients and then drafting a Statement of Advice. 234Mr Brailey asserted (at [296]) that the investment in Timbercorp Early Almond 2004 was appropriate for Mr Tomasetti because his fee income was expected to exceed that of the previous year and it was a "good stand alone investment". He also saw it being advantageous to Mr Tomasetti to undertake the investment as a joint venture with the TSF (at [297]). Mr Tomasetti's evidence in reply 235With reference to Mr Brailey's primary affidavit, Mr Tomasetti said (14 July 2010 at [178]) that at no time during the meeting on 3 June 2004 did Mr Brailey tell him that his discretionary spending was out of control or that it was otherwise unwise to invest in this project because it would add to cashflow pressure. 236He also said that it was Mr Brailey who completed the application forms and gave them to him to sign. It was Mr Brailey who selected the number of almondlots and the amount of the investment ([179]). 237Mr Tomasetti denied (at [180]) that there was conversation in the terms set out by Mr Brailey. He had no recollection ([181]) of being provided with any independent research. He was not provided with the Statement of Advice ([185]). He was not told that the quantum of ongoing costs would be such that within a few years there would be no money left in the TSF ([188]). He was not told that the amount of maintenance and management fees was capped in the short term and thereafter was at the discretion of the scheme manager ([191]). Cross-examination of Mr Tomasetti 238Mr Tomasetti recalled "one substantive discussion" which resulted in him entering into the 2004 almond investment (T463.42). In relation to the corrections he had made to his affidavit (noted above), he said that it was his recollection when he swore the affidavit that Mr Brailey had brought tax returns and financial statements. He conceded that he had since seen documents that made him realise that he was mistaken (T464). 239Notwithstanding that he had amended the affidavit by deleting "Statement of Advice" and substituting "Financial Services Guide", he maintained that the ensuing conversation was correct, even though it related to a completely different document (T473.31). He denied that he had sought to tailor his evidence in such a way as to do "minimum violence to the account of events which [he] had given" in his primary affidavit (T473.1). 240There is no dispute that there was some form of spreadsheet at this meeting. I have noted above that Mr Brailey recalled providing Mr Tomasetti with a projected cashflow analysis. The significant point about the cross-examination on this subject is whether Mr Tomasetti was giving evidence of an actual recollection of the conversation or whether he was reconstructing one. He made a concession which is significant in this respect: "Q. When you gave evidence about this transcript page 82? A. Today you mean sir? Q. No, at the beginning of your evidence. You dealt with this by way of correction at the beginning [of] your evidence? A. I did. Q. And you said at line 1 "I believe the spread sheet was available at that meeting as well"? A. Yes. Q. You don't actually recollect that at all, do you? A. No, I can't say it with a hundred per cent absolute certainty that it was there. Q. Accordingly you can't possibly claim to recollect the conversation which refers to the spread sheet as having taken place at this meeting, can you? A. No. I believe that the conversation occurs [as] I've deposed. Q. If you can't say from recollection the spread sheet was there, you can hardly say from recollection that the conversation about the spread sheet took place, can you? A. No, I suppose that's correct. I've done my best to recollect ." (T474.42) (Emphasis added) 241Mr Tomasetti maintained, however, that although he was not 100 per cent certain, it remained his recollection that such a document was present (T475.10). Whilst allowing for the possibility that he was mistaken about this, he maintained that he was not mistaken about "everything else" that he had said about the meeting. He had a clear recollection of it because of the amount of money involved and the difficulty he was experiencing with the payments for the investments he had already made (T475.25). 242Mr Tomasetti was asked about the amendment to paragraph 98 of his affidavit. In its amended form it reads: "I signed the tax returns and looked to find my balance sheet in my financial statements. I leafed through the compilation of documents to see what they comprised. Having familiarised myself with the content of the bundle, I then looked at my balance sheet to see how my capital position was progressing. It looked healthy enough with significant capital value being ascribed to agri-investments. Although there were agri-investment liabilities too they were less than the agri-investments capital value." 243He denied that this was a "false reconstruction" (T477.19). He had recorded the truth as he had recalled it, but made the following concession: "Q. You are no longer prepared to swear, are you, that there was any balance sheet there? A. Balance sheet, no I can't do that. Q. Or that you looked at it? A. I can't do that. Q. Or that you made the assessment that you claim to make in paragraph 98 from it? A. Not at this meeting, no." (T477.41) 244Mr Tomasetti was clearly hampered in giving evidence (written and oral) by the fact that he did not make any contemporaneous notes of conversations (T479.5). However, he said that he reflected on the discussions which had previously taken place every time that he wrote a cheque; every time Ms Cordony spoke to him about the stress she was under; and every time he looked at another bill. He continued: "I have been reflecting on these discussions and what was said to me on a continuous basis since at least 2005. It's wrong to say that the first time I did was in 2009" (T480.7). 245He accepted, however, that the first time he ever tried to record the terms of conversations was in 2009: "Q. Let's just be a hundred per cent clear. You say now that you can recollect conversations that took place in each financial year between 2000 and 2004 in which you as a consequence of which you made a decision to make investments in one or other of these Agribusiness schemes, that's true isn't it? A. Yes, I believe I can. Q. And you don't have any contemporaneous note of any of those conversations? A. No, I think that's correct sir. Q. And the first time which you set out to record in the form of "he said she said" what had been said at those meetings between you and Mr Brailey and perhaps others was when you prepared your affidavit in November '09? A. That's correct sir." (T480.35) 246I have earlier referred to Mr Tomasetti receiving invoices from Timbercorp in October 2004 for annual payments relating to the 2003 and 2004 almond investments (PCT1 at pp. 1910 - 1914). He applied for loans to cover the vast proportion of the expenses for which he (as opposed to the TSF) was responsible (approximately $270,000). There were four separate loan application forms. Mr Tomasetti was shown one of them (Exhibit 18 - the others are in Exhibit 24 at pp. 697 - 738). He had no recollection of signing it, or of the circumstances in which he signed it (T550.10). He claimed that he chose to borrow from Timbercorp because that is what Mr Brailey told him would be done (T550.45). He could not, however, recall any such conversation in relation to this particular loan application (Exhibit 18). 247I note that this loan application was signed by Mr Tomasetti and witnessed by Ms Cordony. It is dated 4 November 2004. It contains the usual acknowledgements in Timbercorp finance applications, namely, that the applicant has read and understood the prospectus; is aware that the investment is speculative; and that borrowing to fund it is therefore subject to risk. Cross-examination of Mr Brailey 248Mr Brailey denied that he said, " I want you to invest in almonds again " (T1004.23). He agreed that he said something about almonds producing an annual income; that Mr Tomasetti would break even and have an income by the fourth or fifth year; and that this was better than forestry projects, where the return is at the end of the project (T1004.40). He accepted that Mr Tomasetti may have said something about struggling; may have asked whether Mr Brailey was sure; and may have said the costs were considerable and that they were always short of money (T1005.2). The amount to invest, $400,000, was not something that he told Mr Tomasetti but something " we agreed on " (T1005.15). That was as a result of Mr Brailey's calculation of what Mr Tomasetti's likely income was going to be. 249Mr Brailey was asked whether Mr Tomasetti said, "You know we've been struggling with these payments from time to time. You're thoroughly familiar with our finances. Are you absolutely sure about this, Ted?" He said that Mr Tomasetti wanted some reassurance. He would have explained the position in terms of his current debt to the tax office and what was likely to happen to that in the future, if he incurred another tax debt (T1005.47). 250Mr Brailey agreed that there was a conversation about a spreadsheet, although he said the conversation was about cashflow rather than profit and loss (T1006). 251Mr Brailey denied saying, " I'm going to have you do a joint venture with the super fund " . Rather, he "suggested he might like to do that" (T1006.37). Mr Brailey thought that was a good idea (T1007.4). 252Mr Brailey denied a proposition that he did not advise Mr Tomasetti that he and the TSF would be obliged to pay significant sums in the future over and above the initial investment of $407,000. He told him of the requirement to pay a further $300,000 in the next two Octobers and thereafter the actual annual costs (T1007.30). 253Mr Brailey was taken to the cashflow spreadsheet (Exhibit M at pp. 307 - 308) (T1008.11). Generally, he maintained a position that it showed viable figures based upon reasonable assumptions. In relation to the TSF, he agreed that if for any reason it did not have sufficient money to pay the annual outgoings, there would be a need for Mr Tomasetti himself to contribute. He denied that his recommendation that the TSF take part in the investment was "foolish" (T1015.3). 254As to the Statement of Advice (PCT1 at pp. 1577 - 1596), Mr Brailey said that he did not prepare it personally but he supervised its preparation (T1015.35). He agreed with the "investor profile" for Mr Tomasetti. As to why it was prepared and sent out after Mr Tomasetti had entered into the investment, he said " [W]e had a practice of getting commitment to the project before we did the statement of advice " (T1017.33). He did not see this as "ludicrous". He said that it " sounds reasonable " that the purpose of the legislative requirement was to ensure a prospective investor was provided with advice before a decision was made to invest. He was asked whether " you just thumbed your nose at the law " and he replied, " You could look at it that way " . In hindsight, he agreed that this is what he did (T1018). It was put to Mr Brailey that various statements in the document were wrong. Ultimately he agreed that the document was not correct, and he knew this at the time it went out (T1021.10). Statements of Advice sent to other clients at the same time were in almost identical terms (T1022 - 1024). There is no question that they were a sham. 2005 investments 255Two investments were made by Ms Cordony in 2005. They were in the Timbercorp Citrus 2005 and the Gunns Winegrape 2005 projects. Documents Timbercorp Citrus 2005 Letter from Mr Brailey addressed to Mr Tomasetti and Ms Cordony dated 3 May 2005 (PCT1 at pp. 2282 - 2283; EB1 at pp. 1697 - 1698). The letter is said to be "just to reiterate phone advice I gave Sassi recently about superannuation and the use of the Timbercorp Table Grape project to offset income tax and super surcharge she may be liable for". There are three references to "table grapes" but one reference has been crossed out and the word "citrus" written above it. Mr Brailey thought that was done by Ms Cordony (T1046.47). He explained in his primary affidavit at [531]) that it had been intended that the investment be in the Timbercorp Table Grape project but there were no lots available. He arranged for an application to be prepared for the Timbercorp Citrus project and the Gunns Wine Grape project instead. A calculation is given to show that Ms Cordony's taxable income would be reduced to nil and that there would be a "positive cash flow" effect of $23,236. The letter also mentions other advantages of Mr Brailey's proposal Letter from Mr Brailey to Ms Cordony dated 9 May 2005 with enclosed reports by Australian Agribusiness Group concerning Timbercorp (PCT1 at pp. 2284 - 2295) The letter states, "You should read it in its entirety". Timbercorp Citrus 2005 PDS (PCT1 at pp. 2214 - 2280) On the first page, under the heading "Important Information", there is a statement that the PDS is an important document which should be read in its entirety. On page 6 there is a "Summary of the offer, Key Features and Fees". Against the item "Project Term" it is said that the term of the project was approximately 22 years. On the following page, against the item "Project Returns", it is made clear that there is no certainty as to financial returns. Against the next item, "Project Risks", the reader is told that the project is intended to be long-term and there were a number of associated risks. Attention was directed to section 10 at page 34 of the PDS. On pages 8 and 9, under the heading "Fees and costs (per Citruslot)" it is clearly indicated that there was to be an initial application fee and then ongoing annual licence and management fees as well as operating costs. On pages 26 to 29, there is a discussion of "Project Returns", including reference to a number of factors which might influence returns. Page 34 and following contains a discussion of a number of factors under the heading "Risk Analysis". One of the many matters discussed is that the project should be viewed as being one for a fixed term of approximately 22 years and that interests issued under the PDS will be relatively illiquid. Page 1 of the "Application and Power of Attorney Form Booklet", under the Heading "How to apply", contains five numbered steps. The first step states that "Before completing and signing this booklet you should read the whole of this PDS". Application and Power of Attorney Form (PCT1 at pp. 2492 - 2493; EB1 at pp. 1719 - 1720) (DTB at 808 - 810) Application for 7 citruslots for a total cost of $49,000, $44,100 of which to be financed throough Timbercorp Finance Pty Limited. In its original form, this application was for 10 citruslots for a cost of $70,000, $63,000 of which was to be financed. Ms Cordony endorsed amendments to the number and cost in Part 3 of the form. Signed by Ms Cordony and witnessed by Mr Tomasetti. Dated 23 May 2005. On the signing page ("Part 4"), the applicant is asked to read "parts 1 and 2 before signing this form". Part 2 includes four declarations, the first of which is that the applicant has read the PDS. Mr Tomasetti signed the credit card authorisation for payment of the deposit. Application for finance form (PCT1 at pp. 2487 - 2491; EB1 at p.1728 - 1736). Application for loan of $44,350. Signed by Ms Cordony and witnessed by Mr Tomasetti. Dated 23 May 2005. Mr Tomasetti signed the direct debit authorisation for monthly deductions of repayment instalments. Section 12 of the form ("What completing and signing this form achieves") includes that the applicant makes the acknowledgments in section 13. Section 13 of the form ("Important acknowledgements") includes acknowledgements that the applicant has read and understood the PDS and also that the applicant was aware that any investment in the project is speculative and that any borrowing to fund that investment is therefore subject to risk. Statement of Advice (EB1 at pp. 1797 - 1808) Date of issue: 20 June 2005 (that is, after the application forms had been signed). Signed by "E.F. (Ted) Brailey FCA, Financial Planning Specialist". There are numerous representations about both the investment and Mr Brailey's understanding of Ms Cordony's investment aims and objectives and her risk profile. Under the heading "Recommendation", it is stated, "We recommend that you purchase 7 Citruslots issued by Timbercorp Securities". Under "How do I proceed?", it is stated that a completed application and power of attorney form and an application for finance had been received and lodged with Timbercorp (which, of course, meant that the provision of the statement of advice was a worthless exercise). Ms Cordony is described as having the following investor profile: "You are a moderately conservative investor who wants a balanced portfolio that works towards medium to long term financial goals. You require an investment strategy that will provide steady levels of income with moderate levels of capital growth and cope with the effects of tax and inflation as well as lower risk through diversification. You are prepared to accept low to medium levels of short-term risks in order to achieve levels of income and stability of capital over the time frame required. If you feel this profile does not suit you, then we should have further discussions before you implement your investment plan." Gunns Winegrape 2005 Gunns Winegrape Project graphs of projected returns (PCT1 at p.2065). Stated to have been prepared by Mr Brailey for Ms Cordony. Undated, but states "You have purchased a total of 2 Vinelots". Indicates a net profit to grower before tax after 20 years of $63,854; an after tax rate of return per annum of 11.3 per cent (geared) or 9.3 per cent (ungeared). Gunns Winegrape Project 2005 projections (PCT1 at p.2066) Stated to be an "Analysis prepared for Sassi Cordony", "Prepared by Ted Brailey" on 25 May 2005. Gunns Winegrape Project 2005 PDS (PCT1 at pp. 2067 - 2136) On page 2, under the heading "Important Information" and the sub-heading "Disclaimers", it is stated that investment in the project is subject to investment and other risks. It is further stated that no guarantee, warranty or assurance as to the performance of the project or any particular return is given. The reader is told that the PDS should be read. On page 4, under the heading "Key Features", the term of the project is stated to be approximately 20 years. It is also stated that the project is subject to a number of risks, and the reader is directed to Section 7 of the PDS. On page 5, there is further reference to the project being long term and the lack of any current active secondary market. A variety of risks are discussed in section 7 on page 15. In the introductory paragraph the reader is advised that these can potentially have a material affect on returns. Section 8 (page 17) is headed "Fees and Charges". It discloses that there are ongoing maintenance and harvest fees and vine right fees. The former is said to be subject to a cap of $3,300 per vinelot, indexed, from year 4 onwards. The latter is said to be payable from year 4 and would be $550 per vinelot, indexed. "Instructions to Applicants" on page 62 includes that the PDS in its entirety should be read. Application and Power of Attorney Form (PCT1 at pp. 2494 - 2495; B1 at pp. 1777 - 1780) Application for 2 Vinelots at a total cost of $34,650, $27,720 of which was to be the subject of finance. Signed by Ms Cordony and witnessed by Mr Tomasetti. Dated 25 May 2005. The printed form includes a statement that the PDS should be read in its entirety before deciding to invest. Mr Tomasetti also signed the "Payment Details" section, authorising payment of the deposit of $6,930 on his credit card. This page is dated 1 June 2005. Application for finance (PCT1 at pp.2496 - 2500; EB1 at pp. 1781 - 1786) Application for loan of $27,720. Signed by Ms Cordony and witnessed by Mr Tomasetti. Dated 1 June 2005. Mr Tomasetti also signed an "Authority for Loan Repayments Via Direct Debit From Bank Account" and a "Credit Card Authority For Loan Establishment Fee". Letter from Gunns Finance Pty Ltd to Ms Cordony (PCT1 at p.2171) This letter is dated 30 May 2005 and thanks Ms Cordony for her finance application "dated 25/05/2005". Statement of Advice (EB1 at pp. 1809 - 1821) Date of issue: 22 June 2005 (that is, after the application forms had been signed). Signed by "E.F. (Ted) Brailey FCA, Financial Planning Specialist". This "advice" is in similar terms to that pertaining to the Timbercorp Citrus 2005 investment. Ms Cordony's evidence concerning the 2005 investments 256Ms Cordony described herself (at [41]) as a "very financially conservative" person who had "always been happy to have most of [her] money in the bank". She said she was not "business savvy" and did not understand or have an interest in share portfolios or investment schemes. 257Ms Cordony worked part-time for Mr Tomasetti from 2002 (shortly before 30 June 2002 (T582)). She met Mr Brailey that year. She described him (at [4]) as a person who "represented a professional identity to whom I could voice my concerns or worries and seek his advice in relation to Peter's financial affairs". Later in her affidavit (at [41]), she said: "Mr Brailey was a figure of authority to me - just like my medical specialists. He was one of the people I trusted regarding my future welfare. I did not hesitate, though we were struggling financially, to question his advice." 258Ms Cordony took responsibility for certain aspects of Mr Tomasetti's financial affairs, such as dealing with invoices for payments concerning his agribusiness investments. She said that he was "always heavily involved with his practice" and "did not want to deal with these matters at any length". She said (at [7]) that it was his invariable practice to ask her to speak with Mr Brailey about them. She set out an account of various difficulties she experienced in organising funds to meet the payment demands and how she liaised with Mr Brailey in this regard (at [8] - [12]; [14] - [18]; [23] - [28]; and [37] - [40]). 259From some time after mid-2004, Ms Cordony received and completed numerous loan applications to Timbercorp Finance in order to fund the investments. She said (at [24]) that she "gave them to Peter to sign, and then returned them to Timbercorp". She did not "understand the intricacies of the loan arrangements and ... did not understand the overall financial implications". 260Ms Cordony referred (at [43]) to the letter addressed to herself and Mr Tomasetti from Mr Brailey dated 3 May 2005. She said that she followed the instructions it contained concerning contributions to the TSF. In relation to the references to her taxation affairs, she said she had a limited understanding of such matters and did not understand that aspect of the letter. 261Ms Cordony frankly conceded in her affidavit (at [41]) that she did not have any recollection of discussions with Mr Brailey about her making the two agribusiness investments in 2005. She said, however, that she did not initiate any such discussion. Ms Cordony also could not recall completing the application forms (at [45]). She assumed that they were completed by Mr Brailey and that she received them ready for her to sign. 262Ms Cordony gave the following account of her reasons for making the two investments ([45]): "My reason for investing in the two projects was that I trusted Mr Brailey and was guided by his suggestions with respect to financial planning. I assumed that Mr Brailey was advising me to invest in these projects because he believed that they were prudent investments." 263Somewhat at odds with her inability to recall discussions with Mr Brailey about her making the investments, Ms Cordony claimed (at [49]) that he did not make her aware that she would incur additional payment obligations in subsequent years in addition to the initial amount invested. She said that if she had been aware of this fact, she would not have made the investments. Each October she received an invoice from Timbercorp for annual licence fees and operating costs which required payments in the order of $25,000 to $30,000 (PCT1 at pp. 2319 - 2368). Further borrowings were necessary to meet these obligations. By comparison, the ongoing annual net costs associated with the Gunns project were relatively minor (PCT1 at p.2555). 264Ms Cordony said in her affidavit of 1 November 2010 that she would not have entered into the investments if she had been aware that they were "highly risky"; that they were long-term and could not be sold; or that a reasonably competent financial planner would not have recommended them to her for those reasons. Mr Tomasetti's evidence concerning the 2005 investments 265Mr Tomasetti did not make any further agribusiness investments in 2005 or beyond. He said that in about June 2005, Mr Brailey came to his chambers with his financial accounts and tax returns for the 2004 financial year. He told Mr Brailey on this occasion that he did not want to make any more investments as he was "at bursting point". Mr Brailey replied that this was okay because he did not need any more ([105]). 266It was some time in the following financial year that Ms Cordony told Mr Tomasetti of her investing in an agribusiness project upon Mr Brailey's advice ([106]). It was not until early 2009 that Mr Tomasetti became aware that Ms Cordony had in fact invested in two projects ([108]). He had a conversation with Mr Brailey about this and subsequently spoke with Ms Cordony ([109]). He asked her how she was paying for them and she told him that he had been. He was previously unaware of that fact. He asked her whether she was aware that the projects run for 20 years. She said that she had "never thought about that". 267Mr Tomasetti subsequently searched through his records and found the documents that related to Ms Cordony's investments. He then realised that he had signed authorisations for payments from his accounts and had witnessed her signature on various applications. He said he did not recall signing such documents. He then referred to a practice when he would return to chambers and find that Ms Cordony had prepared documents for him "to sign or to check or to read". On such occasions, he signed where indicated. As he could not recall signing the documents relating to Ms Cordony's investments, he assumed that he signed them on one of those occasions ([112]). Mr Marksteiner's evidence concerning the 2005 investments 268Mr Bjorn Marksteiner was an employee of BFL Financial Planning. In his affidavit (Exhibit D), he said that he completed most of the application form for the Gunns Winegrape 2005 investment and some of the form for the Timbercorp Citrus 2005 investment. This was not done in Ms Cordony's presence. It was his practice to fill out application forms located in product disclosure statements with client details provided by Mr Brailey. His practice was to then send the forms to clients for completion of outstanding details and signing. On return, he reviewed the forms and then submitted them to the investment promoter. He believed that in this case he had followed his standard procedure. 269Mr Marksteiner recalled that he was asked by Mr Brailey "in or about May 2005" to prepare the Timbercorp Citrus application form for Ms Cordony. He also prepared the Statement of Advice, with input from Mr Brailey and material provided by the investment entity. He did not recall preparing the Gunns Winegrape forms but accepted that it was his writing on it. Mr Brailey's evidence concerning the 2005 investments 270Mr Brailey recalled a conversation by telephone with Ms Cordony "in or around early 2005" (at [326]): EB:"Hi Sassi. I am recommending that you go into agribusiness this year. This is how it works: You are an employee of Tomasetti Trust and therefore Tomasetti Trust gets a tax deduction for superannuation contributions for you. The maximum that can be contributed for you this year is $95,980. Normally the fund will pay 15% contributions tax on that amount. However at the moment there is an extra tax of 15% called Superannuation Contributions surcharge which is payable by the fund if your taxable income plus Fringe Benefits plus superannuation contributions exceeds $105,000 odd. So, to largely eliminate your taxable income you need a tax deduction. And investment in agribusiness fulfils this requirement. In addition to that Peter will get a tax deduction for the amounts he pays the trust to provide your services and this will help him with his tax. On top of all that he will also be able to claim a spouse rebate for you with a bit of luck. Don't worry I'll confirm all this in a letter to you and Peter." SC:"Ok, Ted. That sounds good. I'll read your letter when it comes in." 271Mr Brailey said (at [327]) that he had a similar conversation with Mr Tomasetti around the same time during which he provided similar advice. He could not, however, recall the specific words spoken. He then sent the letter addressed to the two of them on 3 May 2005 outlining his earlier advice. 272Mr Brailey had a meeting with Mr Tomasetti in his chambers on 9 May 2005 (see his file note at EB1 p.1718). A range of matters were discussed, including the possibility of further agribusiness investments. Mr Brailey said (at [331]) that he did not consider that Mr Tomasetti needed any further exposure to forestry or agribusiness at that time. In this context, he referred to the consolidated profit and loss account for Mr Tomasetti's practice that financial year to 31 March which showed a small increase in fees, expenses and net income over the previous year. He had regard to Mr Tomasetti already having a tax deduction of some $265,000 from his investment in almond projects with further deductions also available for minor expenses associated with forestry projects. Mr Brailey said that he also had regard to the proposal referred to in his letter of 3 May 2005 which would bring a further deduction for Mr Tomasetti. Mr Brailey said to Mr Tomasetti: "You do not need to make any more investments into agribusiness projects or forestry. You have enough tax deductions to offset your most of your [sic] estimated taxable income this year". ([329]) 273On about 23 May 2005, Mr Brailey spoke with Mr Tomasetti about the Timbercorp Citrus project. He could not recall the content of the conversation or whether it was in person or by phone. His file note in relation to it simply records "Citrus" ([329]; EB1 at p.1699). 274A little later in his affidavit (at [336]), Mr Brailey said that he had a meeting with Mr Tomasetti in his chambers "on or around" 23 May 2005. Ms Cordony was present. He said that he provided them with a copy of research by Australian Agribusiness Group. The subject was not specified, but he later suggested (at [337]) that it was in relation to the 2005 Timbercorp Citrus project. 275It was in this meeting that the applications by Ms Cordony in relation to the Timbercorp Citrus 2005 investment were executed. 276Mr Brailey said (at [340]) that there was a further meeting with Mr Tomasetti and Ms Cordony on or around 25 May 2005. It was in this meeting that the applications by Ms Cordony in relation to the Gunns Winegrape 2005 investment were executed. 277Mr Brailey said (at [343]) that he caused the Statements of Advice to be issued to Ms Cordony in relation to both investments on about 20 and 22 June 2005. Obviously it was too late to be making recommendations and giving advice about investments that had already been made. 278Mr Brailey claimed that product disclosure statements for both projects were provided to Ms Cordony ([350] - [351]). He could not recall the precise circumstances apart from the fact that it was in Mr Tomasetti's chambers. He thought this might have been on the occasion of the meeting on 23 May 2005. He claimed to have gone through them with her and advised her to read the whole document herself. He said that he referred to risks and to ongoing costs. 279Mr Brailey responded (at [532]) to Ms Cordony's evidence that she did not recall completing the application forms and assumed that they were completed by Mr Brailey (see her affidavit at [45]). He said that he did not complete the forms and he denied that Ms Cordony played no part in completing them. He claimed to have become sufficiently acquainted with her handwriting over the years and referred to a number of areas of the form where he recognised the writing as her handwriting. He suggested that other writing on the forms may be that of Mr Marksteiner. Mr Tomasetti's evidence in reply 280Mr Tomasetti denied in his affidavit of 14 July 2010 that he had conversations with Mr Brailey concerning Ms Cordony entering into investments, and he did not recall receiving the letter of 3 May 2005 ([205]). He disputed the terms of the conversation about him making no further agribusiness investments. He had no recollection of a meeting at which applications for Ms Cordony's investments were signed ([208]). Ms Cordony's evidence in reply 281Ms Cordony did not recall the conversation that Mr Brailey said occurred "in or around early 2005" when he recommended that she "go into agribusiness this year" (her affidavit of 14 July 2010 at [5]). She did not recall being provided with research material from Australian Agribusiness Group and added that she did not read any such material ([6]). She did not recall receiving either of the Statements of Advice ([7] - [8]) or the product disclosure statements ([9]). She denied that Mr Brailey told her about risks associated with the projects. If he had, "alarm bells would have rung" for her and she would have spoken to Mr Tomasetti about it. She added that it was "not in [her] nature to take risks about these kinds of things" ([9]). 282In her affidavit of 1 November 2010, Ms Cordony said that she was "quite certain that there were no meetings with Mr Brailey as he asserts [on 23 and 25 May 2005]". She was "quite certain" that she never attended a meeting with Mr Brailey as he had described occurring on those dates, "nor any meeting with him regarding the investments made by [her] and the Superannuation Fund in 2005" ([4]). Of course, there were no investments made by the TSF in 2005. Cross-examination of Ms Cordony 283Much of the cross-examination of Mr Cordony was concerned with subjects other than her own investments. Some of her evidence on those other subjects is relevant in that it indicates something about her knowledge of agribusiness investments prior to those she made in 2005. 284It is clearly the case that Ms Cordony was aware from at least late 2002 that agribusiness investments involved ongoing costs for management, rent and the like: "Q. So would it be fair to say that from the second half of '02 onwards after you've been through this exercise of these bills coming in, you appreciated that over time an investment was made with agribusiness. First of all a payment would be made at the time the investment was made? A. Yes. Q. Second that money would be borrowed at the time the investment was made and that money would have to be paid off? A. Yes. Q. And third that there would be further bills that would come in representing ongoing management costs and the like? A. Yes. Q. And that those bills might be ones for which further finance was available or they might not in which case they would have to be paid? A. Yes. Q. Whether finance was available or not these proposals were a source of ongoing obligations not just in order to pay them off but also in terms of ongoing management costs, rent and the like? A. Yes. Q. And that as you understood it was a general characteristic of these sorts of investments, at least you had understood that by the second half of 2002 after going through this particular exercise? A. Yes." (T604.28) 285Her agreement to these propositions was confirmed a little later in the cross-examination. She also reiterated that she had this understanding from the second half of 2002 (T608-609. See, similarly, T634-635 and T649). 286Ms Cordony said in her primary affidavit (at [49]): "At the time of entering into the Wine Grape and Citrus projects, I was not made aware by Mr Brailey that I would incur additional payment obligations in subsequent years in addition to the initial amount invested. I was not aware of such obligations and had I been aware I would not have entered into the projects. ..." 287She was cross-examined about those assertions: "Q. Now, we've already established, haven't we, that in fact you can't say from your recollection what it was that you were made aware of or not made aware of by Mr Brailey; do you agree with that? A. I agree with that. Q. To that extent, the affidavit is inaccurate, isn't it? A. I'm absolutely certain that I didn't have any discussions with Mr Brailey. Q. Well, that's a belief, not a recollection, isn't it? A. I'm almost certain we had no discussions at all. Q. Now, the affidavit also says that you were not aware that you would incur additional payment obligations in subsequent years in addition to the initial amount invested? A. (Witness nods). Q. That's not right at all, is it? A. It isn't. It isn't. Q. Because you were in fact well aware of that fact in 2005 as a result of the administering [sic] your husband's investments; that's right, isn't it? A. I certainly should have been aware. Q. I think you agreed with me before the adjournment - but if I've got it wrong, you tell me - that you were in fact aware of that? A. Of-- Q. Of the ongoing expenses? A. Of ongoing expenses, yes." (T654.41) 288Ms Cordony was asked about the letter from Mr Brailey of 3 May 2005 (T626 ff). She said that she would have dealt with it and may not have discussed it with Mr Tomasetti. He had previously told her to " [d]o whatever Ted asks you to do. You follow his advice. Don't talk to me about it. You do what Ted tells you to do. We trust him. He's our accountant. You just do what he says " . 289As she had indicated in her affidavit, Ms Cordony really had no recollection of the circumstances and the discussions pertaining to her making the investments. It follows that she was not in any real position to dispute Mr Brailey's account: "Q. Unless I ask you specifically, if we could just have your recollection. Do you actually have any recollection whatever of the circumstances in which you ultimately entered into these particular investments? A. No. Q. None whatever? A. No. Q. So, if you have none whatever, you would not be in a position to deny that Mr Brailey gave you some information about the investments at some point in discussions, would you? A. I'm almost certain that he didn't. Q. Well, I'm asking about what you are in a position to say, from your recollection. Now you've told me that you have no recollection. Doesn't it follow that you couldn't deny it when he says he did provide you with some information about these investments? A. Yes. Q. You just can't deny that from your recollection; it might be true; it might not be true because you can't recall? That's right, isn't it? A. Yes. Q. And you're also not in a position to say, from your recollection, how it was that you actually came to sign the particular forms in question, are you? A. I - I can't remember the signing of those documents." (T629.22) 290Ms Cordony was shown the documents she signed in relation to the Timbercorp Citrus 2005 investment. (There are two versions but nothing turns on that). It was suggested to her that she had been sent the form; she had filled in some further information that it required; she signed it; and she then sent it back to Mr Brailey's office. She really had no recollection. She did agree, however, that she had filled in some details. It followed, and she agreed, that she had read the form sufficiently to be able to appreciate that there was extra information which was required (T632). 291Ms Cordony also had no recollection of whether the document was brought to chambers by Mr Brailey. He did come to chambers on occasions and she could not deny that this was one of those occasions (T633). 292Ms Cordony had no recollection of the circumstances relating to how Mr Tomasetti was going to pay for these investments (T633.41). 293Ms Cordony agreed that the application for the citrus project, in its original form, involved payment of $7,000 on Mr Tomasetti's credit card and applying for a loan of $63,000 which would be repaid out of his bank account. At first she asserted that she did not conceal this from Mr Tomasetti, but maintained that he did not know about this, or she did not believe that he did (T635.48). She was pressed on this: "Q. That's not [sic] question I asked you. The question that I asked you was, you would not in the ordinary course have ever arranged for your husband to sign up to an obligation to pay $70,000 for an investment of yours without his being aware of that fact? A. No. Q. Are you agreeing with me or not agreeing with me? A. No, I agree. He certainly, yes. Q. And further you would have ensured before obtaining his signature not only that he was aware of the nature of the obligation but that he agreed with it? A. I can't remember that. Q. Well I know you can't remember it but you accept that that's what would have happened, don't you? A. I accept that that could have happened. Q. You accept that that would have happened, I suggest? A. I accept that it could have happened." (T635.50) 294Mr Parker asked about Ms Cordony's general practice in signing documents (because she had no recollection of signing the citrus project application). She said that if she received a document for signature, she would first read it to make sure that it was in order (T636.47). If she was not satisfied that it was in order, she would read it more closely until satisfied that she understood it sufficiently (T637.2). She was not the "sort of person in 2005 who signed ... documents in blank" (T637.6). 295This cross-examination was ultimately directed to the proposition that when Ms Cordony signed the citrus project application form, she had read and understood the declarations which included that the applicant had read the PDS. Ms Cordony was absolutely certain that she did not read any PDS (T639). 296Ms Cordony maintained that she would have just presented the documents relating to her investments to her husband for signature without him being aware, or her telling him, what they were about (T641). The same applied to the subsequent finance applications relating to these investments (T643). She said he was "very angry" when he found out in 2008 that he was paying for her investments (T644). She again said that she did not believe he knew this in 2005, but she acknowledged that she had earlier agreed that "there's no way that [she] would have got his signature on those documents without telling him or satisfying [herself] that he understood it" (T644.25). 297Ms Cordony agreed that she had not deceived her husband and she had in fact told him that he would be paying for her investments (T646.15). She offered the explanation, " I don't think he understood. I don't think he - he didn't understand that he was paying for my investments " (T646.23). She suggested that this was perhaps her own fault " for not explaining things fully enough to him " . She added that he was a busy man with a busy practice (T646.27). 298Mr Parker obtained Ms Cordony's agreement to the proposition that if there was a misunderstanding between her and Mr Tomasetti, it was not something Mr Brailey could be blamed for (T647.6). 299As to the reason she was suing Mr Brailey in relation to these investments, she said that they "were ill-advised" and "were never told that these products were so hugely volatile, risky, and speculative" (T647.30). She agreed, however, that she had no recollection of what Mr Brailey had told her about the investments (T647.44). 300Ms Cordony agreed with the following propositions (T648): * She did not recall anything about what Mr Brailey may or may not have told her about the investments before she decided to go into them. * She could not remember what her reasoning process was based on, what Mr Brailey may or may not have told her, or what she knew from other sources. * She could not remember what the nature of the arrangement was between her and her husband which saw him paying for investments in her name. 301As a result, she agreed that she could not legitimately blame Mr Brailey for her having made the investments on the ground that she was ill-advised (T648.34). 302She knew when the litigation began in 2009, and since, that she could not remember any of the relevant details about the decisions she made in 2005 to make the investments (T648.40). 303Mr Parker asked Ms Cordony about her awareness of certain features of agribusiness investments. She agreed that it was the investor who was at risk and would suffer loss if, in the case of a forestry scheme, the trees did not grow as expected, or at all (T650.45). She acknowledged that there was no guarantee that the trees would survive to be harvested, or as to the price they would fetch if harvested (T651.19). 304Ms Cordony said that she had been told by Mr Brailey at some stage that she and Mr Tomasetti would "break even" in relation to the investments generally in 2010 and 2011 (T651 - 652). She realised, however, that prices fluctuate (T652.46). She knew that the costs were not capped (T653.9). For the latter reason, she knew that there could be events over which the investor had no control which might cause the expenses to be higher than they would otherwise be (T653.14). She also knew that there could be events which could have the effect of reducing or even eliminating crop or forest yields (T653.25). She realised that in such an event, the investor who had borrowed would still be required to repay the loan (T653.30). These concessions culminated with the following: "Q. And you, therefore, appreciated that there was a degree of speculation about the investment? A. I can appreciate that. Q. Because the investor was taking the risk that conditions in the future would be such that the trees would grow and that they would produce suitable product as a result? A. (Witness nods). Q. And that - you have nodded. The answer is yes? A. Yes. Q. And there would be a suitable market for that product? A. Yes. Q. And that the costs would remain under control? A. And the costs would? Q. Remain under control? A. Would not be-- Q. The costs would not exceed-- A. Remain under control? Q. Yes. Exceed the revenue that was ultimately received, if any-- A. (Witness nods). Q. --correct? A. Yes. Q. And you appreciated all of those things before you, yourself, signed the application forms that I've asked you about? A. I know." (T653-654) 305Ms Cordony was "so certain there weren't any meetings" between Mr Brailey, Mr Tomasetti and herself on 23 and 25 May 2005. She agreed, however, whilst she held a very strong belief in that regard, that she could not deny that such meetings took place (T656.29). 306She was reminded of having said in her affidavit of 1 November 2010 that she would not have entered into the investments if she had been aware that they were "highly risky". She agreed, however, that she knew they were "risky projects". She claimed that Mr Brailey had not told her that, but that it was something she did not need to be told (T656.40 - 657.4). 307She had also said that she would not have entered into the investments if she had been aware that they were "long term". She struggled somewhat when asked to explain what she meant by "long term", before saying that to her it "would be ten years" (T658.8). 308Ms Cordony had also said that she would not have entered into the investments if she had been aware that they "could not be sold". By that she meant that there was no market in which they could be sold (T658.50). However, she then conceded: "Q. But you knew that about the investments in 2003 and 2004, didn't you? A. Yes, I did." (T659.2) 309Mr Parker took Ms Cordony back to the issue of "risks". She asserted that Mr Brailey "never did" tell her of the risks that were associated with the product. However, she was reminded of it having previously been established that she had no recollection upon which she could say that and she agreed (T659.43). 310Then, on the subject of the investments being "long term" and "could not be sold": "Q. You knew, in 2005, that products of the sort that you were investing in were long term and could not be sold before the maturity of the project, didn't you? A. Yes Q. And it follows, doesn't it, that paragraph 5 [of the affidavit of 1 November 2010], insofar as it fastens on that particular characteristic of the investments, is incorrect; do you agree? A. Following on, yes, it does." (T660.11) 311Despite this, Ms Cordony maintained that notwithstanding her inability to recall what she had and had not been told, it was her belief that Mr Brailey had not told her anything (T660.45). Cross-examination of Mr Tomasetti 312Mr Tomasetti maintained that he did not recall seeing the letter from Mr Brailey of 3 May 2005 (T551.20). 313He acknowledged that his signatures were on the application forms and related documents for Ms Cordony's investments, but he had no recollection of signing them, nor of the circumstances in which they were signed (T552). He was not aware in 2005 that she was involved in these types of investments; nor was he aware that he was paying for them (T554). Cross-examination of Mr Brailey 314Mr Brailey agreed that the statements of advice sent to Ms Cordony were of no use to her, given that they were sent after she had committed to invest (T1035). 315When his attention was drawn to the evidence of Mr Marksteiner and the records indicating that he was responsible for preparing the application forms for Ms Cordony's investments, Mr Brailey was "not sure" about whether there was the meeting with Ms Cordony and Mr Tomasetti on 23 May 2005 that he spoken of in his affidavit (T1051.34). He seemed reluctant to accept that Mr Marksteiner had charge of preparing the documentation, even after his attention was invited to the records which indicated that to be the case (T1053.12). Fair Trading Act (FTA) claim The pleadings 316Twenty representations alleged to have been made by Mr Brailey are asserted to have been false, misleading and deceptive in breach of s 42 of the Fair Trading Act 1987 (fourth amended statement of claim ("4ASoC") at [59]). 317Counsel for the plaintiffs indicated in written submissions (PWS at [22]) that "the principal representations of existing fact included that the investments were sound, prudent and sensible commercial investments" (emphasis added) and that "t he principal representations as to future matters were that the investments [quoting from paragraph 20 of the 4ASoC]: (b)Would produce reasonable commercial returns with time. (d)Would produce a valuable asset that would be harvested and generate some wealth after payment of assessable income. (e)Would produce financial returns at harvest time estimated to be 10% per annum compounding on capital and that the investments were very good. ... (i)Would provide future income. ... (k)Would achieve the objectives referred to in sub-paragraph 9(i) of the [Fourth] Amended Statement of Claim." (Emphasis added) 318These (and others) were representations that were said to have been made, and relied upon, in relation to the investments in each of the years 2000 to 2004 inclusive (4ASoC at [20] - [34]). At paragraph [59] of the 4ASoC those of the representations that are said to have been "false, misleading and deceptive" are listed. The representation identified as (k) above is not one of them. 319A question was raised in the written submissions for the defendants as to whether the plaintiffs were only relying upon these "principal representations" (DWS at [139]). Mr Faulkner clarified in his oral submissions that he relied upon "the whole of the evidence and ... the whole of our pleadings" (T1222.40). In addition to the six representations above, paragraph [59] asserts that the following representations set out within [20] to [34] were false, misleading and deceptive: 20(j) [The investments were] within Mr Tomasetti's ability to pay for from his barrister's income. 20(m) The annual payment obligations for interest on the loans and project expenses would be within Mr Tomasetti's capacity to pay. 23(d) Almonds had the advantage that they would produce income after a relatively short time. 23(e) Almonds would produce income after year 4 and by year 5 incomes would be substantial so as to exceed all expenses incurred by Mr Tomasetti in owning almond trees. 23(f) As the years went by Mr Tomasetti's income from almonds would increase. 23(g) Mr Tomasetti had sufficient cash flow to fund the recommended investments. 27(i) The investments were all sound well managed investments. 27(iii) The forestry investments would provide a good income to Mr Tomasetti and Ms Cordony in their retirement because they were long term investments with good returns at around 10% per annum of capital. 27(iv) The investments could all be adequately managed on Mr Tomasetti's barrister's income. 27(vi) Mr Tomasetti had adequate cash flow to meet all borrowings. 27(vii) Costs of all projects would be less than income by 2008-09. 27(viii) (In 2004) they would "shortly turn the corner" as income was soon expected to be substantial. 31(b) Significant benefits would flow [to the superannuation fund from the joint venture]. 31(c) The Tomasetti Superannuation fund could fund its component of the joint venture investment. 34 The [2005] investments were prudent investments suitable for [Ms Cordony's] personal circumstances. 320Mr Faulkner described the FTA claim as "straightforward". First, were the representations made? Secondly, were they misleading? Where they concerned future matters - for example, "they will produce a lump sum"; "they will produce a 10% return"; "they will be suitable as retirement investments"; and "they will be suitable for the superannuation fund" - was there no reasonable basis for their making? Mr Faulkner also made the point that the plaintiffs did not need to prove all of the representations but simply that at least one representation materially contributed to the decision by the plaintiffs to enter into the investments (T1222 - 1223). 321Submissions were made on behalf of the plaintiffs concerning a number of legal principles relevant to the FTA claim. Mr Faulkner distinguished between representations as to existing matters (e.g. "these investments are sound, sensible and prudent") and representations as to future matters (e.g. the investments will achieve represented results), noting that the latter were also representations as to an existing matter, namely Mr Brailey's state of mind. 322Reference was made to the provisions of s 41 of the Fair Trading Act . Absent reasonable grounds for making a representation as to a future matter, it is taken to be misleading. The onus of establishing that there were reasonable grounds for making a representation as to a future matter is upon the maker. 323Mr Faulkner then referred to a number of cases which provided examples of misleading or deceptive representations concerned with existing matters, or advice or predictions as to future matters. 324Consideration of these legal propositions may be put to one side for the moment. The first and fundamental question to determine is, as Mr Faulkner submitted: were the representations made? 325The starting point is to note which of the pleaded, and relevant, representations were admitted (by Mr Brailey and the fourth defendant but not by the other defendants). (No further reference will be made to the defence of the fourth defendant as it is identical, in relevant respects, to that of Mr Brailey). The admitted representations are that the investments: 20(a) were sound, prudent and sensible. 20(b) would produce reasonable commercial returns with time. 20(i) would provide future income. 326Some of the representations were admitted (by Mr Brailey) with qualifications. Where the relevant representations were either not unequivocally admitted, or were denied, determination of the question whether they were made very much depends upon acceptance of the evidence of Mr Tomasetti and, to some extent, Ms Cordony. There is a very real question as to the accuracy and reliability of their evidence as to their various conversations with Mr Brailey. The accuracy and reliability of the evidence of Mr Tomasetti and Ms Cordony 327Counsel for the defendants were highly critical of the evidence of Mr Tomasetti and Ms Cordony and also submitted that the testimonial evidence in this case has such frailties that "it would be rare for conclusions provisionally reached on the basis of inference from the established facts to be disturbed by witness testimony" (DWS at [9]). 328Mr Parker referred to the judgment of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319: "Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously describe as "misleading") within the meaning of section 52 of the Trade Practices Act 1974 (Cth) (or section 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the Court: (1) what the alleged conduct was; (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relevantly subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the Court, which means that the Court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of a fact or facts to proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kind can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a cause of action based on section 52 of the Trade Practices Act 1974 (Cth) (or section 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration." 329Counsel for the plaintiffs were stridently critical of the evidence of Mr Brailey. Mr Faulkner submitted that his evidence should not be accepted "where it was in conflict with Mr Tomasetti or any other witness [or] not independently corroborated" (T1222.32). He submitted that "on that basis", Mr Tomasetti's evidence and Ms Cordony's evidence should be accepted in its entirety. Later, when dealing with a specific topic, Mr Faulkner submitted that Mr Tomasetti's evidence was "corroborated by the falsity of Mr Brailey's evidence". These submissions, with respect, lack logic and fail to acknowledge the plaintiffs' onus. Even if Mr Brailey's evidence was rejected in its entirety, it does not follow that the evidence of Mr Tomasetti and Ms Cordony must be accepted. 330Mr Faulkner also sought to characterise something Mr Parker had said as a concession that Mr Brailey's evidence was not relied upon (T1391 - 1392). That is to take what Mr Parker said too far and really amounted to a debating point rather than anything of significance. My views about it were expressed in the course of the exchange with Mr Faulkner and it is unnecessary to repeat them. 331It is of some significance to note the circumstances which led to the evidence that was given by Mr Tomasetti. The starting point is that he had no contemporaneous notes of conversations that he had with Mr Brailey (T479 - 480). The first time he set out to make a record of such conversations was when he compiled his affidavit of 17 November 2009. It purported to set out the substance and effect of conversations which occurred up to about a decade before. He was assisted by documents, but the documents that were available to him at that time were incomplete. He acknowledged that further documents that were subsequently made available to him showed that his account in the 17 November 2009 affidavit was "in error in some respects" (T482.7). 332It is to be recalled that the global financial crisis was gathering momentum in the second half of 2008. Lehman Brothers collapsed in September 2008. There were media reports concerning Timbercorp and Mr Tomasetti became "increasingly concerned that [it] might not survive" (at [137]). In December 2008 there was media speculation about the solvency of Great Southern. Mr Tomasetti repeated that he became concerned ([141]). When Ms Cordony spoke to him about some finance documents from Timbercorp in October 2008 he felt "extremely distressed" ([198]). He said that he suffered "anxiety, nervousness and agitation" ([188]). He had numerous discussions with Mr Brailey in late 2008 - early 2009. One of his concerns was the continued demands for payment of ongoing costs of the projects. 333Timbercorp went into voluntary administration in April 2009, followed by Great Southern in May 2009. It was around this time that Mr Tomasetti was coming to a full realisation of the financial difficulties that had befallen him. He attended a meeting with Mr Brailey and others at Commercial Associates on 26 May 2009. By this time he was actively considering suing Mr Brailey. He felt that he had been let down extremely badly and was angry (T561). 334Mr Tomasetti's undoubted distress had a variety of manifestations. He said that his inability to concentrate and prepare cases compromised his ability to work. He had feelings of being overwhelmed by anxiety. He lay awake at nights, unable to sleep and trembling from anxiety. He consulted his general practitioner, Dr Peter Slezak, who prescribed oxazepam. Dr Slezak became increasingly concerned about Mr Tomasetti's mental state. He referred him to Dr Robert Fisher, psychiatrist, for ongoing management of his "severe anxiety/depressive symptoms". He was prescribed antidepressant medication which he was taking at the time of preparing his primary affidavit ([211] - [218]). 335I turn now to the accuracy and reliability of Mr Tomasetti's evidence as to events, particularly conversations, that are germane to this litigation. 336It should first be noted that I accept that it is well possible that a person may accurately recall a general proposition for a very long period of time. Claims such as, " I never read a prospectus from beginning to end " and " I relied upon my accountant's advice " are so devoid of detail that, despite the time that might have elapsed, there is a greater probability that they are reliable. The situation is different when it comes to claims about the actual content of specific conversations. But where it is alleged that another party has been responsible for misleading or deceptive conduct, or negligent advice, determining what that other party said, or did not say, and the context in which things were said, or not said, is critical. It is not to be expected that there would be verbatim recollection. But Mr Tomasetti's memory about the substance and effect of conversations has been shown to be less than perfect, to put it mildly. 337The first demonstration of Mr Tomasetti's memory being faulty occurred at the commencement of his evidence when he made a number of corrections to his primary affidavit. They were not merely typographical errors. Moreover, Mr Tomasetti agreed that he had carefully reviewed the affidavit prior to giving evidence (T86), but despite this, some aspects of the corrected versions were still wrong. 338He said that he bought a farm in 1987 and sold it in 2000 (at [6]). He corrected that to read that he sold it in 1989 or 1990 (T80.45). The topic is irrelevant to the issues, but it is of some significance that Mr Tomasetti could have a mistaken recollection of some 10 years. 339He said that Mr Brailey set up a company for him, Tomasetti Holdings Pty Limited, shortly after a conversation that occurred in about 2000 - 2001 (at [21]). He said the conversation involved Mr Brailey advising him that through this company he could effectively minimise Mr Tomasetti's tax obligations. Mr Tomasetti corrected that by saying he no longer believed that Mr Brailey set this company up. It was in fact established in 1995 by his previous accountants (T81.3; EB1 at p.177). The correction was also made in Mr Tomasetti's affidavit of 14 July 2010 (at [25]). He added that it "was a dormant shelf company" which was "not involved in my financial affairs until Mr Brailey started to use it". 340Mr Tomasetti set out something of a history of his real estate purchases (at [40]). The subject matter is not significant but the mess that was made of this evidence and the attempts to claim recollections of actual conversations are significant. 341Mr Tomasetti said that in about 1996 "or so" he bought a small apartment in Mosman. He and Ms Cordony then bought a second house at Lovett Bay "for $740,000" (which was corrected to "$840,000 or thereabouts" (T81.31)). "Each time the NAB provided mortgage funds to us" (Mr Tomasetti did not bank with the National Australia Bank ("NAB") until 2003). He said that he then sold the Mosman apartment and purchased a home unit in Point Piper (the Mosman apartment was sold in April 2000; the Point Piper property was purchased in July 1999). In about 2001, they decided to sell Lovett Bay and Point Piper and buy a home at Church Point. 342In the following paragraph, Mr Tomasetti said that "in respect of each of the property acquisitions that I have referred to above, I spoke to Mr Brailey and said words to the following effect". He then purported to set out a conversation he claimed that he had with Mr Brailey about buying the house in Lovett Bay. It included: "Ted, Sassi has found a nice house at Lovett Bay and we are very interested in it. The flat at Mosman is very small and trying to manage 4 children there over the weekend is extremely difficult for me. If we buy this property at Lovett Bay, there will be ample room for everybody and lots of things for the kids to do on the weekend which will make things easier for me. The vendor wants $750,000 or so what do you think" 343The affidavit continues in the same paragraph ([41]) to set out a conversation said to have taken place subsequently with Mr Brailey in Mr Tomasetti's chambers. It concerned his financial situation and included Mr Brailey saying " What do you think Mosman is worth at the moment ?" At the end of this conversation, Mr Brailey said, " Well it all looks good to me. I'll do some work and prepare some up to date accounts and speak to Neale for you " . This was a reference to Mr Neale Howard at the NAB, a man who was not involved with Mr Tomasetti until 2003. 344Mr Tomasetti then (at [42]) set out a conversation he claimed occurred when " Mr Howard contacted me shortly thereafter " . Mr Howard said that he had spoken to Mr Brailey, " everything [would] be fine " , and that he would send some loan documentation. In the following paragraph, Mr Tomasetti said that " the same procedure was followed when we purchased Point Piper, Church Point and later our farm at Robertson in the Southern Highlands. The conversations with Mr Brailey were to the same effect " . 345At the beginning of his evidence, Mr Tomasetti volunteered a correction to paragraph 41 on the basis that the house at Lovett Bay was purchased in May 1998, some six months or so before he had even met Mr Brailey (T81.35). 346Even with that correction, the evidence was wrong in that "the conversations with Mr Brailey" concerning the purchases at Point Piper, Church Point and Robertson could not have all been "to the same effect". Mr Tomasetti denied that it was fictional to refer in his primary affidavit to a conversation about acquiring Lovett Bay for the reason that Mosman was too small (T157.1). He accepted that such a conversation did not take place, but on 17 November 2009 he "had a genuine belief in the truth" of what he had asserted. 347It is unnecessary to refer to the detail of the evidence on this subject any further. It demonstrated, however, a preparedness by Mr Tomasetti to construct a claimed recollection of conversations that could not possibly have taken place in the terms he claimed. 348I have mentioned elsewhere the corrections Mr Tomasetti made to paragraph 45 of the affidavit concerning the occasion of his first conversation with Mr Brailey about agribusiness investments, with even the corrected version being clearly wrong. His claim in the next two paragraphs that at the conclusion of their meeting he signed application forms and Mr Brailey took them away was also shown to be wrong. 349A relatively minor and peripheral matter, but something that speaks of the reliability of Mr Tomasetti's memory, arose when he was asked about a margin loan facility that he had with the Commonwealth Bank of Australia. Mr Tomasetti was being asked about the alternative option of investing by buying shares in "blue chip companies". He mentioned that this is something that he could have done if he had the funds available (T283.44). He agreed that he could have borrowed money to buy shares, but " it's never been my practice to do so because I had watched other people do that and lose money " (T284.16). He amplified on his experience of seeing other people being the subject of margin calls. He agreed that he had a margin lending facility that was put in place for him by his bank, but was adamant that he had " never used it ... for the reasons I have just described. ... I thought it was an unsound thing to do " (T284.47). Earlier in his evidence, he had said that in the period 1997 to 2009, he borrowed money if he did not have the money in his own resources to pay for investments; for real estate purchases; for real estate development; and for the investments that Mr Brailey recommended for him. However he added, " I used my own cash when I invested in the stock market " (T91). 350Mr Tomasetti was then shown a statement in respect of his margin loan account (Exhibit 5). He had in fact traded on it. The facility limit was $200,000 and the balance at 31 July 1999 was $138,000. He acknowledged that his recollection had been wrong (T287.27). 351Mr Tomasetti's signature appears on a document headed "Authority to Proceed" relating to the investment in Great Southern Blue Gum Plantations 2000 (Exhibit 4) which is countersigned by a Tony Snape. The document contained a number of significant acknowledgements (e.g. that the project was longterm and speculative with no guarantee as to possible returns). Mr Tomasetti had no recollection of Mr Snape and no recollection of signing the document. I am satisfied, for reasons given earlier, that it is highly likely that Mr Snape attended Mr Tomasetti's chambers on the day this document was signed. 352Another matter about which I am satisfied Mr Tomasetti's memory was demonstrated to be faulty was in relation to the joint venture investment by himself and the TSF in 2001. He claimed that he had no knowledge that he had entered into this investment on a joint venture basis until 2004 (T417.50). The nature of the documents, particularly where Mr Tomasetti signed for himself and on behalf of the TSF, make it very hard to accept that he signed it without any awareness that it related to an investment on a joint venture basis. I am satisfied that Mr Tomasetti was aware of this in 2001, and that his memory was faulty in this respect. 353Mr Tomasetti's recollection of the circumstances surrounding his making of three applications for investments at the end of the 2003 financial year was demonstrated to be quite poor. He gave an account in his primary affidavit of a meeting in June 2003 when Mr Brailey brought his tax returns and financial statements to chambers and their discussion included Mr Brailey extolling the virtues of almond investments schemes. He made brief reference to Mr Brailey also mentioning an investment in a Gunns Woodlot project. He said that he signed the application forms and Mr Brailey took them away. In cross-examination, Mr Tomasetti maintained that his recollection was that he had signed application forms at a single meeting and Mr Brailey took them away (T432.26). 354This recollection may be contrasted with the documents and with Mr Brailey's recollection. Mr Brailey said there was a meeting on 9 May 2003. He made file notes (EB1 at p.1166) which included reference to "Trees & Almonds". He said that he informed Mr Tomasetti of the availability and features of almond project investments. There was a subsequent meeting on 15 May 2003. It was Mr Brailey's evidence that it was at this meeting that Mr Tomasetti indicated his desire to take up both the almond and the forestry investments which had earlier been discussed. 355Even though there were in fact two applications for investment in almonds, Mr Tomasetti could only recall one. The application forms were signed on 23 May and 30 June 2003. They were witnessed by Mr Clynes and Ms Cordony respectively. There was the one forestry investment and its application was dated 3 June 2003. It was witnessed by Mr Clynes. 356The documents support the proposition that Mr Tomasetti's recollection was wrong. If he had no reliable recollection of how he came to sign the application forms, and how many, it is difficult to see how reliance could be placed upon his claimed recollection of the substance of conversations with Mr Brailey. 357Mr Tomasetti's difficulty in recollecting the conversations and events surrounding the 2003 investments would also seem to be an explanation for another matter. He gave the appearance of being in some difficulty when trying to give an explanation for his claim that he was given to think that the ongoing expenses with the 2003 almond investment would be "trivial". I earlier set out a relatively lengthy extract from the transcript of the cross-examination on this subject (T445 - 449). Mr Tomasetti's evidence about this was quite unsatisfactory. 358A topic that logically follows on from the making of the 2003 almond investments is the receipt of invoices from Timbercorp in October 2003 in relation to them. Mr Tomasetti applied to take up the offer of finance to pay a large proportion of these substantial sums (in the order of $100,000). He was asked about his decision to seek finance rather than paying cash, but he responded, " I did not make that decision Mr Parker at any time. ... I just followed Mr Brailey's instructions " (T504). He did not read the loan application; did not recall signing it; and did not recall any of the circumstances in which he did. He asserted that it was Mr Brailey's job to read these types of application forms and to tell him if there was anything important in them (T505). 359I observed earlier that the nature of the documents appeared more consistent with them having been sent direct from Timbercorp to Mr Tomasetti's chambers. The applications were signed by Mr Tomasetti and witnessed by Ms Cordony. Ms Cordony said that the decision to take up the finance option was one made without recourse to Mr Brailey (T612-613). This topic provides an example of Mr Tomasetti having no real recollection of something but seeking to attribute responsibility to Mr Brailey where no such responsibility lay. 360Mr Tomasetti took up a further $97,000 investment in an almond project in October 2003. He said in his affidavit that he had no recollection of signing up for this investment. He said that if he had made " a decision to buy further almonds in September or October of 2003", he would definitely have remembered it (T518.8). There is no question that Mr Tomasetti signed the application form. It is dated 23 October 2003. This was two days after he had signed applications for finance for almost $100,000 to meet expenses for the earlier almond investments. 361Recollection about the circumstances surrounding the largest of all of the investments, the $400,000 almond project in 2004, was also not without errors. Mr Tomasetti's affidavit originally contained the assertion that Mr Brailey came to his chambers on or about 14 June 2004 with tax returns and financial statements. That was clearly incorrect. He changed it to an assertion that it was on about 3 June 2004 and the documents related to agribusiness. Mr Tomasetti retained in his affidavit an assertion that he had looked to find his balance sheet and observed that his capital position "looked healthy enough". He conceded in cross-examination that he could not maintain a claim that this is something that occurred at this meeting. Another correction had to be made in relation to a document Mr Brailey provided during the meeting - "Statement of Advice" was changed to read "Financial Services Guide" when it became apparent that the Statement of Advice came into existence later than 3 June 2004. 362A most significant concession was made midway through the cross-examination which has a bearing upon the entirety of Mr Tomasetti's evidence. He was asked about his affidavit of 29 October 2010 in which he claimed that he would not have entered into the investments if he had been aware of certain things. He was challenged as to whether each of 13 things he listed applied to the individual investments. For example, he was asked (T382) whether he would not have entered into the first investment he made in 2000 if he had been aware: "That the borrowing necessary to fund the projects would be approximately $1.6 million by the end of ... June 2008". 363Mr Parker suggested that such a proposition would be ridiculous. Mr Tomasetti responded with the assertion that it was part of a strategy: he believed that Mr Brailey had "targeted" him for ongoing commitment to these projects (T382.24). He then gave this evidence: "Q. You seriously maintain that, that he always intended right from 2000 that you would be in the financial position that you are no [sic] now? A. I believe Mr Brailey target[ed] me, in light of my position in life and my income, as a target for these types of investments and he intended to sell them to me on a continuing basis, and would have continued to sell them to me unless I had stopped him. Q. And do you think that that has coloured your evidence in this case at all? A. No. But the catastrophic loss I've suffered, it's undoubtedly coloured my evidence. I have a - you know that I'm not well. It's difficult not to be coloured." (T382.34) (Emphasis added) 364Ms Cordony did not pretend to recall what was said in any discussions with Mr Brailey about the two investments she made in 2005. She advanced reasons for why she invested in the two projects (for example, "I trusted Mr Brailey and was guided by his suggestions"), and also said that she was not told things (for example, he did not tell her that she would incur additional payment obligations in subsequent years). She made a number of significant concessions in the course of cross-examination, culminating in her agreement that she could not legitimately blame Mr Brailey on the ground that she was ill-advised (T648.34). In the light of those concessions, it is difficult to conclude that he engaged in some form of misleading or deceptive conduct in relation to her investments. 365The 2005 investments again highlight problems with Mr Tomasetti's evidence. His account was generally to the effect that he was unaware of them at the time they were made. This included that he was unaware that he had undertaken an obligation to pay for them. Those claims are hard to accept. Ms Cordony could not say with certainty that Mr Tomasetti was not made aware that he was signing obligations to finance her investments (T635). In the end, she agreed with the proposition that she had not deceived him but offered the concern that she had not explained "things fully enough to him" (T646). 366The forms that Mr Tomasetti signed, by their very appearance, make it difficult to accept that he had no idea what he was signing. I will only refer to some examples to make the point. In relation to the citrus investment application, he signed a credit card authorisation for $7,000. Immediately above that part on the page there is a very clear indication that the application is for citruslots with a total amount payable of $70,000. The application for vinelots in the Gunns project was signed on a page headed "Application and Power of Attorney Form". He signed immediately underneath the "Applicant's signature", that is Ms Cordony's signature. Even a very cursory glance at the page would have revealed that it was an application for an investment in vinelots of $34,650. On the following page, Mr Tomasetti signed a credit card authorisation for $6,930. On another page, headed in very large and bold type, "Part F - Direct Debit Authorities", Mr Tomasetti signed in two places: once under a similarly large and bold heading, "Authority for Loan Repayments Via Direct Debit from Bank Account", and again under a heading in similar style, "Credit Card Authority for Loan Establishment Fee". How a person, no matter how busy or pre-occupied, could sign such documents without either having been told what they were for, or failing that, asking what they were for, defies imagination. 367There are some other aspects of the evidence of Mr Tomasetti and Ms Cordony that do not bear upon the reliability of their memories but are relevant in a more general way to the FTA claim. One is that Ms Cordony conceded an awareness of a number of risk factors: price fluctuation; costs not being capped; the investor having no control over costs; yield fluctuation; the borrower being committed to repayments, despite no, or reduced, yields; and that there was a degree of speculation (T652 - 654). She agreed that she appreciated all of these things before entering into her two investments (T654). 368Ms Cordony claimed in her affidavit of 1 November 2010 that she would not have entered into the investments if she had been aware that they were "highly risky". However, she agreed that she knew they were "risky projects" (T656-657). It may be a matter of semantics, but it is difficult to see any significant difference between investments that are "highly risky" and "risky projects". There was also the claim by Ms Cordony in that affidavit that she would not have entered into the investments if she knew that they could not be sold. However, she conceded that she had been aware of that beforehand (T659; 660). 369Mr Tomasetti acknowledged that he knew that the projects were "not as safe as other potential investments", in particular that they were not as safe as blue chip shares. He was conscious of this at the time he made them and that he did not have to make them and could have instead invested in safer investments. He also acknowledged that he was aware of some of the "agricultural risks" and "finance risks", although he did not contemplate the level of debt he would eventually accumulate (T383). 370There was another feature of Mr Tomasetti's evidence that did not encourage its acceptance. At various times in the cross-examination, he gave the impression of being reluctant to give a direct answer to questions. The following is an example. He was being asked about infrastructure bonds being no longer available for use in a tax minimisation strategy in the 2000 financial year. "Q. Did you ask anyone to do it for you; that is, to find out whether something is available to reduce your tax? A. In my initial interview with Mr Brailey, I raised the issue of tax minimisation. Q. That was 1998? A. That was December 1998, yes. Q. But I was asking you about 2000? A. I don't believe I gave any specific instructions to anybody at that time to go looking around for other ways of minimising my tax. Q. Did you expect Mr Brailey to do it as part of his job as your accountant? A. I think the answer to that is yes . Yes, to - yes. Q. So assuming, as you may, for the purposes of these questions that the infrastructure bonds had come to an end-- A. Yes. Q. --your expectation of Mr Brailey was that he should look around to see if he could find something to replace it in terms of obtaining a deduction? A. No, not specifically. Q. Isn't that what you have just said? A. No, I didn't expect him to go looking around for anything. I just expected him to give me advice from time to time about matters including tax minimisation, as had been done in previous years since I first commenced my professional life. Q. Can we at least agree on this: in about April 2000, you were looking to Mr Brailey to see if he could find ways in which you could lawfully reduce your tax? A. I have difficulty in answering that question, I'm sorry. Q. Are you having trouble understanding it? A. I didn't give Mr Brailey any specific instructions to that effect, Mr Parker. Q. That's why I asked you about-- A. But in my initial discussions with him, I did draw to his attention that part of my expectations were to make me aware of lawful tax minimisation measures. And by that I had in mind the service company arrangements and things of that nature. Q. Now-- A. I did not give Mr Brailey any instructions in the 2000 year specifically to go out and find for me investments to replace the infrastructure bond. Q. Well, I didn't suggest you had given him a specific instruction-- A. I'm sorry. Q. --my question was whether that was your expectation? A. No, no, my-- Q. My question first was, was it your expectation-- A. No, it wasn't my expectation -- Q. Please, let me finish this question-- A. I thought you had finished. Q. Was it your expectation in that year that Mr Brailey, as part of his duties as your accountant, would do his best to see whether there were avenues, apart from the ones that you were already using, for you to lawfully reduce your tax? A. Yes ." (T234 - 235) (Emphasis added) 371Another example of Mr Tomasetti appearing to be reluctant to give a direct answer to a straightforward proposition appears in the following exchange. To put it in context, Mr Parker was asking about notes Mr Tomasetti made at and shortly after a meeting that occurred in 2009: "Q. That is the first in chronological sequence meeting in this case of which you have a contemporaneous note? A. No, that's not right. Can we go to the facsimile that I wrote on 3 November 2005 and to which Mr Brailey replied on 4 November. That's a contemporaneous note. Q. It's not a contemporaneous note of a conversation? A. It's a contemporaneous note of exactly what was occurring and it's a contemporaneous note of his response at the time. Q. It is a contemporaneous document. Will you agree with me this, you've referred in this affidavit by the time we get to 2009 to a very large number of conversations that you say you had principally with Mr Brailey? A. Well, only with Mr Brailey essentially sir. I haven't had conversations with others in relation to these matters at Brailey Fenton Lane & Co and there are a number of conversation [sic] and there are contemporaneous notes along the way that myself and Sassy - I dispute the fact that there are not contemporaneous notes. Q. You never set out at any of these meetings to actually make a note at the time of what had transpired at these meetings? A. No, I did not. Q. All of the conversations that you have deposed to which you say took place at the time when you made the decision or you received advice in connection with entry into the projects which are the subject of these proceedings, every one of those conversations is unsupported on your part by any contemporaneous note? A. No, that's wrong sir. Q. Which projects gave rise when you were entering into them to conversations of which you have a contemporaneous note? A. Well, from the very first time that I met Mr Brailey there is a note on a Morgan Stockbroking pad of the conversation I had with him. [This was Mr Brailey's notes of a conversation in December 1998, 16 months before any conversation about agribusiness projects (EB1 at pp. 159 - 170)]. Q. That's Mr Brailey's note? A. I thought you were asking me of a contemporaneous note of my conversations with Mr Brailey? Q. You know that Mr Brailey made contemporaneous notes of many of the conversations the subject of your evidence, don't you? A. No, not many, some. Q. He made some? A. Some, yes. Q. And you haven't got one? A. No, I don't. I've got the note from that meeting but otherwise I-- Q. By that meeting? A. --there may be. Q. Please? A. I haven't answered the question. HIS HONOUR Q. I think Mr Tomasetti is still answering the previous question? A. Thank you very much, your Honour. I do not agree that there are no contemporaneous notes. The documentary record is huge and there are contemporaneous notes, but there's not many and apart from the ones that I've mentioned to you. I'm not in a position to identify them immediately. PARKER Q. I'm asking about your notes? A. No, I didn't take note of my discussions with Mr Brailey Mr Parker. I didn't do that." (T478 - 480) 372There were also occasions when Mr Tomasetti gave the impression of being reluctant to nominate or agree to something that might not have helped his case. It is hard to avoid the conclusion that legitimate tax minimisation was a major factor in deciding to enter into these investments. Mr Tomasetti was earning substantial professional fees which were increasing each year. Infrastructure bonds, a means by which he obtained significant tax deductions in the 1998 and 1999 financial years, were no longer available. Thereafter the agribusiness investments enabled him to reduce his taxable income considerably. 373However, Mr Tomasetti repeatedly said that tax minimisation was not an important consideration. For example, he said tax was not the primary consideration (T301.27); it was not important to him (T362.50); the "tax incentive was not [his] incentive for going into these arrangements" (T363.27); and he was "not particularly keen or otherwise" to receive a tax deduction (T520.15). Mr Parker specifically asked him about the advantages he saw in making the investments in 2000. He responded by identifying diversification, forced savings, and the opportunity to receive an income in years to come. It was only after Mr Parker prompted him with the "elephant in the room" that he agreed that "tax" was another advantage (T296). 374Mr Tomasetti twice referred to his position of being a barrister. These were unnecessary and were unimpressive and self-serving attempts to bolster his own credibility: "Q. In November 2009, it was probable you'd received the prospectus for this project and when you gave evidence today you wouldn't go that far. What is the explanation for that? A. The exchange before lunch, my position as a barrister, I need to be very, very accurate with every answer that I give ." (T244.16) And later: "Q. Is that a serious answer? A. It is an absolute serious answer, your Honour, on my oath, as a barrister of 32 years ." (T460.12) 375Because there is strident criticism by the plaintiffs of the evidence of Mr Brailey, in assessing the reliability of their evidence I have not had regard to anything he said unless it is corroborated by documents. However, there is evidence of another witness which is reliable and contradicts that of Mr Tomasetti. It is concerned with the topic of the meeting in May 2009 at the offices of Commercial Associates, at which Mr Tomasetti, Mr Brailey and Mr Fleming Stojanovski were in attendance, and in which the investments were discussed at length. Mr Stojanovski's affidavit evidence (at [21]) included that Mr Brailey made the following response to Mr Tomasetti: "I have advised you of these risks, Peter. Either you don't recall this or didn't at the time have the necessary level of interest for this information." 376He also said (at [26]) that in response to allegations by Mr Tomasetti that he had not been properly advised about a range of matters, Mr Brailey responded, " But I did advise you of that " . 377This evidence was disputed in the cross-examination of Mr Stojanovski but he maintained that this was his recollection of what was said (T1078 - 1079). 378Mr Stojanovski also gave evidence (at [32] - [33]), which was not challenged, that Mr Brailey said to Mr Tomasetti "Peter, you can't spend the amount of money you have on cars and boats and other luxuries without it having an effect"; and at the end of the meeting, Mr Tomasetti said: "I always thought that I could spend as much as I liked because I was earning such a large income". Conclusions concerning the accuracy and reliability of the plaintiffs' evidence 379It is readily acknowledged that Mr Tomasetti was a very busy professional who was devoted to long hours of hard work. Although Ms Cordony described him as being an "incredibly self-sufficient barrister" (T 594.7), I accept that he had little time or inclination to deal with the minutiae of the administrative and financial aspects of life. He engaged people to perform such tasks and to provide him with advice as necessary. 380However, it must also be acknowledged that he is an intelligent man who is reasonably well experienced in commercial life in a general sense. He is particularly astute in the purchase and development of real estate, a field in which it would seem he was confident in making his own decisions. He had the experience of being directly involved in two farming operations prior to 2000 through which he became aware of a number of risks that beset agricultural pursuits. 381Mr Tomasetti's version of events calls for acceptance of a number of propositions that, at first blush, are difficult to accept. He was completely unfamiliar with agribusiness projects when an accountant he had only known for 18 months first discussed them with him in April 2000. The proposed investments required him to commit to an initial outlay of some $300,000. This involved him borrowing a substantial proportion of that amount. This was a significant financial transaction and yet he rejected an opportunity to peruse the prospectuses that were offered to him and he signed forms without reading them. He sought to portray that the only risk he was aware of in these agricultural pursuits was fire. Matters such as drought, flood, pests and other risks mentioned in the prospectuses were not matters he considered. Mr Brailey did not tell him about them but should have. 382Bills subsequently arrived requiring the payment of further considerable sums. He paid little, if any, attention to these. He assumed it was all part of the plan and paid them, often committing to further substantial loans to do so. He signed applications that contained warnings that the projects were speculative and, for that reason, borrowing to fund them involved risk. He did not read them. 383In the ensuing four financial years, with ever increasing expenses and loan repayments for investments already made, he committed to further investments in the order of $50,000, $100,000, $300,000 and $500,000 respectively. On one occasion an investment was made without him even realising he had made it. Every investment was made without reading a prospectus or PDS. At the most, he flicked through some of them. He agreed that when he came to look at these types of documents in 2009, it did not take long "to see that they were full of reservations, cautions and exclusions" (T566). 384The foregoing is obviously a very broad description of Mr Tomasetti's version. But in essence, that is what he asks to be accepted. At face value, it would seem improbable. That is not to say that it cannot be accepted, but it would require persuasive evidence to support it. 385I have no hesitation in saying that I am not satisfied that Mr Tomasetti has set out to be dishonest. I am also mindful of the need for caution in the assessment of the credibility of witnesses. In Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, per Heydon JA at [35], it was stated: "It is common enough in litigation for witnesses with a truthful story to succumb to the temptation of gilding the lily or over-egging the pudding. The test for the trier of fact is to separate the truthful parts from the rest." 386Reference has been made during the course of my review of the evidence concerning each investment, and in this portion of the judgment, to a number of aspects of the evidence of Mr Tomasetti which lead me to conclude that I have very real doubts about its accuracy and reliability. 387His recollection was shown to be faulty in many respects. There were conflicts between his evidence and irrefutable documentary evidence. The manner in which he gave his evidence was, on occasions, unimpressive. His accounts of the substance and effect of conversations were often unrealistically dressed up to make them sound like a verbatim account to suit the pleadings. One of many examples is his claim that he said to Mr Brailey at their first meeting when agribusiness investments were discussed: "Well Ted, I know nothing about these products, I've never heard of them before and I can only rely on you. Do you think these are sound, prudent, sensible investments as I know nothing about them?" 388In the end, it is not possible to have any confidence in Mr Tomasetti's recollection of significant events, particularly of conversations. It often appeared to be a reconstruction of what he would like to think occurred, rather than what in fact occurred. Mr Tomasetti found himself in a terrible financial plight in 2009. I am satisfied, as he conceded (T382), that his evidence has been "coloured" by "the catastrophic loss [he has] suffered". 389I have come to the view that Mr Tomasetti's evidence should not be accepted where it is in issue and not independently supported. 390Ms Cordony was unable to recall the detail of important conversations and made a number of significant concessions. Her evidence does not advance the plaintiffs' case in respect of the investments made in 2000 to 2004 and lacks the cogency to establish the case in respect of the investments made in her own name in 2005. Determination of FTA claim 391There are many frailties in the evidence of each of Mr Brailey as well. Mr Parker put that it was unnecessary for Mr Brailey's evidence to be accepted for the defendants' submissions to prevail. I have earlier indicated that rejection of Mr Brailey's evidence does not compel acceptance of the plaintiffs' evidence. 392While he was critical of Mr Brailey's evidence, Mr Faulkner did place reliance upon certain things that had been said which were characterised as concessions (see, for example, T1397). Even if such a characterisation was correct, where the subject matter concerned whether a word was used, or a statement was made, in conversations that occurred years earlier, there are very real questions as to whether what was conceded was accurate and reliable. 393I find myself left in the position of having real doubt about the terms of the conversations concerning each and every one of the investments where there is no reliable confirmatory documentary evidence. This case has provided a perfect example of one of the matters to which McClelland CJ in Eq referred in the extract from his judgment in Watson v Foxman set out earlier: "[H]uman memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed." 394That leaves the FTA claim to be determined on the basis of the documents and what has been admitted by Mr Brailey. 395Mr Brailey claimed that he offered a prospectus or PDS to Mr Tomasetti and Ms Cordony in relation to each of their respective investments. The testimonial evidence is insufficiently reliable to establish that this occurred on every occasion, but it is clearly the case that it occurred on some, and probably most. Each of these documents provided a description of the potential benefits and risks of the investments in a manner that the plaintiffs have not sought to establish was in any respect erroneous. Each of the application forms that Mr Tomasetti and Ms Cordony signed contained either an acknowledgement that the prospectus/PDS had been read, or, in the case of the Gunns investments, a direction that the investor should read that document in its entirety before deciding to invest. 396Some of the application forms contained other acknowledgements or declarations. The Norgard Clohessy Australian Blue Gum 2000 application form, one of the first that Mr Tomasetti signed, included that the applicant acknowledged that no particular return was guaranteed and that subscription in the project was considered speculative. The finance application for that investment included that the borrower understood the application was for a full recourse loan which must be repaid in full, with interest, irrespective of the success or otherwise of the investment. The Great Southern Blue Gum Plantations 2000 application form included that the project was intended to be long term in nature in commercial forestry and the risks set out in the prospectus were acknowledged. The "Authority to Proceed" for that investment included that the project had been explained to the applicant; participation was considered to be speculative (specific risks being listed); it was a long term investment; redemption before harvest may not be possible; it was not possible to predict returns with certainty; and no guarantee was given. The various Timbercorp application forms invariably contained an acknowledgement as to the investment being speculative and that borrowing to fund it was therefore subject to risk. 397There are admissions by Mr Brailey that he made some of the pleaded representations. Not all of them are contended to have been erroneous, misleading or deceptive. For example, the admission that he represented that the investments would provide "immediate taxation advantages" and were "fully supported by an appropriate tax ruling" were undoubtedly correct. Three of the representations pleaded in respect of the investments made in the financial years 2000 to 2004 inclusive are potentially of significance. They are included in what counsel for the plaintiffs referred to as "the principal representations" (PWS at [22]). They are that the investments were "sound prudent and sensible commercial investments", that they would produce reasonable commercial returns with time, and that they would provide future income. Some of the other pleaded representations were admitted with qualification. It is not possible to reject any of the qualifications because of the lack of cogent and reliable evidence to justify doing so. 398As to the second and third of the admitted representations, the submission for the plaintiffs was that they "did not produce reasonable commercial returns with time" and they "did not provide future income" (PWS [34]). That is a submission made with the benefit of hindsight. It does not establish that this is something that was reasonably foreseeable at the time the representation was made. It was submitted on behalf of the defendants, correctly in my respectful view, that "the mere fact that a prediction or opinion as to future events is not ultimately fulfilled does not make that prediction or opinion misleading or deceptive" (DWS [140]). 399As to the first admitted representation, what is "sound, prudent and sensible" as an investment is a question of relativity and would depend upon factors such as the circumstances of the investor and the purpose the investment it is designed to serve. The word "speculative" that has been used so much in these proceedings is also relative. A retiree investing all of his or her funds in a start-up mineral exploration company could be regarded as making a speculative investment that was not sound, prudent and sensible. In the case of a very wealthy person with a substantial annual income, investing a modest sum in such a way might also be speculative, but would not be regarded as unsound, imprudent or unwise. 400In dealing with the submissions for the plaintiffs, both written and oral, it is necessary to relate them to the individual investments, or to the groups of investments to which they properly relate. At times that has not been an easy task because the submissions often tended to take a global approach and argue that certain representations related to every investment. 401For example, it was put in written submissions (PWS at [34] - [35]) that the representation that the investments were not "sound, prudent and sensible", in part, because they were "high risk". One of a number of reasons advanced for the proposition of "high risk" was that in relation to Ms Cordony's 2005 investments, Mr Brailey had asserted that there was "short-term risk even though it was a long-term project". Putting aside for the moment the validity of the proposition, it has to be borne in mind that "sound, prudent and sensible" is not pleaded (and admitted) to have been a representation made by Mr Brailey in respect of the 2005 investments. 402Earlier, when referring to what were said to be the "principal representations as to future matters", five matters were listed and they included that they "would achieve the objectives referred to in sub-paragraph 9(i) of the Third [and Fourth] Amended Statement of Claim" (PWS at [22]). Sub-paragraph 9(i) refers to the stated desire of Mr Tomasetti and Ms Cordony to "invest prudently with a view to having sufficient capital and superannuation funds to reside in the Southern Highlands in due course on a small farm." This is something they raised in a meeting with Mr Brailey on 9 August 2003. He cannot have made a representation about investments achieving that objective prior to then. 403Counsel for the plaintiffs submitted (DWS at [34]) that the investments were not sound, prudent and sensible because they were: a) High risk, including the risk of complete loss of all investment moneys paid. b) Speculative. c) The risks were transferred almost entirely to the investor. d) There was no certainty of any income, but there was complete certainty of the requirement to pay all outgoings for the life of the project, irrespective of receipt of any income. 404A number of submissions were made in support of the proposition that the investments were "high risk" (PWS at [35]). Not all of them were concerned with features of the investments. Some were concerned with Mr Brailey's conduct, for example, not making an assessment of Mr Tomasetti's tolerance to risk in 2004. (In relation to that assertion, I note the transcript reference (T1024) is to Mr Brailey saying he made no formal assessment). Other submissions were concerned with matters that had nothing to do with the individual investments - for example, an absence of diversification of Mr Tomasetti's range of investments. 405In dealing with the factors which are properly relevant to the level of risk of individual investments, the first was the submission that the tax benefit of the investments was a significant factor, but it depended completely upon compliance by others with the ATO product ruling that applied to each project. It was asserted in relation to this, with reference to the evidence at T1012 - 1013, that Mr Brailey "never properly considered" the possibility that there might not be such compliance. I have reviewed the evidence to which reference was made. It does not support the "never properly considered" assertion. To the contrary, Mr Brailey's evidence was that he considered the issue and determined that there were good grounds for being optimistic that the ATO rulings would be complied with. The plaintiffs have not sought to establish that Mr Brailey's determination was wrong. 406Reference was made to the absence of a secondary market, thus rendering the investments illiquid for their entire term. Mr Brailey acknowledged that was the case. It was a matter that was addressed in each prospectus or PDS. 407Then there was the absence of "certainty of income". Reference was made to Mr Brailey's evidence (at T1028) where, in the context of questions about the Timbercorp Early Almond 2004 investment, he said there was "no absolute certainty" of income. Earlier in the cross-examination about this investment, it was being put to him that the cashflow analysis (Exhibit M at pp. 307 - 308) showed very substantial expenses over the life of the project that the grower was committed to pay regardless of the income received. It was suggested to him that he had not considered the "worst scenario", that is, that there was no income. His responses included, " I don't understand how you can just forget about the income" and " that does not seem like a - any way reasonable scenario to me " (T1010). 408There is no evidence from which a conclusion could be drawn as to how an assessment could have been made in 2004 of the prospect that this investment would not have generated for its growers the income anticipated. In investments of this type, anything might be possible, but the question is how realistic the possibilities are, and how such possibilities should have been foreseen and assessed by a person in Mr Brailey's position. 409The plaintiffs' submission was, in part, that there was "complete certainty of the requirement to pay all outgoings for the life of the project" (PWS at [34(d)]). In the case of the almond projects which were to have a "life" of 20 years, that would appear to be an alarming prospect. Mr Parker's submission was that this was an overstatement (T1350). There were provisions for the unit holders or the manager to wind up projects. Mr Parker cited the example of the ITC Solidwood 2001 project which was wound up following it becoming commercially unviable. It does not seem to be realistic that in the event that something occurred which severely compromised the viability of a project, that the unit holders would sit by and pay ongoing expenses for the entire balance of the project with the prospect of no or little income coming their way. 410Each of the admitted representations must be seen in the context in which they were made. The investments were being proposed or recommended in order to achieve a number of purposes, a significant one of which was to legitimately minimise the tax payable upon a large income. I accept that Mr Tomasetti said "nothing speculative" to Mr Brailey in December 1998 when they had a discussion about his investment strategy. However, that was in the context of Mr Tomasetti having Commonwealth infrastructure bonds available to him for tax minimisation purposes. They were no longer available and some alternative investment approach needed to be considered for the 2000 tax year and beyond. 411The context also includes the sort of person who Mr Tomasetti is. I have earlier described a number of his personal attributes and experiences. He was far from being a person who was unintelligent, naive, poorly educated and inexperienced in investment and financial matters. He certainly had the capacity to understand the cautionary statements in the prospectuses. 412It must be borne in mind that in respect of future matters, the onus is upon the maker to establish that there were reasonable grounds for making the representation: Fair Trading Act, s 41 . Whether or not Mr Brailey orally informed Mr Tomasetti of the risks associated with the projects, he at least conveyed that information in the form of providing the prospectuses. His representations should be understood as being, in effect, "the investments have these attributes" (the three admitted representations), "subject to what you must also understand about them" (the qualifications and warnings in the prospectuses). 413I am not satisfied that Mr Brailey engaged in misleading or deceptive conduct in respect of the three admitted representations or, for what it is worth, in relation to his dealings with Mr Tomasetti and Ms Cordony in relation to the investments generally. Negligence 414In paragraphs 40 and following of the 4ASoC, it is pleaded that Messrs Brailey, Fenton and Lane owed a duty of care to the plaintiffs "with respect to recommendations, encouragement, wealth management advice and financial planning advice" given to the plaintiffs concerning the investments to act with the reasonable skill, care and prudence of professional accountants, wealth managers and financial planning advisors. It is contended that in breach of that duty, they were negligent in giving the recommendations, encouragement and wealth management advice to the plaintiffs to invest in the projects. 415This claim, insofar as it concerns the second and third defendants, depends in part upon determination of the partnership issues. For the moment, consideration will be confined to whether Mr Brailey was negligent. If he was, the consequences for other defendants may then be considered. 416Before turning to the submissions that were made on the negligence claim, it is appropriate to refer to the evidence of Mr Geoffrey Wall who sought to provide opinions as to "the conduct of a reasonably competent financial planner/advisor". Evidence of Mr Geoffrey Wall 417Mr Wall prepared three reports. His main report, dated 19 November 2009 ("the report") was supplemented by further reports of 9 July and 30 September 2010 ("the first and second supplementary reports"). Objection was taken by the defendants to this evidence. Submissions were made by counsel on the objection but it was agreed that a ruling was not needed before the end of the hearing. Mr Wall was called and cross-examined on 17 November 2010. Counsel made submissions concerning his evidence in February 2011 in the event that I determined that it was admissible. 418An important point that must be borne in mind in relation to Mr Wall's opinions is the extent to which, if at all, it is suggested that Mr Brailey's conduct fell short of the standards of conduct of a "reasonably competent financial planner" that Mr Wall speaks of, and whether such shortcomings as there were had any real bearing on what occurred. For example, in relation to the first section of the report, what is the significance of the fact that Mr Brailey did not have Mr Tomasetti complete "a comprehensive Client Questionnaire" (paragraph 11.9 of the report)? What additional information would Mr Brailey have derived if he had done so, and how would that have affected the advice that he provided? 419At paragraph 12.2, Mr Wall set out a list of information that "should be gathered from the client by interview and completion of an appropriate Client Questionnaire". The sixth bullet point in the list, to take an obvious example is: "Full particulars of the client's current health. This investigation may necessitate having the client undertake medical examination. The presence of a life-threatening illness is critical to wealth management and future financial planning." 420Investigating the client's health was one of the matters referred to in the plaintiff's submissions (PWS at [48]) in a summary of Mr Wall's evidence. Mr Brailey was not cross-examined about whether he investigated Mr Tomasetti's health, and it was not suggested that he should have had Mr Tomasetti undertake a medical examination to determine if he had a life-threatening illness. There has been no suggestion that if this had been done, anything of significance would have been revealed. This highlights one of the difficulties I have encountered with the submissions for the plaintiffs. It is one thing to refer to the evidence, but that is meaningless without a submission as to how it is relevant and supports the case that is sought to be made. 421Another problem with Mr Wall's evidence is that it assumes as facts the matters deposed to in the plaintiffs' affidavit evidence and referred to documents without the benefit of what had been said in the oral evidence. For example, reference was made in the written submissions for the plaintiffs (PWS at [51]) to Mr Wall's evidence: "The Morgan's 'Personal Profile' document completed by Mr Brailey is superficial, and does not satisfy the 'know your client' rule and Mr Tomasetti's circumstances. (see section 14.4)" 422The document to which he referred was something that was used by Mr Brailey to jot down some notes during his initial meeting with Mr Tomasetti in December 1998. It was not an exercise of a financial planner obtaining a full profile of his client's circumstances, needs and desires as a basis for providing investment and wealth creation advice. 423Another general observation about Mr Wall's report concerns his criticisms of the statements of advice that are in evidence. Clearly they were perfunctory, inaccurate and ineffective attempts to purport compliance with legislative requirements. They had no bearing on the decisions of the plaintiffs to enter into the investments. Recognising that, there is little to be achieved by exploring the detail of the extent of their inadequacy and failure to comply with the standards of a reasonably competent financial planner. 424I turn to deal with Mr Wall's reports in more detail. The report first dealt with the appropriate steps that should be taken by a reasonably competent financial planner in providing financial planning advice to clients, both generally and in respect of specific investments. Much of what appears in the first section of the report is concerned with Mr Wall's understanding of the law. It is unnecessary for Mr Wall to make submissions on the law and opinions he expressed that amount to legal conclusions are clearly inadmissible. However, the opinions that are subsequently expressed about what a reasonably competent financial planner should do (paragraph 11.8 ff) are relevant and properly the subject of expert evidence. They are expressed, however, in very general terms and without reference to the facts of the case at hand. Paragraph 11.11 is particularly pertinent in that respect. 425The second section of the report is concerned with the information and detail that a reasonably competent financial planner should obtain from a client prior to making recommendations and providing advice with respect to financial products. Much of this is common sense, that is, not a matter requiring expert opinion. However, the factor that renders it admissible is the comprehensive way in which Mr Wall is able to list all relevant factors, a matter generally beyond the capacity of a person without qualification, training or experience in the field. 426The third section of the report is concerned with the steps that should be taken by a reasonably competent financial planner in assessing specific investment products and their suitability for specific clients. There are problems with the admissibility of this section. Some of it is repetitive of what is said in the first section of the report, but, in the main, it states matters which are really a matter of common sense, rather than opinions derived from the author's training, study or experience (see, for instance, paragraph 13.13). To the extent that the content of this section involves Mr Wall providing legal interpretations, it is inadmissible. 427The fourth section of the report sets out Mr Wall's opinions as to the suitability of the investments recommended by Mr Brailey. The opinions rely upon versions of events set out in the affidavits of the first and second plaintiffs. Elsewhere I have expressed reservations about those versions. 428Questions about admissibility arise in relation to various paragraphs within this section. They need not be determined because the entire section is of little or no utility with the exception of the final paragraph: "14.36 A reasonably competent financial planner would have provided a comprehensive projection of cash flows relating to further borrowings due to ongoing cost requirements, variations in interest rates, and how these relate to variations in income received from the investment over its life." 429The fifth section of the report contains Mr Wall's opinion as to the nature and character of the investment schemes recommended by Mr Brailey to the plaintiffs and how he would classify them generally. He expressed a highly negative opinion about them, but it was based upon an opinion he formed of some unspecified agricultural managed investment schemes he investigated in the mid-1990's. His opinion is, in effect, "they had many negative characteristics and therefore the ones that Mr Brailey recommended have too". That is not a proper foundation for an expert opinion about different investments at a different time. The section fails the test of relevance: Evidence Act 1995, s 55. 430The sixth section of the report was not read. 431The seventh section contains a response to a request for Mr Wall's opinion as to the "suitability and appropriateness of the Agricultural Managed Investment Schemes as investments for [the plaintiffs]". Much of this section is premised upon the material in the plaintiffs' affidavits. It therefore suffers from the same problem discussed in relation to the fourth section. An additional difficulty is that Mr Wall often expresses himself in terms of his personal beliefs. Paragraph 17.10 contains an assertion that Mr Brailey exposed the plaintiffs to investment risk far greater than that which was appropriate for them. "These risks were detailed in [the sixth section] of this Report". Given that that section was not read, this opinion is inadmissible on Makita v Sprowles grounds. Paragraph 17.11 in the first, second and last sentences contains matters which are obvious and not a matter for expert evidence. The third sentence is not based upon disclosed reasoning: Makita v Sprowles . Paragraph 17.12 contains admissible expert opinion, but it is of no assistance as the opinion fails to take into account all of the relevant circumstances, particularly the tax benefits associated with the investments. Paragraph 17.13 suffers from the problem that it is linked to, or based upon, opinions expressed elsewhere in the report that are not admissible. The concluding opinions in paragraphs 17.14 - 17.15 are inadmissible, given they are based upon that which precedes them. 432The eighth section of the report contains Mr Wall's response to a question as to what a reasonably competent financial planner would have advised "our client" with respect to the taxation and cashflow implications of the investments and the incurring of loans with respect to them. 433Mr Parker submitted that this entire section was inadmissible on the basis that (a) there is no pleaded complaint about the tax deductibility of the investments, and (b) there is no indication of what a cashflow analysis would have revealed and, in any event, what is said about cashflows is stated at "a level of complete generality". 434In my view the entire section is admissible. The opinion of Mr Wall concerning the taxation implications of the investments is not solely concerned with tax deductibility. It suggests six matters that a reasonably competent financial planner would have done in relation to the taxation aspect generally. They are not matters necessarily within the knowledge of a lay person and I am satisfied that they are the product of Mr Wall's specialised knowledge based upon his training and experience. 435The problem, however, is that the plaintiffs have not established that Mr Brailey failed to do anything of significance in relation to the various matters listed in paragraph 18.1, apart from the opinion that he should have "referred Mr Tomasetti to his accountant to obtain his ... opinions of the taxation implications". That, however, suffers from the problem that Mr Wall appears to have overlooked the fact that Mr Brailey was Mr Tomasetti's accountant! 436As to the cashflow implications, whilst it is true that what Mr Wall states is at a level of generality, I do not accept that for the opinion to be admissible it would be necessary for there to be an indication of what a cashflow analysis would have revealed in the circumstances. Mr Wall's opinion that a reasonably competent financial planner would have provided "detailed annual cash flow charts" that would take into account a variety of variables including "before and after tax scenarios" is useful, not obvious to a lay person and is clearly a product of Mr Wall's specialised knowledge. 437However, admissibility is one thing. Whether it advances the plaintiffs' case is another. Without there being evidence as to what a cashflow analysis would have revealed, I do not believe that it does advance the plaintiffs' case. 438None of the material in the ninth section of the report, in which Mr Wall responded to an offer to provide any further comment or opinion which he considered relevant, is admissible: Australian Securities and Investments Commission v Vines [2003] NSWSC 1095; (2003) 48 ACSR 291 at [14], [30]. 439The tenth and final section of the report is a response to Mr Wall being asked to provide his opinion "as to the steps which a reasonably competent financial planner would take with respect to the ongoing consideration, and advice, to be given to a client, with respect to the client's investments". 440The opinions expressed in this section are clearly based upon Mr Wall's specialised knowledge. It was not suggested otherwise. It was submitted, however, that this section is "wholly irrelevant". This was put on the understanding that what Mr Wall was saying was directed to the situation that the plaintiffs encountered after the last of the investments was made in 2005. 441Mr Faulkner, on the other hand, pressed the admissibility of this section of the report upon the basis that the opinions were relevant to the advice and conduct of a reasonably competent financial planner in the period between the making of the first investment and the last. In other words, in advising a client on the question of making further investments, regard should have been had to whether the existing investments remained prudent and appropriate in the client's circumstances. In my view, this is an appropriate matter for expert opinion and it is relevant to the issues pleaded. 442Again, however, admissibility is one thing, but whether it advances the plaintiffs' case is another. Without there being evidence as to what ongoing monitoring of the existing investments would have revealed, and then, how this would have, or should have, affected advice given in relation to subsequent investments, I do not believe that it does advance the plaintiffs' case. 443The first supplementary report is divided into four sections. The first is concerned with the question whether Mr Wall considered it appropriate to advise a client to invest in financial products primarily for the purpose of tax deductions. In response, he stated that a financial adviser may need to recommend specific financial products offering tax advantages as part of a tax minimisation strategy, but that this should not be the sole reason for a product being recommended. Acceptable future returns should also be taken into account. Further, the product should be appropriate for the investment risk tolerance of the client. 444The material in this section is expressed in very general terms. The facts in issue in this case are concerned with far more precise questions concerning the appropriateness and adequacy of the advice given to Mr Tomasetti and Ms Cordony. Those questions fall to be determined upon consideration of their individual circumstances. I accept that the material in this section is admissible. However, it is of assistance in the resolution of the issues in this case in only a very general sense. 445The second section was not read. 446In the third and fourth sections, Mr Wall provided his opinion "as to the appropriateness of a financial planner relying upon research and analysis of financial products produced by ratings agencies or market research groups" (third section), and "in particular, ... where such ratings and research is undertaken by the organisation for a fee paid by the issuer of the financial product" (fourth section). 447His response was that it was appropriate to rely upon such research and analysis, but only if the financial adviser conducted his/her own research into the methodology of the investment research utilised by the research provider. Further, he was "of the strong opinion" that it is inappropriate to utilise such research if the agency or research group was paid a fee by the issuer of the investment product. 448Addressing section three of the report first, in the case for the plaintiffs that was ultimately formulated and put in closing submissions, there was no suggestion that Mr Brailey was in any way in error in the manner in which he sought out independent research analyses in relation to the investments. It was not suggested that there was anything in that material that was incorrect, misleading or incomplete. It was not suggested that there was some other specific material that he should have sought out. Section three is not relevant: Evidence Act, s 55. 449Submissions that were made by Mr Faulkner in support of the admissibility of the fourth section were made in anticipation of there being evidence, and an issue between the parties, on the subject. In the end, there was nothing in the subsequent cross-examination of Mr Brailey or anything put in closing submissions that rendered Mr Wall's opinion admissible. Admissibility was dubious in any event in that the opinion did not seem to be based upon his specialised knowledge but rather was a simple matter of common sense: ASIC v Vines at [14]. 450The second supplementary report was provided by Mr Wall in response to a request by the solicitor for the plaintiffs for clarification of a number of matters and opinions on some further issues. Aside from introductory and explanatory matters, the actual report comprises 20 paragraphs. Paragraphs 8 to 18 inclusive were not read. Paragraph 1 to 7 are confined to Mr Wall correcting errors in his main report about when certain legislation was in force. Paragraphs 19 and 20 concern Mr Wall's interpretation of a document that does not appear to have been referred to in the evidence or submissions. None of the second supplementary report is admissible. 451Mr Wall was called for cross-examination. That exercise tended to confirm that Mr Wall's opinions depended upon acceptance of the versions of events given by Mr Tomasetti and Ms Cordony. It also confirmed that Mr Wall's opinions, in the main, were concerned with the generic methodology of a reasonably competent financial planner. He had not conducted any cashflow analysis of Mr Tomasetti's future needs or requirements at any relevant time (T728). He had no regard to Mr Tomasetti's tax returns, balance sheets or profit and loss statements in relation to his cash position after the investments had been made, although he agreed that whether a financial adviser had properly advised a client depends critically upon the client's financial circumstances at the time the advice was given (T728-729). However, Mr Wall was of the view that he did not need to know Mr Tomasetti's financial circumstances in order to comment on the adequacy of the advice he was given (T730). 452Mr Wall was critical of Mr Brailey for not conducting a "know your client" exercise. If such an exercise had been conducted, it is not apparent what it would have revealed. In other words, what new information of significance would have become available to Mr Brailey as a consequence of undertaking this exercise? Mr Wall did not attempt such an exercise himself (T733-735). Even if he had, it would have been of dubious utility, given that it would have been done in the light of events that had transpired in recent years. 453Mr Wall was asked specifically about the ITC Solidwood 2001 investment. After some hedging, he eventually agreed that he did not have any information about Mr Tomasetti's financial situation at the time that this investment was made (T740). Earlier, he had agreed that because Mr Brailey had access to Mr Tomasetti's financial and taxation records, he would have been better informed than Mr Wall was (T736). 454Mr Wall agreed that, at the "bare minimum", it would be necessary for the financial adviser to make an analysis of the product disclosure statements for each specific investment. He was asked whether he had conducted "a detailed analysis of the merits and demerits, features, and the like, of all of the products which were the subject of the investments in these proceedings". He replied that he had not (T749.49). That response was immediately followed by the following evidence which, with what followed, serves to demonstrate that Mr Wall's evidence was of very limited utility. "Q. Did you in fact conduct such a detailed analysis for any of the products which are the subject of these proceedings? A. Would you define "detailed analysis" for me? Q. What I've just indicated. First, you have said that a competent financial planner would, at the very least, read the PDSs thoroughly? A. Yes. Q. And then, having done that, make some sort of analysis of the risks and rewards that were associated with that particular product; do you agree? A. Yes. Q. And the time frame over which the investment might be realised? A. Yes. Q. And the track record of the promoter? A. Yes. Q. And that could be different depending on who the promoter was and what the product was? A. I agree. Q. Well, you would say that a competent financial planner was required to do at least that in order to make some sort of sensible recommendation to the client, wouldn't you? A. A competent financial planner would very quickly get a grasp of the appropriateness of that product in relation to the risks declared or undeclared in the PDS. Q. Now, my question was: did you conduct such an analysis, that is the analysis that you say a competent financial planner ought to have conducted in relation to each of these products, or any of them? A. I conducted sufficient analysis of the products to determine to - to support my answers to my opinions and asked-- Q. You keep saying that. Would you mind answering my question? I have put an analysis to you, and you said could you explain it. I've explained it to you in terms that you, yourself, would use in terms of what a competent financial planner ought to do. We've defined the exercise. The question is a simple one: did you conduct such an exercise yourself in relation to any of the products which are the subject of these proceedings? A. I conducted sufficient-- Q. It's either a yes or no, please? A. Yes. Q. Which ones? A. I would have to refer to - to notes. Q. What notes? A. Well, to my research notes that I might have made at the time back in-- Q. Where are your research notes? A. Well, because I only have the reports with me, I don't have those with me. Q. Well, is the answer that sitting there in the witness box you are unable to answer? A. Sitting here in the witness box, yes. Q. So you have come to court today to criticise Mr Brailey for something that you, sitting there in the witness box, are unable to say whether you, yourself, have done or not? A. No. Q. You don't agree with that? A. No. PARKER: Your Honour, I can't carry out the cross-examination any further, but I would ask that the notes that have been referred to be produced. I may then need to make an application to cross-examine further. I can't see any other efficient way of doing it." (T750 - 751) 455Mr Wall was stood down and asked to produce his notes the following morning. He did not return and nothing was produced. He sent an unsolicited email to the defendants' solicitors informing them that "they were merely handwritten notes compiled as I read the PDSs that were then transposed to my reports ... It is quite possible that I disposed of them once the reports were completed" (Exhibit H). Mr Parker submitted that the email did not advance the matter any further and did not provide any confidence that Mr Wall ever actually conducted any detailed analysis of either the product disclosure statements or Mr Tomasetti's financial circumstances (T763). I accept that submission. Submissions for the plaintiffs 456The first submission for the plaintiffs was that they were owed a duty of care (PWS at [68]). There is no issue about that. The other submissions for the plaintiffs characterising how the negligence claim was put may be summarised in what follows. 457Mr Brailey was in breach of the duty owed to each plaintiff in significant respects in recommending investments which were high risk and were not sound, prudent and sensible. Reference was made to Sweetman v Bradfield Management Services Pty Ltd [1993] FCA 598; (1994) ATPR 41-290 (" Sweetman v Bradfield ") for the proposition that the question is "what would the plaintiffs have done if the defendant had not breached the duty, i.e. if the defendant had fulfilled the duty of care" (PWS [71]). Counsel for the plaintiffs answered that question by submitting that if there was no breach of duty, Mr Brailey would not have recommended the investments to the plaintiffs and they would not have entered into them. 458It was submitted that if Mr Brailey had considered that the investments were not sound, prudent and sensible, he would not have recommended them. He had specifically agreed with that proposition in relation to the 2000 investments (T843). Counsel for the plaintiffs contended that this was the situation in relation to each of the investments from 2000 to 2005. In recommending them, and regarding them as being sound, prudent and sensible, Mr Brailey breached the standard of care owed by a reasonably competent accountant and financial adviser (PWS at [74]). In oral submissions, Mr Faulkner said that "had [each of the projects] been assessed without breach of duty, they would have been assessed as not sound, not prudent and not sensible and never ever put to the plaintiffs, and the investments would not have been entered into" (T1145.33). 459I conclude from this that by the end of the hearing, the plaintiffs case was that Mr Brailey breached his duty of care by making an incorrect assessment about the soundness, prudence and sensibleness of the projects. If there had been no such breach, Mr Brailey would never have put them to the plaintiffs for consideration, let alone recommended them. 460Mr Faulkner drew from the facts in Sweetman v Bradfield in support of the plaintiffs' case on negligence. In that case, the plaintiffs were partners who were inexperienced with agribusiness investments. In the 1989 tax year, their net profit was trivial, but in the following year it was substantial. They discussed with the defendant (Royce, who was employed by Bradfield Management Services Pty Ltd) their options for reducing their tax liability. Various investment opportunities were discussed, but none had been entered into by the time that the 1990 tax year was drawing to a close. Pressure was on to find another tax scheme. 461On 27 June 1990, the defendant sent a facsimile to the plaintiffs advising, in part, "Wildflowers - all systems go. Finance Ok. Info attached hereon". He advised them that he had "been up to the Factory and have known the management of the Promoters for some 5 years", and believed them, and the investment, to be honest. He had every expectation of a good return. He had invested in it himself. "Accordingly please sign the Power of Attorney and Application and Fax back to me... For every $10,000 you invest you should receive $10,950". 462The proposal was to invest $170,000 in the Australian Wildflower Trust, with $163,000 to be funded by borrowing. The information attached to the facsimile was an extract of some pages from material published by a promoter of the scheme, including a schedule of "projected returns". The plaintiffs entered into the scheme as proposed and in due course received significant tax benefits. However, some 18 months later, the Australian Wildflower Trust collapsed. No income had been distributed. 463The plaintiffs failed in a claim of misleading or deceptive conduct under the Trade Practices Act 1974 (Cth). It was held that there had been misleading conduct, but it was also held that this was not the cause of the plaintiffs' loss. They succeeded, however, on a claim of negligence. Lee J held that it was incumbent upon the defendants to refrain from suggesting tax minimisation investments to the partners unless satisfied that participation in such a scheme provided a prospect of financial advantage for them and, if participation presented a risk, that substantial financial disadvantage could be suffered, to refrain from suggesting participation unless the full extent of the risk had been explained. It was in breach of that duty that the scheme was put before the plaintiffs without assessing what the likelihood was that financial disadvantage could be suffered. The breach involved more than a failure to warn of the possibility of economic harm being suffered by participating in a speculative venture. It also involved a failure to refrain from making any recommendation to participate before carrying out the necessary assessment of the extent of the risk involved ( Sweetman v Bradfield at [45] - [46]). 464Various failures by the defendant to make inquiries about the project were identified in the judgment, before Lee J concluded: "55. On the state of knowledge Royce then held Royce could not have recommended to the partners that they undertake the borrowing of the sum of $163,000 for the purpose of applying that sum to Australian Wildflower Trust. The combination of the limited knowledge held by Royce, the failure of Royce and Bradfield to undertake enquiries and the failure to assess the extent to which the partners risked suffering financial harm meant that the recommendation that the partners invest in the scheme was not consistent with observance of the duties of care owed by Royce and Bradfield. Had Bradfield and Royce met the duties of care owed by them expenditure on Australian Wildflower Trust could not have been recommended in the terms set out in the memorandum forwarded to the partners on 27 June 1990. I am satisfied that if the duties of care had not been breached in the manner described, the partners would have been advised that no plan to further reduce tax for that income year could be provided, the wildflower project would not have been put before them and the partners would not have invested in that venture. It follows that the difference between the expenditure incurred on the scheme and the amount of tax that would have been payable otherwise was a loss sustained by the partners which flowed from the negligence of Royce and Bradfield." 465Mr Faulkner submitted: "We rely on that case to assist your Honour in formulating the duties that Brailey was obliged to perform and particularly as to the assessment of the products that he was putting forward and recommending to the plaintiffs and also why your Honour will conclude in the end that there was never any true assessment by him." (T1126-1127) 466Mr Faulkner was highly critical of Mr Brailey's evidence and referred at length to a number of matters raised in the course of his cross-examination concerning Mr Brailey's assessment of the suitability of the investments for Mr Tomasetti and Ms Cordony. There were many matters to which attention was drawn. It is impractical to refer to them all, but they included what follows. 467Mr Brailey agreed that Mr Tomasetti had said in the first meeting in December 1998, " I wouldn't want to do anything speculative " (T776). To Mr Brailey, "speculative" meant gambling; something that carries a high risk "of losing the whole lot" (T843). He agreed that "sound, prudent and sensible" did not equate with "speculative" (T844). When he saw in a prospectus or PDS a statement that investment in a project was considered to be "speculative", he disagreed with it. For example, he saw such a statement in the prospectus for the Great Southern Blue Gum Plantations 2000 investment and disagreed with it because: "I took speculation to be something that was short-term, a gamble, or similar to a gamble, and I didn't consider that these projects were short term and similar to a gamble" (T857.25). 468He could not recall whether he told Mr Tomasetti that the promoters said that the investment should be considered as speculative (T858.30). He was not prepared to agree that he never said this. He said, " I went through the risk with Mr Tomasetti. I can't remember whether I actually said that or not " (T859.5). Mr Brailey's account of the conversation he had in about April 2000 with Mr Tomasetti does not include any specific mention of the word "speculative". However, it does include mention of "risks" and also includes that he told Mr Tomasetti that he should read the prospectuses, especially the sections on risks. 469For reasons given elsewhere, I do not have confidence in the evidence of Mr Tomasetti of conversations that occurred many years ago. Mr Brailey's evidence was of a similar quality. They are both, in the main, reconstructions of what they think would have been said, rather than accounts of what was actually said. There is also the possibility that what they think would have been said has been coloured, subconsciously at least, by subsequent events. Accordingly, I am unable to come to any conclusion as to whether there was mention by Mr Brailey of the promoters of an investment having regarded it as speculative, and that he, himself, took a different view. 470Mr Brailey initially agreed that the Great Southern investment in 2000 was the type of investment Mr Tomasetti had said in 1998 that he wished to avoid; that is, it was one that was "speculative". A short time later he withdrew that answer and said that he did not regard any of the 2000 investments as "speculative" (T781 - 784). 471Mr Brailey agreed that if it was not for the investment in the agribusiness projects in 2000, Mr Tomasetti would have got to the end of that tax year without a tax deduction to replace the infrastructure bonds he had invested in for tax minimisation purposes in the previous two years. Mr Faulkner compared this to the situation in Sweetman v Bradfield where there was an urgent desire for a tax deduction and Lee J had held that the plaintiffs would have entered into the investment regardless of the advice given. He submitted that the present case differed in that here, there was an unsolicited suggestion from Mr Brailey that Mr Tomasetti enter into the investment. 472There were a number of features of Mr Brailey's evidence which were submitted to have been unsatisfactory. One was the issue as to whether he "proposed" the investments to the plaintiffs, or "recommended" them. He had made the admission in the first version of his pleaded defence that he had made recommendations. That changed in the subsequent defence that was filed to "proposed". He explained that to "propose" is to, in effect, say "this is what is available - if you want to do it, then, we'll discuss it further, if you don't want to do it, that's okay". It was a better word than "recommend" because "propose" denoted that there was no pressure from him for Mr Tomasetti to do anything (T925). 473It is unnecessary to explore the detail of Mr Brailey's explanations on this subject further. It suffices to say that I accept that his evidence on this rather semantic point was unimpressive and gave the impression that he was seeking to downplay any force or authority with which he put the various investments to Mr Tomasetti and, later, Ms Cordony. The most remarkable feature of Mr Brailey's evidence in this respect came in the course of his cross-examination about the provision of statements of advice to Mr Tomasetti and Ms Cordony in 2004 and 2005. On a number of occasions (for example, T803) he gave the explanation that he "proposed" the investments and once the client had made a decision, he then "recommended" them. Mr Faulkner's submission was, in effect, that this was nonsense, absurd and unbelievable. I accept that submission. 474Mr Faulkner obtained concessions from Mr Brailey on a number of occasions during cross-examination that something he had said previously had been "false" (for example, T800; T807). It was not clear, however, and doubtful in my view, that these were concessions that the previous statements were deliberately incorrect as opposed to mistaken. 475There was lengthy cross-examination about the content of some of the prospectuses and whether Mr Brailey had read parts of them, such as reports by independent experts. For example, Mr Brailey said that he did not read the expert reports concerning the Norgard Clohessy Australian Blue Gum 2000 project "in detail". He was asked whether he had read them at all and he could not remember. That applied to the forester's report and the accountant's report. He could not remember reading the expert reports in the prospectus for the Great Southern Blue Gum Plantations 2000 project either (T845). The important point about this is that it was not established that there was anything significant in the expert reports or otherwise in the prospectuses or product disclosure statements of which Mr Brailey was not aware. In other words, doubts about whether Mr Brailey had read something might be significant if there was something of importance that he had neglected to read and of which he was otherwise unaware. However, that was not shown to be the case. 476One aspect of Mr Brailey's evidence on this subject should be commented upon. He was taken to the "investigating accountant's report" in the prospectus for the Norgard Clohessy Australian Blue Gum 2000 project (PCT1 at p.66). On the second page of this report, it is said that participation in the project is subject to attendant risks and should be considered as speculative. It then nominates a number of risks: "fire, drought, other acts of God, disease, pests, technological advances, demand for hardwood chips, changes in prices and costs, currency movements, government imposts and regulations, and general economic and international issues". Mr Brailey was asked whether he was aware of each of these risks at the time he was speaking to Mr Tomasetti about this project in 2000. He replied, " Most of them. I'm not sure about the technological advances. But generally speaking, yes " (T854.5). Mr Faulkner referred to this response in his submissions and said "it highlights the absence of this knowledge of the speculation aspect" (T1148.38). The problem with that submission is that Mr Faulkner did not pursue with Mr Brailey what "most of them" meant; did not seek to ascertain which one or more of the risks Mr Brailey was not aware of; or seek to establish that "technological advances" was a significant matter that Mr Brailey should have been aware of, in the event that "not sure" could be taken to mean he was not aware of it in 2000. 477Another aspect of Mr Brailey's evidence which was unsatisfactory emerged when he was being asked about whether he had in mind an assessment of Mr Tomasetti's investment risk profile when he came to discuss investments with him in June 2003. He said he did have such an assessment in mind at the time: "He seemed to be not averse to taking on debt and ... he seemed to be coming more open to other types of investment rather than just blue chip shares" (T863.35). 478It was suggested to him that nothing had occurred between his first meeting with Mr Tomasetti in 1998 and June 2003 that led him in any way to form a view that Mr Tomasetti's comment that he wanted "nothing speculative" had changed, but he replied, " I think it did " (T864.20). He thought that by June 2003, Mr Tomasetti was prepared to invest in speculative investments if they had tax minimisation characteristics (T864.24). What had led him to this view was that Mr Tomasetti had invested in almonds and the forestry projects in the preceding years. He agreed that he had earlier said that he regarded each of those projects as "non-speculative" (T864.30). "Q. And so the fact that Mr Tomasetti invested in projects that were non-speculative is the reason you have just given as to why you thought he would be now prepared in June 2003 to invest in speculative investments? A. The risk is that was changing, he was prepared to take more risk." (T864.35). 479Mr Faulkner submitted that this was "nonsense evidence" (T1150.40). There is force in that submission. 480Mr Brailey was challenged about his assessment of the Timbercorp Eucalypts 2000 project as a good investment. He agreed that he had said in his affidavit that he had told Mr Tomasetti that at the time the trees are planted, a contract is signed between the project manager and the ultimate buyer of the wood chips " so that you have a guaranteed sale of your wood chips " . He agreed that he had not seen the contract, but he had seen reference to this in one of the promotional documents and had been told about it as well. His evidence in this respect was challenged on the basis that he had construed "the mere fact of a contract being signed between a project manager and a buyer as equating a guaranteed sale of those wood chips". He agreed that this was the case (T900.20). Mr Faulkner submitted that Mr Brailey was engaging in "salesman's hyperbole" (T1155.29). 481It was put to Mr Brailey, and denied, that he had made no general assessment at all as to the suitability of the investments proposed in 2003 (T973.35). He explained that what he was concerned to deal with was the fact that Mr Tomasetti owed $400,000 in tax that he could not pay and the current financial year was about to end, which may have added a further amount to that. He was concerned to reduce the 2003 tax burden which would have added to the existing burden. The only alternative course of action that it was suggested that Mr Brailey should have taken was to make arrangements with the tax office for Mr Tomasetti to pay his arrears of tax by instalments. Mr Brailey agreed that this could be done "once the debt has crystallised " (T974.5). That would deal with Mr Tomasetti paying the arrears, and whatever tax became due for the current year. It would have done nothing to reduce the amount payable. 482Mr Faulkner submitted that Mr Brailey had never turned his mind to a strategy; that the tax situation had to be dealt with and in a way that did not expose Mr Tomasetti to risk in relation to his preservation of his capital. He submitted, "A tax plan involving the tax office, or whoever, certainly was necessary if these investments were not sound prudent and sensible but it never crossed [Mr Brailey's] mind in my submission. He didn't want to do it in my submission because he was selling product" (T1179). This does not deal, however, with the fundamental question of whether or not the investments were "sound, prudent and sensible". I readily accept that if they were not, then some alternative course of action was necessary, including, perhaps, making arrangements with the tax office. 483Further reference was made to Mr Brailey's notes of the first meeting with Mr Tomasetti in December 1998 (Exhibit M at p.88 ff). They included that Mr Tomasetti had said, in the context of investments he wished to avoid, " Nothing speculative " . In relation to particular types of investments he wished to have in his portfolio, Mr Brailey had noted, " Increase share portfolio - 100-200K p.a. - reinvest dividends " . Mr Faulkner submitted that Mr Brailey must have left this meeting with the idea that the person he was dealing with was a conservative investor and somebody who wanted preservation of his capital (T1177). It was further submitted that "there was no reason for Mr Brailey to ever think otherwise" (T1179.3). I have earlier noted that tax minimisation was being taken care of as at December 1998 by various means. They included investment in infrastructure bonds and the way Mr Tomasetti's practice was administered through the use of a service trust. The situation changed with the bonds no longer being available for the 2000 tax year. 484Another aspect of the evidence that is presently relevant is the cross-examination of Mr Brailey about the cashflow spreadsheet concerning the proposed investment in the Timbercorp Early Almond 2004 project (Exhibit M pp. 307 - 308). I have earlier referred to this and the submissions made concerning it. 485Mr Brailey's attention was drawn to the two investments made by Ms Cordony in 2005 and the fact that the projects had a lifespan of 20 years and 22 years. He accepted that they would come to an end when she was aged 75 and 77 respectively. Irrespective of this, he maintained that he considered that they were suitable investments for her to enter into (T1035). He accepted that Ms Cordony had not asked him to provide her with advice on investments (T1045.35). He agreed that he had made a "recommendation", but added that it was to both "she and Mr Tomasetti" (T1045.38). A further unsatisfactory feature of Mr Brailey's evidence emerged a short time later when he said " It was a proposal in the beginning and it became a recommendation " . It became a recommendation " when Sassi indicated that she was happy to go through with it " (T1047). 486Mr Brailey was referred to the evidence of Mr Marksteiner, namely that he had been told by Mr Brailey that Ms Cordony was "liable for a reasonably large tax bill and is looking at strategies to minimise her tax exposure". He did not recall having said that and agreed that it was not correct. Ms Cordony did not need to look for strategies to minimise her tax exposure (T1049). However, he also said that the reference in his primary affidavit (at [326]) to having said to Ms Cordony, " So, to largely eliminate your taxable income you need a tax deduction " was correct. 487Mr Faulkner referred to Mr Brailey having acknowledged that he knew that Ms Cordony was a PAYE tax payer. It was submitted that "here we are in May of the year, she's already paid 46 out of 52 weeks tax". The submission ignores the fact that what was being proposed was something that would amount to a tax deduction and that Ms Cordony would receive a tax refund. That was set out in the letter that Mr Brailey sent to Ms Cordony and Mr Tomasetti on 3 May 2005 (Exhibit M at p.371). 488Mr Brailey was cross-examined on a cashflow spreadsheet concerning the Gunns Winegrape 2005 project. It included reference to Ms Cordony having a taxable income from her employment of $76,360 at the commencement of the investment which was indexed by 3 per cent each year for 20 years. Mr Brailey accepted that the after tax cashflow for the project was predicated for the whole 20 years upon Ms Cordony receiving a pre-investment taxable income (T1057.5). He disagreed, however, that the cashflow was predicated upon her remaining in salaried employment for the entire period (T1058.43). Mr Faulkner submitted that this was "a false answer". It may be generous, but it is possible that Mr Brailey's negative response derived from his reluctance to accept that the figure of $76,360 represented Ms Cordony's salary from employment. In his letter of 3 May 2005, he had referred to her income at that time as being "salary and other income " (emphasis added). 489Mr Faulkner submitted that putting to Ms Cordony an investment that was based upon her maintaining the same level of income (subject to indexation) for 20 years, at a time when she was aged 55, demonstrated that Mr Brailey had lost sight of his duties to his client; was abusing the confidence and trust placed in him; and was merely "selling product" (T1196). 490Towards the end of the cross-examination, Mr Brailey was asked about a number of things that it was suggested he did not do in relation to each of the investments (T1060 ff). He agreed that at no time did he make any "written analysis of the project viability". He said that he " relied on the PDS and the research documents that were available " (T1060.20). He said that he was " not really qualified " to make a written analysis of project viability for the term of the ventures (T1061.3). He did not make a checklist of events of risk (T1061.10). He understood that if there was a failure by the project manager to comply with the ATO product ruling the investment would lose its tax deductibility (T1061.25). He did not make any assessment as to what would be the client's financial position for any year or period should that occur (T1061.29). He did not make any assessment of what the client's position would have been in the event of a marked change in exchange rates or if the price of the product dropped dramatically (T1061.37). 491It was suggested that he made no assessment of the impact of a market for the agricultural products falling "away to almost nothing" but he disagreed. He claimed that his assessment was that " these were well-managed, large projects, able to withstand a certain amount of market volatility for their products " (T1062.36). He also took into account volatility of price in the primary production environment. He said he took into account " the data that the product provider was providing us about the market itself and what their experts saw as the future of the market " (T1063.27). He did not necessarily simply accept what the experts said as to the future of the market. He said, " I assessed it and if I disagree with it, I disagree with it, but I very seldom did that. I mean, as I said, I'm not qualified to make those sort of decisions myself " (T1063.32). 492Mr Brailey also said that he was " making an assessment the whole time [he] was involved " of the risks against what the product provider was saying were the positives of the venture (T1063.38). 493Mr Brailey agreed that he was advising Mr Tomasetti and Ms Cordony "in regard to risks to their hard won assets and wealth" and that this "required [him] to take a good deal of care as to what [he] was advising them" (T1064.10). He agreed that it was necessary for him to fully consider the expert reports as stated in the provided literature and that this was because they were more likely than himself to identify project negatives (T1064.20). He insisted that he did fully consider the expert reports in relation to all of the projects. Further, he visited the projects and saw what was happening (T1064.30). 494Where the expert reports in relation to some of the 2000 projects stated that the projects involved longterm investments and should be considered speculative, he accepted that it was necessary for him to ascertain and understand their reasons for those opinions (T1065.6). It was suggested that he did not do this and he said, " I understood the reasons, I think " (T1065.9). He reiterated his earlier evidence that he disagreed with the assessment of the investments as "speculative" (T1065.12). Mr Brailey agreed, however, that he did not advise Mr Tomasetti or Ms Cordony about any of the experts' opinions on the occasions where they said that an investment was regarded as speculative (T1065.22). He did not think that it was necessary (T1065.46). On this topic, Mr Faulkner submitted that "it is quite ludicrous for a financial planner to take that position, that if the experts say it is speculative and he disagrees that it wasn't necessary for the client to be aware of that difference of opinion" (T1197.16). 495Mr Brailey accepted that it was necessary for him to "critically consider" whether a particular investment project was illiquid (T1066.1). It was put that he had "blindly accepted the provider's material as accurate" in relation to all of the investments, including that he adopted the cashflow analysis of the provider without conducting his own analysis. He agreed, saying that he was not qualified to criticise them (T1066.20). Mr Faulkner submitted that this was in breach of Mr Brailey's obligations and one which a competent financial planner would not engage in, and one which would not permit Mr Brailey to provide the advice that he did (T1197.35). 496It was put to Mr Brailey that he did not "assess carefully and critically [his] clients' - that is, both of them - investment profiles, tolerance to risk and wealth creation issues on a holistic basis". He maintained that he did (T1067.22). It was submitted that this was contrary to his earlier evidence (at T929.29). However, that evidence was not inconsistent. At that point, it was put that Mr Brailey had " never prepared for [Mr Tomasetti] a wealth creation plan on a holistic basis " and he replied, " Not as such " . 497A final matter to note about the evidence of Mr Brailey and the submissions made concerning it is that it was a general theme to suggest, and submit, that he was not objectively assessing the various projects and giving objective and balanced advice to his clients. Rather, it was contended that he was "promoting" or "selling" the products. It is not productive to explore this issue. If the contention as to "promoting" and "selling" is correct, it would serve to provide an explanation for why Mr Brailey did not properly assess the investments and how he came to a mistaken, or even dishonest, view that they were "sound, prudent and sensible". The primary issue is the latter. The underlying cause of it, if the plaintiffs' contention is correct, is a secondary issue in relation to the negligence claim. It does, however, have potential relevance in relation to the breach of fiduciary duty claim. Submissions for the defendants 498The first point made in the submissions for the defendants was that it was Mr Tomasetti who made the decisions to invest (DWS [164]). It was not a case of decision making in this respect having been delegated to Mr Brailey. Moreover, it was shown that Mr Tomasetti did not simply accept every investment proposition that was put to him by Mr Brailey. He rejected a proposed investment in a mortgage fund and he made the decision for himself that he did not wish to enter into any new agribusiness investments after 2004. It was also pointed out that Mr Tomasetti was a man who was experienced in borrowing money for various real estate purposes; he was aware of his financial capacity; and he had virtually instantaneous access to information concerning the cashflow of his practice (T1317). 499It was submitted that it was incumbent upon the plaintiffs to show, first, what advice Mr Brailey did give, and secondly, how it can be characterised as negligent (DWS at [165]). This was a difficult task in light of the fact that Mr Tomasetti was a man with significant financial experience; the risks associated with each of the investments were clearly disclosed in the relevant prospectus or PDS; and Mr Tomasetti acknowledged in application forms and, to some extent in cross-examination, that he was aware of the risks. Ascertaining precisely what advice was given, and what was said in various conversations that occurred years ago, in order to understand the context in which things were said, suffered from the same problems identified in the submissions on the FTA claim . I accept that there is this difficulty. I have earlier said that I have no confidence in the accounts of either Mr Tomasetti and Mr Brailey concerning the terms of their conversations. In the case of Ms Cordony, she confessed to having a very poor memory of what was said. 500Counsel for the defendants noted that it was not alleged by the plaintiffs that the projects were such that investment in them would have been unsatisfactory under any circumstances (DWS at [166]). Mr Wall, for example, did not suggest that no competent financial adviser would ever recommend investment in any of the projects irrespective of the client's financial position (T729.45). The question really is whether each investment could reasonably have been considered by Mr Brailey to have been appropriate to the plaintiffs' circumstances at the relevant time, having regard to the perceived benefits and risks. Accordingly, it was not established that the investments themselves were inherently not "sound, prudent and sensible". The question is whether they were sound, prudent and sensible in the light of the plaintiffs' circumstances. 501Next, it was submitted that the level of risk had to be understood in the context of what Mr Tomasetti was trying to achieve, and had the financial resources to achieve (DWS at [167]). In relation to the 2000 investments, Mr Tomasetti said that he was aware that they were "less safe than investing in blue chip shares" (T295.47). However, he said that at the time he made the decision to enter into the investments, he saw them as offering the advantages of diversification, a deferred income stream, and forced savings. He explained that diversification was in terms of having investments away " f rom real estate, from shares, from my professional endeavours at the bar, earnings, professional income, from the cash that I had in my superannuation fund for instance with Cromwell, diversification in those classes. This was something different " (T296). He agreed that this was a "positive advantage" (T297.25). "Forced savings" was something he appreciated would come from " entering into a commitment, as I've done all my life, to pay down a debt " (T298.9). 502Mr Parker submitted that Mr Tomasetti's evidence as to these advantages showed that he had a level of understanding about how the investments worked, particularly in relation to the debt associated with them and the deferral of income (T1318). It also showed that he was not a person who was interested in saving up his money and buying blue chip shares when he could afford them. 503It was the defendants' contention that Mr Tomasetti was also keen to obtain the advantage of tax minimisation. Mr Tomasetti attempted to minimise the importance of this issue when questioned about factors bearing upon his decision to enter into the investments. When questioned in a more general way, he gave this evidence: "Q. And that's why you were keen, as much as you lawfully felt you could, to engage in whatever tax minimisation strategies were available to you; correct? A. Yes, I believe it was my responsibility not to pay more tax than I was required to by law." (T116.1) 504With some equivocation, he gave similar evidence the following day: Q. You were always conscious of your obligation, as you saw it, to pay as little tax as possible? A. No, I wouldn't [sic]. Q. Yesterday, you said you thought you had an obligation to pay as little tax as possible? A. I would have to look at the exact words that I used. I was conscious of my responsibility not to pay tax that wasn't necessary to pay. You know, I don't know what words I used, but-- Q. You were conscious of that in 2000? A. Mm-hmm. Q. So, presumably, as the year end approached, you started to give thought to what tax you would be paying on the income that you were earning - which at that point you could see would be very substantial? A. I am mindful of tax all the time, Mr Parker, no matter what time of the year it is. I don't leave it to the last moment in the year, if that is the question-- Q. No, it wasn't-- A. --to say, Well what am I going to do about tax?" (T232) 505Dealing specifically with the question whether Mr Brailey was negligent in the advice he gave at the time the investments were entered into, it was submitted that Mr Tomasetti went ahead with them fully appreciating that they involved speculation and risk (DWS [175]). Prospectuses and product disclosure statements were provided to him. Applications and related forms were signed which contained the acknowledgements referred to earlier. It was submitted that it was not credible that Mr Tomasetti was inveigled into departing from a stipulation that he would never invest in anything "speculative". 506Reference was made to the plaintiffs' submission that Mr Brailey "blindly" adopted what appeared in the prospectuses and product disclosure statements (DWS at [176]). What was it in those documents which was unsound? If there was, what inquiry should Mr Brailey have made to discover this? Why was Mr Brailey not entitled to rely upon material published by apparently reputable sources? It was submitted that the plaintiffs' case failed to provide answers to questions such as these. 507The submissions for the defendants addressed the criticisms that were made by the plaintiffs about the investments Mr Cordony entered into in 2005 (DWS at [177] - [178]). It was submitted that the criticisms were misconceived and failed to have regard to the true situation. Ms Cordony was not financially independent of Mr Tomasetti. There was no suggestion that she would be paying for the investments, either in terms of the initial outlay or the ongoing costs and repayment of loans. The defendants accepted that the investments would have been inappropriate if Ms Cordony was single and required to meet the payments and repayments by herself. However, her income and her liability for tax, were not independent from Mr Tomasetti's interests. 508When Ms Sucur was working for Mr Tomasetti, she was being paid a salary and superannuation contributions in the order of $50,000 per annum. Ms Cordony, working two days per week, was paid salary and superannuation of $60,000 in 2003; $90,000 in 2004; and $165,000 in 2005 (DWS App 3). She was paid via the service trust and there was also the mark-up on service trust fees. Mr Tomasetti obtained a significant tax benefit through this income splitting type of arrangement. 509As to the suggestion that Mr Brailey had gone behind Mr Tomasetti's back after he had said that he had no interest in any further agribusiness investments, Mr Parker referred to the fact that Mr Tomasetti had signed documents relating to each of the two applications. There was also Ms Cordony's evidence that she did not conceal these investments from her husband. Further, there was the letter that Mr Brailey wrote on 3 May 2005 about his recommendation that Ms Cordony make an agribusiness investment. It was addressed to both Ms Cordony and Mr Tomasetti, entirely inconsistent with an attempt to go behind Mr Tomasetti's back. 510A further submission made by Mr Parker (T1324) was that the plaintiffs had not sought to establish that the proposals set out in Mr Brailey's letter of 3 May 2005 did not make sense, or that there was a better way of saving tax. 511The defendants' submissions (DWS at [179]) turned to a long standing statement of principle: "[no] conclusion of negligence can be arrived at until, first, the mind conceives affirmatively what should have been done": Metropolitan Gas Co v Melbourne Corporation [1924] HCA 46; (1924) 35 CLR 186 at 194 per Isaacs ACJ. This was cited with approval by Gummow and Hayne JJ in Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540 at [192]. Their Honours there made the point that formulating a duty of care retrospectively as an obligation purely to avoid the particular act or omission said to have caused loss, or to avert the particular harm that in fact eventuated, is likely to obscure the proper inquiry as to breach. Reference was made to Brodie v Singleton Shire Council [2001] HCA 29; (2001) 206 CLR 512 at [30 9 ], where Hayne J said: " shifting the focus to breach rather than duty will inevitably shift the balance in favour of plaintiffs and against defendants. That is not reason enough to refuse to take the step, but it is a consequence which must be recognised." 512These authorities were the basis for a submission that the plaintiffs' case fails to identify with any specificity what "ought to have been done". Mr Wall's evidence, to the extent that it involved suggesting that there should have been advice given by Mr Brailey to the plaintiffs to engage with more conventional investment strategies, failed to take into account their actual circumstances. Mr Parker submitted (T1352), citing the circumstances in 2003 as an example, that such a strategy would have failed to meet Mr Tomasetti's needs and wishes. A recommendation by Mr Brailey at any time from 2000 to 2005 that Mr Tomasetti should invest in blue chip shares, fixed interest securities and the like would have been unrealistic. Mr Tomasetti did not have much capacity to take up such investments in any event. Gearing into such investment types was not something he was interested in either. He only appeared to be interested in gearing if there was a substantial tax incentive on offer. 513Mr Parker continued: "The case, in our submission, fails both in terms of breach of duty and causation because they haven't proved that Mr Wall's alternative investment strategy was the right one for Mr Tomasetti's circumstances at any particular point in time, nor have they proved that it is one that could practicably have been implemented." (T1352.25) 514There was no suggestion by the plaintiffs that there was some other tax-advantaged investment available with less risk; or that there were other agribusiness investments which were somehow safer or superior. Doing nothing was not an option either as it would have left Mr Tomasetti with substantial tax liabilities. 515The defendants' submissions concluded with the contention that "the plaintiffs' negligence case fails the 'what ought to have been done' requirement on both breach of duty and causation grounds". Conclusion on negligence 516The question posed by counsel for the plaintiffs - "what would the plaintiffs have done if the defendant had not breached the duty?" - is ancillary to a more fundamental question - "was there a breach of the duty?". The way the plaintiffs' case was put, that involves consideration as to whether Mr Brailey was wrong to have regarded the investments as "sound, prudent and sensible". 517Mr Tomasetti was able to achieve substantial reductions in his taxable income throughout the years 2000 to 2005 through his agribusiness investments. In 2000, he earned professional fees of $848,000, but was liable for only $72,000 in tax (and Medicare levy) after deductions which included $328,000 as a result of agribusiness investments. The investments made in 2001 and 2002 were more modest. In those years, earnings from professional fees were $802,000 and $798,000, but Mr Tomasetti's tax liabilities were $136,000 and $260,000 respectively after deductions which included $103,000 and $37,000 respectively for expenses related to agribusiness investments. In 2003, professional fees earned were $1,023,000; tax payable was $95,000; and agribusiness related deductions were $330,000. In 2004, professional fees of $1,105,000 were earned; zero tax was payable; and agribusiness related deductions were $626,000. Although no investments were made in 2005 by Mr Tomasetti, his professional fees were $1,151,000; tax payable was $17,000; and deductions for agribusiness investments were $385,000. 518In the years 2006 to 2009, Mr Tomasetti's professional fees averaged about $1,350,000, yet tax payable averaged about $25,000. The average yearly deduction for agribusiness expenses was about $520,000. 519The foregoing analysis (derived from figures in DWS Appendix 3) is simplistic in that it does not refer to the myriad of other income and expenses taken into account. It does, however, give a broad indication of the dimension of the tax benefit Mr Tomasetti achieved through the investments. Mr Parker also submitted (T1334 - 1335), in effect, that there were a number of other features of Mr Tomasetti's accounts which revealed a continued endeavour to minimise tax. One of the features of the accounts to which Mr Parker drew attention was the extent to which Mr Tomasetti was able to "live expensively" and have significant amounts of discretionary expenditure dealt with in a tax advantageous way. 520Notwithstanding the minimisation of his tax liabilities, Mr Tomasetti was not always able to make payments to the ATO on time. On occasions, it was necessary for arrangements to be made for payment by instalments. For example, in October 2002, the ATO agreed to an arrangement whereby an outstanding amount of $111,000 was to be paid by monthly instalments. Similar arrangements were put in place in July 2003 in respect of an outstanding amount of $265,000 and in April 2004 for an outstanding amount of $230,000 (EB1 at pp. 1968; 1963; and 1957 - 1958 respectively). 521At around the time Mr Tomasetti made the decision to enter into the 2003 investments, his tax liability must have been a matter of significant concern. As at 28 April 2003, he was in debt to the ATO in the order of $180,000 (EB1 at pp. 1951 and 1954). Lodgement of his return for the 2002 tax year was imminent and it was estimated that about $215,000 would be payable (EB1 at p.404). Accordingly, he was faced with the prospect of having to pay almost $400,000 to the ATO. He did not have the resources to meet such an obligation. Investment in the nature Mr Wall spoke of in a diversified portfolio of local and international shares, property, bonds and cash was out of the question. 522Despite the frequent suggestions to the contrary, I am satisfied that tax minimisation was a very attractive proposition to Mr Tomasetti. Entering into them with a high level of gearing enabled him to deal with problems with his tax liabilities and to maintain his lifestyle. Meeting the repayments on borrowings for agribusiness investments undoubtedly was a source of stress. However, I accept the submission that Mr Tomasetti was " in a strong position to estimate his future income and cash flow from his professional activities " (DWS at [171]). The level of fees he was generating in his work was substantial but so too was his level of discretionary expenditure. At one point, Mr Parker put to him, " you had a heavy level of expenditure that was essentially based on achieving and maintaining a nice lifestyle for yourself and your family ?" Mr Tomasetti did not dispute the description (T238.15). 523Ms Cordony gave evidence that they always had to borrow in order to pay the invoices from Timbercorp. It was put to her that her husband was "a big earner" (she agreed) and she was asked why he did not have the funds available. She said, " Well, our money went on - was spent on other things. ... We maintained our lifestyle. We maintained chambers and our lifestyle and there wasn't money just left over " (T609). She was taken through a number of aspects of their expenditure (T610 - 611). There was the purchase of the Church Point property with borrowings in the vicinity of $1.7 million or $1.8 million, with monthly interest charges of around $10,000. She agreed it was not unusual to spend $10,000 a month on a credit card on discretionary spending. She agreed that they had a "series of not inexpensive cars"; holidays; and the "expensive" boat that Mr Tomasetti was buying. When the Church Point property was sold and the Robertson property was purchased, they also rented a place in Sydney. Ms Cordony agreed that if it was necessary to raise the money to pay $20,000, $50,000 or even $100,000 to Timbercorp, it would have been possible to cut down on some of the spending to raise it. However, they preferred to borrow from Timbercorp rather than cutting down on spending. She was aware that "the loan finance from Timbercorp was tax deductible" (T611). 524I am satisfied that Mr Brailey counselled Mr Tomasetti from time to time about the need to curb discretionary expenditure, something which he appeared reticent to address. Despite this, Mr Tomasetti managed to meet his ongoing obligations in relation to the ongoing costs and repayment of borrowings for the investments and they began to generate income: $50,000 in 2007; $165,000 in 2008; and $288,000 in 2009 (DWS App 3). 525There is no evidence that anything in the prospectuses, product disclosure statements or in the independent research analyses that Mr Brailey had recourse to, was either inaccurate, misleading or incomplete. The plaintiffs' case, including the evidence of Mr Wall, does not involve any criticism of that material at all. There were also suggestions that Mr Brailey should have gone beyond that material, but there is no evidence as to what exactly he should have done, or what further inquiries he should have made, let alone any suggestion that if he had done so he would have become aware of additional and material information. 526In relation to the other research material to which Mr Brailey had recourse, although there was an objection taken to his description of it being "independent", it was not established that this was not apt. An example of such material is a report by Australian Agribusiness Group: "2003 Timbercorp Almond Project. Part C Project Review - March 2003" (EB1 at p.1248). The project was given a four out of five star rating. A summary under various headings on the first page includes the following: Returns: "Overall, AAG consider the potential for returns to be good" Management: "Timbercorp are leaders in the field of agribusiness project management" Agricultural Parameters; "Yields estimates for this project are at the high end of past industry standards but are supported by the Independent Expert" Disclosure and Risks: "Timbercorp have a long track record in managing Agri MIS projects across several agri-sectors and the parent entity, Timbercorp Ltd, is listed on the ASX. The risks of this project are not above normal risks associated with an Agribusiness MIS" 527No attempt was made to criticise the accuracy of this, or similar, research material. 528I am not persuaded that it has been established that the investments were not sound, prudent and sensible in the circumstances and for the purposes for which Mr Brailey recommended them to the plaintiffs. They were not inherently unsatisfactory. They certainly carried elements of risk, but they also brought with them specific advantages that were capable of meeting important needs and desires of the plaintiffs, particularly Mr Tomasetti. 529The "what should have been done" question posed by the defendants involves consideration of whether the investments were suitable for the plaintiffs and whether they were alerted to the risks. Having regard to the plaintiffs' circumstances, particularly those of Mr Tomasetti, I am not persuaded that the investments were not suitable for them. Although it is not critical to that conclusion, it is of some significance that it has not been established that there was some viable and realistic alternative course of action that should have been taken. 530It is clear enough that it would have been a breach of Mr Brailey's duty to have put the investments forward without his clients being aware of the risks. I am not persuaded, however, that this occurred. There is a dispute between Mr Tomasetti and Mr Brailey as to the extent of discussions they had about risks. I have indicated my view of the reliability of the evidence of each of them. I am not satisfied that Mr Brailey did not sufficiently convey to Mr Tomasetti the risks in relation to each investment. As for Ms Cordony, she was unable to reliably say what was said by Mr Brailey, and what was not said, because of her inability to recall. I accept that prospectuses and product disclosure statements were usually provided. If Mr Tomasetti and Ms Cordony never read any prospectus, PDS or application form (which I very much doubt), that was not Mr Brailey's fault. 531I conclude that the plaintiffs have failed to discharge their onus of establishing that there was a breach of the duty of care that was undoubtedly owed to them. Breach of contract 532The pleadings assert that in or about December 1998, Mr Tomasetti and Ms Cordony entered into an agreement with the first three defendants to provide them and the TSF with expert accounting, taxation, wealth management and financial planning and advisory services for remuneration. It is contended that the first three defendants breached this retainer upon the same factual basis that is relied upon for the FTA and negligence claims. 533The findings I have made in relation to the FTA and negligence claims mean that the contract claim must fail as well. Statutory breaches 534It is pleaded (4AsoC at [50] - [51]) that the fourth defendant is liable under s 917A of the Corporations Act 2001 (Cth) for the negligent acts and omissions of Mr Brailey in its capacity as a financial services licensee and his capacity as its authorised representative from 23 June 2003 to 31 July 2008. The fourth defendant's liability arose upon it obtaining a financial services licence on 17 June 2003. 535That claim must fail for reasons given above. 536At [52] - [55], it is pleaded that the first and fourth defendants provided personal advice to the plaintiffs as retail clients as described in s 944A of the Corporations Act . In written submissions (PWS at [114]), the "essence of the allegations" in relation to this claim was described as follows: "There was an obligation to provide Statements of Advice to the Plaintiffs, and an obligation to carry-out certain duties thereunder. Mr Brailey (and, relevantly, the Fourth Defendant) failed to do those things. Failure to do so gives rise to a cause of action similar to the FTA contraventions and to the counts of negligence (and arising from the same facts and circumstances); the difference being that s 953B(2) speaks of a 'person suffer[ing] loss or damage because' of the non-provision (or defective nature) of the Statement of Advice." 537Liability in relation to the claims concerning statements of advice is confined to the fourth defendant as the financial services licensee: s 953B(3) Corporations Act (DWS at [190]). 538I have referred earlier to the statements of advice that Mr Brailey did provide to the plaintiffs. There were three and they related to the Timbercorp Early Almond 2004, Timbercorp Citrus 2005 and Gunns Winegrape 2005 investments. They were each provided after Mr Tomasetti in 2004, and Ms Cordony in 2005, had signed the relevant application forms. 539There is really no issue that there was a failure to comply with the statutory requirements, at least in terms of when a statement of advice is required to be provided. It was accepted that criticism of Mr Brailey in this respect was justifiable (T1356.5). The defence to these claims is concerned with the issue of causation. Recovery of loss or damage is authorised under s 953B(2) if it is suffered "because" the client was not provided with a statement of advice (or was provided with one that was defective). 540Mr Tomasetti unequivocally denied receiving the 2004 statement of advice (14 July 2010 affidavit at [185] - " I received no Statement of Advice in relation to this project " ). In cross-examination he said that he did not recall receiving it, but if he did, it was unlikely he would have read it (T547). There is no evidence that Ms Cordony read either of the statements of advice prepared in June 2005. It would appear safe to assume that if the plaintiffs had read them, they would have raised something with Mr Brailey about certain parts of the contents which they now contend were erroneous, particularly the descriptions of their risk profiles. 541If there had been compliance with the Corporations Act provisions, would it have made any difference? If proper statements of advice had been provided at the time when they were required to be provided, would they have been read by Mr Tomasetti and Ms Cordony and would this have led to them making a different decision (DWS at [194])? There is no evidence of this and it would seem unlikely in any event, given the general tenor of what they have said about reading documents relating to the investments. 542I am not satisfied that the claims concerned with statutory breaches have been made out. Fiduciary Duty 543The pleading in respect of this claim (4ASoC at [63] - [69]) alleges that Messrs Brailey, Fenton and Lane were accountants and financial advisers to the plaintiffs and as such had a fiduciary duty. Each of the investments involved finance borrowings which were recommended by Mr Brailey. He was paid a commission by the financiers based upon the amount borrowed and he did not disclose to the plaintiffs his entitlement to payment; the terms of such payment; nor the fact of payment. Accordingly, Mr Brailey had a "significant personal interest" in each finance transaction and so had a conflict of duty whereby his personal interests conflicted with his duties to the plaintiffs. He failed to eschew this conflict and thereby preferred his own interest to the interests of the plaintiffs. As a result, Messrs Brailey, Fenton and Lane were liable for the loss that would not have happened had he (or they) not breached the fiduciary duty. 544In response, the first and fourth defendants (although I note that the claim is not brought against the fourth defendant) plead that trailing commissions were paid, but only by Timbercorp to BFL Financial Planning Pty Ltd and only from October 2006. The total amount paid was $1,500. The entitlement to commission of this type was disclosed and contained within the financial services guide provided to the plaintiffs. 545Much was said, both written and oral, in the plaintiffs' submissions in contending that a fiduciary relationship existed. Reference was made in support of the proposition to a number of authorities, including Daly v The Sydney Stock Exchange Limited [1986] HCA 25; (1986) 160 CLR 371 and Lloyds Bank v Bundy [1975] QB 326. There was no real contest about this, at least insofar as Mr Brailey was concerned. 546Mr Brailey's duty was described in written submissions (PWS at [105]) as being to furnish the plaintiffs with all the relevant knowledge which he possessed, concealing nothing that might reasonably be regarded as relevant to the making of the investment decision: see Daly v The Sydney Stock Exchange Limited at 385 per Brennan J. It was submitted that he obtained, or stood to obtain a benefit from the plaintiffs entering into the investments, or he had some other interest in that occurring: see Lloyds Bank v Bundy at 341 per Sachs LJ. 547There was then set out in the plaintiffs' written submissions some extracts from the cross-examination where, in essence, Mr Brailey denied a number of propositions, including that he preferred his own interests over those of the plaintiffs; that his primary concern was earning commission; that his ability to properly advise the plaintiffs was impaired by such a desire to earn commission; and that he had lost all sense of duty to his clients. It was submitted that such denials should be rejected and that it should be found that Mr Brailey was "avid for commission earnings, and in this significant respect, preferred his own interest to that of the plaintiffs" (PWS at [107]). 548It was submitted that it was not sufficient, nor correct, that "Mr Tomasetti knew what was going on". That was a reference to something Mr Parker had said in opening (T59), where he clarified that the pleaded case for the plaintiffs was not concerned with the upfront commissions. Mr Brailey had rebated 50 per cent of those to the plaintiffs. It was in that context that Mr Parker referred to Mr Tomasetti knowing what was going on; he received the rebates. Mr Faulkner responded (T65) by submitting, in effect, that it did not matter if Mr Tomasetti knew of Mr Brailey's entitlement to commission. The important point was that he had a conflict of interest and, on the plaintiffs' case, he preferred his own interest to theirs. This was reiterated in the written submissions (PWS at [108]), where it was said: "Mr Brailey's duty was to eschew his own interest in generating commission income, in preference to the Plaintiffs being committed to inappropriate, unsuitable and onerous investments. Although it is a factual ingredient, this [is] not a case depending entirely upon the question of the extent of Mr Brailey's disclosures concerning the receipt of commission; it is one in which Mr Brailey's interest in the generation of commission (which was, as a matter of fact, wholly dependent upon the Plaintiffs' subscription to the investments) needs to be assessed in the light of his providing advice to the Plaintiffs as to the suitability of certain investments, against the particular context of their instructions as to those investments." (Emphasis in original). 549It will be seen that a component of that submission is that the investments were "inappropriate, unsuitable and onerous". Further, it calls for consideration of the plaintiffs' "instructions" as to the investments. I have indicated elsewhere that the plaintiffs have failed to establish the former. As to the "instructions", I take this to be a reference to things said in conversations with Mr Brailey. I have indicated elsewhere my lack of confidence in the evidence as to conversations. 550The plaintiffs' written submissions conclude on this topic with the assertion that but for Mr Brailey's advice, the plaintiffs would not have entered into the investments (PWS at [109]). The consequence of that conclusion being drawn would be that they were entitled to equitable compensation; the obligation of a defaulting fiduciary being to make good the loss occasioned by his/her breach of duty. 551In the defendants' written submissions, it was put that there was no support in the evidence for the contention that Mr Brailey sacrificed the plaintiffs' interests so as to gain commission on the investments (DWS at [183]). It was reiterated that Mr Tomasetti was aware of the fact that Mr Brailey and the fourth defendant would receive commission on the amount invested, and that this would be split evenly with him. Again, as in Mr Parker's opening, it was noted that the plaintiffs' claim was concerned with an asserted potential conflict of interest arising out of an alleged entitlement to trailing commissions on finance associated with the investments. It was submitted that "these claims go nowhere" as the entitlement to the trailing commissions only came into existence after the last of the investments had been made. This involved reference to a paragraph of an affidavit that was not read (paragraph 11 of the affidavit of Mr Timothy Bolger). 552Counsel for the plaintiffs indicated in oral submissions that no reliance was placed on the question of trailing commissions because there was no evidence. Mr Maroya continued: "So the claim as it concerns breach of fiduciary duty is one which is put upon the potential for conflict overall which was engendered by Mr Brailey's receipts of the commissions that he got on the placement of the investments" (T1224.30). 553Mr Maroya's submissions concluded with this characterisation of the claim: "In this case the plaintiffs' argument proceeds on these bases. One, Mr Brailey had a conflict of interest which was the fact that by dint of the eventual receipt of commission benefits he was able potentially to prefer his own interests to that of the plaintiffs. The second point is that Mr Tomasetti knew about this. The third point is that Mr Brailey was permitted by the plaintiffs to continue to act for them in the presence or in the existence of that conflict so long as it remained only a potential conflict, so long as he didn't prefer his own interests. When he did prefer his own interests, that is when the breach happened and the breach is exemplified by the failure to eschew the conflict" (T1238). 554Mr Parker indicated at the outset of his oral submissions on this topic that it seemed to the defendants that the claim for breach of fiduciary duty appeared to have been abandoned. The pleaded case was specific in that it was said that this claim was concerned with commissions on finance borrowings. However, Mr Maroya had conceded that there was no evidence on this. Mr Maroya had then proceeded to indicate that the case was concerned with commissions that were paid on placement of the investments. So much is clear from the extract from the submissions (at T1224) appearing above. 555Apparently, commission became payable in respect of new borrowings at some point after 2005, but the plaintiffs did not lead the evidence of this (T1353.27). There was no evidence of there being an entitlement to commission in respect of loans at the time that any of the investments were made. 556Mr Parker also characterised the plaintiffs' case as going beyond the negligence claim in that, in relation to the fiduciary duty claim, it was not merely contended that there was negligence, but that there was a deliberate going out of Mr Brailey's way to induce the plaintiffs to enter into the investments in a sacrifice of their interests for his own desire to earn commission. It was submitted that "if the investments were negligent, they were negligent. Adding an equitable claim doesn't really seem to add any great difference" (T1355.16). 557In reply, Mr Faulkner sought to clarify what the plaintiffs' case was: "[T]he existence of the commissions first of all created a conflict, and that conflict was a continuing conflict and it was revealed to us. So he was entitled to continue to act so long as he did not put his own interests ahead of my clients' interests. And we said he preferred ... his own interests to our clients' interests, and it's not a case of earning commission that he didn't reveal to us, and that even goes to trailing commissions. We only rely upon the entitlement to commissions as creating the conflict. For all the reasons we have already stated as to the breaches for negligence and FTA, there he was preferring his own interests to our clients' interests." (T1404.42) Conclusion as to fiduciary duty 558The plaintiffs' case fails for two reasons. First, the claim is specifically and unequivocally pleaded as relating to Mr Brailey having "a significant personal interest in each finance transaction" as a consequence of a commission being payable "by respective financiers based upon the amount of each borrowing by the respective plaintiff" (4ASoC at [66] - [67]). There is no evidence of this. Even the evidence which was not read did not support the proposition. The closing submissions for the plaintiffs sought to rely upon other commissions. That was not an argument that addressed the pleaded case. 559Secondly, and in any event, it is an inherent component of the case sought to be made by the plaintiffs that Mr Brailey's advice as to the investments was as they sought to establish under the FTA and negligence claims. I have indicated elsewhere that I am not satisfied of that. Other issues 560None of the claims brought by the plaintiffs can be upheld. There were, however, a range of other issues raised in the proceedings, some of which were dealt with at quite some length in terms of both evidence and submissions. It is appropriate to express my conclusions where possible. Partnership 561There was a significant dispute in the proceedings about two issues concerned with questions of partnership. 562The first issue is whether Messrs Brailey and Fenton were partners in the firm of Brailey Fenton Lane & Co. It is asserted in the 4ASoC: "3At all material times [Edmund Brailey, John Fenton and Christopher Lane] were chartered accountants carrying on (with Brailey & Fenton Pty Limited) an accountancy partnership trading under the name Brailey Fenton Lane & Co Chartered Accountants ..." 563The defendants' pleaded response to this may be summarised as follows: "Up until March 1987, Messrs Brailey and Fenton practised under the name Brailey & Fenton Chartered Accountants. They then incorporated Brailey & Fenton Pty Limited, of which they were directors, and continued to practice as Brailey & Fenton Chartered Accountants. On 23 October 1991, Mr Lane joined Brailey & Fenton Pty Limited in its practice as chartered accountants whereby Mr Lane, in partnership with Brailey & Fenton Pty Limited, practised under the name Brailey Fenton Lane & Co. This practice was sold in April 2007 to Commercial Associates Accountants and Advisers Pty Limited." 564The other issue is whether, when Mr Brailey provided advice to the plaintiffs concerning the investments, he was "acting in the ordinary course of business of the firm", namely Brailey Fenton Lane & Co (s 10(1) Partnership Act 1892) or whether, when he did so, he acted "for carrying on in the usual way business of the kind carried on by the firm" (s 5(1) Partnership Act ). 565It is asserted in the 4ASoC: "8In or about December 1998, Mr Tomasetti and Ms Cordony entered into an agreement with [Messrs Brailey, Fenton and Lane] to provide them and [the Tomasetti Superannuation Fund] with expert accounting, taxation, wealth management and financial planning advisory services ... for remuneration ..." 566The defendants' pleaded response may be summarised as follows: From May 1992, Desly Pty Limited owned and operated a financial planning business trading as No Frills Financial Services. The shareholders of Desly Pty Limited were Kambala Trading Co Pty Limited, Mr Brailey's family company; Mr Fenton, as trustee for his wife; and Ms Ruth Lane, Mr Lane's wife. In May 1993, Mr Brailey and Desly Pty Limited executed a trust deed whereby, in effect, Mr Brailey traded as No Frills Financial Services and operated that financial planning business on behalf of Desly Pty Limited. Desly Pty Limited changed its name to BFL Financial Planning Pty Limited on about 17 September 2001. BFL Financial Planning Pty Limited was registered as the entity carrying on the business of No Frills Financial Services in lieu of Mr Brailey on 1 March 2004. BFL Financial Planning Pty Limited obtained a financial services licence in June 2003. On about 7 March 2008, the practice of BFL Financial Planning Pty Limited was sold to Commercial Associates Financial Planning Pty Limited. On about 29 August 2008, BFL Financial Planning Pty Limited changed its name to TJC Financial Planning Pty Limited. Messrs Brailey, Fenton and Lane were at all times directors of Desly Pty Limited / BFL Financial Planning Pty Limited / TJC Financial Planning Pty Limited. The agreement as alleged in [8] of the statement of claim is denied. In about December 1998, Brailey & Fenton Pty Limited together with Mr Lane were trading as chartered accountants as Brailey Fenton Lane & Co. Mr Tomasetti and Ms Cordony retained Brailey & Fenton Pty Limited and Mr Lane to provide them with accounting and taxation advice. There was no agreement as alleged in about December 1998 to provide wealth management and financial planning advisory services to the plaintiffs. Any agreement to provide wealth management and financial planning advisory services by TJC Financial Planning Pty Limited (previously BFL Financial Planning Pty Limited and Desly Pty Limited) to Mr Tomasetti and the Tomasetti Superannuation Fund was reached in or around May 2000 with [Desly Pty Limited] or, alternatively, with Mr Brailey as trustee for that company. Any such agreement with Ms Cordony was reached in or around 2003 with BFL Financial Planning Pty Limited, or, alternatively, with Mr Brailey as trustee for that company. Were Messrs Brailey and Fenton partners in the firm Brailey Fenton Lane & Co? 567The written submissions on behalf of the plaintiffs commenced with a number of general propositions of law concerning partnerships. Reference was made to the terms of s 1 of the Partnership Act 1892 which, relevantly, is in these terms: " 1Definition of partnership (1)Partnership is the relation which exists between persons carrying on a business in common with a view of profit ..." 568Reference was then made to the uncontroversial proposition succinctly summarised in Keith L Fletcher, The Law of Partnership in Australia , 9 th ed (2007) Lawbook Co at 2.15: "For a business to be carried on in common, it is not essential for all the partners to take an active part in its direction and management. ... What is necessary is that the business must be carried on either by or on behalf of all the persons who are alleged to be partners." 569The receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business, but this fact does not of itself make the person a partner: Partnership Act , s 2(3). Partners are free to arrange for the remuneration of themselves in any manner they choose. They may agree that one or more shall receive specific sums, or that one or more receive nothing and, in either case, irrespective of profits: M Young Legal Associates Ltd v Zahid [2006] EWCA Civ 613; [2006] 1 WLR 2562 per Hughes LJ at [41]. 570Reference was made to s 15 of the Partnership Act which provides that admissions and representations made by a partner concerning the partnership affairs, and in the ordinary course of its business, are evidence against the firm. No explanation was provided as to how that provision is relevant and it is not self-evident. It seems to me that the section is irrelevant to the present issue. It proceeds upon the basis that a person is a partner of a firm and does not assist in the determination of the question as to whether that is in fact the case. 571The next proposition in the plaintiffs' submissions is that there may be a sub-partnership within a principal partnership. Reference was made to R C I'Anson Banks, Lindley & Banks on Partnership , 18 th ed (2002) Sweet & Maxwell at 5-79 (in the same terms at 5-67 in the 19 th ed (2010)). There, Lord Lindley referred to a sub-partnership as "a partnership within a partnership" and said that "it presupposes the existence of a partnership to which it is itself subordinate". The current editor added: "Thus, a sub-partnership is, conventionally, a partnership in a share of another partnership and, whilst it is of a derivative nature, the sub-partnership normally operates outside the confines of the main partnership. However, there is, in theory, no reason why a sub-partnership should not be formed between a group of partners within the head partnership , with or without the blessing of the other partners." (Emphasis added in plaintiff's written submissions). 572It was submitted that "the documents ... demonstrate a strong case for [the] existence of partnership as pleaded by the Plaintiffs" (PWS at [120]). I take that to mean that Messrs Brailey, Fenton and Lane (with Brailey & Fenton Pty Limited) were carrying on the accountancy practice which traded under the name Brailey Fenton Lane & Co. The submission depends upon a construction of the partnership agreement of 23 October 1991 to which the three men, and Brailey & Fenton Pty Limited, were parties (EB1 at p.21). 573Important features of this agreement, for present purposes, are: * After naming the four parties to the agreement, it specifically nominated Brailey & Fenton Pty Limited and Mr Lane as being "hereinafter also referred to collectively as 'the partners' and individually as 'partner'". * It recited that Messrs Brailey and Fenton were directors of Brailey & Fenton Pty Limited. * It also recited that Brailey & Fenton Pty Limited and Mr Lane proposed to carry on the business of accounting, taxation and associated services in partnership, and at the request of Messrs Brailey and Fenton had agreed to record in writing the terms which followed, which were said to be "terms and conditions of the partnership". * Clause 2 provided that the partnership shall carry on "the said business" under the name "Brailey Fenton Lane & Co". * Clause 4 provided that Messrs Brailey and Fenton on behalf of Brailey & Fenton Pty Limited and Mr Lane shall devote equal time and effort to the business. * Clause 6 provided that Brailey & Fenton Pty Limited would contribute two-thirds and Mr Lane would contribute one-third capital to the business. * Clause 7 provided that the partners shall be entitled to share profits, or shall be liable to bear losses, in the same proportions as they contributed capital. * Clause 8 prohibited the partners, and Messrs Brailey and Fenton, from engaging in any other employment, occupation or business without the consent of the others. * Clause 9 provided that each of Messrs Brailey, Fenton and Lane could operate upon the partnership bank account. * Clauses 11,12 and 13 provided for dissolution of the partnership by one partner giving written notice to the other. Provision was also made for the "continuing partner" to purchase the "outgoing partner's" share (cl 11), or the "offending partner's" share being purchased by the "other partner (not being the offending partner)" (cl 13). * Clause 16 prohibited the partners from entering into any arrangement whereby the partnership property might be put at risk without the consent of the other partner. * Clause 17 provided for each partner, and Messrs Brailey and Fenton, to pay their respective debts etc and to keep indemnified "the other partner or the partners as the case may be" against any claims, demands etc with respect thereof. * Clause 18 provided that each of Messrs Brailey, Fenton and Lane shall be entitled to a specified period of holidays per annum. * Clause 19 required each of Messrs Brailey, Fenton and Lane to maintain sickness and accident insurance in favour of the partnership. * Clause 20 provided that, in the event of the death of either of Messrs Brailey, Fenton and Lane, the "survivors shall buy the deceased's share of the Partnership property". There was a requirement for each of the three men to maintain a life insurance policy in favour of "the survivors" to enable them to purchase "the deceased's share". It was also provided that in the case of Messrs Brailey and Fenton, their share will be one half of the share of the partnership property of Brailey & Fenton Pty Limited and the price of that share would be paid to Brailey & Fenton Pty Limited. * Clause 21 provided that Brailey & Fenton Pty Limited shall have two votes at meetings of the partnership and Mr Lane shall have one. Brailey & Fenton Pty Limited irrevocably appointed Mr Brailey to exercise one of its votes and Mr Fenton to exercise the other. * Clause 22 provided grounds for dissolution of the partnership if either of Messrs Brailey, Fenton or Lane absented themselves from the business for a certain period or had membership of the Institute of Chartered Accountants forfeited or suspended. Notice of dissolution of the partnership could be given by the "non-offending partner" who shall "thereupon purchase the share of the partnership property of the other partner". * Clause 24 provided covenants in restraint of competition by a partner whose share of the partnership property was purchased by another partner pursuant to cl 11 or cl 13. The clause specified that if the outgoing partner was Brailey & Fenton Pty Limited, then this covenant was binding upon Messrs Brailey and Fenton. 574The agreement was signed by Mr Brailey, as secretary, and Mr Fenton, as a director, on behalf of Brailey & Fenton Pty Limited, as well as by each of Messrs Brailey, Fenton and Lane as individuals. 575Mr Faulkner contended in written submissions that this agreement provided for: (a) the conduct of the accounting business; (b) in common; (c) for profit; (d) by the 3 natural persons; (e) including the provision of financial advising services. 576It should be immediately observed that the agreement does not, in fact, say anything express about "the provision of financial advising services". Recital B described the nature of the business that is the subject of the agreement as "the business of accounting, taxation and associated services". 577Mr Faulkner also characterised the agreement as having the commercial objective of establishing the "shop-front" for the conduct of a business with a view for profit and defining the roles the four parties would play within that business. 578The very fact that the written agreement was headed, "PARTNERSHIP AGREEMENT" was said to be significant as "evidence that they were entering into and then did conduct a partnership of all four of them" (T1130.25). 579Reference was made to the submission of the defendants that there was a "two person partnership", that is, between Brailey & Fenton Pty Limited and Mr Lane. The plaintiff's response was to point to the fact that there was no separate partnership agreement between those two parties. The only written agreement of partnership for the conduct of the accountancy practice was the four party agreement, an agreement to which Messrs Brailey and Fenton, as individuals, were parties. 580Further, it was submitted that such partnership as there was between Brailey & Fenton Pty Limited and Mr Lane was a sub-partnership, subsidiary to the four party partnership. The fact that, pursuant to clause 7, profits of the partnership were to be directed only to Brailey & Fenton Pty Limited and Mr Lane did not preclude a conclusion that there was a four party partnership: M Young Legal Associates Ltd v Zahid , supra. 581Mr Faulkner pointed to various terms of the agreement which provided Messrs Brailey and Fenton with rights and obligations in respect of the partnership as supporting the proposition that they were partners in a four party partnership and as being inconsistent with the defendants' contention that there was only a two party partnership. He referred in oral submissions to a number of provisions in the agreement: * The requirement that the three men devote equal time to the business (cl 4). * The prohibition on engaging in other employment etc applying to all three men (cl 8). * The three men being authorised to operate the partnership bank account (cl 9). * The provision in cl 10 for "the partners" drawing agreed sums on account of their respective shares of the profits. * The requirement in cl 17 that each partner, and Messrs Brailey and Fenton, pay their debts etc and indemnify "the other partner or the partners as the case may be" against claims etc in respect thereof. * Each of the three men being entitled to a specified period of holidays per annum (cl 18). * Each of the three men being required to maintain sickness and accident insurance in favour of the partnership (cl 19) and life insurance in favour of "the survivors" (cl 20). * The provision in cl 24 restraining competition by any of the three men upon departure from the partnership. 582The Court was invited to consider "the authority or the legal source" for activities carried out by each of the three men in the business and submitted that the answer was the four party agreement (T1131.43). 583It was submitted that "Messrs Brailey, Fenton and Lane each conducted themselves on the basis that they devoted their professional lives to (the accountancy) business and its subsidiary brokerage and (financial) planning business for many years, as required by their contract, the 4 person 'PARTNERSHIP AGREEMENT'" (PWS at [122]). Whether the financial planning business was "subsidiary" is an issue that requires separate consideration. It is certainly the case that the three men were required by the terms of the agreement (specifically clause 4) to devote equal time to the conduct of the business of the partnership. However, clause 4 commences with the words, "Brailey and Fenton on behalf of [Brailey & Fenton Pty Limited] and Lane shall ...". 584In support of this submission, reference was made to evidence to the effect that the three men, as between themselves, regarded each as a partner of the other in the business and conducted themselves accordingly. There are many examples of this in the evidence. They include the following: * Mr Brailey and Mr Fenton each, on occasion, signed Brailey Fenton Lane & Co documents with them being described as "Partner". They were taken to many of these in the course of their evidence and, generally, the response was that it was either a mistake or they did not notice. At one point Mr Brailey said that even before Mr Lane joined the business and when it was being operated by the company, Brailey & Fenton Pty Limited, he signed as a partner (T911.30). He agreed that over the years it had become a habit when signing documents in relation to the accounting business to call himself a partner (T912.10; see, similarly, at T986). * Stationery used within the business of Brailey Fenton Lane & Co was designed as if the three men were partners. The letterhead had the title of the firm in the top left corner and "Chartered Accountants" in the top right corner. Underneath the latter there were listed the names of the three men in the manner one might expect partners in a firm to be listed. * A form with the title "Tax Return Administration Sheet" was used as a checklist in the preparation of tax returns for clients (Ex M at 480). Mr Brailey agreed with the proposition that over the years 1994 to 2007, he, Mr Fenton and Mr Lane signed off the "partner review" on these forms (T1070.19). Mr Faulkner made the point that there was no need for the item "partner review" on this form if the defendants were correct in saying that there was only one natural person in the partnership of Brailey Fenton Lane & Co, namely Mr Lane (T1198). The fact that Mr Brailey initialled, dated and signed as "partner" was submitted to be a further indication that he regarded himself as such. * Partnership tax returns showed an item "Partner salary JCF and CCL" (e.g. Ex M at 515). Mr Fenton explained in his affidavit (at [73] ff) that this was simply due to the practice's internal record keeping. Mr Lane provided a similar explanation in one of his affidavits (3 November 2010 at [9] - [13]). He termed it "a short hand way of describing [a] notional salary" paid to Mr Fenton and himself to compensate them for a benefit that Mr Brailey received which they did not (the provision of a car). * Some specific items of correspondence were referred to. For example, in a letter on Brailey Fenton Lane & Co letterhead to ABN Amro Morgans Limited of 3 October 2001 (EB1 at p. 116), Mr Brailey referred to a decision that had been made after "discussion with my partners". In the ensuing nine paragraphs there were repeated references to "we", "our" and "us". Mr Brailey explained that this letter concerned the financial planning business and so he should not have used the firm letterhead. The references to "partners" was a reference to Messrs Fenton and Lane, but he was in fact referring to his fellow directors (of BFL Financial Planning Pty Limited) (T919.34). * In a letter written to Mr Tomasetti on 29 April 2004, Mr Brailey explained how in future he would be devoting more time to the financial planning business (PCT1 at p. 2376). He said, nevertheless, that, "I remain a partner at Brailey Fenton Lane & Co". Mr Brailey explained that this was "a mistake" (T995.6). * This letter of 29 April 2004 was accompanied by a financial services guide in respect of the financial planning business. It included information as to a complaints resolution procedure. Mr Brailey wrote that the first contact should be with him, but if there had been no satisfactory resolution within three days, "please contact John Fenton (a partner of Brailey Fenton Lane & Co Chartered Accounts)". Mr Brailey explained that this was "a mistake" (T997). In his primary affidavit he said it was "intended to be read in a colloquial sense rather than a formal or legalistic sense". 585I accept that the above examples do indicate that Messrs Brailey and Fenton were regarded, and regarded themselves, as partners in the firm of Brailey Fenton Lane & Co. However, it is important to bear in mind that the intention of the parties must be objectively ascertained from their written agreement as well as from their words and conduct. Descriptions used by the men themselves in referring to their relationship are not conclusive. In Brooker v Friend & Brooker [2006] NSWCA 385, McColl JA stated at [141]: "The question whether a partnership exists is a mixed question of law and fact: Keith Spicer Ltd v Mansell [1970] 1 WLR 333; app. Jolley v Federal Commissioner of Taxation (1989) 86 ALR 297. It turns on whether the substance of the relationship between the parties exhibits the indicia of partnership. The fact that the parties occasionally, or indeed constantly (although that is not this case) referred to each other as partners does not prove that was their legal relationship: Duke Group Ltd (in liq) v Pilmer; sub nom Duke Group (in liq) v Pilmer (1999) 153 FLR 1 at 402, applying Inland Revenue Commissioners v Williamson (1928) 14 TC 335 at 340; nor would a statement by them that they were not partners: Weiner v Harris [1910] 1 KB 285 at 290." 586There are examples in the evidence that provide a contrary indication to those matters referred to above. Mr Parker referred to a number of matters which he submitted, were "entirely consistent with the business of [Brailey Fenton Lane & Co] being carried on in partnership by [Brailey & Fenton Pty Limited and Lane]" (DWS at [71]). Such matters include: * Brailey & Fenton Pty Limited and Mr Lane were at all material times the joint registered proprietors of the Brailey Fenton Lane & Co business name (see EB1 at p. 62). * In applying for registration as a tax agent with the Tax Agents Board in May 1992, the partners of Brailey Fenton Lane & Co were said to be Brailey & Fenton Pty Limited and Mr Lane (EB1 at p. 63F-63G). * An ABN was issued to Brailey & Fenton Pty Limited and Mr Lane as proprietors of Brailey Fenton Lane & Co when it became necessary to register for GST purposes (DTB at p. 247). * A tax file number was obtained for the partnership of Brailey & Fenton Pty Limited and Mr Lane (Ex 22 at p. 33). * Accounts were prepared, and tax returns filed, for the partnership of Brailey Fenton Lane & Co with the partners being recorded as Brailey & Fenton Pty Limited and Mr Lane (see, for example, DTB at p. 322-335). * Premises leased for the business of Brailey Fenton Lane & Co were leased by Brailey & Fenton Pty Limited and Mr Lane as joint tenants (Ex 22 at p. 209). Conclusions 587The four party partnership agreement of 23 October 1991 makes it abundantly clear that it was the intention of the three men to create a partnership between Brailey & Fenton Pty Limited and Mr Lane. The words used in the document are expressly and unambiguously to that effect. 588It was necessary to include Messrs Brailey and Fenton as parties to this agreement because it was necessary to assimilate them to the same position as Mr Lane. The business depended upon the work of all three individuals and so it was appropriate to provide that Messrs Brailey and Fenton had rights and obligations similar to those granted to, or imposed upon, Mr Lane. Thus, it was appropriate that there were provisions in the agreement such as that the men devote themselves to the business equally; that they be afforded an equal period for holidays; and that they each be prohibited from competing with the business if they were to leave. 589Aside from specifying these individual rights and obligations, the agreement consistently asserted that the partners were Brailey & Fenton Pty Limited and Mr Lane. It was those two parties who were to contribute capital, not Messrs Brailey and Fenton. It was those two parties who were entitled to share profits, or were liable to bear losses, not Messrs Brailey and Fenton. Provisions relating to the dissolution of the partnership referred to the rights in that respect of "the partners", previously identified as being Brailey & Fenton Pty Limited and Mr Lane. Messrs Brailey and Fenton were not afforded rights, as individuals, to initiate a dissolution. 590Clause 22 is problematic. It provides for notice of dissolution to be given by the "non-offending partner" if any of Messrs Brailey, Fenton or Lane absented themselves from the business for a certain period, or lost their membership of the Institute of Chartered Accountants of Australia. Assuming the partnership had just the two parties, if one of those things occurred in relation to either Mr Brailey or Mr Fenton, the "non-offending partner" would be both partners. In my view, however, the wording of this clause is probably a matter of poor drafting. I cannot see how it could prevail over the balance of the agreement which quite clearly evinces an intention that Brailey & Fenton Pty Limited and Mr Lane, and only those two parties, be the partnership to be known as Brailey Fenton Lane & Co. 591That this was the intention is evident from the clear statement at the very beginning of the agreement that the partners were Brailey & Fenton Pty Limited and Mr Lane. It is reinforced throughout the agreement by the manner in which it distinguishes Messrs Brailey and Fenton from those partners. The following examples may be given (with emphasis added): * Clause 4 provides for equal devotion to the conduct of the business of the partnership and refers to Mr Lane and to "Brailey and Fenton on behalf of" Brailey & Fenton Pty Limited. * Clause 8 commences with the words, "Neither partner nor Brailey nor Fenton shall ...". * Clause 17 commences, "Each partner and Brailey and Fenton ...". * The voting rights in clause 21 are assigned to Brailey & Fenton Pty Limited and Mr Lane. 592Moreover, if it was the intention to create a four party partnership, there was no purpose in drafting the document so as to only refer to two parties as "partners" rather than to four partners. 593I accept the submission of Mr Parker to the effect that the source of the authority for the acts of Messrs Brailey and Fenton was their position as officers of Brailey & Fenton Pty Limited. They were authorised to do certain things on behalf of the partnership by virtue of a partnership agreement that rendered the company of which they were directors a partner. Their authority did not derive from the agreement making them partners in their own right. 594The subsequent conduct of the parties does not warrant a conclusion that their intention was other than that which was expressed in writing. I accept the submission on behalf of the defendants that this was through "sloppiness" (T1245.13) and may be explained as having its genesis in the days when the three men were indeed partners in the three person auditing partnership. If Messrs Brailey and Fenton had conscientiously turned their minds to their correct designation when signing documents on behalf of Brailey Fenton Lane & Co, they should have realised that they were signing as a director of the partner, Brailey & Fenton Pty Limited. 595Even if it was the subjective belief of Messrs Brailey and Fenton that they were partners, that does not transform their legal position to conform with such description: see, for example, Salib v Gakas [2010] NSWSC 505 per Ward J at [233]. The significant point is that whenever it was necessary to describe the true situation with precision for regulatory or taxation purposes, it was consistently maintained that the partners were only Brailey & Fenton Pty Limited and Mr Lane. 596I am satisfied that Mr Brailey and Mr Fenton were not partners of Brailey Fenton Lane & Co. Were members of a partnership firm liable for the conduct of Mr Brailey? 597This question remains to be determined notwithstanding the conclusion that Mr Brailey was not a partner of Brailey Fenton Lane & Co. It was accepted in submissions for the defendants (DWS at [53]) that "if the necessary connection existed [between Mr Brailey advising on the investments and] the business of [Brailey Fenton Lane & Co], Mr Brailey's acts would be the acts of [Brailey & Fenton Pty Limited] on ordinary agency principles and accordingly the requirement of acts by 'a partner' - namely [Brailey & Fenton Pty Limited] - would be satisfied". 598This would leave open the possibility that Mr Lane would be liable for the acts of Mr Brailey. It would also have left open the possibility of Brailey & Fenton Pty Limited being liable, but that question may be put aside as it is no longer being sued. 599The defendants' case is that the financial advising/planning business was separate to, and not part of, the business of Brailey Fenton Lane & Co, or, at least, the converse had not been proved by the plaintiffs who bore the onus. 600It was submitted on behalf of the plaintiffs (PWS at [127]) that the business carried on by Brailey Fenton Lane & Co (ignoring for the moment the assertion that there were four partners) was "the accountancy and financial advising business via the mechanism established by" the written agreement of 23 October 1991. However, as previously observed, that agreement made no express reference to a "financial advising business". It referred to a "business of accounting, taxation and associated services". 601Mr Faulkner submitted that every "relevant act of Mr Brailey" (which I take to mean providing advice concerning the investments) was "an act for carrying on in the usual way the business of" Brailey Fenton Lane & Co. That is the expression used in s 5(1) of the Partnership Act which, relevantly, is in these terms: " 5 Power of partner to bind firm (1) Every partner in a partnership ... is an agent of the firm and of the other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which the partner is a member, binds the firm and the other partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom the partner is dealing either knows that the partner has no authority, or does not know or believe the partner to be a partner." 602It is useful at this point to refer to the provisions, insofar as they are relevant, of some other sections of the Partnership Act . " 9 Liability of partner Every partner in a firm ... is liable jointly with the other partners for all debts and obligations of the firm incurred while the partner is a partner ..." " 10 Liability of firm for wrongs (1) ... where by any wrongful act or omission of any partner in a firm ... acting in the ordinary course of the business of the firm, or with the authority of the partner's co-partners, loss or injury is caused to any person not being a partner of the firm, ... the firm is liable thereof to the same extent as the partner so acting or omitting to act." " 12 Liability for wrongs joint and several (1) Every partner in a firm ... is liable jointly with the partner's co-partners and also severally for everything for which the firm while the partner is a partner therein becomes liable under either of the two last preceding sections." 603Both Mr Faulkner and Mr Parker referred to the judgment of Campbell JA in Seiwa Australia Pty Ltd v Beard [2009] NSWCA 240; (2009) 75 NSWLR 74 in which, in a s 5 context, his Honour stated (at [301]) that "the 'business of the kind carried on by the firm' is what the kind of business would reasonably seem to be to someone dealing with the firm, and in particular to someone who had had the type of contacts and dealings with the firm that the plaintiff had had". 604His Honour earlier noted in Seiwa (at [249] ff) the different formulations in s 5 and s 10. Section 5 speaks of the doing of an act by a partner "for carrying on in the usual way business of the kind carried on by the firm", whereas s 10 is concerned with a partner "acting in the ordinary course of the business of the firm". His Honour referred to the observation of Dawson J in National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21; (1986) 160 CLR 251 at 298 that s 10 may be contrasted with s 5 in that "the ordinary course of the actual business of a firm may be narrower than the course of business of the kind carried on by a firm and requires an examination of the actual practices of the particular firm". 605It was submitted by Mr Faulkner that each of Messrs Brailey, Fenton and Lane were "personally liable to the Plaintiffs for all damages awarded in these proceedings pursuant to the provisions of the Partnership Act , particularly s 10" (PWS at [131]). 606Mr Parker, on behalf of the defendants, put it more precisely in written submissions (DWS at [48] - [51]). Sections 10 and 12 give rise to liabilities imposed by statute or the law of tort. Sections 5 and 9 provide for liability for "debts and obligations of the firm". Thus, as Mr Parker characterised it (at DWS [53]), noting that the claims against Messrs Fenton and Lane (and the claims against Mr Brailey for breach of contract and fiduciary duty) are claims against them based upon alleged liabilities of a firm of which they were allegedly partners, the question is essentially whether, in advising on the investments, Mr Brailey was "acting in the ordinary course of the business" of Brailey Fenton Lane & Co (s 10) or, to the extent that s 5 is applicable, whether he acted "for carrying on in the usual way business of the kind carried on by the firm". 607Mr Parker did not concede that s 5 and s 9 were relevant. He submitted that this was a matter for the plaintiffs to establish. However, he also submitted that if they were relevant at all, they were limited to the claim in contract, and that all of the other claims gave rise to consideration of s 10 (and s 12). 608The key question is whether the business pursuant to which Mr Brailey provided investment advice to the plaintiffs was part of the business of Brailey Fenton Lane & Co. The answer to this question will go a long way towards answering, and perhaps will completely answer, the questions raised under either or both of sections 5 and 10. I accept the submission of Mr Parker that this involves an objective assessment, whether one is considering s 5 or s 10 (DWS [55] - [56]). 609One matter relied upon by Mr Faulkner was the minutes of a meeting between Messrs Brailey, Fenton and Lane on 23 October 1991, the date upon which the four party partnership agreement was signed. Those minutes (EB1 at p. 59) have a number of headings, the first of which is, "Purchase of a one-third share interest in Brailey & Fenton accountancy practice". Under that heading it is recorded that the three men agreed that "the Brailey & Fenton interests would sell and C.C. Lane would purchase a one-third interest in the accountancy practice". Further down the page, but still under the same heading, it is recorded that: "The sale and purchase is to include not only one-third of the practice operated by Brailey & Fenton Pty Limited but also one-third of Brailey & Fenton, Chartered Accountants (which performs all statutorially (sic) required functions) and one-third of the brokerage trading as No Frills Financial Services" 610The plaintiffs' case was that this confirmed that the "brokerage" business, which was conducted in the name of No Frills Financial Services, later BFL Financial Planning, and later still BFL Financial Planning Pty Limited, was a part of the business of Messrs Brailey and Fenton in 1991 and that, following the sale of the one-third share to Mr Lane, it became a part of the business of Brailey Fenton Lane & Co (T1142.33; T1399-1400). "They merely continued on with where they were in 1994 [sic] without having thought about it" (T1399.13). 611It was submitted that Messrs Fenton and Lane trusted and left to Mr Brailey the conduct of the brokerage/financial planning business. They never discussed whether there should be any separation of the businesses and "it was merely a lawful taxation division for them within their business" (T1142.30). 612Mr Brailey referred to the minutes of the 23 October 1991 meeting in his primary affidavit at [20] - [21]) but made no comment about them (after a sentence in [21] was excluded (see T757)). In oral testimony, he said that the only assets held at that time by the financial planning practice were "cash balances and things like that" and that it had "very little" income which was "sporadic" (T768). 613Mr Fenton's evidence was that it was in accordance with the arrangement recorded in these minutes that the financial planning practice was transferred in May 1992 from Independent Means Pty Limited to Desly Pty Limited (affidavit of 2 November 2010 at [29]). The shareholders in Desly were a company controlled by Mr Brailey, Mr Lane's wife, and Mr Fenton (as trustee for his wife). 614Mr Lane's evidence concerning these minutes was that his entitlement to a one-third interest in No Frills Financial Services was not effected, but that on 19 May 1992 his wife acquired a one-third interest in Desly, which in turn had acquired No Frills Financial Services (affidavit of 17 June 2010 at [17]). The fact remains that the minutes record that his purchase of the "Brailey & Fenton interests" included the brokerage business. 615Whilst it was the case that the accountancy practice, the audit practice and the brokerage were all the subject of a simultaneous sale of a one-third interest to Mr Lane, I do not find that this assists the plaintiffs to establish the proposition that the brokerage business was part of the accountancy practice. I note that the audit practice also was part of the sale but it could not be said that it, too, was part of the accountancy practice. It was dealt with in a completely separate partnership agreement between Messrs Brailey, Fenton and Lane. History of the financial advising / planning business 616Before going any further, it is appropriate to trace the history of the financial advising/planning business in some more detail. 617At the time the partnership agreements were executed on 23 October 1991, the proprietor of No Frills Financial Services was Independent Means Pty Limited. Messrs Brailey and Fenton were its directors (EB1 at pp. 64 and 75). I have mentioned that the minutes of the meeting on this date recorded that the sale to Mr Lane included the "brokerage" business. There is no written agreement explicitly recording this. I was not invited to construe the words "associated services" in the description of the business in the recitals in the four party partnership agreement as including the "brokerage". There was merely the very broad submission that the brokerage was a part of the business of Brailey Fenton Lane & Co. 618On 20 May 1992, Desly Pty Ltd took over and traded as No Frills Financial Services (EB1 at p. 75). Messrs Brailey, Fenton and Lane were directors of Desly from 19 May 1992 (EB1 at p. 70). The shareholders were a company owned by Mr Brailey, Mr Fenton (as trustee for his wife) and Mr Lane's wife. 619There had been correspondence between Morgans Stockbroking Limited (Morgans) and Mr Brailey from December 1991 concerning him being appointed as a proper authority to enable him to deal in securities. The Corporations Law at that time provided for the licensing of persons carrying on a business of advising on securities, but such a business could only be carried on by a licensee (as Morgans was) or by a person acting as a "representative" of a licensee who held a "proper authority" from the licensee. 620By letter of 11 December 1991 (EB1 at p. 77), Morgans advised its requirements for the issue of a proper authority. Mr Brailey replied on 28 May 1992 (on Brailey Fenton Lane & Co letterhead) indicating that " we have now put in place our structure for this activity and can now proceed" (emphasis added) (EB1 at p. 80). He advised that " I will be acting for Desly Pty Limited trading as No Frills Financial Services". By letter of 24 June 1992 Morgans replied to the effect that the Corporations Law required that a proper authority be a natural person (EB1 at p. 101). 621On 11 May 1993, Mr Brailey took over from Desly Pty Limited as the proprietor of No Frills Financial Services (EB1 at p. 75). He did so as trustee for Desly. This was in order to meet the Corporations Law requirement (Mr Brailey's primary affidavit at [40]). Mr Brailey was then granted a proper authority by Morgans (EB1 at p. 108). Morgan Stockbroking Limited later became ABN Amro Morgans Limited following a takeover (T918-919). Mr Brailey primarily dealt with Morgans as its authorised representative until October 2001. 622On 17 September 2001, Desly Pty Ltd changed its name to BFL Financial Planning Pty Ltd. The directors and shareholders remained unchanged. 623The business name of BFL Financial Planning was registered on 21 September 2001. The proprietor was BFL Financial Planning Pty Limited (EB2 at p. 2). Mr Brailey immediately lodged a Statement of Change in Persons, notifying that BFL Financial Planning Pty Ltd had ceased to carry on the business and that he would in lieu (EB2 at p. 3). 624Mr Brailey wrote to Morgans on 3 October 2001 (on Brailey Fenton Lane & Co letterhead) advising that " we have decided to appoint Garvan Financial Planning as our new dealer" (emphasis added) (EB1 at p. 116). GWM Adviser Services Limited, trading as Garvan Financial Planning, appointed Mr Brailey as an authorised representative on 4 October 2001 (EB1 at p. 115; Supp DTB at p. 291). 625BFL Financial Planning Pty Limited obtained its own Financial Services Licence on 17 June 2003 (EB1 at p. 73). Mr Brailey was its authorised representative, although through oversight, ASIC was not notified of this until 15 September 2006 (Mr Brailey's primary affidavit at [54]; EB1 at pp. 143-144). The form by which ASIC was notified of Mr Brailey's appointment as an authorised representative for BFL Financial Planning Limited has against "lodging party or agent name", "Brailey Fenton Lane & Co". 626On 1 March 2004, No Frills Financial Services was transferred from Mr Brailey to BFL Financial Planning Pty Ltd, but according to Mr Fenton, "by that stage it was not actually in use" (his affidavit of 2 November 2010 at [33]). 627On 29 August 2008, BFL Financial Planning Pty Ltd became TJC Financial Planning Pty Ltd. The directors and shareholders were unchanged (EB1 at pp. 69-72). 628In summary, despite some references in the documents that might suggest otherwise, throughout the period in which Mr Brailey provided investment advice to the plaintiffs, he was doing so as an entity that was not Brailey Fenton Lane & Co. At first, he was trading as No Frills Financial Services and was an authorised representative of Morgans. In September - October 2001, he commenced to trade as BFL Financial Planning and became the authorised representative of Garvan Financial Planning. Then in June 2003, he commenced to act as the authorised representative of BFL Financial Planning Pty Limited. Documentary evidence 629Apart from the separate business name and separate legal structure , there are other matters which support the proposition that the financial planning business was not part of the business of Brailey Fenton Lane & Co. The evidence I refer to in this section is derived from documents, although at times I will make reference to explanations and amplifications in the affidavit and oral evidence. 630The financial planning business operated its own bank account. Commissions were received into a bank account in the name of No Frills Financial Services. The account was subsequently in the name of Mr Brailey himself and later in the name of BFL Financial Planning Pty Limited (Mr Brailey's primary affidavit at [356]). 631The bank statements that are in evidence (EB2 at tab 6) show the account was in the name of Mr Brailey at least in the period January 2001 to February 2003, and then between at least March 2003 to February 2004 in the name of BFL Financial Planning Pty Limited. 632The financial planning business had its own ABN from 2000 (Mr Fenton's affidavit 2 November 2010 at [46]). 633Income derived from the financial planning business was dealt with in the accounts of Desly Pty Limited, and, later, BFL Financial Planning Pty Limited, from which there were dividends paid from net earnings to the company's shareholders (Ex M at pp. 118, 139, and 178). Thus, Brailey Fenton Lane & Co did not benefit financially from the operation of the financial planning business. 634The defendants provided evidence as to the premises and signage that were used in an endeavour to support the proposition that there were two distinct businesses. 635Mr Brailey said in his primary affidavit (at [58]) that "in the period of practice both the accountancy practice and the financial planning practice operated out of the same offices at Victoria Road, Gladesville". Apart from employed staff, he was the only person who carried out the "financial planning part of the practice". To his knowledge, neither Mr Fenton or Mr Lane performed any financial planning work. I do not know whether it was a parapraxis, or careless drafting, but the reference to the "financial planning part of the practice", on its face, tends to suggest there was one practice of which financial planning was a part. 636The partnership agreements of 23 October 1991 indicate that business was conducted from offices at 7 Cowell Street, Gladesville (Mr Fenton's affidavit of 2 November 2010 at [36]). That was also the address for No Frills Financial Services (see, for example, EB1 at pp. 75 and 90). 637Premises at 3 Cowell Street, Gladesville were occupied from late 1999 (DWS at [25A]). 638In around December 2002, there was a move to 171 Victoria Road, Gladesville (Mr Lane's affidavit of 17 June 2010 at [9]). Mr Lane's evidence included that signs were erected at these premises and copies of the tax invoice and the mock-up for these were annexed to his affidavit (annexure B). Two matters are notable in relation to these annexures. The first is that the signs advertise both Brailey Fenton Lane & Co and BFL Financial Planning, but they are the subject of single invoice to Brailey Fenton Lane & Co. The second is that whilst there were three signs for each of the two entities, in which their respective (and different) telephone and facsimile numbers are included, there were also two signs, each with the details of both entities upon them. 639There was a move to premises at 151 Victoria Road, Gladesville in around April 2004 (Mr Lane's affidavit of 17 June 2010 at [11]). Brailey & Fenton Pty Limited and Mr Lane leased the premises and then sublet a portion of them to BFL Financial Planning (JF1 at p. 209). Invoices for rent were issued to BFL Financial Planning on a monthly basis (JF1 at pp. 210 - 211). A mock up and some photographs of the signs for these premises were annexed to Mr Lane's affidavit (annexures C and D). There were separate signs for Brailey Fenton Lane & Co and BFL Financial Planning placed one immediately below the other. The font, in both style and size, and the logo for each were identical. 640Mr Lane's evidence (in his affidavit of 17 June 2010 at [12] - [14]) was that when they were at 7 Cowell Street, he, Mr Brailey and Mr Fenton each occupied individual offices. At 3 Cowell Street, and also at 171 Victoria Road, he and Mr Fenton had an office each whilst Mr Brailey worked in the open plan general office section. At 151 Victoria Road, Mr Brailey and his financial planning team occupied a discrete area of the building at the rear upper level, whilst Mr Lane and Mr Fenton had their own offices at the front of the building. Some exceptions in practice 641Much, but by no means all, of the foregoing tends to support the proposition that the financial planning business was not a part of the business of Brailey Fenton Lane & Co. However, there are quite a number of matters within the documentary evidence relating to the plaintiffs' investments that indicate that a distinction between the two businesses was not always recognised and maintained. Indeed, Mr Brailey conceded in his primary affidavit (at [47]), after setting out "the structure and history of the accountancy and financial planning practice", that, "Notwithstanding this there exists certain isolated anomalies in some of the correspondence from [Brailey Fenton Lane & Co] and the accounting practice which appear inconsistent with the actual structure of the practices " . The following are examples. * While Mr Brailey held the appointment as a proper authority from Morgans, Brailey Fenton Lane & Co stationery (letterhead, facsimile transmission cover sheets and "With Compliments" slips) was printed with "E F Brailey - Authorised Representative ABN AMRO Morgans Limited" endorsed at the bottom. Such stationery was used for the purposes of the financial planning business. (See, for example, EB1 at pp. 103 and 810; Ex M at pp. 106, 109, 126, 129, 130, 160, 161, 186, 224 and 226). Mr Brailey being an authorised representative of a licensed dealer in securities had nothing to do with his work as an accountant and everything to do with his work as a financial advisor/planner. * On 26 June 2002, Mr Brailey faxed to Mr Tomasetti some figures in relation to a proposed investment in Gunns Woodlot 2002 (PCT1 at p. 1312). The imprint indicated that the facsimile was sent by BFL Financial Planning. The coversheet, however, is headed Brailey Fenton Lane & Co. * Mr Brailey wrote to Ms Cordony on 13 August 2002 concerning both accountancy and financial planning matters. He used Brailey Fenton Lane & Co letterhead (EB1 at p. 117). He explained in his primary affidavit (at [49]) that the matters relating to agribusiness " should have been included in a separate letter under the name of No Frills Financial Services. This is an error on my part " . * On 10 December 2002, Mr Brailey wrote to Timbercorp (cc to Mr Tomasetti) advising that Mr Tomasetti was unable to pay certain amounts for rent and insurance, and proposing a settlement by way of instalments. On this occasion, Mr Brailey used Brailey Fenton Lane & Co letterhead, still with the Morgans endorsement at the bottom, and signed the letter above that name (EB1 at p. 103). Mr Brailey claimed in his primary affidavit (at [50]) that " such matters are relatively procedural and are quite capable of being classified as accountancy matters " . 642Mr Brailey sought to explain why the Morgans endorsement appeared on Braily Fenton Lane & Co stationery (his primary affidavit at [38] - [39]). In the letter of 24 June 1992 from Morgan Stockbroking Limited (EB1 at p. 101), it had been explained to him that a proper authority holder must be a natural person and must be identified in any communication to a client as either a dealer in securities or an authorised representative of a dealer. It was said that "there must be no confusion in the mind of a client with whom they are dealing, and consequently who is liable for any advice". It was also said that it was "a strict requirement ... that all agents use personal letterhead (not a practice or a Company)". 643Mr Brailey referred to those parts of the letter and said that despite those requirements, some of the correspondence that he despatched after he obtained the proper authority from Morgans was on Brailey Fenton Lane & Co letterhead, as distinct from his own personal letterhead. He could not recall why, but said it was possible he had forgotten the requirements stipulated in the Morgans letter. He pointed out, however, that he did also use No Frills Financial Services letterhead, in which his status as an authorised representative of Morgans was noted (for example, a letter to Mr Tomasetti of 5 November 2001 (EB1 at p. 104)). That does not explain, however, why he would have his status as an authorised representative of Morgans endorsed on both the letterhead of Brailey Fenton Lane & Co and No Frills Financial Services. This tends to indicate that Mr Brailey saw little distinction between the two entities. 644A tax invoice was sent to Mr Tomasetti on 31 May 2003 on Brailey Fenton Lane & Co stationery (EB1 at p. 118). It itemised work of a general accountancy nature but included that it was for "financial advice from time to time". Mr Brailey's explanation was that this was not a reference to "financial planning advice", but related to a meeting in Mr Tomasetti's chambers in which there was discussion of a potential joint venture involving a property development on the Central Coast (Mr Brailey's primary affidavit at [51]). He referred again to this tax invoice later in the same affidavit (at [234]) where he sought to explain that in his experience, "this type of advice work in relation to a client's purchase of property is commonly attended to by accountants". 645What appears to have been the first invoice sent to Mr Tomasetti in respect of fees for financial planning advice and services was sent on 28 February 2003 on BFL Financial Planning letterhead (PCT1 at p. 2579). There is a collection of subsequent tax invoices from both Brailey Fenton Lane & Co and BFL Financial Planning up until 7 March 2008 in the pages of the exhibit immediately following. 646Mr Parker submitted that at least from the time these bills were being sent out by BFL Financial Planning (that is, from 28 February 2003), "anyone receiving these bills [knows] that they are being asked by a separate business to pay separately in relation to the loan applications" (T1281.12). That submission loses considerable force when it is observed, first, that the design, layout and typeface of the stationery used by Brailey Fenton Lane & Co and BFL Financial Planning is identical, with the exception of the name of the business and, in fine print, the ABN. The second observation is that, on some occasions, BFL Financial Planning stationery was used for the billing of accountancy work. An example of the latter is a tax invoice of 30 June 2003 (PCT1 at p. 2587): "FOR FINANCIAL PLANNING SERVICES During the six months ended 31 March 2003 including: Letter of recommendation to Jenny regarding accessing equity in family home. Spreadsheet of Peter and Jenny's equity in Northwood going forward if loan implemented." 647The "Jenny" referred to is Mr Tomasetti's former wife. A home at Northwood was purchased for her and the children when the marriage ended. A loan was taken which Mr Tomasetti was repaying. There is a handwritten endorsement on this letter by Ms Cordony, addressed to Mr Brailey, in which she reminded him, "we did ask for the account to be split between Jenny & Pete. Could you pls do that". It may be inferred from the fact that Mr Tomasetti's former wife had nothing to do with his investments that this invoice had nothing to do with them either. 648A tax invoice from BFL Financial Planning of 16 December 2003 (PCT1 at p. 2590) itemised various activities in relation to the plaintiffs' investments, but it also included: "Completion of Insurance documents. Associated administration (your share of cost - split with Jenny). Administration on insurance applications (your share of cost - split with Jenny). Administration related to payment of Super Fund tax bill." 649I infer for the same reason that the first two of these items had nothing to do with financial planning and it would seem likely that payment of a tax bill for the superannuation fund had nothing to do with it as well. 650I have elsewhere referred to a letter written by Mr Brailey to Mr Tomasetti on 29 April 2004. It was on BFL Financial Planning stationery (PCT1 at p. 2376). The letter was headed "Your 2004 Financial Planning". It included, in part: "Several changes are taking place at Brailey Fenton Lane . Firstly, my time is now almost fully committed to our financial planning services through BFL Financial Planning (BFLFP). I remain a partner at Brailey Fenton Lane & Co. , (BFL) and continue an involvement with our clients in their accounting and taxation affairs, however, in the main, I am devoting myself to the broader issues of your wealth management through BFLFP. Both firms have moved again, just a little further down Victoria Road towards the city, to No. 151, as we have now outgrown our previous premises. Relevant to my new role and the different corporate entity, I would like to formalise your authorisation to use the information on file at BFL to enable BFLFP to help you with your financial planning. Please see attached the authority form." (Emphasis added) 651The letter then proceeded to advise the various means that were available for BFL Financial Planning to provide assistance. Enclosed with the letter was " our financial services guide and our privacy statement (emphasis added)", which was said to be a legal requirement. 652The financial services guide included: "BFL Financial Planning Pty Ltd is owned and operated by the Partners of Brailey Fenton Lane & Co Chartered Accountants." 653The financial services guide also included information concerning a complaints resolution procedure. Mr Brailey wrote that the first contact should be with himself but if there had been no satisfactory resolution within three days, "please contact John Fenton (a partner of Brailey Fenton Lane & Co Chartered Accounts)". 654Mr Parker submitted (T1285) that this letter and the accompanying financial services guide made clear that there were two distinct entities: Brailey Fenton Lane & Co and BFL Financial Planning. It is certainly true that there is reference to the two entities but a reader of the letter, and guide, would be forgiven for gaining the impression that the latter had, at least up until the date of this letter, merely been an arm of the former. It is difficult to construe otherwise the reference in the first two paragraphs to Brailey Fenton Lane and "our financial planning services through BFL Financial Planning". Expressions such as, "both firms have moved again" and "we have now outgrown our previous premises" have a tendency to indicate that the relationship of one business being a part of the other was intended to continue. 655Mr Faulkner submitted (T1183.47) that Mr Brailey had "throughout, communicated with Timbercorp as Mr Brailey from Brailey Fenton Lane & Co". This submission was made in the course of referring to a letter of 10 June 2004 from Timbercorp addressed to Mr Brailey as such (Ex M at p. 283). That is not the only communication from Timbercorp addressed in that way: see, for example, a letter of 17 June 2004 (Ex M at p. 394). However, this is not a practice that was carried on "throughout" as was submitted. There were at least two communications from Timbercorp that were addressed to "BFL Financial Planning, C/- Mr E F Brailey" in July 2005 (Ex M at p. 430-431). In any event, there was no adequate explanation for what led Timbercorp to communicate with Mr Brailey at Brailey Fenton Lane & Co, so this matter can be disregarded. A distinction maintained 656I have referred to various occasions in which the financial planning business was conducted as if it was a part of the business of Brailey Fenton Lane & Co. There are, in the evidence, a number of examples of situations in which a distinction was maintained between the two businesses. The following are some: * Mr Tomasetti received a rebate of 50% of the commission in relation to the 2000 investments in Great Southern Blue Gum and Timbercorp Eucalypts. Cheques in respect of those rebates were forwarded to him under cover of a letter on No Frills Financial Services letterhead on 3 August 2000 (PCT1 at p. 557). Mr Brailey's signature appears above the name of that business. The cheques were drawn on an account styled "EF Brailey trading as No Frills Financial Services" (DTB at p. 286). * A rebate of commission in respect of the ITC Solidwood 2001 project was sent by Mr Brailey to Mr Tomasetti under cover of a letter on No Frills Financial Services letterhead on 5 November 2001. The cheque is drawn on the same account mentioned above (PCT1 at p. 2503). * There was another rebate of commission on 19 September 2002 in respect of an investment (Cromwell) not the subject of the present proceedings. On this occasion, Mr Brailey forwarded the cheque under cover of a letter on BFL Financial Planning letterhead and signed above the name BFL Financial Planning Pty Limited (PCT1 at p. 2373). The same procedure, in terms of stationery and signing, was adopted in respect of subsequent rebates of commission on 19 July 2003 (PCT1 at p. 2374), 19 August 2003 (PCT1 at 2375), 21 November 2003 (EB1 at p. 1841), 4 March 2004 (EB1 at p. 1842), 4 August 2004 (EB1 at p. 1840), and 20 January 2005 (EB1 at p. 1839). * A statement of advice was sent to Mr Tomasetti on 7 April 2004 by Mr Justin Clynes (financial planner employed by BFL Financial Planning) in relation to a proposed investment of the TSF in a solicitor's mortgage fund (EB1 at p. 2481). BFL Financial Planning letterhead was used. The same was the case in respect of the statement of advice by Mr Brailey concerning the 2004 Timbercorp Almond Project (PCT1 at p. 1577). Mr Brailey's evidence 657The foregoing review of the documentary evidence demonstrates that there was a degree of inconsistency as to whether the financial planning business was treated as separate to, or a part of, the business of Brailey Fenton Lane & Co. Such inconsistency is apparent from Mr Brailey's evidence itself. 658Mr Brailey was cross-examined about his meeting with Mr Tomasetti on 21 June 2002. When speaking about Mr Tomasetti's tax position, he was speaking in his role as "accountant" (T928.12). When he then raised the question of whether Mr Tomasetti wanted to "invest in more forestry to defer this tax a long way into the future", he agreed that at this point he had put his "financial advising" hat on (T928.20). A short time later he said that in proposing the investment to Mr Tomasetti in 2002, he was not acting for Brailey Fenton Lane & Co; he was doing so as a "financial planner"; and not as a "financial adviser" (T929). 659Mr Brailey was shown a copy of an ITC Tree Farm Term Loan Package (Ex L) which he had filled out for Mr Tomasetti in May 2000. He was asked whether, in completing these forms, he was doing so as an accountant from Brailey Fenton Lane & Co. He replied, "I wasn't really making a differentiation" (T931.39). He was then asked if he was also acting as Mr Tomasetti's financial adviser and he said, "Well, all these documents were done as his financial planner" (T931.42). 660Mr Brailey agreed that he regarded Brailey Fenton Lane & Co to be Mr Tomasetti's financial adviser (T931.50). His attention was then drawn to a part of the form where he had written against "Accountant (Firm Name):" the words, "Brailey Fenton Lane". Then, immediately below the contact name, telephone number and address, against "Financial Advisor (Firm Name):" he had written, "as above". He was asked whether he had intended by that to indicate that Mr Tomasetti's financial adviser was Brailey Fenton Lane & Co, but he answered, "No" (T932.23). He subsequently explained that it was incorrect to have inserted "as above". He attributed it to laziness. What he should have written was "No Frills Financial Services" (T934). He explained, "I was the financial adviser, right? I was also the financial planner. In this respect, I'm the financial planner" (T935.21). He reiterated, "Financial adviser, Brailey Fenton Lane & Co. Financial planner, No Frills Financial Services" (T935.38). 661Mr Faulkner then queried the basis upon which Brailey Fenton Lane & Co was the financial adviser and Mr Brailey replied, "That's how we accepted the proposition in the beginning" (T935.42). In June 2000, Brailey Fenton Lane & Co was the financial adviser and No Frills Financial Services was the financial planner (T935.50). 662Mr Faulkner pressed for an answer as to what financial adviser activities Brailey Fenton Lane & Co was engaged in for Mr Tomasetti in 2000, but he could not remember. He could remember, however, that No Frills Financial Services was engaged as the financial planner in 2000 in "the placement of these investments in forestry". "Placement" included discussions with Mr Tomasetti about them. So, when he had the first discussion with Mr Tomasetti in 2000 about agricultural products, he went to his chambers and began to speak to him as his accountant . When the topic turned to agricultural products, he was then speaking to him as the financial planner for No Frills Financial Services (T936). 663It is to be remembered that eight pages earlier in the transcript he had said that in 2002, when the conversation turned to the question of investing in more forestry, he had his financial advising hat on (T928.20). 664Mr Faulkner sought some clarification of this issue when his cross-examination of Mr Brailey resumed on the next morning of the hearing. Mr Brailey confirmed that Brailey Fenton Lane & Co were Mr Tomasetti's accountants and financial adviser , and No Frills Financial Services was the financial planner . He had two "hats"; one as an accountant and financial adviser, and the other as a financial planner. Mr Faulkner put to him that it never happened at any time in conversations with Mr Tomasetti during 2000 to 2004 that he turned his mind to the capacity in which he was speaking. Mr Brailey replied, "In my mind? I just accepted that that was what was happening" (T942.47). He did not, however, give any "active conscious thought" at the time he was speaking to Mr Tomasetti to the capacity in which he was acting. 665Mr Faulkner referred again to the ITC Tree Farm Term Loan Package forms (Ex L) in which Mr Brailey had written "as above" (indicating Brailey Fenton Lane & Co) where the form sought the name of the applicant's financial adviser. Given the explanation Mr Brailey had given that Brailey Fenton Lane & Co were the financial adviser, he asked why Mr Brailey had said the previous afternoon that he should not have written "as above", but should have written "No Frills Financial Services". Mr Brailey explained, "But by 'adviser', they mean planner in my terminology" (T944.4). He agreed that there was nothing on the form that indicated that, in the box to write the name of the financial adviser , the intention was that the applicant would write the name of the financial planner . He denied that he was making up this evidence (T944.25). 666Mr Faulkner submitted that Mr Brailey's claim that advice to Mr Tomasetti concerning the investments was given by him on behalf of No Frills Financial Services and not on behalf of Brailey Fenton Lane & Co was disingenuous (T1162). 667Mr Brailey referred in his affidavit evidence (9 November 2010 at [19]) to the distinction he made between a "financial adviser" and a "financial planner". He said, "The former advises on operational aspects of specific financial transactions at the behest of a client. The latter predominantly provides advice including in relation to a financial product recommended by the planner". 668The conclusion seems inescapable that Mr Brailey did not really distinguish at all between the concepts of financial advising and financial planning. Clearly, he had a multi-faceted role in his dealings with the plaintiffs. He was an accountant, a financial adviser and a financial planner. It is understandable that there would be an overlap in the carrying out of those roles. It does not follow, however, that because he did not think about what particular role he was performing at any particular time that the provision of advice concerning the agribusiness investments was part of the business of Brailey Fenton Lane & Co. Evidence of Mr Fenton 669In his affidavit of 2 November 2010, Mr Fenton provided uncontroversial evidence as to the genesis of the accountancy practice of Brailey & Fenton Pty Limited and the audit practice of Brailey & Fenton. He also spoke of being, with Mr Brailey, a director of Independent Means Pty Limited which traded as No Frills Financial Services. Whilst he participated in the "overall management of the business as a director", he had "no involvement in the provision of financial advice to the clients of the business. That was all done by Mr Brailey" (at [12]). 670Mr Fenton claimed (at [32]) that from the time of the transfer of the financial planning practice to Desly Pty Limited in May 1992, he had no involvement in that practice beyond being involved in the overall management as a director of Desly. To his observation, the same applied to Mr Lane. It was Mr Brailey and staff who undertook all financial advice and day to day administration. 671Mr Fenton's affidavit includes (at [36] - [42]) the history of premises occupied by the accountancy practice and the financial planning practice. At all relevant times they were in the same premises with Brailey Fenton Lane & Co as the leaseholder. However, at least from April 2004, the portion of the premises which the financial planning practice occupied was sublet to it. 672Other matters Mr Fenton alluded to (at [43] - [47]) in relation to the separation of the two entities included that they each had their own stationery and accounting and billing systems. 673Mr Fenton concluded this section of his affidavit (at [48]) with a statement that it was his understanding that at all times "the accounting practice and the financial planning practice were legally, operationally and financially distinct from each other". 674Mr Fenton stated (at [56] - [63]) that he was unaware of certain correspondence concerning the financial planning practice being either addressed to Brailey Fenton Lane & Co or being sent out on Brailey Fenton Lane & Co letterhead. He did not know what "financial advice" was the subject of an item in a memorandum of fees due to Brailey Fenton Lane & Co from Mr Tomasetti dated 31 May 2003 (Ex 22 at p. 262). He did not draft, nor was he consulted as to, the letter sent by Mr Brailey to Mr Tomasetti on 29 April 2004 in which Mr Brailey referred to himself as a "partner" at "Brailey Fenton Lane & Co" (Ex 22 at p. 263). Similarly, he did not draft, nor was he consulted as to, the Financial Services Guide which accompanied that letter (Ex 22 at p. 265). Evidence of Mr Lane 675In his first affidavit (7 May 2010), Mr Lane referred to the accountancy practice of Brailey Fenton Lane & Co being conducted by Brailey & Fenton Pty Limited and himself. He asserted that it did not provide financial planning advice. It was Mr Lane's understanding that Desly Pty Limited or Mr Brailey conducted a financial planning advice business in the name of No Frills Financial Services from 20 May 1992. 676Mr Fenton and Mr Lane undertook tax and general accounting work in Brailey Fenton Lane & Co. Mr Brailey did likewise as well as being involved in giving financial planning and investment advice on behalf of Desly Pty Limited (later BFL Financial Planning Pty Limited). 677In another affidavit (17 June 2010), Mr Lane stated that he did not have any input into the drafting of the Financial Services Guide, presumably referring to the one sent out by Mr Brailey under cover of the letter of 29 April 2004 (Ex 22 at p. 265). 678Mr Lane referred to the memorandum of fees due to Brailey Fenton Lane & Co from Mr Tomasetti dated 31 May 2003 which included an item termed "financial advice from time to time" (affidavit of 3 November 2010 - annexure A). He asserted that from his experience as an accountant over 42 years, accountants are invariably asked by clients for advice as to a range of matters incidental to their immediate taxation and accounting needs. He said (at [7]) that it was the practice of Brailey Fenton Lane & Co to bill these "financial services" as "advice from time to time". This was different from "the type of financial planning advice which is the subject of these proceedings". Mr Tomasetti's evidence 679It will be recalled that Mr Tomasetti said (primary affidavit at [16]) that his first contact with Mr Brailey was by telephone in late 1998. After introducing himself and telling Mr Brailey of his dissatisfaction with his previous accountants, he claimed that Mr Brailey responded: "We will be more than happy to act for you Peter. We have a suburban accountancy practice. There are three partners, myself, Christopher Lane and John Fenton and we are at Gladesville. I'd like to come and meet you." 680As is the case with Mr Tomasetti's evidence generally, it is difficult to accept that he had an actual recollection of being told this in the very first conversation with Mr Brailey 11 years previously. 681Mr Tomasetti's account of the balance of this conversation, if correct, was to the effect that he told Mr Brailey that he was looking to him not only for general accounting and taxation services, but financial planning advice as well. 682It was claimed (at [45]) that in their first conversation about agribusiness investments in 2000, Mr Brailey told Mr Tomasetti of commissions being split 50/50. He claimed that Mr Brailey spoke of "some accounting and financial planning practices" keeping all of the commissions but " our practice at Brailey Fenton Lane is not to do that" (emphasis added). I infer that Mr Tomasetti was intending to convey that he had been led by Mr Brailey, by statements such as these, to believe that advising in relation to investments was being done on behalf of the accountancy practice. However, for the reasons given earlier in this judgment, his recollection of the terms of conversations that occurred years before is of very doubtful reliability. Although I express no concluded view, one cannot help but wonder whether this is a reconstruction to suit the pleadings. 683In his affidavit of 14 July 2010, Mr Tomasetti made the following claims: * Mr Brailey was engaged to act as his accountant. Mr Tomasetti understood that an accountant's work included giving financial advice, financial planning and taxation advice (at [5]). He did not receive an explanation that accounting work would be undertaken by one entity and financial planning work by another. * When speaking with Mr Brailey, they would invariably discuss both accounting and financial planning matters without any conscious differentiation (at [11]). * The only occasion when Mr Brailey mentioned the corporate structure or personal arrangements between himself and Messrs Fenton and Lane was in about April 2004 when Mr Brailey told him that in the future, he would be concentrating on financial planning and Messrs Fenton and Lane would concentrate on the accounting (at [8] and [12]). He also stated (at [36]) that Mr Brailey never mentioned the names No Frills Financial Services, Independent Means Pty Limited or Desly Pty Limited. 684Mr Tomasetti acknowledged (primary affidavit at [116]) that he received correspondence concerning the rebate of commissions (PCT1 at p.2505 ff). The letters are dated from 5 November 2001 to 28 August 2007 and are on No Frills Financial Services and BFL Financial Planning stationery. Evidence of Mr Justin Clynes 685Mr Clynes is a financial planner who was taken on by Mr Brailey in late 2002 to work in the financial planning business. He was aware of the business being run in close conjunction with the accountancy practice. According to Mr Clynes, the financial planning business utilised the client base of the accountancy practice to identify potential "prospects for financial planning services". However, and significantly, there is no suggestion that he understood that he was employed by Brailey Fenton Lane & Co. His evidence is quite clear that he was employed by BFL Financial Planning Pty Limited. He left to obtain other employment in October 2004. Evidence of Mr Bjorn Marksteiner 686Mr Marksteiner was employed by BFL Financial Planning Pty Limited, initially as a "paraplanner" and then as an authorised representative from October 2004 until December 2007. He reported to, and assisted, Mr Brailey who he understood to be "the Financial Planner". As with Mr Clynes, his evidence is clear that he was employed by BFL Financial Planning and not by Brailey Fenton Lane & Co. Conclusion as to whether members of a partnership firm were liable for the conduct of Mr Brailey in advising on the investments 687From the foregoing review of the evidence, it is apparent that there is support for a conclusion that the provision of investment advice to the plaintiffs was not a part of the business of Brailey Fenton Lane & Co. In this regard I am particularly mindful of the following: * at all relevant times there was a separate legal entity which existed for the purpose of conducting the "brokerage" business; * this entity had its own bank account and ABN; * financial benefits accruing from the brokerage business went to the accounts of Desly Pty limited and BFL Financial Planning Pty limited, not Brailey Fenton Lane & Co; * a distinction was generally made in terms of premises and signage; and * Messrs Clynes and Marksteiner were employed as financial planners (or similar) between late 2002 and 2007 by BFL Financial Planning Pty Limited, not by Brailey Fenton Lane & Co. 688Evidence which points in the opposite direction generally concerns the manner in which Mr Brailey conducted the brokerage business. On many occasions, little regard was paid to maintaining a distinction between the accountancy practice and the brokerage business. The manner in which stationery was used interchangeably for the purposes of what are claimed to be two distinct entities is a primary example. However, that was not always the case. 689There certainly appeared to be some confusion in Mr Brailey's mind as to whether he was, at times, performing work for one entity or the other. It was Mr Tomasetti's evidence that in his dealings with Mr Brailey, at least until April 2004, he was unaware of the existence of some entity other than Brailey Fenton Lane & Co that was involved in providing financial planning services. That is difficult to accept in the light of all the letters and cheques that were sent to him from No Frills Financial Services and BFL Financial Planning from as early as August 2000. Even if he did not see them all, he must have seen some. 690I have earlier stated an acceptance of Mr Parker's submission that an objective assessment is required. What Mr Brailey and Mr Tomasetti perceived to be the case is not determinative. The review of their evidence was not for that purpose, but in order to determine whether their conduct could assist in the objective determination of the present issue. 691In the end it is unnecessary to consider in any detail the questions posed under s 5 and s 10 of the Partnership Act . That is because in this case there is evidence that Mr Brailey's work in relation to the investments made by the plaintiffs was, viewed objectively, not part of the business of Brailey Fenton Lane & Co but was part of the business of another entity. 692The distinction might not always have been maintained by Mr Brailey. Mr Tomasetti may, at least for a time, have been unaware of the distinction. 693The fact remains, however, that there was another entity and it was distinguished from Brailey Fenton Lane & Co in a number of important respects. In this regard I have in mind, in particular, the matters listed in the bullet points in the first paragraph under the present heading. Having come to this conclusion, it is simply not possible to answer the s 5 and s 10 questions in a manner favourable to the plaintiffs. 694For these reasons, the partners of Brailey Fenton Lane & Co could not be liable for the conduct of Mr Brailey in advising the plaintiffs about their investments. Limitations 695The defendants plead that the negligence and breach of contract claims are statute barred where damage was first suffered or breach of retainer occurred before 15 June 2003: Limitation Act 1969, s 14. To the extent that damage was first suffered prior to 25 August 2003 in respect of the FTA claim there is also a statutory bar: Fair Trading Act , s 68(2) and 11D of Schedule 5. 696Two issues were debated by the parties. One concerned the time at which damage arose. The other was concerned with who bore the onus of proof. 697It was submitted for the plaintiffs that there was no evidence of damage being suffered at any time prior to either of the above dates. Identifiable loss had been suffered in 2009 and 2010 when expert evidence was obtained. 698For the defendants, it was submitted that if the investments would not have been made but for a breach of duty on the part of the defendants, the payment of a portion of the initial cost of the investment and the incurring of an obligation on loan account to pay the balance gave rise to damage at the point at which the application for the investment was accepted (DWS at [198] - [199]). This was said to be consistent with the plaintiffs' approach in claiming to recover all of their payments on revenue account (including the initial payment), together with interest from the date of making each payment. 699Reference was made in the defendants' submissions to Forster v Outred & Co [1982] 1 WLR 86; [1982] 2 All ER 753. There, the plaintiff, on negligent advice from her solicitors, executed a mortgage over her property to secure the debts of her son. The English Court of Appeal held that the loss arose at the time of entering the mortgage and not when the mortgagee sought to enforce the security following her son's bankruptcy. This was explained in Wardley Australia Limited v State of Western Australia (Rothwells Loan case) [1992] HCA 55; (1992) 175 CLR 514 (at 529) on the basis that upon execution of the mortgage, the plaintiff had suffered the immediate reduction in the value of her equity in redemption. 700Reliance was also placed on Jobbins v Capel Court Corporation Ltd (1989) 25 FCR 226. It involved claims of misleading or deceptive conduct under the Trade Practices Act concerning investment in a film production. The representations in question, including that returns were guaranteed, were made between 8 November 1985 and 24 March 1986. On 24 March 1986, the applicant entered into an agreement to invest $60,000 in the film which was paid on 9 April 1986. On a strike out motion, it was contended that the action was brought outside the three year statutory limitation period, the statement of claim having been filed on 14 September 1989. It was submitted that the cause of action must have accrued at the latest by the date of the payment, being 9 April 1986. The applicant contended that the cause of action did not completely arise until October 1986. It was then that the first instalment of the supposedly guaranteed returns was not paid and it was this non-payment that established the falsity of one of the representations. 701The Full Court of the Federal Court held (at 231): "[T]he applicant suffered damage immediately upon his entry into the agreement and the making of the payment thereunder, both of which occurred outside the three year period. According to the pleading, the investment lacked the represented qualities; as a consequence it was from the outset less valuable than it should have been." 702In the Rothwells Loan case, it was noted that the Full Court had failed to specify whether damage was suffered on entry into the agreement or on payment of the $60,000. It was said that the decision could be supported if it was the latter, but doubts were expressed about the former. The plurality commented (at 529): "But we have difficulty in accepting that the applicant suffered loss or damage on entry into the agreement merely because the investment was alleged to lack the represented qualities. On this aspect of the case, the question was whether the investment was worth less than the applicant contracted to pay for it and, if so, when the applicant first sustained loss or damage. How that question could be answered in the absence of evidence is not evident to us . Although the investment lacked the represented qualities, it may have been worth no less than the consideration provided by the applicant." (Emphasis added) 703The defendants drew from this that the High Court had approved of the actual result in Jobbins on the basis that time began to run when money was paid out on the investment in question, and the making of the payment was alleged to constitute loss or damage. It was submitted that the plaintiffs' case here is indistinguishable (DWS at [204]). 704It is difficult to understand this so-called approval of the result in Jobbins . It was not a critical matter in the Rothwells Loan case , the ratio of which, adopting the succinct statement in the headnote, was that risk of loss is not a category of loss. If the representation in Jobbins had been that there would be a guaranteed return in three years and one day, loss would not have been known, or knowable, until then. However, the defendants' submissions would have it that damage was suffered at a time more than three years preceding the only realistic time when proceedings could commence. In any event, it would seem doubtful, at least, that there was endorsement by the High Court of the result of the case. True it is that it was said the decision "could be supported", but this was followed by a question as to how the matter could have been determined without evidence that a loss had been suffered. 705Jobbins was distinguished by the Full Court of the Federal Court in a five judge bench decision in Magman International Pty Ltd and other v Westpac Banking Corporation (1991) 32 FCR 1. Beaumont J, with whom the other members of the Court agreed, referred (at 18) to Jobbins involving "a once and for all dealing", and differentiated it from a situation where the parties are "in an ongoing relationship over a period which may be substantial". His Honour continued: "In such a situation, it may be that the net effect, in terms of benefit and detriment, of entry into such a transaction can only be assessed once the term of the transaction has expired." 706On the onus of proof issue, the defendants contend that the onus is first on the plaintiffs to show that they have suffered damage. Only then does the onus shift to the defendants to show that it was suffered at a time before the relevant limitation dates (DWS at [207]). The plaintiffs' case is criticised on the basis that they had not articulated what they say the damage is that gives rise to their cause of action. It was submitted that if, as the plaintiffs appeared to suggest, the making of the initial payments was not a loss, then what is the plaintiffs' damage?. The mere fact that the investments may not have performed as they were expected to is not damage (DWS at [208]). 707The plaintiffs principally relied upon HTW Valuers v Astonland [2004] HCA 54; (2004) 217 CLR 640; the Rothwells Loan case and Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388. 708HTW Valuers v Astonland was primarily concerned with the assessment of damages. For present purposes, it provides an example of an identifiable loss being suffered at the time that an asset was acquired, with greater loss being suffered in time to come. The cause of action was said (at [28]) to have arisen on the date of acquisition of a property. It may be contrasted with the situation in the Rothwells Loan case, where it was held that no loss was suffered until a contingency arose at a time subsequent to when an indemnity was granted as a result of misleading or deceptive conduct. 709The facts of the Rothwells Loan case were that on 24 and 25 October 1987, representations were made by a merchant bank ( Wardley ) that were said to have induced the State to grant an indemnity to the National Australia Bank (the Bank) against a facility granted by it to Rothwells. The representations were statements to the effect that Rothwells was a viable and sound financial institution. Money drawn down under the facility was left owing when Rothwells went into liquidation a year later. The Bank called on the indemnity. A settlement was reached but then the State commenced proceedings against Wardley, alleging misleading or deceptive conduct under the Trade Practices Act 1974. The proceedings were commenced on 24 October 1990, within the three year limitation period in respect of the representations that were made on 24 October 1987. 710The statement of claim was amended in January 1991 to introduce a claim relying upon an additional representation made by the merchant bank on 25 October 1987. This was struck out on the ground that the amendment pleaded a cause of action which was out of time. The decision was overturned in the Full Court of the Federal Court. The merchant bank obtained special leave to appeal to the High Court, contending that the State had suffered loss at the time it executed the indemnity. The basis for this contention was that, at that time, its liability was greater than it would have been had the representations been correct. This argument was rejected. It was held (at 532): "[W]here, as a result of the defendant's negligent misrepresentation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability ... the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred." 711The plaintiffs in the present case relied upon the following passage in the judgment of Mason CJ, Dawson, Gaudron and McHugh JJ (at 527): "When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of "loss or damage". And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." 712The defendants sought to distinguish the Rothwells Loan case on the basis that no actual payment was made and no actual liability was incurred at the time the indemnity was executed. It was only a contingent liability. In the present case there had been no attempt by the plaintiffs to identify any particular later event which could be seen as the fulfilment of a similar contingency (DWS at [208]; T1358 - 1359). 713It was put in the defendants' submissions that if the plaintiffs were contending that damage was not suffered until some time after the investments were first entered into, then they would have no entitlement to claim damages for the initial payments (DWS at [209]). If they were saying that the cause of action arose upon making the initial payments, it was necessary for them to show that the true value of the payments was less than the amounts paid. It was submitted that the onus to establish this was upon the plaintiffs and they had not done so (DWS at [211]). 714Reference was made by Mr Parker in his oral submissions to the judgment of Giles JA in Wilson v Rigg [2002] NSWCA 246; (2002) 36 MVR 451. The facts of that case merely provide an example of an event which was said to be the occasion of a plaintiff suffering damage. A solicitor was sued for negligence in failing to bring proceedings concerning a level crossing accident until they were out of time. The proceedings themselves were brought more than six years after the limitation period had expired for the original proceedings. Giles JA (Santow J and Foster AJA agreeing) held that there was a valuable asset, a cause of action against the State Rail Authority (SRA), which had been immediately diminished in value upon the expiration of the limitation period. This was because of the likelihood that the SRA would subsequently plead the limitation and the possibility that such a plea would be upheld. 715The decision, in my view, is more useful for the succinct statements of general principle. Omitting citations (which included the Rothwells Loan case ), Giles JA stated at [23]: "There must be actual damaged, as distinct from the risk or prospect of damage or contingent damage, and the damage must be measurable or beyond what can be regarded as negligible. Within these guides, however, whether and when damage is suffered is a matter of fact." 716A part of the defendants' argument was that the initial payments (actual outlays plus borrowings) were on revenue account and were declared as losses, and therefore deductions, in the plaintiffs' tax returns. Those losses, that is, damage, occurred at the time the applications were accepted and that goes back to the end of the 1999-2000 financial year. The fact that subsequent events might occur which would render the loss greater, or lesser, or would mean no loss was suffered at all, did not alter the fact that loss was suffered at the time the transaction was entered into. 717Mr Parker agreed with a proposition put to him in the course of his oral submissions that if Mr Tomasetti had become aware in 2000 that he had been induced to enter into an investment through negligence or misrepresentation, he could have brought proceedings then. This could not have been met by a claim that he had not suffered any loss at all because he had acquired a right to participate in a scheme which would bring short-term tax benefits and the prospect of long-term substantial return. The prospect that he might get some money back in the future did not alter the fact that he had suffered a loss, as his tax return demonstrated. So, in answer to the plaintiffs' contention that there was no evidence of a loss of value of any of the investments at any time before the relevant limitation dates, Mr Parker accepted that the defendant's case was that there was evidence of value and it was "nil" (T1362). Many more authorities were cited in the competing submissions but, given my findings as to the primary issues, it is unncecessary and unproductive to refer to them all. Conclusion 718In short, the plaintiffs' submissions are to be preferred. The mere fact of making payment, as the defendants contend, cannot arbitrarily and solely be held to be the occasion of damage being suffered. Characterisation of the payments as outgoing payments on revenue account and being declared as losses in tax returns is not at all decisive. The true situation is that the plaintiffs acquired something by the payments: rights as growers in agricultural pursuits and rights as to future returns from those ventures. It cannot be, as the defendants contend, that they did not acquire anything, or that what they acquired had no value. 719The plaintiffs' claim is not for recovery on a contractual basis; that is, to recover what they should reasonably have received, or were given to understand they should have received, by way of returns for the investment. It is for the recovery of what they have outlaid and the liabilities they have incurred. This does not, however, compel a conclusion that relevant loss must be held to have occurred at the time of the outlays and incurring of the liabilities. In reality, the plaintiffs' claim is concerned with the infringement of an expected recoupment of their outlays and fulfilment of their liabilities. The following from the judgment of Gaudron J in Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539, which was cited with approval by the plurality in the Rothwells Loan case (at 533), is apposite: "[I]f the interest infringed is an interest in recouping moneys advanced it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, for the actual loss is sustained only when recoupment becomes impossible." (at 601) "It would be too simplistic to restrict analysis of economic loss merely to a consideration of reduced value or increased liability." (at 602) 720Moreover, there is the point made by Brennan J in the Rothwells Loan case at 536: "A plaintiff may suffer economic loss or damage in a number of ways: by payment of money, by transfer of property, by diminution in the value of an asset or by the incurring of a liability. Whether loss or damage is actually suffered when any of those events occurs depends on the value of the benefit, if any, acquired by the plaintiff by paying the money, transferring the property, having the value of the asset diminished or incurring the liability. If the plaintiff acquires no benefit, the loss or damage is suffered when the event occurs. At that time, the plaintiff's net worth is reduced. And that is so even if the quantification of that loss or damage is not then ascertainable. But if a benefit is acquired by the plaintiff, it may not be possible to ascertain whether loss or damage has been suffered at the time when the burden is borne that is, at the time of the payment, the transfer, the diminution in value of the asset or the incurring of the liability. A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If the balance cannot be struck until certain events occur, no loss is suffered until those events occur." 721The submission for the plaintiffs that there is no evidence of loss at the time of entering into the investments is significant. No attempt has been made to value the interests they acquired at the time of acquisition or at any later time until recent years. It is certainly the case that there is no evidence that what they acquired had any lesser value than the amount paid. In other words, there is no evidence of loss being occasioned at any time before the relevant limitation dates. 722The necessity for there to be evidence as to loss having occurred prior to the limitation date was something alluded to by the plurality in the Rothwells Loan case (in the emphasised sentence in the passage at 529 quoted earlier). See, similarly, Magman International Pty Ltd v Westpac Banking Corporation at 26 per Hill J: "the determination of that question [that the applicant suffered loss before the relevant limitation date] would require evidence", and Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 at 45E-F per Sackville J: "objective criteria supported by evidence". The point was made clear by Ipp JA in the emphasised portions of the following statement of general principles in his Honour's judgment in Christie v Purves [2007] NSWCA 182; (2007) Aust Torts Reports 81-899: "[40] The general rule can be stated as follows. For economic loss (as with other forms of damage) to be sustained, there has to be some actual, measurable damage that is beyond what can be regarded as negligible. While prospective loss, alone, is not enough, a cause of action of negligence will accrue when the plaintiff first suffers any actual damage of the kind described . The cause of action will then be regarded as having accrued, even if some of the plaintiff's damages are prospective. The plaintiff may then claim for the actual damages that have been incurred and should quantify and claim for the prospective damages (such as, for example, future loss of profits). This, for example, is what occurred in Perre v Apand Pty Ltd (1999) 198 CLR 180. These propositions are well-established and are manifest from Commonwealth v Cornwell (at 152 to 153, [16] to [18]), Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (at 530 to 531), Hawkins v Clayton (1988) 164 CLR 539 (at 561 and 588), Winnote Pty Ltd v Page [2006] NSWCA 287 (at [40] to [41]), Cheney & Wilson v Duncan (2001) 34 MVR 28 (at 32, [24] to [26]), Scarcella v Lettice (2000) 51 NSWLR 302 (at 306), Law Society v Sephton & Co (a firm) [2006] 2 WLR 1091 (at 1108, [60]), Cartledge v E Jopling & Sons Ltd (at 772). [41] The principles applicable when the claim is for damages for misleading or deceptive conduct under the Fair Trading Act (or the Trade Practices Act 1974 (Cth)) are the same. In Wardley , the High Court, after recognising and discussing the differences between common law damages for negligence and damages under s 82 of the Trade Practices Act, accepted that the general principles governing when time begins to run do not differ in respect of those causes of action. Senior counsel for Mr Christie did not suggest otherwise." (Emphasis added) 723It is unnecessary to deal with the issue as to onus. I am not satisfied that damage has been shown to have arisen prior to the relevant limitation dates. There has been no contention that at any time in 2003 or before the agribusiness investment schemes were performing in a way anything other than anticipated. There has been no contention that forecast returns were any less, and the timing of returns was any later, at any time in 2003 or prior. There is evidence of such matters subsequent to 2003. 724The contract claim is subject to the principle that the cause of action arises upon breach: see, for example, Wilson v Rigg , supra, at [20] per Giles JA. Such claims that concern breach before 15 June 2003 are out of time. The non-contractual claims are not caught by limitation periods. Taxation 725The plaintiffs contended that any award of damages should be "grossed up" so as to account for the fact that they will be liable to pay income tax upon receipt. The defendants submitted that this is unnecessary and inappropriate. Expert evidence 726Before dealing with this issue, it is appropriate to refer to the expert evidence as to the present values of the investments and the assessments as to loss. The experts who provided reports were Mr Martin Hall, a director of Lonergan Edwards & Associates Limited, which is described as a firm that specialises in valuations, consequential loss assessments and associated financial advice; Dr Rodney Ferrier, chartered accountant of Ferriers Corporate and Forensic Accountants; and Mr John Williams, managing director of Lumina, chartered accountants. In the following review of their evidence, there is reference to more than is relevant to the present issue. It is convenient to mention it here to avoid some repetition when I come to deal with the issue of quantum. Mr Hall's report of 29 January 2010 (Exhibit F) 727Mr Hall provided his opinion as to the valuation of each of the 11 investments made by the plaintiffs. He provided a value in relation to 5 of them, but assigned a nil value in relation to the ITC Solidwood 2001, Timbercorp Almond 2003 and 2004, Timbercorp Citrus 2005 and the Gunns Winegrape 2005 projects. 728For those projects in which he did assign a value, it must be noted that he cautioned that because of certain costs, risks and uncertainties, "it is not practical to attempt to determine value rigorously". 729The reasons for assigning a nil value to six of the projects were as follows. The ITC Solidwood 2001 project had been suspended because of an infestation with Kirramyces (a eucalypt leaf disease). The Timbercorp projects of 2003, 2004 and 2005 had been exited by the plaintiffs following the appointment of liquidators in 2009. The Gunns Winegrape 2005 project had been performing significantly below projections and still had a negative cashflow. 730The total value of those projects for which a value was assigned was, in Mr Hall's opinion, $212,245. Mr Hall's report of 18 October 2010 (Exhibit F) 731In this report, Mr Hall clarified the information he relied upon for certain statements and opinions expressed in his first report; expressed a reason for revising his view of the value of the Great Southern Blue Gum Plantations 2000 project; and indicated that some new information had caused him to assign a value to the ITC Solidwood 2001 project. Mr Hall's new valuation was $227,313. Mr Williams' report of 10 December 2009 732In this report, Mr Williams analysed the losses sustained and considered their tax treatment. The final figures given reflect the plaintiffs' pre-tax losses and were calculated by reference to past revenue and capital loss, interest on past loss and expected future loss. All past losses are on revenue account, except for a payment of $750 for the purchase of an option in respect of the Norgard Clohessy Australian Blue Gum 2000 project. The final figures do not factor in either the tax benefits obtained by entering into the investments, or any grossing up for tax. They also do not factor in the current value of the investments as determined by Mr Hall. 733Mr Williams considered the taxation implications of a payment by way of compensation to the plaintiffs ([192] - [220]). Mr Parker objected to any expression by Mr Williams of opinions as to the law. Mr Faulkner accepted that it was a question of law for the Court (T753). Mr Williams' report of 18 October 2010 734This supplementary report updated the loss figures in the first report, based upon additional information set out in 2010 financial documents relating to certain investments, including the Timbercorp Almond projects of 2003 and 2004. The overall effect was a decrease to the total pre-tax losses of the plaintiffs of $31,302. Mr Williams' report of 29 October 2010 735This second supplementary report included further adjustments to the calculation of the plaintiffs' losses, including a recalculation of the plaintiffs' losses on a post-tax basis. Mr Williams calculated the tax savings achieved from entering into the investments and deducted these from the pre-tax loss. He then factored in a figure calculated to make allowance for the compensation amount being taxable. Finally, a deduction was made for the present value of the investments, using the figure calculated by Mr Hall. Mr Williams noted that although Mr Hall's calculation took into account future losses, he excluded that amount from his own calculation so as not to double count. Mr Williams' report of 3 November 2010 736This report merely corrected a calculation error in the previous report and made consequential amendments to various figures throughout. Dr Ferrier's report of 8 November 2010 737This was Dr Ferrier's primary report, but it is unnecessary to review it in detail in the light of the subsequent joint reports with Mr Williams and Mr Hall. Joint report of Dr Ferrier and Mr Hall of 11 November 2010 (Exhibit F) 738This report provided agreed values for the Norgard Clohessy Australian Blue Gum 2000, Timbercorp Eucalypts 2000, Great Southern Blue Gum Plantations 2000, Gunns Woodlot 2002 and Gunns Woodlot 2003 investments. Their total value was $166,573. This incorporated an allowance of 10 per cent for growth in the value of the forestry assets. If that allowance was not made, the total value would have been $153,063. 739It was agreed that there should be a nil value for the ITC Solidwood 2001, Timbercorp Citrus 2005 and Gunns Winegrape 2005 investments. 740There was disagreement as to whether the other investments (each of the Timbercorp almond projects) had a value. Mr Hall remained of the view that they were valued at nil because the plaintiffs had exited from them. Dr Ferrier agreed that the value should be nil if that was indeed the case. 741There was agreement that an award of damages may be subject to tax in the hands of the plaintiffs, but there was disagreement as to the appropriate method to calculate the investment values on a post-tax basis. Joint report of Dr Ferrier and Mr Williams of 12 November 2010 (Exhibit N) 742There was substantial agreement between Dr Ferrier and Mr Williams as to economic loss. For each of the three plaintiffs, this was calculated by adding after-tax loss and a figure for grossing up for tax to yield a pre-tax loss. Figures were then added or subtracted where necessary for superannuation surcharge, interest on past loss and an additional amount to compensate for the payment of additional income tax if damages were taxed at the highest marginal tax rate. The result was expressed for each plaintiff as the "total of potential components of past loss". The total for all of the plaintiffs was $4,483,225. 743It was agreed that the total figures needed to be reduced by the amount determined to be the value of the investments held by the plaintiffs. 744There was agreement with Dr Ferrier's proposition in his report that if the plaintiffs were not ultimately liable to repay some or all of the outstanding loans for the investments, then the award should be reduced by the amount they are no longer required to pay. 745The experts agreed that if the Court determines damages on a post-tax basis, it would be necessary to consider the issue of grossing up for tax. 746The experts did not agree as to whether it was appropriate to use a consumer price index (CPI) indexation adjustment to determine the current value of a past loss. Mr Williams was of the view that it was not appropriate to use the CPI as an index factor to determine current value and considered that the calculation was not relevant in measuring economic loss. On the other hand, Dr Ferrier regarded this as a valid approach in expressing a past amount in terms of the current purchasing power equivalent of that amount. Mr Williams agreed that Dr Ferrier's calculation of the present value equivalent of past losses using the CPI index was mathematically accurate. There was agreement that such a CPI adjustment does not measure compensation for the loss of opportunity to earn interest. 747The experts were unable to agree as to the tax treatment of an award of damages. Mr Williams was of the view that damages would be subject to income tax (and not capital gains tax) in the hands of the plaintiffs, whilst Dr Ferrier did not feel sufficiently qualified to express an opinion. Observations in relation to the evidence 748Mr Williams' methodology for determining past revenue loss and capital loss was not criticised by Dr Ferrier. Dr Ferrier was not instructed to review the source documents underlying the calculations, but he must have reviewed the methodology. Mr Williams was unchallenged in this regard. None of the experts were required for cross-examination. Accordingly, there would seem to be a basis for awarding damages with specific components grossed up for tax. This would address one of the submissions made on behalf of the defendants that will be mentioned later. 749There remains a query as to whether all of the revenue losses were, in fact, deductions. It was noted in the reports of both Mr Williams and Dr Ferrier that there were discrepancies between the amounts claimed on the income tax returns and the revenue losses calculated by Mr Williams. However, no issue was raised about this in submissions. Plaintiffs' submissions 750The plaintiffs submitted that an award of damages would be assessable as ordinary income within the meaning of s 6-5 Income Tax Assessment Act 1997 (Cth) (ITAA 97). It was contended that "amounts received in the course of or on the conclusion of a business as a recoupment of lost income or deductible business expenditure partake of the same character as that which they replace" (PWS on Tax at [8]). The outgoings incurred by the plaintiffs reduced their taxable income. The award of damages in compensation for their outgoings will fill the hole in their taxable income. 751It was submitted that the character of the receipt (an award of damages) arises out of a business activity which the plaintiffs were induced to enter into by the defendant's conduct, and which gave rise to outgoings for which compensation is sought (T1168 - 1169). 752Reference was made to a number of principles and authorities in support of these propositions. 753A starting point is the observation in the joint judgment of Brennan CJ, Dawson, Toohey and McHugh JJ in Federal Commissioner of Taxation v Rowe [1997] HCA 16; (1997) 187 CLR 266 at 279 that "the character of a receipt is assessed by reference to its character in the hands of the taxpayer, not the character of the expenditure which produces the payment to the taxpayer". This was in the context of the Commissioner contending that it was a general principle of law that an amount paid as compensation for, or reimbursement of, a deductible expense is income within ordinary concepts. 754FCT v Rowe and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25; (1990) 170 CLR 124 were cited by Mr Slater (T1168) as examples to demonstrate the proposition that the character of the receipt is determined by the relationship between it and the business activity of the taxpayer, rather than being determined by the nature of the expenditure. 755In FCT v Rowe , the taxpayer had claimed as a deduction his legal costs in defending himself before an inquiry concerned with conduct relating to his employment. Four years later, he received a government ex gratia payment of an amount equivalent to the expenses. It was held that the Full Court of the Federal Court had been correct to characterise the payment as reparation, rather than remuneration, and so not part of assessable income. 756In GP International Pipecoaters v FCT , the taxpayer company incurred expenditure in constructing a plant which it would then use for coating pipes used in mining activities. While the initial amount outlaid was on capital account, the amount received from the counterparty to the contract for its recoupment was not and was therefore assessable. 757In Commissioners of Taxation (NSW) v Meeks (Public Officer of the Sulphide Corporation Limited ) [1915] HCA 34; (1915) 19 CLR 568, Griffith CJ stated (at 580): "In my opinion, damages received as compensation for non-performance of a business contract stand on the same footing as the profits for the loss of which the damages are paid." 758Mr Slater interpolated the comment that "it is a matter of filling the gap in the profits which gives rise to the accessible character" (T1169.30). Griffiths CJ continued (at 580): "It cannot, therefore, make any difference in principle whether the money is actually earned as profit, ascertained by deducting expenses from receipts, or paid as compensation for the loss of the opportunity of earning that profit, or, in the latter case, whether the amount of compensation is assessed by a jury or by mutual agreement." 759Similar statements of principle were cited from Californian Oil Products Ltd (In Liq) v Federal Commissioner of Taxation [1934] HCA 35; (1934) 52 CLR 28 at 46 per Gavan Duffy CJ, and Sydney Refractive Surgery Centre Pty Ltd v Commissioner of Taxation [2007] FCA 1544; (2008) 172 FCR 557 at [14] per Ryan, Edmonds and Gordon JJ. 760In Burmah Steamship Co v Inland Revenue Commissioners [1931] SC 156; 16 TC 67, Clyde LJ considered a situation of "someone who chartered one of the appellants' vessels [who] breached the charter, and exposed himself to a claim of damages at the appellants' instance". He continued: "[T]here could, I imagine, be no doubt that the damages recovered would properly enter the appellants' profit and loss account for the year. The reason would be that the breach of the charter was an injury inflicted on the appellants' trading, making ... a hole in the appellants' profits." 761Mr Slater submitted that in the present case, similarly, "the expenditures which the plaintiffs were induced to make caused a hole in the profits of the business which they were persuaded to enter into" (T1169.40). 762In Commissioner of Taxes (Vic) v Phillips [1936] HCA 11; (1936) 55 CLR 144, there was a question whether a taxpayer was liable to have assessed as income regular monthly payments that were being made to him as, in effect, compensation for the early termination of his position as the manager of a theatre. His remuneration included payment of 12.5 per cent of annual profits. Termination came about four years prior to when the agreement was to have concluded and occurred when the theatre was leased to another concern. An amount of compensation was agreed on the basis of what he was likely to have received as his share of profits based upon past amounts paid. A condition was included in the lease that the lessee would pay this amount to the taxpayer by monthly instalments over the four year period. 763Dixon and Evatt JJ (at 155-156) characterised the arrangement thus: "It appears to us that, for future income which he had a right to earn by performing the agreement, he exchanged a right to receive, through the same duration of time and at the same intervals of time, amounts estimated as equivalent to the income otherwise payable to him." (Emphasis added) 764Their Honours concluded (at 157): "In the present case ... there are monthly payments estimated to correspond in amount with the monthly payment which otherwise the taxpayer would have received and the payments are to be made over the same period of time. In these circumstances they must, in our opinion, be regarded as of the same nature as the payments they replace. They are of an income nature." 765In Federal Commissioner of Taxation v Wade [1951] HCA 66; (1951) 84 CLR 105, a dairy farmer was required to destroy 110 cattle because they were diseased. He received compensation of £2,016 and purchased replacement cattle, 110 of which cost £1,886. The appeal was concerned with how the difference of £130 should be treated. Statutory provisions required that variations in stock level be dealt with on income account. It was held (at 112 per Dixon and Fullagar JJ) that these provisions invoked "the operation of the principle which requires that a receipt representing an asset brought into the income account must be treated as income". 766McLaurin v Federal Commissioner of Taxation [1961] HCA 9; (1961) 104 CLR 381 and Allsop v Federal Commissioner of Taxation [1965] HCA 48; (1965) 113 CLR 341 were cited by Mr Slater (T1170.2) as examples of cases in which the amount for which the taxpayer was compensated was, at least in part, for outgoings and not lost income. The taxpayer escaped liability for reasons which will be mentioned shortly. 767In the event that the characterisation of damages as being assessable as ordinary income did not succeed, it was submitted in the alternative that it would be assessable as statutory income (ITAA 97, s 6-10). 768Subdivision 20-A of the ITAA 97 is concerned, inter alia, with the amounts received by way of insurance, indemnity or other recoupment for deductible expenses that are not otherwise assessable income. Section 20-20, relevantly, provides: " 20-20 Assessable recoupments Exclusion (1)An amount is not an assessable recoupment to the extent that it is * ordinary income, or it is * statutory income because of a provision outside this Subdivision. Insurance or indemnity (2) An amount you have received as * recoupment of a loss or outgoing is an assessable recoupment if: (a) you received the amount by way of insurance or indemnity; and (b) you can deduct an amount for the loss or outgoing for the * current year, or you have deducted or can deduct an amount for it for an earlier income year, under any provision of this Act." 769A "recoupment of a loss or outgoing" is defined in s 20-25 to include "any kind of recoupment, reimbursement, refund, insurance, indemnity or recovery, however described". 770The operative provisions of the subdivision of importance are that assessable income includes an assessable recoupment of "a loss or outgoing" if the loss or outgoing can be deducted in the current year, or has been deducted in one or more earlier income years (s 20-35 and s 20-40). 771It was submitted for the plaintiffs that to the extent that any part of the damages recouping deductible expenditure escaped assessment as ordinary income under s 6-5, they would in any event be included in the plaintiffs' assessable income by these provisions. The submission was that in relation to each loss or outgoing: (a)the damages received would be a "reimbursement ... indemnity or recovery" and therefore a "recoupment" (s 20-25(1)); (b)they would be for a loss or outgoing for which a deduction could be or was claimed, and would be an "assessable recoupment" (s 20-20); and (c)the assessable recoupment would be included in assessable income (s 20-35(1)). 772Mr Slater acknowledged that "there is a well-established line of authority to the effect that an undifferentiated lump sum received in satisfaction partly of claims of a revenue nature and partly of claims of a personal or capital nature is not assessable income" (T1170.46). It is the defendants' contention that any award of damages in this case would constitute such an undifferentiated lump sum (DWS at [229] - [232]). McLaurin v FCT and Allsop v FCT are two of the leading cases in this "line of authority". There is no need to review the facts of the cases; a useful summary is to be found in the judgment of the Full Court of the Federal Court in Commissioner of Taxation v CSR Ltd [2000] FCA 1513; (2000) 104 FCR 44 at [41] ff. In short, they involved a single sum being paid by way of settlement without differentiation as to any constituent components. The original claims included items of both a revenue and a capital character and it was not possible to say that an identifiable part of the payment had been by way of indemnity for a loss or outgoing which was an allowable deduction. 773It was submitted for the plaintiffs that any award for damages in the present case would be such that, in contrast to the situation with a lump sum award made by a jury, the reasoning exposed in the judgment would make it clear how the final sum was arrived at. Accordingly there would not be the problem, as there was in the cases referred to above, of identifying how much would represent an assessable recoupment of deductible losses and outgoings. 774Although it was not referred to by Mr Slater, I note that s 20-25(4) appears relevant in this context: "(4)If you receive an amount that is, to an unspecified extent, * recoupment of a loss or outgoing, the amount is taken to be recoupment of the loss or outgoing to whatever extent is reasonable." 775Mr Slater concluded his submissions, both written and oral, with a succinct statement to the effect that there is no question of any CGT issues arising. Defendants submissions 776It was submitted on behalf of the defendants that the characterisation by the plaintiffs of an award as "filling in a hole in profits" does not apply to the circumstances of this case. This is because there was no ongoing business which pre-dated or surrounded the conduct of the defendants. That is, it is not a case where the plaintiffs were operating a business of primary production and, as a result of Mr Brailey's conduct, did not receive income which otherwise would have been received. Rather, the plaintiffs' claim is that but for Mr Brailey's conduct, they would not have entered into the businesses at all. Any claim seeking to make good expectations on the part of the plaintiffs to receive income from the projects would lead to a contractual measure of damages. 777The defendants endorsed the approach taken by Lee J in Sweetman v Bradfield . I have earlier referred to the factual matrix in this case which is somewhat analogous to the present case. Mr Parker noted that no grossing up for tax took place in that instance: "No-one seems to have suggested to Lee J that his judgment should be grossed up" (T1379.25). 778It was submitted that any award of damages would not be an assessable recoupment in respect of either the whole or a proportion of the award. The submissions sought to characterise an award of damages in this case differently, that is as a "multi-head unliquidated claim" (T1380.26). It was put that the final award will be an undifferentiated lump sum reflecting all aspects of the loss or damage from which it will not be ascertainable which portions of the sum will represent recoupment of a particular deduction or deductions. 779With reliance upon Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9; (1968) 122 CLR 649, it was submitted that unliquidated damages, by their nature, are not a reflection of true damages. This could be problematic if an unliquidated award was appealed. 780The defendants submitted that the language of s 20-20 of the ITAA 97 is of a recoupment "of" a loss, which means that there must be a direct and mathematical relationship between the award and the deductions. It was submitted (DWS at [213] - [216]; T1376) that in this case, damages are said to be comprised of the following components: 1. the amount the plaintiffs currently owe as a result of entry into the investments and associated loan agreements; 2. an adjustment to the above to take into account post tax cashflow effects of the investments; 3. deducting an amount for the net present value of the investments; and 4. adding any award for vexation or distress. 781The first, third and (obviously) the fourth components are said to have no relationship at all to deductions. 782I note in this "component" characterisation of the plaintiffs claim that, in relation to the first three steps, it does not equate with the approach taken by Mr Williams and there was no dispute as to Mr Williams' methodology. 783In respect of past deductions (the second component), it is the cash figure and not the full value of the deductions that is said to be relevant. This requires another exercise that factors in such calculations as the tax effect of the deduction and the time value of money. This exercise is not precise and the calculations reached by the experts do not reflect a precise relationship between the deductions and the award. 784Accordingly, it was submitted that any amount awarded would be neither a recoupment of a particular amount or a fixed and ascertainable proportion of a particular amount or amounts. As a result, it would not be taxable and no "grossing up" is required. Plaintiff's submissions in reply 785The plaintiffs pressed the submission that the conduct of the defendants induced them into entering business activities (namely, the agribusiness investments). These activities incurred outgoings in their operation. The outgoings gave rise to the losses sustained by the plaintiffs. They were treated as tax deductible. As such they are assessable. It was submitted that Mr Williams' report, not rebutted on this point by Dr Ferrier, indicated that the outgoings accounted for the primary amount of the losses. 786Mr Faulkner made the observation that it would be surprising if the Commissioner, having allowed all of the deductions in the past, would not move to assess tax in respect of compensation which might be awarded on a sum which would be, bar $750, all of a revenue nature (T1406.43). 787Reference was made to the submission by counsel for the defendants that damages might include the last of the four components, an item that would clearly not be treated as ordinary income or an assessable recoupment. Mr Faulkner indicated that this item had the tendency to complicate or cloud consideration of this taxation issue and informed the court that for this reason the vexation claim was abandoned (T1407.1). 788Mr Faulkner also noted that there were joint expert reports in relation to the calculation of the plaintiffs' losses and that no attempt had been made to challenge their methodology. It was submitted that there was no evidence supporting the methodology proposed by the defendants in closing submissions. The defendants' methodology involved incorporating components both on capital and revenue account which was contrary to correct accounting concepts. On this issue, Mr Faulkner drew attention to the fact that both parties had accepted the final joint expert report and submitted that it should be relied upon "in its full force and effect without qualification" (1407.16). 789In their written submissions in reply, counsel for the plaintiffs referred to authority for the proposition that an award of damages squarely falls within the ordinary meaning of an "indemnity": FCT v Wade , supra, at 115 per Kitto J; Williamson v Commissioner for Railways [1960] SR (NSW) 252 at 257 per Herron J and 273 per Sugerman J; G oldsbrough Mort & Co Ltd v Federal Commissioner of Taxation (1976) 14 SASR 591 at 598-599 per Walters J; and Melbourne Saw Manufacturing Co Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VR 394 at 399 per Barber J . 790As to any award of damages being by way of a single sum, it was submitted that the decisions in McLaurin v FCT and Allsop v FCT were based upon situations in which it was not possible to elicit from the terms of the agreement or settlement award whether, and if so how much, it was concerned with amounts that could be determined to be on revenue account. That is not the case when the figure can be ascertained. 791Counsel for the plaintiffs referred to Whitaker v Commissioner of Taxation (1996) 63 FCR 1. That case was concerned with whether pre-judgment and post-judgment interest included in an award of damages for personal injury was assessable as ordinary income. Hill J held that it was. He distinguished the question from that which was decided in McLaurin v FCT and Allsop v FCT : "The present is not a case where the basis of apportionment was uncommunicated. It is a case where the basis of calculation of the ultimate award for damage is known. It comprised, relevantly, two amounts. The first was damages for the personal injury suffered by the plaintiff; the second was the interest component under s 94. Rather, the present is a case where the single payment can be apportioned amongst the heads to which it relates and the income or non-income nature attributed accordingly. Further, it is not a case where the payment is in respect of one claim and one claim only. The payment is in respect of two claims, one for damages and the other for interest; one for capital; and one for income." (at 9) ... "The decisions in McLaurin and Allsop received endorsement in the judgment of Davies J in Northumberland Development, and see per Beaumont J at 116. It is of course binding upon me. But the principle can have no application in a case where apportionment is possible. The ambit of the principle in McLaurin and Allsop, in my view, should not be extended." (at 10-11) 792Finally, it was submitted for the plaintiffs that if an award is not treated as ordinary income or statutory income, it would attract CGT. Given the ultimate view I have formed on this taxation issue, it is unnecessary to say more about this submission. Defendants' further submissions 793Counsel for the defendants submitted that the plaintiffs could not withdraw their claim for vexation. They have a single cause of action, not separate claims for various heads of damage. So long as they maintain their cause of action, the Court is required to award an appropriate sum for all aspects of the damage proved by the evidence, including vexation. 794It was submitted that there is nothing illogical about an award of damages comprising components both of capital and revenue loss. The example was given of a misleading or deceptive conduct claim, in which there was both a capital loss, say for the purchase of a business at overvalue, and a revenue loss, say for trading losses. 795Finally, it was stated that the defendants were not departing from the agreed figures arrived at in the joint expert reports. 796The defendants opposed any consideration, let alone grossing up, in respect of capital gains tax. There were too many issues that would need to be addressed by way of evidence and submissions. It was too late for the plaintiffs to be raising the point when they had previously said that it was not an issue. As I indicated above, there is no need to further consider this point. Conclusion on taxation 797I do not accept the submission for the defendants that there is significance in the fact that the plaintiffs were not involved in an ongoing business but claimed to have entered into businesses as a result of Mr Brailey's conduct. It was not made clear why a question as to whether a business was pre-existing, or commenced as a result of the defendant's conduct, should have a bearing upon the operation of the principles to which the plaintiffs referred. There was the characterisation of the plaintiffs' submission as seeking to make good expectations to receive income from the projects. However, the reality is that the plaintiffs are seeking to recover for their losses in terms of expenditure and extant liabilities. No attempt has been made to calculate, let alone claim, income they had an expectation of receiving. 798To the extent that Sweetman v Bradfield Management provides an analogous factual matrix, the fact that Lee J did not "gross up" for taxation is not determinative, or persuasive. One could speculate about the reasons why that was the case. It may be because no-one averted to the issue. It may also be because the issue was averted to but the parties accepted that it was not appropriate to do so. What the parties in that case considered was appropriate is hardly relevant in the present case. Mr Parker's acceptance that "no-one seems to have suggested to Lee J that his judgment should be grossed up" (T1379.25) is an acceptance of either possibility. 799The submissions for the defendants concerning an award in this case being in the nature of an undifferentiated lump sum in respect of which no conclusion could be drawn as to how much was attributable to sums that might be regarded as ordinary income or statutory income cannot be sustained. Any award that this Court might make in the plaintiffs' favour would be the subject of a judgment that would expose sufficient reasoning to enable such an assessment to be made. I was not referred to any authority for a proposition that it is necessary for such an assessment to be made with absolute precision. Commissioner of Taxes (Vic) v Phillips includes reference to "amounts estimated as equivalent to the income otherwise payable" (emphasis added). There is also the reference in s 20-25(4) of the ITAA 97 to an "amount [being] taken to be the recoupment of the loss or outgoing to whatever extent is reasonable". 800Mr Parker referred to appellate consideration of a judgment in which a single sum was awarded and cited Arthur Robinson (Grafton) Pty Ltd v Carter . He submitted that "for the purposes of appeal, one looks at the total figure and compares it with the damage complained of" (T1380.28). That might well be the case with a jury verdict, as it was in the case referred to, but it is difficult to contemplate that in a case where the present tax question is a live issue, an appeal court would do the same. 801The submission that the plaintiffs could not withdraw their claim for damages for vexation has no merit. They can either withdraw the claim, or ask me to award no damages for it; either way, given the concession, no component of any award should include anything for it. 802It can be readily accepted that there is nothing illogical in an award including damages for both capital and revenue losses. Any award in this case would be of such a nature. The capital component would be trivial, as indicated in the calculations of the experts. Nothing in the present consideration is affected by this. 803The submissions for the plaintiffs that any damages awarded (aside for the $750 capital loss) would be assessable as ordinary income are persuasive. However, I prefer the view that they would be assessable as statutory income. Such damages comfortably fit the concept of being an assessable recoupment. Any damages should be grossed up to take this fact into account. Quantum 804Dr Ferrier and Mr Williams agreed upon a figure in relation to each of the plaintiffs for the "total of potential components of past loss". The total for all three plaintiffs is $4,483,225. 805There is an issue about whether there should be an adjustment for the time value of money by CPI indexation. Mr Faulkner submitted on behalf of the plaintiffs that Supreme Court rates should be applied so as to also include adjustment for the plaintiffs being deprived of the use of money (T1213.41). Mr Parker opposed this, stating that a claim for loss of opportunity to invest elsewhere had been abandoned (T1371.6). 806There was originally a claim that in addition to having lost a principal amount, the plaintiffs had lost "interest and the opportunity to invest in other sound and prudent investments" (statement of claim at [42]). The second amended statement of claim saw the deletion of all of those words except for "interest". This is not an abandonment of a claim that would deny to the plaintiffs the submission made by Mr Faulkner. 807The plaintiffs' submission is a reasonable one and, particularly given the period of time that has elapsed since the making of the investments, the deprivation of the use of their money has been significant. If their claim had been successful I would have assessed quantum on this basis. Mr Faulkner indicated (T1214.20) that the figures in the joint report were calculated in that way. 808There is one aspect of the figure in the Ferrier/Williams report that requires adjustment and that is, as the authors indicated, a deduction for the present value of the investments. In the joint report of Dr Ferrier and Mr Hall, that is said to be a total of $166,573. 809I have previously noted that Dr Ferrier assigned a value to the almond investments whereas Mr Hall did not. It appears that Dr Ferrier was uncertain as to whether Mr Tomasetti and the TSF had exited those investments, but Mr Hall had sighted documents which indicated that they had. Mr Faulkner referred to such documents in the course of his submissions (T1211-1212). I am satisfied that neither Mr Tomasetti nor the TSF have any current interest in the almond investments, so the nil value suggested by Mr Hall should be accepted. 810The Gunns Winegrape 2005 project has an agreed valuation of zero. Apparently the project is continuing, but there is uncertainty about what income it will produce. For this reason, Dr Ferrier and Mr Hall were not prepared to put a figure on it. Counsel for the defendants in written submissions (DWS at [224]) suggested that this should not prevent the Court from making some allowance for this project, even if by selecting a "broad brush figure". 811Dr Ferrier and Mr Hall discussed this project (Dr Ferrier's report at p. 14 and Mr Hall's report of 18 October 2010 at p. 7). The assets had been sold to Brown Brothers who had entered into a grape supply agreement to purchase the produce. Mr Hall indicated that further information might be expected when the Brown Brothers 2010 annual report was published in November 2010. Dr Ferrier indicated that "it seems at least possible that the investment will be capable of generating a positive cash flow in the future". Given the time that has elapsed since the reports were written, if an award of damages was to be made, it would be appropriate to defer a final assessment of quantum until more current information was to hand. Conclusion as to quantum 812If the plaintiffs had been successful, damages would have been awarded on the basis of the figures in the joint report of Dr Ferrier and Mr Williams, with a deduction of the present value of the investments and subject to more current information concerning whether the Gunns Winegrape 2005 investment had any value. Contributory negligence and apportionment 813The parties made submissions on the subject of contributory negligence and apportionment (PWS at [77] - [78]; T1136; 1390-1391; 1405-1406; DWS [254] - [267]; T1357; 1381; 1409-1410). 814I have sought to express conclusions on other issues raised in the proceedings where possible. However, whilst I have considered the submissions made on the present topic, expressing conclusions about them is problematic. Determining the issue as to whether there has been contributory negligence and, if so, the degree to which it has been established, depends upon the nature of the facts found in finding a plaintiff's claim proved. Views could be expressed upon a basis that the entirety of the plaintiffs' case was accepted. However, in the circumstances of this case, that appears to be an unlikely outcome even if a different and more favourable view was taken of the plaintiffs' evidence than the view I have taken. 815In relation to proportionate responsibility of concurrent wrongdoers under s 35 Civil Liability Act 2002, the defendants' submission was that the fourth defendant should bear "the lion's share" of responsibility for any other defendants' involvement" (DWS at [267]). The plaintiffs' submission was that the provisions in Part 4 did not apply to the fourth defendant, but if they did, they only apply to the 2005 investments and it was Mr Brailey who was the sole cause of Ms Cordony's loss (T1405-1406). A significant matter in determining these issues would be whether the apportionable claim is one in contract, tort or under the Fair Trading Act . Different views are available depending upon the type of claim involved. Given the range of possibilities, it is not practical to express views in the abstract 816It is appropriate, however, to state some very broad conclusions. I am satisfied that even if the proceedings were determined in the plaintiffs' favour, there would be a very real question as to the negligence of the plaintiffs, particularly Mr Tomasetti. 817Mr Tomasetti's negligence was manifest. He is an intelligent man with significant experience in commercial and financial matters; yet he was reckless to an extreme degree. His claim to have made substantial financial commitments by signing documents with a mental blindfold on is astounding. On his own version, his conduct amounted to an almost complete abrogation of any prudent care for his own financial affairs. 818The conclusion is inescapable that if Mr Tomasetti's version is accepted in its entirety, he was as negligent as Mr Brailey is alleged to have been. If he had exercised anywhere near the level of care that a reasonable person would have exercised in the circumstances, he would not have found himself in the unfortunate position that he has found himself to be in. He has been, to a very large extent, the author of his own misfortune. 819Ms Cordony's level of negligence was less than that of her husband. She was far less experienced with concepts of investments and gearing. She was not driven by tax minimisation beyond the level of the average person who would prefer not to have to pay tax unnecessarily. She admitted, however, that she was aware from her handling of her husband's investment affairs that the investments were risky. She was aware that these types of schemes involved considerable ongoing costs and that further borrowings were necessary. Despite this, she signed up for the investments without reading anything about them (that she could recall) and without any discussion with her husband (that she could recall). 820A further observation should be made concerning the submission that in the event that the plaintiffs' case succeeded, the fourth defendant should bear the "lion's share" of responsibility as compared with Mr Brailey. Reference was made to the judgment of Barrett J in Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 at [60] - [61] and the considerations to which his Honour there referred as being relevant to contributions among tortfeasors. Emphasis was placed on the third consideration; the extent to which they gained from a plaintiff's loss. It was submitted that the fourth defendant received the commissions for the plaintiffs' investments and that this was "a strong indicator that it should bear more liability" (DWS at [264]). 821The first and second considerations mentioned by Barrett J were not addressed, but they are important as well. The degree of departure from the standard of care of the reasonable man, and the relative importance of the acts of the two wrongdoers, are matters that favour a finding more against Mr Brailey than the company he represented. Mr Brailey was, in effect, BFL Financial Planning Pty Ltd. It, relevantly, did nothing independently of what he did. 822Reference was also made to Amcus Pty Ltd v Hurst Rentals Pty Ltd [2009] NSWSC 1016 and the considerations discussed by Slattery J at [67] - [71]. Contrary to the defendants' submissions, this extract further confirms that as between Mr Brailey and the fourth defendant, the former should be the one who might have bear "the lion's share" of responsibility. 823For the reasons given earlier, aside from these broad conclusions I do not believe it is possible to offer anything more specific. Costs 824There seems no reason why costs should not follow the event. However I will reserve leave to apply to discharge or vary the order for costs if there is some reason shown for doing so. Orders 1. Judgment and verdict for the defendants. 2. Plaintiffs to pay the defendants' costs as agreed or assessed. 3. Liberty to apply within 28 days if any alternative order as to costs is sought. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 November 2011