Supreme Court New South Wales Medium Neutral Citation: Perpetual Trustee Company Limited & anor v Peter Ishak [2012] NSWSC 697 Hearing dates: 17, 21, 23, 24, 25, 28 June 2010; 1, 2, 5, 6, July 2010; 27 April 2011 Decision date: 25 June 2012 Jurisdiction: Equity Division Before: Brereton J Decision: Defendant engaged in misleading and deceptive conduct in contravention of Fair Trading Act, s 42, and made false representations in connection with potential grant of interest in land as to nature of the interest in contravention of s 45, and thereby Plaintiffs suffered loss. No apportionment between concurrent wrongdoers as proportionate liability does not apply in respect of s 45. Catchwords: TRADE PRACTICES - Misleading and deceptive conduct - conveyancer represented to incoming mortgagee that contracts had been exchanged - incoming mortgagee advanced funds where borrower had represented that contracts had been exchanged - Whether conduct misleading or deceptive - Misrepresentation by conduct - (NSW) Fair Trading Act 1987 s 42, 68. TRADE PRACTICES - Misleading and deceptive conduct - conveyancer represented to title insurer for incoming mortgagee that contracts had been exchanged - title insurer accepted risk where borrower had represented that contracts had been exchanged - Whether conduct misleading or deceptive - Misrepresentation by conduct - (NSW) Fair Trading Act 1987 s 42, 68. TRADE PRACTICES - false or misleading representations concerning the nature of an interest in land - whether representation concerned the nature of an interest in land - misrepresentation concerning grant of an equitable interest in land by falsely representing to mortgagee that mortgagor had equitable interest in land - misrepresentation by agents - (NSW) Fair Trading Act 1987 s 45. TRADE PRACTICES - Misleading and deceptive conduct - conveyancer represented to incoming mortgagee that he had instructions to apply funds to purchase of certain real property - Whether conduct misleading or deceptive - Whether representation concerned an interest in land - Misrepresentation by conduct - (NSW) Fair Trading Act 1987 s 42. TRADE PRACTICES - Misleading and deceptive conduct - misrepresentation by non-disclosure - conveyancer acting for purchaser and mortgagee did not disclose that client was contemplating alternative arrangements to purchase property - Whether conduct misleading or deceptive - Whether duty to disclose existed - (NSW) Fair Trading Act 1987 s 42. CAUSATION - Trade practices - Misleading and deceptive conduct -whether contravening conduct a cause of the loss or damages - causal connection established by inference - where title insurer liable to indemnify lender in respect of loan where borrower had no equitable interest in property - where lender insured against risk that materialised - whether insurance operates to extinguish loss - loss to insured caused by misrepresentation to insurer. TORTS - duty of care of conveyancer to client when acting in respect of loan transactions - duty based on responsibility and vulnerability - client acquiesced in conveyancer taking instructions from third party - whether breach of duty by making misrepresentations to counterparty to loan transaction. PROPORTIONATE LIABILITY - Loan and mortgage transaction - Fraudster liable to lender for fraud - conveyancer misrepresented to lender that borrower had equitable interest in property - lender's solicitor liable for failing to make proper inquiries - Whether concurrent wrongdoers - Pt 4 of Civil Liability Act 2002 - Whether acts or omissions caused the same damage or loss the subject of lender's claim - Difference between damage and damages - conveyancer, solicitor, and fraudster concurrent wrongdoers in causing lender to advance loan funds - apportion liability 50% to fraudster, 25% to solicitors and 25% to conveyancer. Legislation Cited: (CTH) Australian Securities and Investment Commission Act 2001, s 12DC (CTH) Trade Practices Act 1974, s 53; s 53A; s 82 (NSW) Civil Liability Act 2002, s 34; s 35 (NSW) Fair Trading Act 1987 s4; s 42; s 45; s 68; s 72 Cases Cited: Arab Bank plc v John D Wood Ltd [2000] 1 WLR 857; Australian Crime Commission v Gray [2003] NSWCA 318; Baiyai Pty Ltd v Guy [2009] NSWCA 65; Benlist Pty Ltd v Olivetti Australia Pty Ltd [1990] FCA 288; (1990) ATPR 41-043; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304; Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178; Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd [1998] FCA 693; (1998) 155 ALR 714; Demagogue Pty Limited v Ramensky [1992] FCA 557; (1992) 39 FCR 31; Digi­Tech (Australia) Ltd v Brand [2004] NSWCA 58; (2004) 62 IPR 184; Galaxidis v Galaxidis [2004] NSWCA 111; Gardam v George Wills & Co Ltd [1988] FCA 194; (1988) 82 ALR 415; Garvey v Vamamu Pty Ltd [1998] NSWSC 444; (1998) ATPR 41-656; Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180; (1984) 2 FCR 82; Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357; (1999) 43 IPR 545; Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (No 1) [1988] FCA 40; (1988) 39 FCR 546; Henville v Walker [2001] HCA 52; (2001) 206 CLR 459; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109; Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526; John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1993] FCA 295; (1993) ATPR 41-249; Kayteal Pty Ltd v Dignan [2011] NSWSC 197; Lam v Ausintel Investments Australia Pty Ltd (1990) 97 FLR 458; Lezam Pty Ltd v Seabridge Australia Pty Ltd [1992] FCA 206; (1992) 35 FCR 535; Miller & Associates Insurance Broking v BMW Australia Finance [2010] HCA 31; (2010) 241 CLR 357; Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390; Monroe Topple & Associates Pty Limited v Institute of Chartered Accountants (Aust) [2001] FCA 1056; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191; Port Stephens Shire Council v Booth [2005] NSWCA 323; (2005) 148 LGERA 351; Poseidon Ltd v Adelaide Petroleum NL [1991] FCA 663; (1991) 105 ALR 25; Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187; Rhone-Poulenc Agrochomie SA v UIM Chemical Services Pty Ltd [1986] FCA 218; (1986) 12 FCR 477; Street v Luna Park Sydney Ply Limited [2009] NSWSC 1; (2009) 223 FLR 245; Sullivan v Sullivan [2006] NSWCA 312; Sutton v AJ Thompson Pty Ltd (In Liq) [1987] FCA 167; (1987) 73 ALR 233; Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177; Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; (1996) 186 CLR 574; Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc [1993] FCA 630; (1992) 38 FCR 1; Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505; Watson v Foxman (1995) 49 NSWLR 315; World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181; Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463. Category: Principal judgment Parties: Perpetual Trustee Company Ltd (First Plaintiff) First American Title Insurance Company of Australia Pty Ltd (Second Plaintiff) Peter Ishak (First Defendant) David Ross (Second Defendant) Representation: A Leopold SC, DFC Thomas (plaintiffs) DJ Russell SC, JV Gooley (first defendant) Allens Arthur Robinson (plaintiffs) Maccallum Lawyers (first defendant) File Number(s): 2006/259941 Judgment 1The prospect that upon settlement of a loan transaction involving advances of $1.6 million a sophisticated lender such as the first plaintiff Perpetual Trustee Company Limited ("Perpetual") might hand over to its borrower the second defendant Mr Ross cheques for that amount but receive no certificate of title, discharge of outgoing mortgage, mortgage or transfer in return, nor even any undertaking to deliver them, might appear almost incredible. But that is what happened in this case, on the faith of a mortgage lending policy issued to Perpetual by the second plaintiff First American Title Insurance Company of Australia Pty Ltd ("First Title"). The funds advanced have been dissipated; Mr Ross is a man of straw; and Perpetual holds no enforceable security. Perpetual and First Title now sue the conveyancer who acted for Mr Ross - the defendant Peter Ishak - alleging that the issue of the policy, the advance of the loan funds, and the subsequent omission to stop payment on the cheques before they were dissipated, were occasioned by misleading and deceptive conduct on his part. Background 2Elite Apartments Pty Ltd ("Elite") was the registered proprietor of land in Old South Head Road, Vaucluse, on which it developed an apartment block comprising five units, construction of which was completed in late 2004, with the strata plan being registered in March 2005. The Arab Bank held a mortgage from Elite over the five units. 3Comlend Securities Pty Ltd ("Comlend") was incorporated in December 2004, apparently at the instance of Mr Antonio Iaconis as a vehicle for property dealings. It had three shareholders: Mr Iaconis, Mr Ross, and Mr Williams, and it employed Mr Nesa Padayachee as a mortgage broker. Proposed purchase of the Vaucluse units 4In about March 2005, Mr Iaconis discussed with Mr Ross a proposal to purchase all five Vaucluse units. He told Mr Ross that he had negotiated a deal with Elite that involved vendor finance, but could not buy the units in his own name. Mr Ross, who was at all material times the sole director and shareholder of Equis Securities Pty Ltd ("Equis"), agreed to his request to have Equis undertake the purchase, on terms that Mr Iaconis would discharge Mr Ross' debts (which were in the order of $700,000, although according to Mr Ross their quantum was not discussed). 5Mr Ishak was a licensed conveyancer, who carried on business as a sole practitioner under the name and style "P & A Conveyancing". Mr Ishak first met Mr Ross, in company with Mr Iaconis, in March or early April 2005, when they discussed the prospective pursuit of property deals by Mr Iaconis and Mr Ross. Mr Iaconis told Mr Ishak that he could not own any property in his personal name, or be a company director, for a minimum of three years. While Mr Ishak denied knowledge of this alarming information, he had recorded it in a file note that he made on 1 October 2005 when he decided to document the events. 6Mr Ishak says - although Mr Ross does not accept - that they reached an arrangement that in relation to the purchase of the properties (including the Vaucluse units), Mr Ishak would take his instructions from Mr Iaconis. In this respect, I prefer the evidence of Mr Ishak as far more probable in the light of Mr Ross' general attitude to the transactions thereafter, including his explanation that he did not seek to give instructions to Mr Ishak because "I was a tool for the purchase being run by Iaconis with the legal matters attended to by Ishak". 7Mr Iaconis was able to create the appearance, to Mr Ishak, of being wealthy, and became an apparently very valuable client, who Mr Ishak did his utmost to satisfy. Mr Ishak, who was then 26 years of age, was under some financial stress, having a pressing taxation debt. He developed a close personal and professional relationship with Mr Iaconis, and over the next several months worked practically full-time for him, consulting extensively in respect of many proposed property transactions (of which only one, the purchase of a home at Maroubra for Mr Iaconis, further mentioned below, came to exchange). Mr Ishak perceived that he became important to Mr Iaconis by doing this work, and he agreed that he was prepared "to do whatever it takes to make sure that I pleased the client" within his capacity as a conveyancer, and that he did do whatever it took within his capacity as a conveyancer to achieve Mr Iaconis' "objectives". However, while indicative of an admitted desire on the part of Mr Ishak to do his utmost to please Mr Iaconis, I do not take any of these to be concessions on Mr Ishak's part that he was prepared to act improperly to do so. 8Although it was initially contemplated that Equis could acquire all five Vaucluse units, it appears that by early April 2005 the view had been adopted that Equis should, at least initially, acquire only Units 1 and 2 ("the Units") - although the possibility of the subsequent acquisition of the other three remained alive. On about 31 March or 1 April, Mr Ross signed two loan applications to Resimac - a mortgage broker and manager for Perpetual - each for an advance (to him as borrower) of $800,000, to fund the purchase of the Units. 9On 4 April, Consolidated Lawyers ("Consolidated"), whose Mr Kassem acted for Elite, sent contracts for sale of the Units to Mr Ishak. Mr Ross, on behalf of Equis, signed those contracts on or about 8 April. Also on 8 April, Mr Ishak wrote to Consolidated, stating that exchange and settlement should occur simultaneously, within two to three weeks, and that the total consideration payable on all five units on completion was to be $3 million, with a further $1.7 million to be paid 12 months after completion. On 12 April, Consolidated wrote to Mr Ishak, referring to a sum of $100,000 to be paid forthwith, which may explain why, in subsequent communications, the total price for the five units was said to be $4.6 million. 10On 27 April, Resimac approved Mr Ross's applications for two loans, in respect of units 1 and 2 respectively. Each loan approval stipulated that the loan was to be secured by first priority registered mortgages over the relevant unit. 11On or about 28 April, Fidelity Mortgage Corporation ("Fidelity"), a mortgage originator, on behalf of Resimac and Perpetual, instructed Heidtman & Co ("Heidtmans"), solicitors to act for Perpetual as lender/mortgagee in respect of the loans. Heidtmans were instructed to procure first priority registered mortgages over the Units. Mr McLoughlin, a paralegal, had the conduct of the matter at Heidtmans. 12On 9 May, Consolidated wrote to Mr Ishak that they "would like to agree on specific terms and conditions of the Contract for Sale of Land", particularly as to the vendor finance and the security for it. As will appear, this issue of the vendor finance and security for it was never resolved. 13On 19 May, Mr Ishak wrote to Heidtmans, enclosing the front pages of two forms of Contract for Sale, of units 1 and 2 respectively, signed by Mr Ross on behalf of Equis only, and undated. As solicitors for the incoming mortgagee, Heidtmans on 25 May forwarded to Mr Ross at his home address the requisite security documentation in respect of the proposed loans - the loan agreements, the mortgages and ancillary documents. 14Meanwhile, on 19 May, Mr Iaconis exchanged contracts with J & M Giannikouris to acquire a substantial home at Maroubra. Under this contract, the second instalment of the deposit, being $185,000, was payable by 16 June 2005, in default of which the portion already paid - also $185,000 - would or could be forfeited. As the Plaintiffs emphasise, Mr Ishak knew and understood this. Mr laconis entered into occupation of the Maroubra property during May. 15On 1 June, Consolidated wrote to Mr Ishak, pressing for a response in respect of security for the vendor finance. On the morning of 3 June, Mr Iaconis, Mr Ishak and Mr Padayachee met with Elite's representatives, including Mr Kassem, at the Maroubra property. As recorded in a letter from Consolidated to Mr Padayachee, it was agreed, in effect, that the total purchase price (for five units) was $4.6 million, but the price for units 1 and 2 was reduced to $900,000; that the simultaneous exchange and settlement of Units 1 and 2 would coincide with exchange in respect of units 3, 4 and 5, with settlement of units 3, 4 and 5 to follow within 21 days; that additional security was to be provided in respect of the vendor finance; that the up-front payment in respect of Units 1 and 2 would be a total of only $1 million, with the vendor to carry finance of $380,000 in respect of each of Units 1 and 2; and that there was to be a rebate of $200,000 in respect of each of Units 1 and 2 if the purchaser settled on or before 31 July 2005. The practical effect of these arrangements was that Mr laconis (in the company of Mr Ishak) had created a cash surplus on the acquisition of Units 1 and 2 of about $400,000. Sometime in May - in any event, prior to 10 June - Mr Iaconis had disclosed to Mr Ishak his intention to access this $400,000 for the purpose of obtaining the second portion of the deposit payable in respect of his Maroubra purchase, which was due (as things then stood) on 16 June; Mr Iaconis told Mr Ishak that he would reimburse those funds later from funds he was expecting from another source. 16Subsequently, that afternoon, Mr Ishak met with Mr Ross, in the company of Mr laconis and Mr Padayachee. Mr Ishak asked Mr Ross whether he was aware of the loan amounts ($800,000 per unit), but Mr Ross's attention was not drawn to the circumstance that he would be borrowing $800,000 per unit when only $500,000 per unit would now be required as an up-front payment on settlement of the purchase. Mr Ross executed (witnessed by Mr Ishak) a loan agreement between Perpetual as lender and himself as borrower for a loan of $800,000 to be secured by mortgage over unit 1, an identical loan agreement for a further $800,000 to be secured over unit 2, a mortgage of unit 1, a mortgage of unit 2, and other associated documentation, including an undertaking as borrower that the advance would be used only to fund the purchase of the Units. Mr Ross said that he did so under pressure from and in the presence of four men, including Mr Ishak and Mr Iaconis, and presumably Mr Padayachee, but his evidence does not indicate any actual or improper pressure - he described it as "implied pressure". Under cover of letters dated 3 June, Mr Ishak then forwarded the loan documentation, including the mortgages, together with unsigned transfers of units 1 and 2, and copies of the first page of each contract for sale, signed by Mr Ross but undated, to Heidtmans "in readiness for settlement". 17Mr Ross says that on 3 or 4 June he told Mr Ishak not to settle the purchase without specific instructions from him personally to do so, and that Mr Ishak agreed that he would not do so but revert to Mr Ross first. Mr Ishak denies this. I return to the resolution of this contentious issue, below. The proposed 10 June settlement 18Settlement was appointed for 10 June. A letter of 7 June from Heidtmans to Ishak anticipated settlement of all aspects of the transaction - including the property purchase. It is clear that, at that stage, completion of the purchase of the units - not just the advance of the loan funds - was contemplated. 19By 8 June, Mr Ross on behalf of Equis and in his own right as guarantor, executed Heads of Agreement between Elite, Equis and Mr Ross, providing for the purchase by Equis of the five units for a total consideration of $4.6 million, apportioned $900,000 to each of units 1, 2 and 3; $1.4 million for unit 4; and $500,000 for unit 5. These Heads of Agreement contemplated payment of $1 million on the simultaneous settlement of units 1 and 2, $1.5 million on the (later) simultaneous settlement of units 3, 4 and 5, and the balance of $2.1 million within twelve months thereafter, for which additional security was to be provided. Mr Ross' signature was witnessed by Mr Ishak. 20On 9 June, Consolidated sent Mr Ishak directions for payment. On the same day, in faxes from his firm to Heidtmans, Mr Ishak advised that settlement of the advance from Perpetual to Equis in respect of units 1 and 2 was to take place on 10 June 2005 at 3:00pm, and provided directions for settlement cheques in favour of, inter alia, Arab Bank (to obtain a discharge of mortgage), the office of State Revenue (for stamp duty), Consolidated (the vendor's solicitors), Sydney Water (for water rates), and Elite (the vendor). These cheque directions issued by Mr Ishak conformed to the directions given by Consolidated, and specified that approximately $350,000 of the surplus cash should be payable to Equis, with the other $50,000 directed to Mr Ishak himself. 21Also on 9 June, Consolidated wrote to Mr Ishak, pointing out that there were two matters still outstanding that needed to be completed prior to settlement, namely proof from the incoming mortgagee of the amount of the loan, and details of the additional security for the vendor finance. 22On 10 June, the loan funds were transferred to Heidtmans' trust account, and the requisite bank cheques were purchased and trust cheques drawn in preparation for settlement. While it appears that Elite had hoped to settle on 10 June, it had encountered a last minute problem with its mortgagee the Arab Bank, which was not prepared to release its security over the two units until it was fully repaid the whole of its debt: in other words, it would not give a partial discharge of its security on account of a part payment of its debt. In addition, Equis had not complied with the two requirements that Consolidated had emphasised in its 9 June letter; and terms had not been finally agreed between Elite as vendor and Equis as purchaser. 23Neither Arab Bank nor Elite attended on settlement on 10 June, and accordingly settlement did not take place that day - due to the unsatisfied requirements by Arab Bank of Elite (for repayment in full in return for a discharge), and also to the unsatisfied requirements by Elite of Equis (in particular in respect of security for the vendor finance). However, Mr Ross became liable to pay interest on $1.6 million from 10 June, and on 14 June, Mr Ishak acknowledged to Heidtmans that his "client" was aware that interest on the advances had commenced to run from that day, when they had been drawn down. Mr Ross denies that he was personally so aware, and in the absence of evidence of any communication with him to that effect or at that time, I accept his evidence in this respect. 24Settlement was re-booked for 14 June, but again cancelled. Proposed use of title insurance 25Soon after 10 June, Mr Iaconis told Mr Ishak that he had approached a contact at First Title and had sought to obtain title insurance to enable the loan moneys to be advanced before completion of the property purchase. Mr Ishak's immediate response was: "That's impossible, you haven't even exchanged contracts yet". 26On 14 June, some time prior to 6:00pm, Mr laconis spoke to Ms Comerford of First Title, and thereafter told Mr Ishak that he had spoken to his contact at First Title and had "organised for an insurance policy to be obtained ... which will enable them to settle the finance component of this transaction with Resimac in anticipation of the property settlement with the vendor" and that, as a result, "they should be in a position to settle in a few days". At 5:23pm, Mr Ishak wrote to the solicitors for J & M Giannikouris, seeking an extension until 24 June of the time for payment of the further $185,000 deposit in respect of Mr Iaconis' Maroubra purchase. Although this letter referred to an intention to utilise moneys to be received from overseas, Mr Ishak had previously been told that the source of the balance deposit was to be the surplus cash from the Perpetual loan moneys. 27On 15 June, Consolidated wrote to Mr Ishak, reiterating Elite's outstanding requirements, in particular in respect of security for the vendor finance. Mr Ishak had a telephone conversation with Mr Downes, a manager at First Title, who had already spoken to Mr Iaconis. In the course of this conversation, Mr Ishak said that settlement fell over the previous week "because Arab Bank wouldn't provide discharge", and had been re-booked for that afternoon; he explained that Arab Bank would not discharge until all five units were sold. Mr Downes said that he would need to see the contract, title search and valuation, to which Mr Ishak responded that Heidtmans "have all this". Mr Downes sent an email to Ms Wong of Resimac, offering to insure that Resimac/Perpetual had a first ranking registered mortgage: "essentially, Perpetual can rely on our policy until the mortgage is discharged and Perpetual's mortgage is registered"; to which Ms Wong replied that she would be pleased to have the transaction insured on that basis. 28On 16 June, Mr Downes spoke to Mr Kassem at Consolidated, who confirmed that Arab Bank would not discharge its mortgages until all 5 units were purchased, for the reason that Arab Bank would not have sufficient security if the mortgages over Units 1 and 2 were discharged. Mr Kassem said that Elite was "arranging alternative security". Mr Downes made the following file note: If we pay out Arab Bank over 2 Units, we will be subrogated to their rights as mortgagee - worst case scenario - can arrange transfer of mortgage. 29Mr Ishak rang Mr Downes, requesting that settlement be booked expeditiously. Mr Downes raised Mr Kassem's suggestion that alternative security was being arranged, and Mr Ishak responded "this is being progressed", and did not reveal that the question of security for the vendor finance was not resolved. 30Also 16 June, Mr McLoughlin at Heidtmans sent an email to Mr Downes, stating that settlement had been cancelled the previous day and that Heidtmans had returned all funds to Resimac, and enquiring whether settlement could be re-booked without any certificate of title, discharge of mortgage or transfer being available, or alternatively to wait until the vendor was in a position to settle. Mr McLoughlin thus contemplated that not only would there be no certificates of title nor discharges of mortgage, but also no transfers. Mr Downes' response proceeded on the same assumption. Mr McLoughlin sent another email to Mr Downes, noting that, in the 9 June cheque directions, Elite had been specified as a payee of a cheque for $75,000, and stating that "all the proceeds of the sale did not appear to be being used to pay out ARAB Bank Australia Limited who apparently will not release this security property". 31Still on 16 June, Mr Downes sent a facsimile letter to Mr Padayachee at Comlend, confirming that after discussions with Heidtmans, the lender and the vendor's solicitor, First Title was in a position to issue insurance policies to Perpetual/Resimac to allow settlement of the Units to take place, without receiving discharges of mortgage and title documents from the Arab Bank until the remaining units were purchased. With the letter was enclosed a Request for Insurance Order Form (somewhat strangely, as Perpetual rather than Mr Ross was to be the insured). In his evidence, Mr Downes explained that he perceived the insured risk to be a "timing issue", in the sense that First Title would be on risk until the remaining three units had been sold, or Elite had arranged alternative security as required by Arab Bank. 32On 20 June, Consolidated wrote a letter to Mr Ishak, asserting that Equis' failure to substantiate the amount of the loan on the properties being $3.8 million was a repudiation of the "initial agreement" between the parties and purporting to terminate that agreement. However, this letter was not received by Mr Ishak until 24 June, and the evidence does not establish whether it was received before or after the settlement of that date. 33On 21 or 22 June, Mr Ross signed the Request for Insurance Order Form, although he says that the form was not completed when he signed it. 34On 22 June, Mr Ishak and Mr Downes had their third telephone conversation. Mr Ishak said that he was keen to organise settlement "ASAP". Mr Downes said that the policy could be issued straight away, so that settlement could take place without discharges of mortgage. Mr Ishak asked whether Heidtmans could contact him on his mobile, so that he could give them directions and authority regarding the disbursement of funds. Mr Downes said that Mr Ishak would need to chase up discharges of mortgage following settlement, so that the mortgages could be registered. According to Mr Downes, Mr Ishak responded that the sale of the remaining units should go through in three weeks, so that Mr Downes would be able to get discharges by then at the latest, which Mr Ishak - who otherwise did not dispute this conversation - denied; on this I prefer Mr Downes: Mr Ishak's initial response was that he did not "think" he had said it, that he did not recall and that he did not deny it, but he then reconstructed that he "would not" have said such a thing. 35In the afternoon of 22 June, Mr Downes sent an email to Mr McLoughlin, stating that the borrower had indicated that they now wanted to proceed to settlement, and asking Mr McLoughlin to ring Mr Ishak's mobile number "to discuss arranging the funds and the direction and authority". Mr McLoughlin asked Mr Ishak to advise whether Perpetual would be receiving a transfer for each file from the vendor. Mr McLoughlin reported the conversation in an email that day to Mr Downes, in which he also recorded that he presumed that Perpetual would still be "collecting" transfers, "as this is a purchase". The 23 June cheque directions 36By fax to Heidtmans on 23 June, Mr Ishak advised that settlement was scheduled for Friday 24 June, and directed settlement cheques, including in favour of Elite, Arab Bank, Consolidated Lawyers, the Office of State Revenue, and Sydney Water; the surplus (of about $400,000) was now to be payable to J & M Giannikouris and Asenhurst (in lieu of to Equis, as had been the case in anticipation of the proposed 10 June settlement). As was the case in the directions for the 10 June settlement, $50,000 was to be payable to Mr Ishak; this represented his fees for acting for Mr Iaconis generally, and was required urgently by Mr Ishak to meet his obligations to the Australian Taxation Office which, in his evidence, he described as "my most important issue". Mr Ishak said that the fixing of settlement on 24 June and the cheque directions of 23 June followed a telephone conversation he had with Mr laconis between 20 and 23 June, in which Mr Iaconis directed that cheques be payable to J & M Giannikouris and Asenhurst, and in which Mr Ishak himself sought and received authority for a cheque for $50,000 payable to himself. Although the Plaintiffs submit that Mr Ishak should not be believed in his assertion that he had a telephone conversation in those terms - and as he had given directions for a cheque payable to himself prior to 10 June it is unlikely that this was revisited, I agree that a conversation in the precise terms alleged is unlikely - in my view it is probable to a very high degree that in appointing settlement and issuing the cheque directions he was acting in accordance with Mr Iaconis' instructions. 37Mr Ishak also claims that, shortly after having spoken to Mr Iaconis, he spoke to Mr Ross and obtained his authority to direct cheques in favour of J & M Giannikouris, Asenhurst and Mr Ishak himself. Mr Ross denied any such conversation, and said that he had never even heard of Giannikouris as at June 2005. On this I prefer Mr Ross. Mr Ishak took his instructions from Mr Iaconis, not from Mr Ross. In his mindset at that time, Mr Iaconis was his client and there was no reason for him to seek such instructions from Mr Ross. Even on his own version of the conversation, he did not address the only possible reason for seeking instructions from Mr Ross, namely the personal risk for Mr Ross if the loan moneys were drawn down and some of them disposed of in the absence of the acquisition by Equis of any interest in the Units. Mr Ishak did not mention any such conversation with Mr Ross in his first affidavit sworn 8 June 2007 - despite referring in it to the conversation he alleges he had with Mr laconis. He kept no contemporaneous notes, until he reconstructed the history of the transaction on 1 October 2005 once it became apparent that there were serious problems and potential risk for him. His evidence did not manifest a clear recollection of conversations that took place well before he made that note. And there are other matters, referred to elsewhere above and below, that bear adversely on his credit generally. Inquiries and responses about transfers and Giannikouris 38The response to Mr McLoughlin's request about a transfer, referred to above, came in a telephone conversation on 23 June, in which Mr Ishak told Mr McLoughlin that he did not think that Perpetual would receive a transfer by settlement on 24 June. Although Mr Ishak denied this, I have no hesitation in accepting Mr McLoughlin's version, for the following reasons in addition my general reservations about Mr Ishak's credit. Mr McLoughlin recorded his version in a practically contemporaneous email to Mr Downes, which is corroborated by his email record of a follow-up conversation on 24 June, in which Mr Ishak confirmed that transfers would not be handed over on settlement that day. In cross-examination, Mr Ishak at first merely did not recall whether or not he disclosed to Mr McLoughlin that there would be no transfers available, before reverting to outright denial. 39In his email to Mr Downes, as well as reporting what Mr Ishak had said to him, Mr McLoughlin added that on settlement Perpetual would deliver all the cheques as directed by the borrower's solicitor "and receive nothing", and offered to send to Mr Downes a copy of Mr Ishak's cheque directions. Mr Downes replied that a copy of the cheque directions would be helpful, adding that he did "not understand why the transfer will not be available" and that he would speak to Mr Ishak about it. (Mr Downes later instructed his subordinate Mr Flegg to make that inquiry.) Mr McLoughlin responded to Mr Downes shortly afterwards, that he thought it "strange not to receive a Transfer". 40Still on 23 June, Mr Ishak wrote to Consolidated, setting out the terms of an alleged "agreement", but a cursory perusal of the letter reveals that, as Mr Ishak conceded in cross-examination, "a lot had to happen as things stood at 23 June before there could be a final deal between the parties ready to go". 41Also on 23 June, First Title issued its mortgage lending policy of insurance to Perpetual in respect of the two advances. However, First Title incurred no risk under the policy until the loan moneys were advanced, and it is clear from the course of dealing between Mr Downes and Mr McLoughlin on 23 and 24 June that First Title could have countermanded settlement at any time until it took place, and Heidtmans would have complied. 42At 3:16pm on 23 June, Mr McLoughlin forwarded, to Mr Downes, Mr Ishak's 23 June cheque directions. Mr Downes says that he reviewed these towards the end of the day, when he noticed the direction for the $185,000 cheque to J & M Giannikouris. At 6:04pm, he forwarded the cheque directions to Mr Flegg and asked him to ascertain from Mr Ishak why there was going to be no transfer, why some of the settlement proceeds were going to Giannikouris, and when the remaining units were being purchased or it was likely that Arab Bank would discharge their mortgages. Mr Downes asked Mr Flegg to also contact Mr Kassem about the first and third of those matters. Although Mr Flegg professes that his best recollection is that he actioned that instruction, his recollection of these matters was generally vague, and in the absence of any record or other evidence of any such inquiry being made, I do not accept that he did so. 43On 24 June, at 9:46am, Mr Downes sent Mr McLoughlin an email (with a copy to Mr Flegg), stating that Mr Flegg was "finalising the policy", and adding that First Title was checking with "the vendor's and borrower's solicitors re the transfer issue and will confirm all is in order for settlement once we have spoken with them". Mr McLoughlin responded at 10:19am, asking Mr Downes to confirm by return email when First Title knew whether a transfer for each property would be handed over on settlement and if not, whether Perpetual should proceed without transfers. Mr McLoughlin then had a conversation with Mr Ishak - the terms of which he recorded in an email to Mr Downes, with a copy to Mr Flegg, at 11.16am - in which Mr Ishak said that transfers would not be handed over on settlement, and that he did not think that Elite had prepared or executed them. Although Mr Ishak denied this, again I prefer Mr McLoughlin's version, principally because of his contemporaneous email record, the reliability of which was not challenged. 44In his email to Mr Downes, Mr McLoughlin then asked First Title to advise if settlement was to occur without receiving a transfer for each property. At 11:57am, Mr Downes responded to Mr McLoughlin (with a copy to Mr Flegg), that First Title could proceed without a transfer, and was "just waiting for confirmation as to who the Giannikourises are and why there is no transfer, before confirming you can proceed with settlement". Mr Flegg then spoke with Mr Ishak, following which he sent an email to Mr Downes at 12:11pm, recording that Mr Ishak had told him that he was unsure who Giannikouris was, but would check and get back to Mr Flegg within half an hour, and that the transfer had been signed by Equis, but Elite's solicitor would not "have it ready today", and that the transfer "could" be ready by the end of the following week - that is, around 1 July. Mr Flegg was not challenged on this latter aspect, and the accuracy of his record is reinforced by the circumstance that Mr Ishak's statement that Equis had signed the transfer was accurate. Although Mr Flegg was challenged as to the accuracy of his record of the first part of the conversation, relating to the Giannikourises, which Mr Ishak denied, I accept Mr Flegg's version, for the following reasons additional to my general credit reservations. Mr Flegg made a contemporaneous record, by way of his email, and his version is corroborated by a further email he sent only minutes later (at 12:23pm) to Mr McLoughlin, in which he recorded that he had spoken to Mr Ishak and "He is checking on who Giannikouris is and should be getting back to me shortly. As soon as I hear I will let you know ...". And - as evidenced by a further email from Mr Flegg, referred to below - Mr Ishak in fact rang him back, almost exactly half an hour later, just as Mr Flegg asserts he said he would. 45At 12:13pm, Mr McLoughlin sent an email to Mr Downes (with a copy to Mr Flegg), confirming that settlement was booked for 2:00pm. Mr McLoughlin added that, if Mr Downes did not think that he would know by then the answers to his outstanding queries relating to the Giannikourises and the absence of transfers, then Mr McLoughlin could postpone settlement until later in the day. At 12:20pm, Mr Downes responded to Mr Flegg's 12:11 email, asking him to update Mr McLoughlin and, once Mr Flegg had heard back from Mr Ishak, to confirm to Mr McLoughlin that settlement could proceed if he was happy with Mr Ishak's explanation. As already noted, at 12:23pm Mr Flegg updated Mr McLoughlin. He then heard back from Mr Ishak, in a conversation that is documented in an email sent by him to Mr McLoughlin (with a copy to Mr Downes) at 12:42pm (31 minutes after Mr Flegg's email relating to his earlier conversation with Mr Ishak, which powerfully corroborates Mr Flegg's evidence that Mr Ishak said in that earlier conversation that he would ring back within half an hour, and that Mr Ishak in fact did so), in which Mr Flegg recorded that Mr Ishak confirmed that the cheque to the Giannikourises was correct and that it related to a previous agreement in place between Equis, the Giannikourises and the "developer", and said that he (Mr Ishak) was comfortable with that arrangement. 46Again Mr Ishak denied this conversation, but again I prefer Mr Flegg's version; my reservations about his vague recollection are much diminished in this instance by the availability and consistency of the contemporaneous records. Mr Flegg's version is supported by his contemporaneous record. Mr Ishak in cross-examination spontaneously referred to Elite as "the developer", which was an accurate characterisation, but one which Mr Flegg had no reason to know; there is a high degree of improbability that Mr Flegg, in making his record of the conversation, chanced upon the fact that the vendor was the "developer", and much more likely that Mr Ishak mentioned it, in conjunction with saying that he was comfortable with the arrangement. It is not apparent how else Mr Flegg's record could have come to include a version so far from the truth - as the $185,000 Giannikouris cheque had nothing to do with Equis, and nothing to do with Elite. As Mr Ishak well knew who the Giannikourises were - the vendors to Mr Iaconis of the Maroubra property - these dissembling responses by him to Mr Flegg are seriously adverse to his general credit, and in addition demonstrate intent on his part to mislead First Title into allowing settlement to proceed. At the conclusion of the 12:42pm email, Mr Flegg instructed Mr McLoughlin, "Please proceed with settlement". His evidence that, had Mr Ishak informed him that the cheque for the Giannikourises was for a deposit on a property to be purchased by Mr Iaconis and not for the purchase of the Units, he would have sought confirmation from Mr Downes that the settlement was able to proceed, was unchallenged. The 24 June settlement 47Settlement occurred at about 2:00pm on 24 June at Heidtmans' offices. On behalf of Equis, Mr Ishak attended, accompanied by Mr Williams and Mr Iaconis. Mr McLoughlin represented Perpetual. Mr Ishak understood that only the loan transaction was settling; and Mr McLoughlin was not entirely sure what was settling. There is no doubt that the purpose of the advances then made was intended to be funding the acquisition of unit 1 and unit 2 by Elite. There is also no doubt that Perpetual and First Title knew that no transfer, discharge of mortgage from Arab Bank, or certificate of title were to be delivered. Mr Ishak handed over the cheque directions and certificates of financial advice. Mr McLoughlin handed over and Mr Ishak received cheques, drawn in accordance with Mr Ishak's 23 June cheque directions, in favour of Arab Bank, J & M Giannikouris, Asenhurst, Elite, the Office of State Revenue, and his own firm. 48During the period of his dealings with First Title between 15 and 24 June, Mr Ishak appreciated (as he conceded) that whether contracts had or had not exchanged, and whether the purchase of the Units would proceed, was of vital interest to First Title, but he never informed First Title that there was no agreement between Elite and Equis. I am unable to accept his supplementary oral evidence to the effect that he informed First Title that exchange of contracts between Equis and Elite was yet to take place, for the following reasons in addition to my general credit reservations. Most importantly, Mr Downes and Mr Flegg maintained contemporaneous records, which contain no hint of what would have been a matter of great importance to them had it been mentioned. Mr Flegg's evidence - that had Mr Ishak advised him that the sale of the Units was to proceed by way of simultaneous exchange and settlement, then he would have sought confirmation from Mr Downes that the settlement was able to proceed - was not challenged. The focus of First Title's communications with Mr Ishak was the absence of security on settlement, not on the absence of exchange. Mr Ishak, on the other hand, made no contemporaneous record until 1 October, when he prepared a retrospective account in circumstances in which it was becoming apparent that he was at risk, on advice, primarily for his own protection in case anyone pointed the finger at him for any shortcomings on his part. Further, Mr Ishak admitted that he had no accurate recollection of his conversations with Mr Downes on the topic of settlement, and his evidence of these conversations savoured of reconstruction of what he would have done, affected by the influence of hindsight. After the settlement 49Mr Williams took the Asenhurst cheque immediately following the settlement, and on 27 June Mr Ishak forwarded the Giannikouris cheque to the solicitors for the vendor of the Maroubra property. Mr Ishak promptly banked the $50,000 cheque payable to himself, to facilitate payment of his urgent outstanding tax debt, and retained the remaining cheques in his file. In his affidavit evidence, Mr Ishak said that he retained control over the proceeds of the $50,000 cheque in the event that settlement did not proceed. This was quite deceptive, as he had not only banked the cheque but paid the proceeds to the Australian Taxation Office, and reflects adversely on his general credit. 50Mr Ishak claimed, in his second affidavit, to have had a conversation with Mr Ross on 24 June, after settlement, in which he informed Mr Ross that "the loan transaction" had taken place, the funds drawn down, that interest was payable from 10 June, and that some of the cheques had been disposed of. Mr Ross denies this, and I am unpersuaded that there was any such conversation. 51On 29 June, Fidelity wrote to Mr Ross, informing him that his mortgage had settled on 10 June. Mr Ross says that he had discussions with both Mr Iaconis and Mr Ishak about this news, which he says was alarming to him, and that the conversations presented a conflicting picture. He did not then raise any objection with Mr Ishak. 52Perpetual's mortgages were duly stamped, and on 4 July, caveats were prepared and lodged by First Title on behalf of Perpetual, in respect of Units 1 and 2, claiming an interest as mortgagee under unregistered mortgages of each, and containing a statutory declaration by Mr Downes that the caveatable interest claimed by Perpetual was as mortgagee under an unregistered mortgage given by Equis "as purchaser" of the Units. 53During July, there were communications and negotiations between Mr Ishak and Consolidated in connection with a proposed Master Deed to govern the purchase of the Units, the remaining three units, and related matters. On 28 July, Mr Ishak wrote to Mr Ross, seeking confirmation of his instructions "in light of the circumstances and the information conveyed to me in our recent telephone conversations ...". Mr Ross responded by a letter dated 29 July but transmitted by fax on 1 August, asserting that settlement had been "exactly contrary to the last set of instructions issued to your firm" and had led to the exposure of Equis, that Equis had issued a specific instruction that there could be no settlement without prior consultation with Mr Ross by Mr Ishak, which instruction had been "ignored, defied or substituted as negligence", and that "If settlement has been effected then it has been with a flagrant disregard to direction" from Equis. It seems from this letter that by this time there had been a falling out between Mr Iaconis and Mr Ross, who had come to appreciate that there was indeed risk for him in the transaction. 54Consolidated finally delivered the Master Deed and Ancillary Documents to Mr Ishak on 5 August. This material, which comprised over 100 pages, was returned to Consolidated - albeit in imperfect form - on 14 September. 55Between 30 August and 6 October, there were a number of conversations between Mr Flegg and Mr Ishak. Throughout this period, Mr Ishak understood that Mr Flegg's primary interest was to tidy up the matter by getting in the certificates of title, discharges and transfers. On 30 August, in a telephone conversation with Mr Flegg, Mr Ishak said that documents had had to be sent to Italy for execution by the vendor, and that all going well he expected to receive them the following week. The reference to "documents to Italy" was in fact to second mortgages and guarantees, but was calculated to convey the impression that it was a reference to the discharges of mortgage and transfers. 56On 2 September, Mr Ishak disposed of the $75,000 cheque drawn in favour of Elite and delivered to him at the 24 June settlement, to Consolidated, as a deposit on all five Vaucluse units. 57Also on 2 September, Mr Ross was notified by Resimac that there had been default under his mortgage. He denied responsibility for the loan, and informed Resimac that the loan was "fraudulent". Resimac notified First Title of these developments on 5 September, when Mr Downes, who had just returned from a month overseas, sent an email to Mr Flegg asking him to ascertain from Mr Ishak what was happening with the documents and what was holding up registration. Mr Flegg spoke to Mr Iaconis, who said that arrangements were in hand to transfer funds to clear the arrears. Mr Ishak also told Resimac that such arrangements had been made. 58On 7 September, in a telephone conversation with Mr Flegg, Mr Ishak said that Mr Iaconis would be delivering the "documents" to him that afternoon, and that they had to be signed by a third party who would be attending to do so by the end of the week, in anticipation of being able to settle "next Wednesday", namely 14 September. 59On 13 September, Mr Ross signed documents, including guarantees and acknowledgements of independent advice, witnessed by Mr Ishak, in connection with the Master Deed. On 14 September, the remaining arrears in respect of the loans were cleared, presumably by Mr Iaconis. In a telephone conversation with Mr Flegg, Mr Ishak said that the "documents" had been signed but needed to be checked by the vendor's (Elite's) solicitor, which was anticipated in 20 minutes, and he was looking to settle on Friday 16 September. Somewhat surprisingly, the allegation of "fraud", and Mr Ross' disowning of the loan transaction, appears to have triggered no further response, with Resimac and First Title apparently placated once the arrears were cleared. 60On 16 September, Mr Ishak was instructed, presumably by Mr Iaconis, that the proposed transaction had now changed, and that it was now proposed that "the five units will all be acquired by a new purchaser but that will not proceed prior to Monday 19 September". This would involve transferring funds represented by a bank cheque in the name of Arab Bank for $492,396.49 to Elite personally. Importantly, the proposal no longer involved Equis acquiring the Units: one Mr Hanna was to become the purchaser and, on completion of Mr Hanna's purchase of the Units, Mr Hanna was to reimburse Perpetual for the outstanding loan moneys. The result of this would be that Perpetual's advances to Mr Ross would remain unsecured, and Perpetual's mortgage would remain unenforceable. 61On 21 September, Mr Ishak told Mr Flegg that it would be weeks before the matter settled, sought an opportunity to discuss the situation with First Title, and mentioned that his current instructions were "not clear". Mr Flegg reported this conversation - including that Ishak was "talking of weeks" - to Mr Downes. Mr Ishak did not return telephone calls made to him on 23, 26, and 28 September or 4 October, by Mr Downes. On 6 October, Mr Ishak called Mr Flegg, and said that he was still waiting on instructions from Equis and Mr Ross, which had not been forthcoming. 62Mr Ishak did not inform Perpetual or First Title that it was now contemplated that Equis would not be the purchaser. Mr Ishak understood at the time that, if First Title was not aware from another source of information about the abandonment of any proposal that Equis purchase the Units, such information would possibly have been regarded by First Title as of importance. First Title could still have caused Perpetual to countermand the unpresented cheques, as Mr Ishak was aware. 63In the course of October, Mr Ross terminated Mr Ishak's retainer and required delivery up of the file. On 31 October, Mr Ishak handed his file, containing the remaining unpresented cheques, to Mr Ross, who in turn delivered them to Mr Iaconis. Mr Iaconis forwarded the cheques in favour of Arab Bank to Elite, who banked them on 2 November to the credit of an account with Arab Bank, which collected the proceeds. They have since been withdrawn. Other cheques passed through the hands of Elite, Comlend and others, have passed into currency and become irrecoverable. Comlend went into liquidation in August 2006. 64On 14 November, Elite served on Perpetual a lapsing notice in relation to Perpetual's caveats, leading to urgent enquiries by First Title, which ascertained for the first time that contracts had never been exchanged, and the moneys drawn down on 24 June had not been applied towards the purchase. The Plaintiffs' claims 65The proceedings were instituted in 2006, by Perpetual against the Arab Bank and Elite, in which Perpetual endeavoured to recover the proceeds of the cheques. Mr Ishak was later joined in the proceedings as a third defendant, and the original allegations against him were founded on the contract cover-pages, which were said to have conveyed misrepresentations to the effect that contracts had been exchanged. The proceedings against Arab Bank and Elite were settled. The allegations against Mr Ishak were subsequently amended by the addition of further representations, the latest by the fifth further amended statement of claim in May 2010. It is true that it has taken much time and effort and even ingenuity, and seven iterations of the statement of claim, to formulate the claim against Mr Ishak as it was finally put. But even if the Plaintiffs have been, as the Defendant submitted, "casting around for someone to blame and someone from whom to recover", the Court's function is to adjudicate their claim as it is now put. 66The Plaintiffs' case against Mr Ishak is founded on the statutory provisions that prohibit misleading and deceptive conduct in trade or commerce. Although the (then) (CTH) Trade Practices Act 1974 ("TPA"), and the (CTH) Australian Securities and Investment Commission Act 2001 ("ASICA"), are also invoked, it suffices to focus (as the Plaintiffs did) on the (then) (NSW) Fair Trading Act 1987 ("FTA"), and in particular ss 42 and 45. 67The conduct now impugned falls into two temporal categories, namely that which occurred before 24 June and culminated in the advance of funds on settlement that day; and that which occurred after 24 June and culminated in the omission to stop payment on the cheques before their proceeds were dissipated on or after 30 October. 68Perpetual claims that Mr Ishak's conduct in the period culminating on 24 June was misleading and was a cause of its advancing $1.6 million on that date, and that as a result it has lost almost all of that sum (except for those cheques that it was possible to stop, and the amount recovered from the settlement it negotiated with Arab Bank and Elite), which it would not otherwise have advanced. First Title claims that Mr Ishak's conduct in that period was misleading and was a cause of its issuing the policy on 23 June, and authorising Heidtmans to proceed to make the advance on settlement on 24 June, which it would otherwise have countermanded, and that as a result First Title went "on risk" and has become exposed to liability to indemnify Perpetual under the policy, and incurred the costs of investigation - which risk and costs it would not otherwise have incurred. 69Both Perpetual and First Title claim that after 24 June and until 30 October, Mr Ishak's ongoing conduct was misleading, and his failure to disclose the change to the proposal involving Mr Hanna, had the consequence that they did not take steps, which they would otherwise have taken, to cause payment on the cheques - the overwhelming majority of which remained unpresented until 30 October - to be stopped, which would have averted all but about $473,000 of the loss. 70In addition, as assignee from Mr Ross, Perpetual claims damages for negligence, limited to the amount of the cheques totalling $473,000 that were disposed of between 24 June and 2 September. The alleged misleading conduct 71The Plaintiffs' pre-24 June case of misleading and deceptive conduct was founded on the following representations, said to have been conveyed by Mr Ishak's conduct: (1)That transfers had been signed ("the Signed Transfer Representation"); (2)That execution by Elite and exchange of contracts had occurred ("the First Representation"); (3)That Mr Ishak held instructions to proceed to settlement of the property purchase transaction ("the Second Representation"); (4)That Mr Ishak had instructions to apply the moneys advanced by Perpetual, in substantial part, to the settlement of the purchase of the Units, shortly after 24 June ("the Third Representation"); and (5) That transfers would be delivered promptly after 24 June ("the Prompt Transfer Delivery Representation"). 72In respect of Mr Ishak's conduct after 24 June, it is alleged that the effect of his pre-24 June conduct - in particular the First Representation - continued, and in addition that he engaged in misleading conduct by failing to disclose, following 16 September, that Equis was no longer the intended purchaser of the Units ("the Post Settlement Conduct"). The Signed Transfer Representation 73In their final submissions, the Plaintiffs expressly did not press the pleaded case founded on the alleged Signed Transfer Representation. It therefore requires no further consideration. The First Representation 74The First Representation is that Mr Ishak impliedly represented (to Perpetual in the period 19 May to 24 June, and to First Title in the period 15 June to 6 October) that executed contracts for the sale of the Units had been exchanged between Elite as vendor and Equis as purchaser. This representation is said to have been false, as there had been no such exchange. 75Section 42 (like its TPA and ASICA analogues) is not confined to misrepresentations: it is contravened if the acts, omissions, statements and/or silence of the defendant, taken as a whole and considered in light of all relevant circumstances, are misleading or deceptive or are likely to mislead or deceive [Campbell v Backoffice Investments Pty Ltd [2009] HCA 25 ("Campbell"), [102]; (2009) 238 CLR 304; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ("Butcher"), [104]; (2004) 218 CLR 592]. Conduct is misleading if it induces, or is capable of inducing, error [Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 198; Rhone-Poulenc Agrochomie SA v UIM Chemical Services Pty Ltd [1986] FCA 218; (1986) 12 FCR 477; Campbell, [25]; Butcher, [111]], and likely to mislead or deceive where there is a real (or not remote) chance or possibility that the conduct will have that effect [Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180, [14]; (1984) 2 FCR 82]. 76Whether conduct has a tendency to lead into error is an objective question of fact, to be determined on the basis of the conduct of the defendant as a whole viewed in the context of all relevant surrounding facts and circumstances [Campbell, [102]; citing Butcher, [109] (McHugh J: where the conduct involves delivery of a document, the effect of the document must be examined in the context of the evidence as a whole, and the court must have regard to all the defendant's conduct in relation to the document, including its preparation and distribution and any statement, action, silence or inaction in connection with it)]. In this exercise, often called "characterization", the subjective impact of the conduct on the plaintiff is irrelevant, the focus being the objective tendency of the conduct to induce an erroneous assumption on the part of a hypothetical individual, but taking into account the respective positions of the parties, including such matters as their knowledge of each other from previous dealings and their respective familiarity with the subject matter [Sutton v AJ Thompson Pty Ltd (In Liq) [1987] FCA 167, [30]; (1987) 73 ALR 233]. The objective nature of this inquiry means that a finding that conduct is misleading or deceptive is not avoided merely because a plaintiff could by proper inquiries have discovered the misleading or deceptive conduct [Butcher, [111]; Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (No 1) [1988] FCA 40, [40]; (1988) 39 FCR 546 (Lockhart J: it is no answer to say that a plaintiff should have made its own inquiries and that, if it had done so, it would have found out the true position)]. However, this does not create by a side wind an obligation of full disclosure in commercial negotiations [Poseidon Ltd v Adelaide Petroleum NL [1991] FCA 663; (1991) 105 ALR 25, 26; Lam v Ausintel Investments Australia Pty Ltd (1990) 97 FLR 458 ("Lam"), 475]. Nor does it mean that a party to commercial negotiations is obliged to volunteer information that will be of assistance to the decision-making of another, or that will avoid the consequences for another (of equal bargaining power and competence) of careless disregard for its own interests [Miller & Associates Insurance Broking v BMW Australia Finance [2010] HCA 31 ("Miller v BMW"), [22]; (2010) 241 CLR 357]. A party that itself independently forms an erroneous impression [Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc [1993] FCA 630; (1992) 38 FCR 1] or leaps to its own erroneous conclusion [Miller v BMW] is not to be regarded as misled, and failure to make reasonable inquiries may be a relevant circumstance in assessing whether a non-disclosure is correctly characterised as misleading [Miller v BMW, [91]]. 77Accordingly, the question is whether Mr Ishak's relevant conduct had a tendency, or was likely, to lead Perpetual and/or First Title into the erroneous belief that there were executed and exchanged contracts in respect of units 1 and 2. If it was, it is beside the point that by proper inquiries Perpetual and First Title could have discovered the truth. Was the First Representation conveyed? 78The Plaintiffs accept that Mr Ishak did not expressly say at any point that there were exchanged executed contracts for sale of the Units. Their case is that the following conduct on his part, viewed as whole, had the tendency to lead them into the erroneous state of mind that executed contracts had been exchanged: * First, Mr Ishak's statements to Mr Downes on 15 June, particularly that "settlement fell over last week" because "Arab Bank wouldn't provide discharge", that settlement had been booked for that afternoon, and (in response to the request by Mr Downes to see the contract, title search and valuation) that Heidtmans "have all this"; * Secondly, Mr Ishak's conduct on 16 June, in seeking to re-book "settlement" with Mr Downes and in stating that alternative security for Arab Bank was "being progressed"; * Thirdly, Mr Ishak's statement to Mr Downes on 22 June, that he was keen to organise settlement "ASAP" (and that Mr McLoughlin should ring Mr Ishak on his mobile phone so that Mr Ishak could provide cheque directions), that the sale of the remaining units should go through in three weeks, and that Arab Bank's discharges should be available in three weeks at the latest; * Fourthly, Mr Ishak's statement to Mr McLoughlin on 23 June that he did not think that transfers would be available to be handed over at settlement the next day - which (as was foreseeable) was passed on to Mr Downes by Mr McLoughlin; * Fifthly, Mr Ishak's statement to Mr McLoughlin on 24 June that transfers would not be handed over on settlement and that he did not think that Elite had prepared or executed transfers - which also (as was foreseeable) was passed on to Mr Downes; * Sixthly, Mr Ishak's statements to Mr Flegg on 24 June, particularly that the transfer had been signed by Equis but "the vendor's solicitor will not have it ready today" and that the transfer "could be available by the end of next week"; * Seventhly, the provision by Mr Ishak to Mr McLoughlin (and again passed on to First Title) of the cheque directions for the moneys to be advanced by Perpetual; * Eighthly, Mr Ishak's attendance on and conduct at settlement on 24 June (rather than cancelling it), when he handed over an original of the amended financial advice and cheque directions, and received from Mr McLoughlin on behalf of Perpetual the cheques totalling $1.6 million (less the deductions authorised in the documents signed by Mr Ross on 3 June) - which First Title, although not present at settlement, was aware was occurring; * Ultimately, in the context of the above conduct, Mr Ishak's non- disclosure to the Plaintiffs that exchange of contracts had not occurred and that Equis and Elite were nowhere near reaching consensus as to terms and conditions by which each was prepared to be bound. 79Essentially, the Plaintiffs' case is that the above conduct had the capacity and tendency to convey, to Perpetual and to First Title, that contracts had been exchanged, because it was conduct that in the ordinary course of a conveyancing transaction would follow exchange and the existence of an enforceable right on the part of the purchaser - all the moreso where the existence of such an interest was fundamental to the concept of title insurance. 80One must be cautious in concluding that conduct that, in the context of a routine transaction, would be merely consistent with contracts having been exchanged, conveys an implied representation that contracts have been exchanged - for at least two reasons. The first is that this was far from a routine conveyancing transaction, most particularly because it involved title insurance - with which none of the parties had any experience in the context of a purchase (as distinct from a refinance). The second reason is that conduct that is consistent with contracts having been exchanged, may also be consistent with contracts not having been exchanged. Conduct, like words, can be capable of bearing multiple meanings, and conduct is not misleading just because it creates confusion [Taco Co of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177]. However, ambiguous words - and therefore conduct - will be regarded as conveying the meaning attributed to them by the representee if (1) it is reasonable for the representee to have interpreted them in that way, (2) it is a meaning that the words (or conduct) are clearly capable of bearing, and (3) it is a meaning upon which it is reasonable for the representee to rely. In Galaxidis v Galaxidis [2004] NSWCA 111, Tobias JA, with whom Giles and Hodgson JJA agreed, said: [93] In my opinion, the effect of this Court's decision in [Australian Crime Commission v Gray [2003] NSWCA 318] is that even if a representation is insufficiently precise to give rise to a contract (as in the present case), that fact does not necessarily disqualify the representation from founding a promissory estoppel. Much will depend upon the circumstances in which the representation is made and the context against which it is to be considered. In its context, the representation is sufficiently clear and unambiguous if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely. In these circumstances, it would be unconscionable for the representor to deny responsibility for the detriment that arises because of that reliance. [94] On the other hand, if it is not reasonable for the representee to rely on the meaning he attributes to the representation in that had he acted reasonably he would have attributed an innocent meaning to the representation, then it cannot be unconscionable for the representor to deny responsibility for the detriment that the representee sustains because of that unreasonable reliance (original emphasis). 81In Sullivan v Sullivan [2006] NSWCA 312, Hodgson JA, with whom McColl JA agreed, said: [85] Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit. 82In my opinion, while spoken in the context of representations that found equitable estoppels, these observations also inform the circumstances in which, for the purposes of the FTA, conduct that is capable of bearing more than one meaning will be taken to convey a particular alleged representation. 83The Defendant submits that his conduct ought not be regarded as having conveyed the First Representation, as at no time did the Plaintiffs ask him whether contracts of sale had exchanged, or whether a deposit had been paid, nor did he so advise them; at no time did they ask him to produce, or receive from him, copies of contracts for sale signed by the vendor; while, prior to 24 June, Perpetual and Heidtmans had received from Mr Ishak a copy of the front page of the form of contract of sale, signed by Mr Ross only, no representation was made to the effect that Elite had signed its copy of the contract; and by 24 June, the Plaintiffs were prepared to settle the finance transaction with full knowledge that they would not be receiving certificates of title, discharges of mortgage or memoranda of transfers, because they were not available to be handed over and because the Arab Bank would not relinquish part of its security until it was fully paid. 84Because the Plaintiffs' case is founded on a representation allegedly implicit in the impugned conduct, the absence of an express representation, and the failure to make inquiry, does not mean that an erroneous impression was not conveyed by Mr Ishak's conduct. However, the gravamen of the Defendant's submission is that, in the absence of an express representation and inquiry, it was not reasonable for the Plaintiffs to attribute to Mr Ishak's conduct the interpretation that contracts had been exchanged, or to rely on that interpretation, when in the ordinary course one would expect them to make inquiries which would have ascertained the true position - particularly having regard to the context being a conveyancing transaction, in which those taking title are expected to make the appropriate inquiries to protect their position. 85Much of the conduct relied on in this case, while consistent with contracts having been exchanged, is not inconsistent with there not having been an exchange, and, in particular, with a proposed simultaneous exchange and settlement - a concept which, while Mr Downes may not have heard of it, is, while exceptional, far from unknown. I do not accept that the prospect of simultaneous exchange and settlement was excluded because the contract provided for a "Deposit" and a "Completion date": contracts are usually prepared initially with a view to exchange in the usual course before settlement, but sometimes subsequently proceed on the basis of simultaneous exchange and settlement; moreover, it is quite clear that simultaneous exchange and settlement was indeed contemplated, at least until about 10 June. 86Thus, confirming that settlement was arranged for 10 June and directing cheques payable to Arab Bank, Elite and the Office of State Revenue does not mean that there was necessarily a binding contract in place; such conduct is also consistent with an anticipated simultaneous exchange and settlement. Acknowledgement after 10 June that interest had commenced to run from that date conveys only that, funds having been advanced, interest had commenced to accrue; it does not convey the existence of binding contracts. Mr Ishak's statement on 15 June (in response to the request by Mr Downes to see the "contract, title search and valuation"), that Heidtmans "have all this", in its context, did not necessarily import an executed and exchanged contract. What had been provided to Heidtmans were the front pages of the contracts, signed by the purchaser only, and undated. Thus not only did they not convey that there had been an exchange, but (because they were signed by the purchaser, and undated) suggested if anything that they had not been exchanged. Incoming financiers often wish to see the contract, as Mr Downes explained, to check the particulars and see if there are any "flags", but in the usual transaction, satisfaction that exchange has taken place is not a matter of interest to the incoming financier. Mr McLoughlin had not asked for evidence of a concluded agreement, and the front pages were not provided in response to any such request. Objectively, it would be anticipated that Heidtmans would use the front pages for formal particulars to prepare the mortgages and loan agreements. Neither Mr McLoughlin nor Mr Downes thought that they conveyed that there was an exchanged or concluded agreement. 87Booking a settlement, while consistent with contracts having been exchanged, is also consistent with contemplation of a simultaneous exchange and settlement. It is not implicit in suggestions of imminent or urgent settlement that all is in place, or that all pre-conditions to settlement - even exchanged contracts - have been met: because there is another possibility - simultaneous exchange and settlement. The reference to the sale of the remaining units proceeding in three weeks, while suggestive that something in the selling process had happened with the first two units, says nothing as to the status of those sales, and is consistent with their being at any point from payment of a holding deposit, to issue or exchange of contracts, to completion. Execution by the purchaser of transfers can happen before contracts are exchanged, and must in the case of a simultaneous exchange and settlement. And statements to the effect that transfers would not be available on settlement, but could be available within a week or so, are consistent with contracts not having yet been exchanged, as they are with contracts having been exchanged. 88Even the issue of the cheque directions, in precise amounts and in favour of the vendor and the vendor's mortgagee - on which the Plaintiffs place great emphasis as creating and/or reinforcing the impression that executed contracts for sale had been exchanged, by reason of their apparent referability to a purchase, being made out to the vendor and vendor's mortgagee and ordinary adjustments, and being calculated down to odd cents referable to the appointed day - does not of itself convey that there were executed and exchanged contracts. This too was consistent with a simultaneous exchange and settlement. 89All that said, the usual explanation of the conduct described in the preceding paragraphs would be that contracts had been exchanged, as the alternative explanation of a proposed simultaneous exchange and settlement is exceptional. Moreover, in this case, that conduct is given colour by a number of additional factors. 90The first is that, for Mr Ishak to say to Mr Downes on 15 June - in his initial discussion with Mr Downes - that "settlement fell over last week" because "Arab Bank wouldn't provide discharge", had the tendency to convey the impression that the problems with Arab Bank were at least the main reason that settlement had not earlier proceeded, and implicitly that if the problem of the Arab Bank could be overcome, there was no other significant obstacle to completion of the purchase. This had the effect of creating the impression in the mind of a prospective title insurer that all that was outstanding was obtaining a discharge of the Arab Bank mortgage, and obscuring the truth that there was another significant obstacle - namely the absence of consensus, let alone exchanged contracts, between vendor and purchaser. Thus there was created, at the outset of First Title's involvement, the appearance that everything was in place for settlement, save only the problem with the Arab Bank - an impression that was never thereafter dispelled. Mr Ishak agreed that if he had volunteered to Mr Downes that settlement had fallen over the previous week because Arab Bank would not provide a discharge, then he was not "telling the whole story". 91The second is that, as was apparent to Mr Ishak, First Title was proceeding on the assumption that Equis would acquire at least an equitable interest on settlement, if not before. Indeed, Mr Ishak not only knew that the question of whether exchange of contracts had occurred would be of vital importance to First Title, but had unsurprisingly been of the view that a title insurance policy permitting a settlement of only the "finance component" was "impossible" in the absence of exchange. In other words, Mr Ishak correctly appreciated that no title insurer in its right mind would accept the risk in the absence at least of exchange of contracts. While I accept that the realisation that certain information may be of crucial importance to another party does not of itself make its non-disclosure misleading, awareness of the other party's state of mind can contribute to a judgment that conduct that tends to confirm that state of mind is misleading, as evaluation of the relevant conduct takes into account what matters of fact each party knew or is to be taken to have known about the other [Butcher]. 92The third is that, while I do not accept that the provision by Mr Ishak of the 23 June cheque directions conveyed a representation that contracts had been exchanged, it did convey the impression that there would be an exchanged contract by, or contemporaneously with, the settlement. In addition, that cheques were directed and received on 24 June in favour of third parties, rather than in favour of the borrower for investment pending settlement of the property purchase - with the borrower incurring interest in the meantime - suggested that there would upon settlement be an imminent obligation to pay the payees, in particular the vendor and the vendor's mortgagee. 93The fourth is that Mr Ishak's response to the Plaintiffs' last minute inquiries about receipt of a transfer on settlement - to the effect that transfers would not be available on 24 June, and that he did not "think" that Elite had prepared them and had them executed, but that they could be available by the end of the following week - was an incomplete answer to the question (which was then of obvious materiality to the Plaintiffs) why there would be no transfer, and obscured the real obstacle to availability of a transfer, namely that there was no consensus between vendor and purchaser, let alone exchange. 94The fifth is Mr Ishak's suppression of the true nature of the payment to J & M Giannikouris. Given Mr Ross' undertaking as borrower that the advance would be used only to fund the purchase of the Units, and the Plaintiffs' interest manifested by their inquiry about this cheque, disclosure that it was for the purpose of funding Mr Iaconis' Maroubra purchase and unassociated with the purchase of the Units would have rung alarm bells; passing this payment off as associated with an arrangement with "the developer" with which Mr Ishak was "comfortable" contributed to the impression of orthodoxy. 95The sixth is that Mr Ishak attended on settlement, and took delivery of cheques payable to the putative vendor and vendors' mortgagee, which suggested (at least to First Title, who was not represented at the settlement) that Equis would thereupon acquire at least an equitable interest in the Units. At least by this point, there was no longer any prospect of simultaneous exchange and settlement, and there was going to be no settlement of the purchase. It is true that it was known to all parties that transfers were not to be provided, but the combination of the issue of the insurance policy and the provision and receipt of the cheques, drawn in favour of the putative vendor and outgoing mortgagee, point strongly to an impression that upon settlement, if not before, Equis would have at least an equitable interest - an impression which was confirmed, if not created, by Mr Ishak's cheque directions. 96Furthermore, Mr Ishak's non-disclosure that exchange of contracts had not occurred was not inadvertent. Where, as here, silence is relied upon as conduct giving rise to a contravention of the FTA, the effect of the silence is considered in light of the relevant surrounding circumstances. An important question in this context is whether the plaintiff was reasonably entitled in all the circumstances to expect that the defendant would make a positive disclosure [Street v Luna Park Sydney Ply Limited [2009] NSWSC 1, [180]; (2009) 223 FLR 245; Demagogue Pty Limited v Ramensky [1992] FCA 557, [3], [33]; (1992) 39 FCR 31]. One such case is where a defendant's knowledge of previous communications between the parties and their overall significance imports an obligation to supplement the earlier information [Lam, 475]. But while silence (or non-disclosure) may in this way always be a circumstance against the background of which a defendant's conduct can be viewed, where the silence or non-disclosure is "not inadvertent", then it itself constitutes not just a background circumstance, but "conduct" within the meaning FTA, s 4(4), in the nature of "refraining" from making the disclosure [Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd [1998] FCA 693; (1998) 155 ALR 714, 722]. 97Here, the conclusion that Mr Ishak's non-disclosure was not inadvertent follows from his admitted state of mind in June that exchange was of "vital importance" to the Plaintiffs, and his suppression of the true nature of the payment to J & M Giannikouris. Accordingly, the non-disclosure was itself "conduct" within the meaning of the FTA, and not merely a background circumstance. Moreover, Mr Ishak believed (by 1 October) that he "should" have said to First Title, back in June, that exchange of contracts had not occurred - a belief he held because he thought it "impossible" that drawdown of the loans could occur before settlement of the property purchase in the absence of exchange of contracts. This is of considerable significance, because if Mr Ishak had himself come to that assessment, it supports the view that there was objectively a reasonable expectation that in the circumstances disclosure would be made - a classic indicium of when silence or non-disclosure may be regarded as misleading. 98In my judgment, in the light of what had so far occurred, for Mr Ishak to proceed with the settlement on 24 June, without disclosing that upon settlement Equis would not have any interest in the Units, had the capacity and tendency to convey the impression that Equis had at least an equitable interest on settlement - or in other words, that by settlement, contracts had been exchanged. This conclusion is fortified when one stands back from the detail and looks at the picture that presented, particularly to First Title, as a whole as at 24 June. Mr Ishak was acting for a purchaser/mortgagor, in a substantial conveyancing transaction, receiving cheques representing an advance of $1.6 million, payable to the vendor and the outgoing mortgagee. A professional conveyancer's attendance on and proceeding with settlement and receiving those cheques payable to the vendor and vendor's mortgagee, in the context of what had gone before (including the representation that the previous settlement had fallen over because the Arab Bank would not provide a discharge, and the fact that mortgages had been executed and delivered by Equis to Perpetual) manifestly had the capacity and tendency to create or confirm the impression that as at settlement his client Equis had an interest capable of securing the advance, albeit that it was not yet perfected. Was the First Representation misleading or deceptive? 99It is common ground that contracts were never exchanged, and thus that Equis never acquired an equitable let alone legal interest in the Units; and there was no consensus between vendor and purchaser (indeed, although Mr Ishak may not yet have known it, the vendor was adopting a position that such arrangements as there were had been repudiated and terminated). It follows that the conduct in question was misleading or deceptive. Contraventions 100As a licensed conveyancer acting in this transaction, Mr Ishak was engaged in trade or commerce. His conduct in question therefore contravened FTA, s 42. 101The Plaintiffs contend that his conduct also contravened FTA, s 45 (and its analogues: ASICA, s 12DC; TPA, s 53A). This has significance because the proportionate liability regime will not apply if section 45 is successfully invoked, as while (NSW) Civil Liability Act 2002, s 34(1), includes within the definition of "apportionable claim" one under FTA s 42, it does not include one under s 45. 102Section 45(1) provides as follows: (1) A person shall not, in trade or commerce, in connection with the sale or grant, or the possible sale or grant, of an interest in land or in connection with the promotion by any means of the sale or grant of an interest in land: (a) represent that the person has a sponsorship, approval or affiliation the person does not have; (b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land; or (c) offer gifts, prizes or other free items with the intention of not providing them or of not providing them as offered. 103Thus s 45 relevantly has the following relevant requirements: (a) that there be a representation; (b) that the representation be made "in trade or commerce"; (c) that the representation be made in connection with the sale or grant or possible sale or grant of an interest in land; and (d) that the representation concern the nature of the interest in land. The Plaintiffs contended that the First Representation was a representation in connection with the possible sale of land and concerning the nature of Equis' interest in land. It was said that the First Representation "concerned" whether or not Equis held (and/or would hold when settlement occurred) an equitable interest in land commensurate with the right to seek specific performance of executed and exchanged contracts. 104As to (a), I accept that, unlike s 42, s 45 is concerned not with "misleading and deceptive conduct" but with false or misleading representations, so that while not necessarily limited to express representations, its operation is somewhat narrower than that of s 42: it is necessary to find a specific, if implicit, representation. Nonetheless, I have found, above, that the conduct that constituted the First Representation did, albeit implicitly, convey such a representation. This requirement is satisfied. 105As to (b), it is uncontroversial that, as a licensed conveyancer acting for a purchaser/mortgagor on a conveyancing transaction of this kind, Mr Ishak was engaged in trade or commerce. 106As to (c), it is irrelevant that the Units were not ultimately acquired by Equis, because s 45 applies to "possible" as well as actual sales and grants of interests in land. The Plaintiffs primarily submitted that the First Representation was made "in connection with" the possible sale of an interest in the Units, where Mr Ishak was the conveyancer for a putative purchaser, and that conduct in connection with a possible purchase is inextricably in connection with as possible sale. I do not accept this: s 45 is focused on representations made by the vendor or grantor, not the purchaser. The purpose of the provision is to provide protections to purchasers (and grantees) from the mischief of vendors (and grantors) making misrepresentations that induce a sale. Accordingly, representations made by a purchaser are not, for the purposes of s 45, made in connection with a sale or proposed sale [cf, in the context of TPA, s 51AC, Monroe Topple & Associates Pty Limited v Institute of Chartered Accountants (Aust) [2001] FCA 1056, in which it was held that that provision, which prohibits a corporation "in connexion with the supply or possible supply of goods or services", engaging in conduct that is in all the circumstances unconscionable, was contravened only by conduct that accompanied, went with or was involved with the supply of goods or services]. However, confronted with this proposition in argument, the Plaintiffs adopted as an alternative position that Mr Ishak was acting for Equis as the possible grantor to Perpetual of a security interest in the Units, and that the First Representation was made in connection with the possible grant of that interest. 107The Defendant submitted that the section was concerned with parties who are themselves selling or granting an interest in land. If this is intended to mean that the section is concerned with misrepresentations by or on behalf of vendors and grantors, not purchasers and grantees, then as explained above I agree, but - as between Equis and Perpetual - Equis, for whom Mr Ishak was acting, was a (possible) grantor. If, however, the submission is intended to mean that the section captures only misrepresentations made by principals, and not those made by agents, then it is wrong [see Garvey v Vamamu Pty Ltd [1998] NSWSC 444; (1998) ATPR 41-656; Benlist Pty Ltd v Olivetti Australia Pty Ltd [1990] FCA 288; (1990) ATPR 41-043; and, in the context of TPA, s 53, Gardam v George Wills & Co Ltd [1988] FCA 194; (1988) 82 ALR 415, 427 (applied in John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1993] FCA 295; (1993) ATPR 41-249, 41,355); see also Lezam Pty Ltd v Seabridge Australia Pty Ltd [1992] FCA 206; (1992) 35 FCR 535]. 108Accordingly, and consistent with those authorities, unless Mr Ishak be regarded as merely passing on information for what it is worth and without any belief in its truth or falsity (which plainly was not the case, as evidenced for example by his expression of "comfort" with the Giannakouris cheque), he is to be taken as having made the representations that his conduct conveyed, and to have done so in connection with the possible grant (by his client Equis) of an interest in the Units. 109As to (d), did the representation concern the nature of the interest in the land? In FTA, s 4 [cf TPA, s 53(3)], "interest" in relation to land is defined to mean a legal or equitable estate or interest in the land, a right of occupancy of the land or a building on it, or a right power or privilege over or in connection with the land. The prohibition is relevantly directed to misrepresentations of the nature of the interest the subject of the grant or possible grant. While it might be argued that to represent that an interest exists when it does not is a representation as to the existence and not the nature of the interest, in my judgment these are indistinguishable: a representation that the grantor has and is granting an interest of a particular nature is a misrepresentation as to the nature of the interest, whether the grantor has and is granting a different interest or no interest at all. 110Accordingly, the conduct that constitutes the First Representation - conveying as it did that upon settlement on 24 June Equis had and was granting to Perpetual at least an equitable interest in the land - amounted to a false representation made in trade or commerce and in connection with the possible grant of an interest in land concerning the nature of the interest in the land, in contravention of FTA, s 45. The Second Representation 111The Second Representation is that Mr Ishak represented (to Perpetual in the period 19 May to 24 June, and to First Title in the period 15 June to 20 September) that he had instructions from his client to proceed to settlement in respect of the purchase of the Units. This representation is said to have been false, as he had no such instructions. Was the Second Representation conveyed? 112The Second Representation is said to arise from the same conduct that was relied on as giving rise to the First Representation, as summarized above. The Plaintiffs' case is that that conduct had the capacity and tendency to convey, to Perpetual and to First Title, that Mr Ishak held the requisite instructions, particularly because a professional conveyancer acting in such a manner is naturally taken by all to be acting in accordance with instructions. 113First, as with the First Representation, Mr Ishak's statement that the original settlement had fallen over the previous week because the Arab Bank would not provide a discharge conveyed, at the outset, the impression that there was otherwise no substantial obstacle to settlement, which was never dispelled. 114Secondly, the request for settlement "ASAP", conveyed that his client wanted the matter settled as soon as possible. 115Thirdly, the issuing of cheque directions, with the bulk of the advance apparently payable to the putative vendor and vendor's mortgagee, conveyed that he was instructed to settle the purchase. Otherwise, the loan funds would surely have been made payable to the borrower (for investment), rather than to the vendor. 116Fourthly, and fundamentally, a professional conveyancer who engages apparently on behalf of a borrower in conduct with a lender (or lender's insurer) ordinarily conveys the impression that he or she is acting on the instructions of his or her client. As the conveyancer apparently acting for Mr Ross and Equis, Mr Ishak's dealings with First Title and Perpetual necessarily implied that he was doing so in accordance with their authority and instructions. 117In my view, Mr Ishak's conduct, culminating in his attendance on and proceeding with settlement and taking delivery of cheques payable to the putative vendor and vendor's mortgagee, had the capacity and tendency to create the impression that he held instructions from Equis and Mr Ross to complete the purchase of the Units. Was the Second Representation misleading or deceptive? 118Although the Plaintiffs submitted that the absence of consensus between vendor and purchaser of itself meant that Mr Ishak could not have held instructions to proceed to settlement and therefore falsified the second representation, I do not agree: such instructions could be held (for example, but not only, in contemplation of a contemporaneous exchange and settlement) consistently with consensus not yet having been attained. Whether the Second Representation was contrary to the facts and therefore misleading or deceptive depends essentially on the important factual issue whether (as Mr Ross contends but Mr Ishak disputes) Mr Ross, shortly after executing the documents on 3 June, told Mr Ishak not to proceed to settlement of the purchase of the Units without further reference to him. If Mr Ross' version is accepted, then it follows that, in the absence of further instructions to proceed to settlement, Mr Ishak did not have those instructions. However, Mr Ishak said that Mr Ross' version was an "utter lie". 119Mr Ross maintained his version under powerful challenge in cross-examination. My reservations about Mr Ishak's credit have already been expressed. But there are matters adverse to Mr Ross' credit also, although not to the same extent. His arrangements with Mr Iaconis were puzzling - apparently Mr Iaconis was to pay off Mr Ross' debt (which was $700,000, although Mr Iaconis did not ask how much) in return for the use of Equis. He signed the loan applications in blank, including a declaration that the contents were true - which allowed them to be completed (falsely) by others; despite his denial, he must have provided at least some of the information in them (for example, his licence number). He attempted to explain his signature of the contracts and loan documentation on 3 June as the result of pressure from the men who brought the documents to his office (including Mr Iaconis and Mr Ishak), but this was raised for the first time in his oral evidence, and then modified to "implied pressure" - yet these documents gave effect to exactly the transaction he had agreed to facilitate and which he perceived (remarkably) was without risk for him. His attempt to explain paragraphs 58-60 of his affidavit as dealing with an on-sale does not sustain scrutiny: it is plain that he was then contemplating completion of the purchase of the Units by Equis, and that he must have known that the purchase had not been completed. His initial denial, and later non-recollection, of an email which showed him using Mr Ishak as an adviser in connection with an unrelated transaction was not credible. Although he initially described his alleged 3 or 4 June instruction to Mr Ishak as an "instruction" - including in his 1 August fax - he later eschewed that terminology and described it as a request, maintaining that it was not his transaction and that he therefore did not give instructions. 120There is no contemporaneous note of the alleged instruction, on either side. This does not assist Mr Ishak, who made no contemporaneous note of anything in the course of this transaction. But the closest to a contemporaneous record is Mr Ross' 1 August letter to Mr Ishak, in which Mr Ross asserted in the plainest terms that the settlement which had taken place on 24 June took place without prior consultation with him, and contains a reference to "instructions" consistent with his claim to have given such instructions to Mr Ishak on or about 3 June. The letter contains a tone of outrage which adds to its verisimilitude, and it was not suggested to Mr Ross that it was fabricated or relevantly inaccurate. Further, Mr Ishak never traversed or responded to the allegation in it, even though he understood that it amounted to a serious attack on his professionalism, which cried out for a response. Moreover, he merely exhibited the letter to his affidavit, without comment. These matters are adverse to Mr Ishak's version, and weigh heavily in favour of the view that the settlement on 24 June took place contrary to Mr Ross's express instructions and without his authority, as asserted by Mr Ross. While this is fortified by my general impression that, while the credit of neither of them was untarnished, Mr Ross was less adversely affected than Mr Ishak, such impressions provide unfirm ground on which to found important findings of fact. 121However, there are contrary indicia. First, between the date on which Mr Ross claims he gave those instructions (3 or 4 June), and 1 August when he sent the facsimile letter: * Mr Ross on or before 8 June, signed the Heads of Agreement providing for the purchase of all five units of $4.6 million, with $1 million payable on settlement of Units 1 and 2; his signature was witnessed by Mr Ishak. Although in his oral evidence he said that these were signed before 3 June, this appears unlikely given that the execution page was transmitted by facsimile as a separate page on 8 June; * Mr Ishak sent him a series of letters on 8 June advising of the (then) imminent 10 June settlement, with his estimated costs. The despatch of these letters (and the absence of any response) does not sit well with the alleged instruction of 3 June; * Mr Ross on or about 9 June 2005 signed an agreement that recited a contract for the sale of Unit 2 dated 10 June, and recorded an agreement to reduce the purchase price by $200,000 in the event of completion before 31 July; * Mr Ross, on 21 or 22 June, signed the Request for Insurance Order Form that Mr Downes had forwarded to Comlend on 16 June - although Perpetual was to be the insured, and although he says it was blank when he signed it. An annotation was made on the facsimile letter, probably by Mr Padayachee, "Antonio, speak to David Ross. He wouldn't sign until certain conditions are met". His signature - particularly in the light of that annotation - is inexplicable unless he intended that settlement (which was the purpose of obtaining the policy) proceed, and is inconsistent with Mr Ross' instructions being otherwise. At the least, it illustrates that he did not take an interest in the transaction and was simply lending his name to Mr Iaconis, in which case it is improbable that he had placed any impediment on the matter settling; and, * Following receipt of Fidelity's advice of 29 June that his mortgage had settled on 10 June, Mr Ross discussed it with both Mr Iaconis and Mr Ishak and, although he says it was alarming to him, he did not then object to Mr Ishak (or anyone else) that his instructions had been disobeyed. 122Secondly, Mr Ross had originally instructed Mr Ishak to take instructions from Mr Iaconis. He had made two loan applications, which had been approved. At the 3 June meeting, he had signed the first page of the contracts, the mortgages and loan documentation. Mr Ross took little interest in the transaction because he supposed that Mr Iaconis was the principal and he was happy to do as requested. He did not perceive that he was taking on any risk. He did not give it close attention, because he saw himself as 'a tool for the purchase being done by Iaconis with the legal matters being attended to by Ishak'. He believed that he was not entitled to give instructions in connection with the transaction, as in substance Mr Iaconis was the real party. This makes it unlikely that Mr Ross would have given such instructions. Indeed, in the course of his evidence, he shifted to the position that his "instruction" to Mr Ishak was not an instruction at all, but a request, albeit a firm one. 123The onus of proving falsity is borne by the Plaintiffs. While there are undoubtedly matters that favour Mr Ross' version, it sits very uncomfortably in the whole context. On balance, I am left unpersuaded that Mr Ross gave the alleged instruction to Mr Ishak. I therefore do not accept that the Second Representation was falsified on account of any such instruction as Mr Ross claims to have given, not to settle without further reference to him. 124More generally, given that Mr Iaconis was the vehicle for obtaining instructions, I am unpersuaded that, insofar as Mr Ishak's conduct conveyed a representation that he had instructions to proceed to settlement of the purchase, that conduct was relevantly misleading. Contraventions 125It follows that by engaging in the conduct that conveyed the Second Representation, Mr Ishak did not thereby contravene s 42. 126Had the Second Representation been false or misleading, I would nonetheless not have found it to have contravened s 45. While the Plaintiffs submitted that it encompassed the notion that exchange of contracts had already occurred, giving rise to the interest in the land which exchange confers on the purchaser, I do not accept that the Second Representation, as pleaded, is a representation as to the nature of the relevant interest in land: it is a representation about the state of Mr Ishak's instructions, not about the nature of the interest in the land in question. The Third Representation 127The Third Representation is that Mr Ishak impliedly represented to Perpetual and First Title, between 9 June and 24 June, that he had instructions from Equis to apply the moneys advanced by Perpetual, in part, to the settlement shortly after 24 June of the purchase of Units 1 and 2, and related disbursements, as set out in the cheque directions. This representation is said to have been false, as he had no such instructions. Was the Third Representation conveyed? 128The Third Representation is said to arise from the same conduct as is relied on as giving rise to the First Representation, as summarized above, together with Mr Ishak's conduct on 24 June in informing Mr Flegg that the Giannikouris cheque was associated with arrangements between Elite and Equis. The Plaintiffs' case is that that conduct, viewed as a whole, had the capacity and tendency to convey, to Perpetual and to First Title, that Mr Ishak had instructions to apply the moneys advanced by Perpetual, in substantial part, to the settlement of the purchase of the Units, shortly after 24 June. 129First, the provision of the cheque directions, specifying amounts calculated to the settlement day down to cents, conveyed the impression that there was an imminent intention to deliver those cheques to the payees: adjustments for council rates and for interest owing to Arab Bank would be current for only one day. Further, the fact that the cheques were directed to be drawn in favour of payees associated with the purchase, rather than into an investment account on behalf of Mr Ross to earn interest to offset his obligations to pay interest to Perpetual, suggested that the cheques were for immediate payment to the payees. 130Secondly, Mr Ishak attended on and proceeded with the settlement on 24 June, rather than deferring it until any requirement to deliver the cheques to the payees had arisen. This conveyed the impression that his acceptance of the cheques on 24 June was for the purpose of delivery to the payees. 131Thirdly, Mr Ishak knew, during his discussions with Mr Flegg in relation to the Giannikouris cheque, that First Title was depending on him for a careful and frank answer, and that the answer would be of importance to First Title. His non-disclosure of the true purpose of the Giannikouris cheque, which he well knew - to pay the balance of Mr Iaconis' deposit on his Maroubra purchase - was not inadvertent, and thus itself constitutes relevant "conduct". 132Fourthly, all parties understood that the purpose of the loan was to enable the property purchase. At the 3 June meeting, in the presence of Mr Ishak, Mr Ross signed undertakings "to use the loan funds only for the purpose set out in the offer letter", and these were among the documents forwarded by Mr Ishak to Heidtmans under cover of his letters of 3 June. Mr Ishak knew that the loan purpose specified in respect of Mr Ross's loan was the acquisition of the Units, and he understood that the Plaintiffs would have had an expectation that the loan moneys would be applied in respect of the property purchase, and that Perpetual would obtain a first ranking mortgage over the Units to secure the advances. Mr Ishak also understood that First Title, given that it was considering issuing an insurance policy, must have shared the understanding that the loan funds were to be applied to the property purchase. In that context, Mr Ishak's conduct, particularly in issuing the cheque directions, had the capacity and tendency to convey the impression that the cheques were to be paid to the drawees specified in the cheque directions. That was the obvious, if not the only sensible, conclusion. 133Accordingly, Mr Ishak's conduct had the capacity and tendency to convey, to Perpetual and to First Title, that he had instructions to apply the moneys advanced by Perpetual, in substantial part, to the settlement of the purchase of the Units, on or shortly after 24 June. Was the Third Representation misleading or deceptive? 134As at 24 June, Mr Ishak did not have instructions to apply the cheques towards the property purchase, which was then at best an expectation. As things stood at 23 June, there was much yet to take place before the purchase of the Units could be consummated. First and foremost, agreement as to the terms had yet to be reached with Elite, the vendor. He had no current directions from Elite as to payment of the purchase moneys, to which his 23 June directions to Heidtmans corresponded; rather, his directions, so far as they were apparently connected with the property purchase, simply repeated the earlier directions for the failed 10 June settlement. He could not have known whether the amount of the cheques payable to Arab Bank would be acceptable to the vendor, and many of the cheques would, after 24 June, be for inappropriate amounts, as the adjustments would vary on a daily basis. The passing-off of the Giannikouris cheque as related to a previous agreement in place between Equis, Giannikouris and "the developer", and his statement that he was comfortable with that arrangement, deceptively conveyed that that payment was related to the purchase, when it was not. 135That Mr Ishak did not have instructions to apply the moneys advanced by Perpetual, in substantial part, to the settlement of the purchase of the Units, shortly after 24 June, is confirmed by events: having received the cheques, Mr Ishak retained those having an apparent connection with the property purchase in his filing cabinet, as he had intended when he attended the settlement. 136The Third Representation was therefore false. Contraventions 137Accordingly, by making the Third Representation, Mr Ishak contravened s 42. 138However, I do not accept that the Third Representation was in contravention of FTA, s 45. While the Plaintiffs submitted that it encompassed the notion that exchange of contracts had already occurred, giving rise to the interest in the land which exchange confers on the purchaser, I do not accept that the representation, as pleaded, is a representation as to the nature of the relevant interest in land. Again, it is a representation about the state and content of Mr Ishak's instructions, not about the nature of the interest in the land in question. The Prompt Transfer Delivery Representation 139The Prompt Transfer Delivery Representation is that, on or about 24 June, Mr Ishak orally represented to First Title by its employee Mr Flegg that signed memoranda of transfer in respect of Units 1 and 2 would be delivered in a matter of days. It is said to have been false by reason that it was a representation in respect of a future matter made without reasonable grounds. Was the Prompt Transfer Delivery Representation conveyed? 140The Plaintiffs submit that when Mr Ishak said to Mr Flegg on 24 June that Elite's solicitor would not have the transfers "ready today", but that they "could" be available by the end of next week, he conveyed the impression that it was reasonable to think that the transfers would be delivered promptly, and thereby represented that the transfers would be delivered "in a matter of days". They submit that, notwithstanding that Mr Ishak used the word "could", the clear implication was that the estimate he gave was something that was reasonably achievable in the near future, and that - given the context that Mr Ishak was speaking to Mr Flegg in response to a serious question posed by Mr Flegg in the context of Mr Ishak's desire that First Title permit the settlement to proceed under the umbrella of its insurance policy - the ordinary reasonable hypothetical individual hearing those words would not take them as a mere expression of a speculative possibility. 141Where misleading or deceptive conduct takes the form of spoken words, McLelland J's comments in Watson v Foxman (1995) 49 NSWLR 315 (at 318-19), are apposite: ...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 relatively 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 of 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. 142That what is remembered - by Mr Flegg, whose recollection of these events did not impress as detailed, clear or precise - is of a statement that something "could" happen, rather than that it "would" happen, itself speaks volumes: the impression with which he was left, reflected in those words, was one of something that was said to be a possibility, rather than of something that was assured or promised. I cannot, in those circumstances, be satisfied that Mr Ishak's words conveyed a representation that the transfers would be delivered "in a matter of days". Mr Flegg eschewed any suggestion that he took anything said by Mr Ishak as an undertaking, as did Mr Downes. 143Accordingly, I do not accept that the Prompt Transfer Delivery Representation was conveyed. It is therefore unnecessary to consider whether, if conveyed, it would have been misleading or deceptive The Post-settlement conduct 144The Plaintiffs further allege that Mr Ishak engaged in misleading and deceptive conduct after 24 June, by non-disclosure of the circumstances that, by 16 September, the proposal that Equis purchase the Units from Elite had been abandoned and superceded by the proposal that a third party, Paul Hanna, purchase the Units and reimburse Perpetual for the outstanding loans - with the consequence that purchase by and transfer to Equis of the Units was no longer contemplated, and that the advances could no longer be secured by mortgages over the Units. This nondisclosure is said to have constituted misleading and deceptive conduct by reason that the emergence of this alternative proposal gave rise in all the circumstances to a "reasonable expectation" on the part of First Title that Mr Ishak would inform First Title of these matters, all the moreso in the context of his ongoing dealings with First Title after 24 June. The relevant conduct 145Between 30 August and 6 October, Mr Ishak and Mr Flegg had several conversations, in the context that Mr Flegg's primary interest was to "tidy up" the matter by getting in the certificates of title, discharges of mortgage and transfers, and in the course of which Mr Ishak made references to unspecified "documents" being available soon, which would naturally have been taken by First Title to be references to the requisite certificates, discharges and transfers that would perfect Perpetual's security and bring First Title's risk to an end. 146On 16 September, Mr Ishak learnt - from Mr Iaconis - of the proposal that the five units be acquired by Mr Hanna rather than by Equis, and that on completion Mr Hanna would reimburse Perpetual for the outstanding advances to Mr Ross. If this proposal were to proceed, then Equis would not acquire title to the Units, and the Perpetual mortgage would not become effective, as the putative mortgagor would not acquire any estate or interest in the Units. This would have, self-evidently, implications for Perpetual, and perhaps even moreso for First Title: although it contemplated that Perpetual would be repaid, it did not involve Perpetual being secured. 147The First Representation (that by settlement Equis had at least an equitable interest in the Units) did not cease to operate on 24 June; nothing had occurred to dispel its ongoing effect. Nor had anything occurred to change the position that all the parties - including Mr Ishak -understood that the purpose of the loan was to permit Equis to purchase the Units, the acquisition of which would enliven Perpetual's mortgage, which was to secure repayment of the loans; indeed, Mr Ishak informed Mr Ross on 16 September, after he learned of the new proposal: "I believe that if you agree to proceed in this way you will likely be in breach of the terms of your Mortgage with Perpetual Trustee Company Limited". Mr Ishak understood that First Title would possibly have regarded information about the proposed abandonment of any proposal that Equis acquire the Units as of real importance. 148After 16 September, Mr Ishak continued to have dealings with First Title. On 21 September, he told Mr Flegg that it could be "weeks before the matter settles". On 6 October, after for some time failing to return calls, he called Mr Flegg and advised him that he had sought instructions on a number of occasions but that they had not been forthcoming. He did not disclose that Equis was no longer contemplated to be the purchaser of the Units. He was aware that First Title could have caused Perpetual to countermand the unpresented cheques, and consciously refrained from disclosing the developments to First Title. 149I therefore accept that the First Representation continued to have effect after 24 June and until 30 October, and I accept that by not disclosing the alternative proposal Mr Ishak engaged in relevant conduct (because the non-disclosure was not inadvertent). Was the post-24 June conduct misleading? 150However, I do not accept that the conduct constituted by that non-disclosure was misleading in the circumstances, because there was no reasonable expectation that Mr Ishak, as the conveyancer for Mr Ross/Equis, would make a disclosure of confidential instructions that an alternative proposal - which would still see Perpetual repaid - was under consideration, but not yet confirmed. 151Although the Plaintiffs submit that from 16 September there ceased to be any real possibility of Equis, the putative mortgagor, acquiring an interest in the Units so as to enliven the Perpetual mortgage, the Hanna proposal had not crystallised to the point that it was clear that Equis would not be the purchaser. Mr Ishak was awaiting written instructions to confirm how the matter was to proceed, and the possibility that Equis would be the purchaser had not been completely abandoned. I do not think that the reference on 21 September to it being "weeks" before the matter settled conveyed any misleading impression that it was progressing satisfactorily towards settlement. 152Moreover, Mr Ishak's instructions were confidential. While there is an obligation not to engage in misleading conduct, there is no obligation to speak out in breach of confidence, even though the information is believed to be of significance and importance to another party. For example, it sometimes happens in the course of a conveyancing transaction that after exchange but before settlement, the purchaser's finance is not approved, or is revoked. The purchaser may well inform its solicitor of that development, and suggest that it will try to find alternative finance, but is not sure that it will be able to do so. Such a development is plainly of potential significance for the vendor, but it would not ordinarily be considered incumbent on the purchaser's solicitor to disclose it; to the contrary, the solicitor would be expected to keep it confidential. 153Bearing in mind his obligations of confidence to his client, I do not consider that Mr Ishak was obliged to disclose to Perpetual or First Title that an alternative means of implementing the transaction - one which still involved Perpetual being paid out - was under consideration. Contraventions 154It follows that the post-24 June conduct did not amount to a further contravention of s 42. 155Further, had that conduct been misleading, I would not have found it to have contravened s 45. While the Plaintiffs submitted that the conduct concerned the nature of Equis' interest in the Units and encompassed the notion that exchange of contracts had already occurred, giving rise to the interest in the land which exchange confers on the purchaser, no sufficiently specific representation (as distinct from conduct) capable of satisfying s 45 has been identified; moreover, non-disclosure of an alternative proposal is not a representation as to the nature of the relevant interest in land. Causation 156Damages under FTA, ss 68 and 72 (as with their analogues), are recoverable by a plaintiff who incurs loss or damage caused "by" the contravening conduct. This requires only that the contravening conduct be a cause of the loss or damage. The word "by" in ss 68 and 72 requires the existence of a causal connection between the contravening conduct and the loss and damage of the claimant, but the contravening conduct need not be the sole or even dominant cause of the plaintiff's loss or damage; it suffices that it be but "one of the causes of the loss or damage sustained by the claimant", and it "will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage" [Henville v Walker [2001] HCA 52 ("Henville"), [14], [106]-[107], [109]; (2001) 206 CLR 459]. Subject to the operation of any statutory proportionate liability regime and any relevant law as to contributory negligence, once the contravening conduct is identified as a cause of the loss or damage, a defendant is liable for the entirety of the loss suffered by the plaintiff, notwithstanding that another cause may have been the plaintiff's own negligence, or the contravening conduct of third parties [I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41, [33], [50], [60]-[62]; (2002) 210 CLR 109; Henville [13], [140], [166]]. 157The test for causation is subjective, so that it concerns the actual effect of the conduct on the particular plaintiff [Butcher, [37]]. A plaintiff is not denied relief because a reasonable person in his or her position, acting diligently to protect his or her interests, would not have been misled or deceived [Henville, [13], [140]]: not only the careful and astute, but also the gullible, inexperienced and unintelligent, are protected by s 42 [World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181, 203; Henville, [13]]. As Gleeson CJ pointed out in Henville (at [13]), even the negligent plaintiff is entitled to succeed, unless the negligence was the "sole cause" of the loss or damage. 158A causal connection can be established not only by direct evidence of the influence of the contravening conduct, but also by inference [Hanave Pty Ltd v LFOT Pty Ltd [1999] FCA 357, [45]-[46]; (1999) 43 IPR 545]; indeed, inferences drawn from the surrounding circumstances, other objective facts, and the probabilities are often a preferable guide to assertions by a party of how it would otherwise have acted [Baiyai Pty Ltd v Guy [2009] NSWCA 65, [56]]. First Title 159The loss and damage claimed by First Title is its exposure to the liability to indemnify Perpetual in respect of Perpetual's not having acquired effective security over the Units. 160There can be little doubt that, had it understood - at any time before the moment the cheques were handed over at the 24 June settlement - either that contracts had not been exchanged, and that Equis had no equitable interest in the Units, or that there was no imminent obligation or intention to pay the advance in substantial part to the vendor and/or the vendor's mortgagee, First Title would have instructed Perpetual not to hand over the cheques, Perpetual would have complied, and First Title would not have incurred the risk. I agree with the Plaintiffs' submission that it is practically unthinkable that First Title, had it known the true position, would have given the go-ahead for settlement to occur: no rational person would agree to insure the title of a putative mortgagee in respect of property to which the putative mortgagor had no title, entitlement or control. First Title's conduct is explicable only on the basis that it assumed that Equis had, by or upon settlement, at least an equitable interest in the Units. 161It is true, as the Defendant submits, that the outstanding interest of Arab Bank, which was not going to be removed by a part payment of its debt, posed an additional obstacle to Perpetual obtaining effective security, as perfection of Perpetual's security would require completion of the sale of the remaining units so that the Arab Bank could be discharged. However, First Title (by Mr Downes) was of the view that, in the worst case, Perpetual would be subrogated to Arab Bank's interest and would in that way have at least an equitable security. This reinforces that First Title assumed that the settlement cheques payable to Arab Bank would immediately be paid over to it. It also reinforces that, had First Title learnt that Equis would not on settlement have any interest in the Units, it would not have authorised the settlement to proceed. 162Further, in my judgment, Mr Ishak's contravening conduct - the conduct that constituted the First Representation and the Third Representation - contributed to First Title's state of mind that permitted the settlement to proceed. The statement that the 10 June settlement had fallen over because of the Arab Bank's position, the cheque directions, and the attendance on settlement and receipt of the cheques, had the tendency to confirm the appearance that this was an orthodox transaction in which Equis would, at least by completion, have an equitable interest capable of securing the advances. Thus, while as in Miller v BMW, there is an element of Mr Downes on behalf of First Title having leapt to the conclusion that contracts had been exchanged, in this case there is more: there is conduct by Mr Ishak, who knew that First Title was under that misapprehension, that tended to confirm it. In that context, the non-disclosure that it would not acquire such an interest - or that contracts had not been exchanged - is decisive on the question of causation. Had the disclosure been made, First Title would have countermanded settlement and averted the risk. 163The Defendant submitted that First Title has suffered no damage because the policy has not become effective to cover the loss, since it contains a provision to the effect that First Title will not indemnify the Insured and will not have a duty to defend "resulting from" any risk comprising any exclusions listed in para 6 of the Schedule, which lists the Arab Bank mortgages. Under the policy, First Title has a duty to defend the title to the Units and to defend the Perpetual mortgage in respect of the covered risks, which relevantly include (a) par 3.1 (that Equis was not the owner of any estate or interest in the Units); (b) par 3.2 (that someone other than Equis owned an interest in the Units); and (c) par 3.13 (that the Perpetual mortgage was unenforceable). The duty to defend confers on First Title the right to commence proceedings to seek to prevent or reduce loss to Perpetual, and to pursue such proceedings to their conclusion, before indemnifying Perpetual. The present proceedings meet that description. Failing such defence, First Title is required to indemnify Perpetual. 164The exclusion referred to by the Defendant means that First Title does not have any duty to defend the title to the Units - or the Perpetual mortgage - against the interest comprised in the Arab Bank mortgages. However, the covered risks that enliven Perpetual's rights under the policy are those in pars 3.1, 3.2 and 3.13 of the policy - that Equis is not the owner of any estate or interest in the Units, and that Perpetual's mortgage is not enforceable. These are not risks that arise or result from the Arab Bank mortgages. Accordingly, the exclusion does not apply. 165Moreover, the risk that has materialised is precisely the risk that the policy was intended by the parties to cover. On 15 June, Mr Downes told Ms Wong of Resimac: "We would insure that Resimac/Perpetual has a first ranking registered mortgage - essentially, Perpetual can rely on our policy until the mortgage is discharged and Perpetual's mortgage is registered", to which Ms Wong replied that she would be pleased to have the transaction insured on that basis. On 22 June, Mr Downes told Mr McLoughlin that First Title was prepared to issue a policy "covering Resimac for the fact that they will not be able to register their mortgage until the ARAB Bank gives a full discharge", to which Mr McLoughlin responded to the effect that he presumed that the policy would note that the loan advances would be settled without, inter alia, discharges of mortgage. On 22 June, Heidtmans gave a certification to Perpetual/Resimac that was subject to First Title providing a policy "as we will not be receiving", on settlement of the loan, inter alia, discharges of the Arab Bank mortgages. Mr Downes told Mr McLoughlin: "I confirm that we will be issuing a title insurance policy to cover Resimac/Perpetual in respect of those matters you set out in the Certification attached to your email below, namely that the insurance policy will protect the insured lender as having a validly registered mortgage in the absence of the Arab Bank providing a discharge at settlement". On 24 June, Mr McLoughlin emailed Mr Downes and asked, in relation to the transfers, whether "they too will be excluded (sic) on your policy". Mr McLoughlin relied upon First Title as to whether or not settlement should take place on 24 June. 166That the policy would apply in the events that have happened was an assumption mutually adopted by First Title and Perpetual/Resimac as the conventional basis of their relationship. First Title could not in those circumstances deny that it would be liable to Perpetual in the events which have occurred. 167Accordingly, in the events that occurred, First Title is exposed to indemnify Perpetual under the policy issued on 23 June, in respect of which risk was incurred when the settlement proceeded on 24 June. It follows that Mr Ishak's contravening conduct was a cause of the loss and damage suffered by First Title through incurring a risk that materialized, which it would otherwise not have incurred. That it was far from the sole cause is not to the point. Perpetual 168Perpetual's claimed loss and damage is the sum it advanced on 24 June and has not been able to recover. In Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390 ("Mitchell Morgan"), Giles JA (with whom Bathurst CJ, Campbell JA, Macfarlan JA and Sackville AJA agreed) explained (at [41]-[43]) that where a lender was fraudulently induced to pay out money, it could protect itself and avoid losing the money if it obtained adequate and enforceable security, and where it did not obtain such security due to the negligence of its solicitors, it suffered two different losses: first, paying out money when it would otherwise not have done so; and secondly, not having the benefit of the security. This was so, notwithstanding that the measure of damages might in both cases be identical. That analysis is applicable to the present case in the sense that Perpetual's loss if any caused by the contravening conduct is correctly identified as paying out money which would not otherwise have been paid. The circumstance that it is insured in respect of the security it expected to but did not obtain does not operate to extinguish or reduce its loss in this respect [Arab Bank plc v John D Wood Ltd [2000] 1 WLR 857, 879 [101]]. 169Perpetual submits that, although it did not itself directly perceive all of the elements of Mr Ishak's misleading conduct, the simple question is whether that conduct caused Perpetual to suffer any loss or damage, and that but for the contravening conduct, First Title would not have authorized Perpetual to hand over the cheques, and for that reason the transaction would not have proceeded. 170Mr McLoughlin (who had the conduct of the matter on behalf of Perpetual) did not labour under any relevant misconception. He did not turn his mind to whether contracts had been exchanged (or whether Equis had an equitable interest). However, he ensured that he understood precisely what were First Title's requirements - including, ultimately, that settlement could proceed without a transfer. He understood that the cheques were to be handed over to Equis, and no documentation received in return, and that Equis was to effect completion of the purchase in whatever manner it could in due course. Perpetual did not hand over the cheques on the basis that it was acquiring an effective security. It did so in the knowledge that, at least in for the time being, it would not have an effective security, but instead would have the benefit of the title insurance policy to protect its position. Perpetual received on settlement no less than it expected or intended - insurance rather than security. So long as it could rely on the insurance policy, Perpetual was content to make the advances. Perpetual was not reliant on the advances being secured on units 1 and 2; it was reliant on the title insurance policy. 171However, although neither Mr McLoughlin nor Perpetual were misled by or relied on Mr Ishak's contravening conduct in any relevant way, that is not decisive of the question of causation. While reliance is often important, it is not in the context of the FTA a substitute for the essential question of causation [Campbell, [143]], and it is not always necessary that the plaintiff has been misled by or relied on the contravening conduct [Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526]. The contravening conduct need not be directed towards the plaintiff, either for it to be characterized as misleading or/and deceptive, or for the purpose of establishing causation: the question is simply whether the contravening conduct was "a cause" of the plaintiff's loss or damage. Contravening conduct directed to one person can sometimes have a causal impact on another. The relationship between the particular plaintiff on the one hand, and the person to whom the conduct is immediately directed on the other, may be important. Where the latter is the agent of the plaintiff, misleading or deceptive conduct that induces the agent to engage in conduct detrimental to the principal can be sued on by the principal [Digi­Tech (Australia) Ltd v Brand [2004] NSWCA 58, [159]; (2004) 62 IPR 184 ("reliance by or on behalf of the plaintiff"); cf Port Stephens Shire Council v Booth [2005] NSWCA 323, [147]; (2005) 148 LGERA 351]. 172While First Title was not an agent for Perpetual in its dealings with Mr Ishak, First Title was Perpetual's putative insurer, and conduct towards First Title had the capacity, as Mr Ishak knew or ought to have known, to expose its insured Perpetual if it induced First Title to permit "settlement" of the loan drawdown in the absence of Equis acquiring any interest in the Units. But for Mr Ishak's contravening conduct, First Title would not have authorized, or would have countermanded, the settlement on 24 June. Had the settlement been countermanded by First Title, Perpetual would not have handed over the cheques, and paid out the loan moneys. While in this context the notion of causation incorporates the common law concept of remoteness, so as to exclude liability for loss or damage that was "not reasonably foreseeable even in a general way by the contravener'" [Henville, [136]], it could not be said that it was unforeseeable to someone in Mr Ishak's position that First Title had practical control of, and - if not misled - would countermand, the settlement. 173In this way, Mr Ishak's contravening conduct was a contributing cause of Perpetual's loss. Quantification 174Of the $1.6 million advanced by Perpetual on 24 June, some cheques were never presented (Sydney Water for $225.65, Office of State Revenue (two cheques each in the sum of $45,992, and a further cheque in the sum of $26,227.47), and a trust cheque to the borrower for $55). These total $118,492.12, leaving Perpetual out of pocket to the extent of $1,481,507.88. Perpetual also lost the use of its money, but as some interest payments were made, it is entitled to claim interest in the nature of damages for loss of use of money only from October 2005. In addition, Perpetual must give credit for the sum that resulted from the settlement of the proceedings against Arab Bank. 175First Title will be obliged to indemnify Perpetual under the title policy, but only to the extent that Perpetual fails to recover its loss or damage in its claims against Mr Ishak, and subject also to the limitation that First Title's liability to Perpetual cannot exceed the insured sum of $1.6 million. In addition, First Title has incurred investigative costs, amounting to $161,283.84, which would not have been incurred if the contravening conduct had not occurred, as First Title would not have gone on risk. As it is not yet known to what extent Perpetual will succeed in enforcing a judgment against Mr Ishak, it seems that quantification of First Title's liability to indemnify it is not yet possible. However, it may be possible to deal with the situation by way of declaratory relief. The assigned claim 176Perpetual, as assignee of such causes of action as Mr Ross may have had against Mr Ishak, claims damages for breach of a general law duty of care said to have been owed by Mr Ishak to Mr Ross in connection with acting for him on the loans from Perpetual, in that Mr Ishak permitted cheques to the value of $473,000 to be drawn and delivered on and following 24 June to third parties, with the result that Mr Ross was personally liable to repay those amounts to Perpetual in circumstances where Perpetual had no recourse to the Units. While Mr Ishak eventually - when he ceased to act on or about 30 October - handed most of the cheques received on settlement to Mr Ross, and it is accepted that Mr Ross could have no claim in respect of them - cheques to the value of $473,000 were disposed of between 24 June and 2 September: to J & M Giannikouris (to fund part of the deposit for the purchase by Mr Iaconis of the Maroubra property), to Asenhurst (apparently in respect of a potential acquisition by Mr Iaconis), to P&A Conveyancing (Mr Ishak's fees), and on 2 September to Elite (the vendor of the units, being the deposit on the sale of five units). It is in respect of these cheques that the assigned claim is brought. Duty of care 177The Plaintiffs contend that a duty of care arose in tort by reason of Mr Ishak's assumption of responsibility, combined with Mr Ross' vulnerability. Mr Ishak is said to have assumed responsibility for dealing with Perpetual and First Title on behalf of Mr Ross, and Mr Ross' vulnerability is said to arise from the circumstance that, by the loan drawdown proceeding prior to the property purchase, he was exposed to risk - when to Mr Ishak's knowledge it was critical to Mr Ross that there be no risk for him in the transaction. Absence of risk to Mr Ross necessitated that Perpetual have recourse to the Units - which were valued at a total of at least $2.2 million, well in excess of the $1.6 million being borrowed (and Mr Ross says he thought the valuations were slightly higher than that) - and therefore that Equis acquire an interest in the Units simultaneously with the advances being made. Thus it is said that it was reasonably foreseeable that a failure by Mr Ishak to exercise reasonable care with respect to his conveyancing services could cause economic harm to Mr Ross, and that Mr Ishak therefore owed Mr Ross a duty to take reasonable care in respect of Mr Ross's exposure to personal liability to Perpetual under the loans. 178This argument, however, overlooks a number of matters. First, it is important to remember that Mr Ishak was a conveyancer, not a solicitor; and Mr Ross was a finance broker. The scope of duty of a conveyancer is narrower than that of a solicitor, and would not ordinarily include financial and commercial advice, let alone to a finance broker. Secondly, Mr Ross never retained Mr Ishak to act for or advise him. Mr Ishak's real client was always Mr Iaconis, who retained and instructed him. Mr Ross told Mr Ishak that he was to act on instructions from Mr Iaconis. He was prepared to let Mr Iaconis go ahead and make whatever arrangements he could to consummate the deals, and for that purpose give whatever instructions he wanted to Mr Ishak. As Mr Ross put it, "Iaconis introduced me to Ishak and Ishak had carriage of the legal/conveyancing matter in the purchase". While the Plaintiffs sought to distinguish the loan transaction from the purchase for this purpose, in my view they cannot be so separated, and Mr Ross' overall conduct throughout the transaction, at least until August - including his signature of the loan applications and later his signature of the insurance application - bespeaks acquiescence in whatever Mr Iaconis proposed. Fourthly, Mr Ross did not rely on Mr Ishak to protect his commercial interests. While Mr Ross maintained (and was essentially unchallenged) that he relied heavily on having no personal exposure - on the basis that, in the event of default, Perpetual would have recourse to the Units - he did not claim to have relied on Mr Ishak to safeguard his position in that, or any other, respect. He did not seek advice from Mr Ishak because "I was a tool for the purchase being run by Iaconis with the legal matters attended to by Ishak". 179Mr Ross acceded to Mr Iaconis' request to lend his company's name to the transaction. It seems that in return, Mr Iaconis was to discharge certain indebtedness of Mr Ross. Except for the disputed conversation said to have occurred on 3 or 4 June (in which Mr Ross claims to have requested - not instructed, because he eschewed being entitled to give instructions - that Mr Ishak not settle without his further instructions), as to which as explained above I am on balance not persuaded, Mr Ross does not claim to have given instructions to, or sought advice from, Mr Ishak. 180I therefore do not accept that the relationship between Mr Ishak and Mr Ross was one which gave rise to a relevant duty of care. Breach of duty 181The pleaded case of breach is limited to making the first, second and third representations, providing the cheque directions to Heidtmans, and attending on settlement. The Plaintiffs did not plead, as a breach of duty, failure to warn or advise Mr Ross of the risks inherent in the transaction. 182While attendance on settlement would have been a breach of duty were it accepted that Mr Ross had given and not countermanded the alleged oral instructions of 3 or 4 June, I am - for reasons already explained - unpersuaded that he gave such instructions. It is true that, on Mr Ishak's own evidence, he did not obtain Mr Ross's consent to the cheques identified in the 23 June cheque directions, totalling around $1.2 million, but in circumstances where Mr Ross had authorised him to act on Mr Iaconis' instructions, he was not obliged to do so. 183It does not follow from the finding that Mr Ishak made the First and Third Representations (I have not accepted that the Second Representation was misleading), and that in doing so he engaged in misleading conduct, that Mr Ishak was thereby in breach of any duty owed to Mr Ross. It is not necessarily a breach of duty to one's client (assuming the existence of a duty of care) to make misrepresentations to a counter-party to the transaction. Causation 184Given Mr Ross' reliance on having no personal exposure, it may well be that, had he been apprised of the risks for him personally associated with payment of the cheques amounting to some $473,000 to third parties unassociated with the purchase, he would have withdrawn his support for the transaction. However, where what is relied upon is an absence of advice, that does not of itself establish causation, which requires an element of reliance on Mr Ishak to give the appropriate advice. As already explained, I am unpersuaded that there was any such reliance. 185As Perpetual acknowledged, the loss or damage caused by Mr Ishak's breach could not on any view include the cheques handed over by Mr Ishak to Mr Ross on 30 October (or the stopped cheques), and was confined to the amount of $473,523.49, being the sum of the cheques payable to J & M Giannikouris, Asenhurst, Mr Ishak and Elite, which were irrevocably disposed of on or shortly after 24 June. This is because the remainder were disposed of by Mr Ross after they came under his direct control. Yet he did not then act on Mr Ishak's advice to return them to Perpetual - which would have markedly reduced his total potential liability; to the contrary, he handed them over to Mr Iaconis. This powerfully reinforces that he did not rely on Mr Ishak, and that whatever advice Mr Ishak might have given would have made no difference. 186Accordingly, Perpetual fails on the Assigned Claim. Proportionate liability and contributory negligence Contributory negligence 187Fair Trading Act, s 68, while closely analogous to TPA, s 82, has the significant difference that contributory negligence is available as a defence to a claim under s 82, but not to one under s 68. Accordingly, neither Perpetual's nor First Title's claim is liable to be reduced on account of their contributory negligence. Proportionate liability 188(NSW) Civil Liability Act 2002 ("CLA"), Pt IV, relevantly provides as follows: 34 Application of Part (1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law. (1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1). (4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died. (5) (Repealed) ... 35 Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. 189A claim for damages under FTA s 68 for contravention of s 42 is an apportionable claim [CLA, s 34], but not one for contravention of s 45. As I have concluded that the conduct that constituted the First Representation was a contravention of s 45 as well as of s 42, neither Perpetual's nor First Title's damages are liable to be reduced by reference to the proportionate liability regime. 190However, lest I be wrong in that respect, I shall express a view as to how liability should be apportioned, were the proportionate liability regime applicable. For this purpose it is necessary to consider separately Perpetual's claim and First Title's claim. 191In identifying "concurrent wrongdoers", the central concept is that of a single apportionable claim, which directs attention to claims in respect of the same loss or damage - even if the claims are based on more than one cause of action [CLA, s 34(1)(a)]. The judgment of the Court of Appeal in Mitchell Morgan emphasizes (particularly at [41]-[43]) the necessity to identify the particular loss or damage said to be the subject of a single apportionable claim, distinguishing (in that case) the loss suffered by a lender who is fraudulently induced to pay out money (in respect of which it could protect itself and avoid losing the money if it obtained adequate and enforceable security), and that suffered by the same lender in respect of the same loan where it did not obtain such security due to the negligence of its solicitors. While the Defendant pleaded numerous concurrent wrongdoers, most did not cause the relevant loss and damage incurred by Perpetual when it advanced the loan moneys: subsequent conversion of the cheques, even if conversion were established, is a different loss for these purposes. However, on the available evidence, two concurrent wrongdoers contributed to the relevant loss. 192The first of them is Mr Iaconis. What Mr Ishak did, he did as an agent for Mr Iaconis, who was his principal. As Brennan CJ, Dawson and Toohey JJ pointed out in Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; (1996) 186 CLR 574 (at 580), principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as may be employer and employee where the latter commits a tort in the course of employment. That is equally applicable to the concept of concurrent wrongdoers under the proportionate liability regime. Although initially I was troubled by the failure of the evidence to identify contravening conduct on the part of Mr Iaconis personally, once it is appreciated that Mr Ishak was his agent this does not matter. There is no reason to suppose that Mr Ishak was acting other in the course of his instructions, and every reason to infer that he was acting in accordance with Mr Iaconis' instructions. Mr Iaconis is therefore a concurrent wrongdoer. 193The second is Heidtmans. Heidtmans were retained to act as Perpetual's solicitors on the transaction, and undoubtedly owed Perpetual a common law duty of care. They failed to inquire whether contracts had been exchanged, or to take any step to confirm that Equis would have an equitable estate upon settlement - steps which a reasonable prudent solicitor for a lender must in the circumstances have taken. In this case, their failure resulted not, as is often the case, in defective or inadequate security (which, on the authority of Mitchell Morgan, is a different loss); rather, it was that the settlement proceeded and Perpetual paid out the loan moneys - the same loss as that for which Mr Ishak is responsible. 194In determining the relative responsibility of concurrent wrongdoers for a loss, it is necessary to compare the blameworthiness and causative potency of the conduct of each of them [Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187, [50]-[53]]. Relevant factors include, but are not limited to, which of the wrongdoers was more actively engaged in the activity causing loss, and which was more able effectively to prevent the loss [Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463, [93]-[97]]. Although allowance should be made for the circumstance that the responsibility of one wrongdoer may be relatively increased if it was engaged by the plaintiff specifically for the purpose of guarding against the potential wrongdoing of another (such as a fraudster), there must nonetheless still be a reduction in the liability of the first, as the fraudster is on any view a concurrent wrongdoer, and the fraudster's responsibility may well exceed that of the solicitor. Thus in Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60, Hoeben J apportioned liability 90% to the fraudster and 10% to the solicitor. An almost identical result was reached by Bryson AJ in Chandra v Perpetual Trustees Victoria Ltd [2008] NSWSC 178. In Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505, [571]-[600], Young CJ in Eq (as he then was) apportioned responsibility 72.5% to the principal fraudster (Caradonna), 15% to a solicitor who had falsely witnessed a signature (Flammia), and 12.5% to the negligent solicitors - even though a purpose of engaging solicitors was to guard against the conduct of the fraudster. As his Honour said (at [593]-[595]), it would be wrong simply to say that those cases almost compel subsequent courts to reach the same apportionment in similar cases; but they do provide much needed guidance. While his Honour's decision was overturned in Mitchell Morgan, on the ground that there was not a single apportionable claim, it remains valuable in indicating how the relative responsibility of fraudsters and negligent solicitors has been evaluated. With reference to the foregoing decisions, in Kayteal Pty Ltd v Dignan [2011] NSWSC 197, I apportioned liability between a fraudster (47.5%), a grossly negligent valuer (40%) and negligent solicitors (12.5%). 195In apportioning responsibility for Perpetual's loss, the relevant factors are: * Mr Iaconis was the principal, the architect of the scam, and a significant beneficiary (in that he obtained the benefit of at least the Giannikouris cheque, and control of most of the other cheques); * Mr Ishak was his agent, and though a beneficiary (in that he obtained the benefit of the $50,000 cheque in his favour) significantly less so than Mr Iaconis. Although the significance of his misleading conduct is increased by his professional status, that is offset by the circumstance that his obligations lay primarily to his client and not to Perpetual, who had their own professional advisers; * Heidtmans were primarily responsible for advising Perpetual and protecting Perpetual's interests. By not inquiring whether contracts had exchanged and not ascertaining that Equis would not have even an equitable estate upon settlement, they manifestly failed to do so. Not only did Heidtmans never ask the critical question, whether contracts had been exchanged: Mr McLoughlin did not turn his mind to that critical question. Mr McLoughlin was uncertain what was settling on 24 June, yet proceeded solely in reliance upon the insurance policy. It is not open to Perpetual to say on the one hand that it has suffered loss (on the basis that its insurance is to be disregarded for that purpose), yet on the other that Heidtmans were not obliged to make further inquiries as it sufficed to rely on the policy. While Mr Ishak's conduct contributed to some extent to Heidtmans' state of mind, their own conduct amounted to a very serious departure from the practices of prudent solicitors acting for lenders in such circumstances. 196In my assessment, Mr Iaconis, as the architect and chief beneficiary of the scam, bears the predominant responsibility for Perpetual's loss. The gravity of Heidtmans' departure from prudent practice indicates a significantly higher degree of responsibility vis-à-vis the fraudster than in the cases to which I have referred. Their much more proximate and direct relationship with and obligations to Perpetual would ordinarily indicate that Heidtmans' responsibility for Perpetual's loss exceeded that of Mr Ishak, but that is offset by the circumstances that Mr Ishak derived a direct benefit from the transaction, and that his conduct contributed to Heidtmans' relevant state of mind. If it were relevant to do so, I would apportion liability for Perpetual's loss 50% to Mr Iaconis, 25% to Heidtmans, and 25% to Mr Ishak. 197First Title's loss is different, being its exposure to indemnify Perpetual. For the same reasons as given in connection with Perpetual's loss, Mr Iaconis is, in respect of First Title's loss also, a concurrent wrongdoer. The more difficult question pertains to Heidtmans, who were retained by Perpetual and not by First Title - in particular, did Heidtmans owe First Title a duty of care? 198It is true that Mr Downes at First Title was himself a solicitor, and that he had his subordinate Mr Flegg make at least some inquiries (for example concerning the Giannikouris cheque). But others he made of Heidtmans, who passed on information to First Title for that purpose. First Title gave Heidtmans "instructions" in connection with settlement, and Mr McLoughlin regarded First Title as able to give him instructions to proceed (or not) with the settlement. While in a sense insured and insurer are counter-parties, this is so only to a limited extent: they also share a common interest, and the insured owes the insurer a duty of utmost good faith. Heidtmans assumed responsibility for ensuring that the insurer's requirements were fulfilled. First Title relied on Heidtmans' certification. First Title was vulnerable to any failure by Heidtmans to use reasonable care to protect the interests of Perpetual on settlement - including ensuring that upon settlement Equis had at least an equitable estate in the Units. It was foreseeable that if Heidtmans allowed settlement to proceed without Equis having an equitable estate, their client Perpetual would suffer loss which in turn might be visited upon its insurer, First Title. 199For those reasons, Heidtmans owed First Title a relevant duty of care. For the reasons explained in respect of Perpetual, it breached that duty and, if it were relevant to do so, I would apportion liability for Perpetual's loss also 50% to Mr Iaconis, 25% to Heidtmans, and 25% to Mr Ishak. Conclusion 200My conclusions may be summarised as follows. 201I do not accept that the Prompt Transfer Delivery Representation was made, as I cannot be satisfied that Mr Ishak's words conveyed a representation that the transfers would be delivered "in a matter of days". 202Mr Ishak's conduct up to the settlement on 24 June had the capacity and tendency to convey the impression that upon settlement Equis had and was granting to Perpetual at least an equitable interest in the land - or in other words, that by settlement contracts had been exchanged. That was misleading in contravention of FTA, s 42. It was also a false representation made in connection with the possible grant of an interest in land concerning the nature of the interest in the land, in contravention of FTA, s 45. 203Mr Ishak's conduct, culminating in his attendance on and proceeding with settlement and taking delivery of cheques payable to the putative vendor and vendor's mortgagee, had the capacity and tendency to create the impression that he held instructions to complete the purchase of the Units. However, I do not accept that the Second Representation was falsified, as on balance I am not persuaded that Mr Ross gave any such instruction not to settle without further reference to him, as he claims. It follows that Mr Ishak did not thereby contravene s 42. Even had the Second Representation been false or misleading, it would not have been a contravention of s 45. 204Mr Ishak's conduct had the capacity and tendency to convey, to Perpetual and to First Title, that he had instructions to apply the moneys advanced by Perpetual, in substantial part, to the settlement of the purchase of the Units, shortly after 24 June. That representation was false, and accordingly, by making the Third Representation, Mr Ishak contravened s 42. However, the Third Representation was not a contravention of s 45. 205While the First Representation continued to have effect after 24 June and until 30 October, I do not accept that the conduct constituted by the (albeit non-inadvertent) non-disclosure of the alternative Hanna proposal was misleading in the circumstances, because there was no reasonable expectation that Mr Ishak, as the conveyancer apparently acting for Mr Ross/Equis, would make a disclosure of confidential instructions that an alternative proposal, which would still see Perpetual repaid, was under consideration, but not yet confirmed. 206Mr Ishak's contravening conduct was a cause, though far from the sole cause, of the loss and damage suffered by First Title through its incurring a risk that later materialized, which it would otherwise not have incurred, as had it understood - at any time before the moment the cheques were handed over at the 24 June settlement - that Equis had no equitable interest in the Units, and that there was no imminent obligation or intention to pay the advance in substantial part to the vendor and/or the vendor's mortgagee, First Title would have instructed Perpetual not to hand over the cheques, Perpetual would have complied, and First Title would not have incurred the risk. As in those events Perpetual would not have paid out the loan moneys, Mr Ishak's contravening conduct was also a contributing cause of Perpetual's loss. 207Perpetual's damages comprise the loss of $1,481,507.88, and interest thereon from October 2005, less the sum recovered from the settlement of the proceedings against Arab Bank. First Title's damages comprise its exposure to indemnify Perpetual under the title policy, but only to the extent that Perpetual fails to recover its loss or damage in its claims against Mr Ishak in these proceedings, and subject to the limitation that First Title's liability to Perpetual cannot exceed the insured sum of $1.6 million; plus its investigative costs amounting to $161,283.84. 208Perpetual fails on the assigned claim, as I do not accept that Mr Ishak owed Mr Ross a relevant duty of care, nor that any pleaded breach of that duty was a breach, nor that Mr Ross relied on Mr Ishak for any relevant advice, nor that any such advice would have caused him to act differently. 209As the Plaintiffs succeed under s 45 in respect of the First Representation, proportionate liability does not arise. Had it arisen, Mr Iaconis and Heidtmans were concurrent wrongdoers in respect of both Perpetual's and First Title's claims, and in both cases I would have apportioned responsibility 50% to Mr Iaconis, 25% to Mr Ishak and 25% to Heidtmans. 210I direct that the Plaintiffs bring in short minutes to give effect to this judgment. ********** 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: 29 June 2012