Wylie v Orchard (No 2)[2020] QDC 315

DISTRICT COURT OF QUEENSLAND

Contents

Summary5

The witnesses7

Ms Wylie7

Mrs Orchard8

The factual background10

Ms Wylie as at September 201010

Mrs Orchard as at September 201011

Bank on Property11

Mrs Orchard’s role13

BOP makes contact with Ms Wylie14

The first meeting: 8 September 201015

Further contact before 29 September 201016

Events on 29 September 201017

Ms Wylie’s version17

Mrs Orchard’s version18

Conclusion on execution of the contract20

Visiting Mr St Pierre21

The contract22

Did Mrs Orchard know the deposit terms?23

Further steps in the property transaction up to finance notification24

The loan agreement and the bank cheque25

Mr La Torre’s evidence29

Ms Wylie’s evidence about events up to payment of the $100,00029

The loan agreement30

The funds are disbursed31

Mrs Orchard state of mind relating to the $100,00033

The parties’ dealings from 19 October until termination of the contract33

Refund franchise idea abandoned33

Safety in the Market34

Staunch36

Time for completion passes36

Mrs Wylie demands her money back: November 2010 to January 201137

Emails on 5 and 6 December 201038

Events through to termination of the contract42

The criminal litigation43

The civil litigation45

The issues45

The contract claim45

The deceit claim46

The trust claim47

Mrs Orchard’s dealing with the $100,00048

Did Mrs Orchard make representations about use of the money?48

Mrs Orchard’s state of mind49

The evidentiary effect of the conviction53

The contract claim54

The loan has not been repaid54

Contract claim not statute barred55

Contract claim succeeds57

The deceit claim57

Deceit claim as an alternative57

Fraudulent misrepresentation and reliance57

Loss was caused by the fraud59

Decision to terminate59

Decision not to pursue Mr Silver59

The deceit claim is statute barred60

The trust claim63

Relevant principles64

Mrs Orchard received the bank cheque on constructive trust70

No defence of laches arises70

Summary

1. In early September 2010, the plaintiff, (Ms Wylie) was contacted by a telemarketer representing a real estate marketing business called Bank on Property (BOP).  Ms Wylie expressed some interest in investing.  The result was a visit to Ms Wylie’s house by the defendant (Mrs Orchard) representing BOP.  Mrs Orchard later provided a contract to buy a house and land located at 25 Collins Street, Brighton, about 20km from Hobart (the Property).  The house had not been built.
2. On about 29 September 2010, Ms Wylie entered into a contract to buy the Property from a Mr Bradley Silver for $295,000 (the contract).  The contract did not provide for any deposit to be paid.  The contract was subject to finance.  Mrs Orchard was present when Ms Wylie signed the contract.  She took Ms Wylie to see an accountant to be given advice on tax advantages of the investment.  She assisted in completion of her finance application to Westpac’s Pacific Fair branch.  She took her to see the manager of that branch: a Mr St Pierre.  Westpac approved finance for an amount exceeding the purchase price and finance was notified by Ms Wylie’s solicitor in Tasmania to the seller’s solicitor.  Each of Mrs Orchard, Mr Silver and Mr St Pierre were involved with the broader Tasmanian property business of which BOP was unquestionably the marketing arm.  These steps were completed by about 11 October 2010.
3. At around that time, Mrs Orchard also began discussing further investments with Ms Wylie.  As a result, on about 18 October 2010, Ms Wylie gave to Mrs Orchard a bank cheque in favour of Mrs Orchard for $100,000.  At the same time, Ms Wylie and Mrs Orchard signed a loan agreement (the loan agreement) by which Mrs Orchard made various promises to Ms Wylie in relation to the $100,000, including a promise to repay the advance after three years and to pay interest annually of $15,000.  It is uncontentious that Mrs Orchard paid most of the $100,000 at the direction of and for the benefit of Mr Silver (the vendor).  Mrs Orchard has never repaid the money obtained from Ms Wylie. 
4. Ms Wylie advances three claims against Mrs Orchard: a claim in debt under the loan agreement, a claim in deceit and a claim for breach of trust.  The latter two claims, in broad terms, arise from the contention that Mrs Orchard’s intention at the time she obtained the $100,000 was to pay it to the benefit of Mr Silver and that she dishonestly concealed this from Ms Wylie and represented quite a different intention.  Thus, her alleged statements that she would invest the money for Ms Wylie’s benefit were knowingly untrue (deceit) and further she obtained the money dishonestly in a manner attracting equitable remedies.
5. The gravamen of Mrs Orchard’s defence to these claims is that while Mrs Orchard admits she paid most of the $100,000 to, or for the benefit of, Mr Silver, these payments were, and were intended by her to be, for Ms Wylie’s benefit because they comprised payment of a deposit under the contract to buy the Property.  Accordingly:
   1. (a)
      As to the claim on the loan agreement, on the proper construction of the loan agreement payment to Mr Silver comprised a discharge of Mrs Orchard’s debt; and
   2. (b)
      As to the deceit and trust claims, there was no deceit or dishonesty because Mrs Orchard did apply the $100,000 to Ms Wylie’s benefit. 
6. Mrs Orchard also argues that the common law claims are statute barred and that a defence of laches arises in respect of the equitable claim.  Ms Wylie contends in response that the debt claim did not accrue until within 6 years of the commencement of the proceedings and that the other claims were not statute barred or barred by laches.
7. For the reasons which follow, I find that each of the claims advanced by Ms Wylie are established on the evidence.  At the heart of all these conclusions is my finding that Mrs Orchard acted dishonestly when obtaining the bank cheque from Ms Wylie.  Further, I find that no limitations defence is available against the contract claim nor is a laches defence available against the trust claim.  However, I accept the defendant’s submission that a limitations defence to the deceit claim was established.
8. However, as the contract claim is the principle claim advanced, I order judgement for the sum claimed in that regard: $150,500.

The witnesses

9. Only three witnesses were called in the trial: Ms Wylie, Mrs Orchard and Mrs Orchard’s son, Mr La Torre.   I had no reason to doubt Mr La Torres’ evidence and no submission was made to me that I should.  Indeed, his evidence provides useful insight into the genesis of the plan to obtain the payment of $100,000 from Ms Wylie.  Ms Wylie and Mrs Orchard were each unreliable witnesses, though in different ways.

Ms Wylie

10. Mr Morris QC, who appeared for Mrs Orchard, submitted that though Ms Wylie was not deliberately dishonest^[1],  her evidence did demonstrate she had a grievance arising from the loss of her money which warped her recollection of events.  He pointed to her inability to make concessions of obviously correct matters arising from documents apparently signed by her, and her assertion of incredible explanations of how her signature came to appear on the documents.  He also pointed to her willingness, unfairly, to blame the solicitor acting for her on the Tasmanian property purchase for her loss.  Mr Morris submitted that though none of these matters went to the heart of the claims Ms Wylie advanced, they did demonstrate that her evidence on all matters was very unreliable.^[2]
11. In my view, Mr Morris’ points as to the unreliability of much of Ms Wylie’s evidence were well made.  Mr Jones, who appeared for Ms Wylie, did not really cavil with them.  He accepted that while giving evidence about documents, Ms Wylie presented as bewildered and her evidence was bewildering.   Frankly, I do not think that goes far enough. Her strange evidence about her signature being placed on various documents in some way that did not involve her, reflected on her broader reliability, as did some other matters raised by Mr Morris.  However, Mr Jones made three points.
    1. (a)
       First, he submitted that the oddities in her evidence and her clear sense of grievance did not mean that all the evidence she gave should be disregarded, particularly where it is consistent with other uncontentious evidence, particularly documentary evidence and/or inherently likely in the light of other uncontentious facts.  I agree.
    2. (b)
       Second, he submitted that notwithstanding the attacks on the credit of both witnesses, much of their evidence was not that far apart.  This point is also correct, as will be seen in my analysis of the facts below.  Indeed, there was numerous factual matters which were either admitted or demonstrated by documents which I accept as authentic and accurate.
    3. (c)
       Third, he submitted that much of the case against Mrs Orchard can be made out on her own evidence.  Again, as will be seen, I accept that proposition.

Mrs Orchard

12. Mrs Orchard appeared to have a better recollection of uncontentious points of detail than Ms Wylie.  However, when it came to key contentious issues, I found her evidence to be entirely unreliable.  On key issues, she had, at best, reconstructed her evidence in a manner which, presumably to her, was exculpatory.  So much emerges when her evidence is measured against other evidence which I accept and obvious inferences which flow.  Specific examples of this are referred to in my analysis of the evidence and findings below.  One key example, however, was her position adopted at trial that the payment of the $100,000 to Mr Silver was payment of a deposit on the contract.  I reject her evidence that she believed that to be true at any material time (though she might later have convinced herself it was so).^[3]  
13. Further, Mrs Orchard’s evidence on collateral matters disclosed a capacity for exaggeration and a willingness to mislead.  For example, when asked by Mr Jones how she came to be involved with BOP, she said:

… I had a company, my own business, since 1989, and it was a nanotechnology business, environmental – environmental research and environmental science products.

What kind of products were they?   Basically for health and vehicle pollution.

And what, sorry?   Vehicle pollution reduction.  Omission reduction.

Right.  Did you have qualifications in nanotechnology and environmental science?   I had worked at Monash University in the physics department, and I had had a keen interest in – in technology and I had been a – a fan of Nikola Tesla for a long time.  Did a lot of research.

Have you got any university qualifications in science?   No.

What were you doing at Monash?   I was a – a technical assistant to the lecture hall steward, and I – in the physics department, and I – I worked there for almost two years.

Okay.  Thanks?    [indistinct]

MR JONES:   And what did that work involve?  What was your day to day work at Monash?   Well, as – as assistant lecture hall steward, my job was to provide the lecturers, the physics professors with the – the correct equipment that they needed to demonstrate various experiments and so on to the students and to help maintain the equipment and do what my boss directed me, and he was the head lecture hall student – sorry, the – the head lecture hall steward, and he was absent a lot of the time, so it was a responsible job.

Okay.  So would it be fair to say that that was a clerical or administrative role as opposed to a scientific or academic role?   No, because my job was really to make sure that all the apparatus was there.  I was familiar with the apparatus and I sat in on a number of the lectures, although I had – I didn’t have the mathematics background at school.  At high school, I did commercial instead of – instead of science.

But you didn’t have any academic post or position at Monash, did you?   No.  It wasn’t an academic post.

And you’ve never obtained a formal qualification from any university in science, have you?   No.  I didn’t.  But I – I did have to pass the first year English literature exam at Monash in order to be able to assist in marking papers for the university, because all staff members were asked to participate in that sort of thing at that time, in the seventies.

[underlining added]

14. The underlined passage demonstrates that Mrs Orchard avoided the question as to whether she had any qualifications and instead chose to give a quite misleading answer suggestive of some scientific skill (falsified by her further evidence).
15. Another example was the YouTube video which Mrs Orchard accepted she had posted on the internet.  In that video Mrs Orchard refers to a product called the Plasmatech pendant she said had been developed by her following a lifetime’s work, including collaborating with various scientists.  It is said that the product may assist in curing cancer.  Many other outlandish assertions are made.  Mrs Orchard’s cross examination on this document reflected poorly on her credibility and reliability.  She asserted that the product did work and that it had been medically proven and registered by the TGA.  Both propositions are patently false, though again Mrs Orchard might have persuaded herself that they were true. 
16. Mrs Orchard also sought to distance herself from some of the assertions in the video by saying they were written by the “computer programmer”.   However, every page is marked with her name and photograph and marked as copyright to Mrs Orchard, using another name (Elizabeth Seewald, seemingly her maiden name).  At one stage, after being shown to have wrongly denied that the product was said in the video to cure cancer, this exchange occurred:

So is it right that you – would you agree that you were asserting by this slide that the produce [sic product] that you developed may assist in the cure for cancer?   Yes.  Without any specific reference to how.

Yes.  But you’re contending that the device may assist in a cure for cancer?   Yes.  That’s what it says there.

…

When you said a minutes ago that you’ve never asserted this device can help to cure cancer, that was a lie, wasn’t it?   No, it wasn’t. 

Could the video please be moved to about two minutes 44, or close enough?   The words “assisting cure for cancer”, my products promote oxygen – oxygen balance on medical devices.  And I think that’s what a programmer meant by putting that in.

17. Mrs Orchard was keen to assert that the video had not been available for public viewing.   Given the misleading nature of her other evidence about this document, I doubt her evidence on that point.  However, the video is important not only for the ridiculous nature of the claims made, but also for Mrs Orchard’s misleading and evasive evidence about it in cross examination.
18. Not only does this evidence give insight into her lack of reliability as a witness, it also gives an insight into Mrs Orchard’s capacity for self-delusion and grandiose self-confidence.  In my opinion, this explains conduct by her in relation to this matter which might otherwise seem peculiar to a more grounded person (such as signing the loan agreement and making herself liable in debt for money she knew was to be paid away to Mr Silver).
19. Mr Morris submitted that I should conclude Mrs Orchard was a naïve and innocent victim of the fraud of people around her involved in BOP.  I can accept that she was not the guiding mind and will of that company and the property scheme of which it was a part, nor was she the mastermind of its activities.  I otherwise reject that argument.  As I explain in detail below, the evidence established that she was actively involved in carrying on her part in the property business of which BOP was a component, and that she was the principal actor in the fraud practiced on Ms Wylie to dishonestly obtain $100,000.   There might be others also culpable in that regard, but that does not alter the fact of Mrs Orchard’s culpability.

The factual background

Ms Wylieas at September 2010

20. As at September 2010, Ms Wylie was an older person living in her own home at Logan.  She had had a modest work history, if her position as at September 2010 was any guide. 
21. Her employment was eclectic.  She worked seemingly on a casual basis, cold calling potential clients for a real estate agency trying to build a rent roll.  Her role was merely to call clients and if they were interested, to refer them to another person.  She also sold Arbonne beauty products.  She might also have been involved with a health product called Ganoderma.   She worked as a lollipop lady.  She sometimes rented out a room in her home.  There is no suggestion that any of these ventures were lucrative.^[4]  (Her loan application shows her annual income at about that time was $36,000.  She does not accept the accuracy of the loan application and I regard it with some suspicion as well, given the involvement of Mrs Orchard and Mr St Pierre in its preparation.  However, it is unlikely her income was more that amount). 
22. Her asset position reflected very modest employment success.   Her main asset was her house valued at perhaps^[5] $340,000; she owed about $60,000 on the home but had $140,000 in an offset home loan account (which, as I understand such accounts, means that a total of $200,000 was due but $140,000 of that was held in an account offset against the debt and which could be drawn at will).  She also said she was due an unspecified inheritance, but no more was heard about that in the trial.
23. She was 63 in 2010.  Her financial position was not strong for someone seeking to retire. 
24. Both her personal history and her presentation in the witness box indicated to me a person of little sophistication and of limited understanding of business or financial affairs.  That impression was reinforced by her sometimes incredible evidence about documents in this case already mentioned.  In my opinion, part of the explanation for that evidence was her poor understanding of the documents themselves.  Her numerous modest attempts at small business projects and different employment alternatives reflected, I say with respect, a person who was trying to improve her financial security but who had limited capacities for succeeding and who was perhaps becoming a little desperate as to her future.  She did also not appear to have any partner or other person supporting her. 
25. She denied telling Mrs Orchard that she wished to retire and receive rental income, but it is very likely she was concerned about her financial future and was susceptible to suggestions as to how a more secure retirement could be secured.  This susceptibility was aggravated by a limited ability to judge the wisdom of what was proposed.

Mrs Orchard as at September 2010

26. As at September 2010, Mrs Orchard was employed as customer service manager for BOP.  I infer she was perhaps at that time in her mid to late 50s.^[6]  She has little by way of tertiary or professional training.  Her career up to that time is only partially in evidence.  She appears to have worked as a laboratory assistant at some stage, to have worked in real estate in Melbourne at some stage and to have been involved with a business arising out of her “nanotechnology” beliefs.  In about 2005 she appears to have been involved in telemarketing for a company called SMS.  It is unclear what that business involved but it seems likely it was property marketing.  She clearly understood how property contracts generally worked.  My impression is that she had had some considerable involvement in property sales over her work life.  Her financial position was never fully disclosed, though she claimed to have lost funds when Capital Growth International Club (CGIC), a company involved in the property scheme of which BOP was a part, became insolvent.^[7] 

Bank on Property

27. BOP was the trading name of All About Property Developments Pty Ltd (AAPD).  AAPD was incorporated in December 2009, less than a year before Mrs Orchard first met Ms Wylie.  The ASIC search shows Mr Sean Rossely as its sole director and shareholder.  
28. Each of Mr Rossely and Mr Silver were 22 years old.  It appears that their fathers also had significant involvement in the business.^[8]  It was uncontentious that the fathers had each been disqualified from being company directors. Mrs Orchard said she did not know that at the time.  She said she was way down the food chain.^[9] (This comment reflects a common tendency in Mrs Orchard to downplay her role in the affairs of BOP). When asked whether she thought it odd that the 22-year-old sons were directors not the fathers, Mrs Orchard said she did not give it a thought (even though she recognised that at least Mr Silver senior directed Mr Silver junior).^[10]  
29. BOP’s brochure^[11] (provided to Ms Wylie at the first meeting), provides relevantly as follows:
    1. (a)
       Under the heading “About Us”:

Bank On Property is founded on service to clients seeking quality property investments. Our professional organisation markets high quality developments with a wide range of homes, units, and new house/land packages available.

Packages are tailored towards your income whether you be a high or low income earner, retiree, professional investor or off plan buyer. If we don’t have what you want, we will do our best to locate a property that best suits your needs and budget.

Our experienced professional staff can assist with all aspects of property acquisition, obtaining finance, legals, finding the right tenants for your property and more.

2. (b)
   Under the heading “Finance Assistance to Genuine Investors”:

Our properties are financed by major lenders to approved purchasers.

We specialise in helping First home buyers and retirees meet Lender’s criteria by offering unsurpassed value for money.

3. (c)
   The last page identified Mrs Orchard, Mr Rossely and Mr La Torre by name. 

30. The gravamen of the BOP brochure in my view was that it provided a broad property investment service drawing on many sources of property and finance.  That was false.  In fact, BOP sold property from one source (house and land packages developed in Brighton and New Norfolk, suburbs of Hobart, by others involved in the scheme), provided advice from one source (Mr Tomlinson, an accountant) and financed by one source (a Mr St Pierre, a manager of Westpac’s Pacific Fair branch).   BOP was properly characterised as the marketing arm of a property finance and development scheme in which the Silvers, the Rosselys and Mr St Pierre^[12] all participated, along with Mrs Orchard (the scheme). 
31. Another corporate entity involved in the scheme was CGIC.  Its role in the scheme was never made clear.  It appears to have been an investment channel for funds for carrying out the construction of the properties sold by BOP or through BOP.   It was wound up in February 2011.   Mrs Orchard, her son and Mr Silver were shareholders of the company until they transferred their shares to Mr Rossely.  Mr Silver was the director from incorporation in 2008 until May 2010, when Mr Rossely took over.  Mr St Pierre also had some involvement in its affairs, according to Mrs Orchard: she said he advised her to invest in it. BOP’s role appears to have been to channel potential investors in property located by its cold calling activities to contracts with Mr Silver (and perhaps others) for house and land packages in Tasmania and then to Mr St Pierre for finance. 
32. The integrated nature of this scheme was effectively described by Mrs Orchard and understood by her at the time.^[13]  For example, when asked as to who was in control of BOP on a day to day basis she nominated Mr Rossely and the Silvers as the “management team”. 
33. It is further revealed by the fact that Mr La Torre, though one of the three people identified by name in the BOP brochure, in fact worked as a project manager in Tasmania for the development arm of BOP, which seemingly oversaw the construction of the houses.^[14]   Indeed Mr La Torre in explaining how he perceived things, said that BOP and CGIC “were all the same company.” A probative insight from someone who worked in both companies from 2008.^[15]
34. It was also demonstrated by the fate of Ms Wylie once she was engaged with Mrs Orchard and BOP: she was introduced to a house in one of the Tasmanian developments, a contract for that house was produced and signed, she was taken to Mr Tomlinson and she was taken to Mr St Pierre for finance.  Mrs Orchard accompanied Ms Wylie for each of those steps.
35. Mr St Pierre and Mr Silver were ultimately each convicted of fraud offences for their part in this scheme, although the precise nature of their frauds was not explained in the trial.

Mrs Orchard’s role

36. Mrs Orchard was at pains to identify the limits of her role in the activities of BOP specifically and the property scheme generally. She said that she was neither an owner nor director of BOP.  She said she was employed as Customer Service Manager of BOP and paid a salary with no commission  
37. She clearly had a broader involvement in the scheme.  She was an investor in the scheme through CGIC.  She gave evidence that she invested an insurance payout of about $115,000 with CGIC in 2008.  She said she lost part of those funds when CGIC went into liquidation.  She also said that she had known Brad Silver since she gave him a job in 2005 (when he was 17).   She also said she invested those funds on Mr St Pierre’s advice.  I find that she understood the whole of the scheme and the place of BOP in it as the conduit of potential buyers to Mr Silver junior (and other sellers in the scheme) and had an interest in its success through her capital invested in CGIC.
38. She explained her role as Customer Service Manager as follows
    1. (a)
       Her job was “gathering information and giving [Ms Wylie] the correct information.”^[16]
    2. (b)
       “I had nothing to do with legals and I had nothing to do with finance. My job was to approach clients and assess their ability…to enter a property contract of any kind and assess … if they were at all interested in property.”^[17]
39. The company had telemarketers who effectively cold called potential clients and sent marketing material (such as the brochure) to persons who showed interest.  It was never made clear what these telemarketers said.  However, if a person showed any interest, a Ms Rogers would make an appointment for Mrs Orchard to visit the client in person.   Mrs Orchard would then go to visit that person.
40. Mrs Orchard was keen to make clear that she did not act as a sales agent.  She said BOP had sales agents: Mr Rossely junior and senior and three other persons.^[18]  She said that she was not a registered sales agent. 
41. It can be accepted that, officially, Mr Rossely junior or one of the other licensed agents was the selling agent. However, at least where Ms Wylie was concerned, I reject Mr Orchard’s evidence that she did not act as an agent and investment advisor to Ms Wylie in relation to the property Ms Wylie purchased because there was simply no-one else who could have done so.   Even on Mrs Orchard’s evidence, Ms Wylie had nothing to do with Mr Rossely except on the day of the signing of the contract (on Mrs Orchard’s version: as to which see from paragraph [65] below).  No-one else from BOP had any dealings with her by which BOP could have carried out its advertised services set out the brochure given to Ms Wylie.
42. Whatever role she played with other buyers, I find that Mrs Orchard’s role was to visit Ms Wylie, find out if she would be able to get finance to buy a property, and if she was able to get finance, to persuade her to buy a property and then try to ensure that she did so.   As will be seen, that is exactly what she did.

BOP makes contact with Ms Wylie

43. The first contact with Ms Wylie on behalf of BOP which Ms Wylie recalled was a cold call from a telemarketer in early September 2010 who mentioned the possibility of property investment in Tasmania.  Ms Wylie gave evidence that she said she was not interested but mentioned her Arbonne products.^[19] 
44. There is no doubt that something of this kind happened in early September 2010.  However, there might have been some prior contact with BOP by Ms Wylie because on 28 July 2010 am email was sent to Ms Wylie’s email address from BOP.  It is unlikely this email resulted from a telephone communication because it is addressed to “Mr Wylie”.^[20]  The email goes on to state:

Re: Tasmanian property opportunity

Your request for further information on the above opportunities is very much appreciated. Our new House / Land packages in Brighton or New Norfolk offer open plan living, well appointed kitchens inclusive of quality appliances, split system air conditioning, quality carpets, tiling and blinds, and are’ turnkey’ complete with landscaping and fencing. Prices start at $265,000 and comprise of 3 or 4 bedroom homes. The demand for rental properties has these homes achieving rents no less than $295 per week.

The suburbs of Brighton and New Norfolk are both a short drive along the Midland Highway, located within easy reach of Hobart City. Tasmania’s largest residential development has recently been approved for Brighton comprising of 400 homes. Also, construction on the Brighton Transport Hub and Bypass, peaking at $243 million, jointly funded by the State and Federal Government, is due for completion in September 2012. This significant injection of infrastructure and housing will see the greater area of Hobart experience major growth in the years ahead, currently creating a fantastic opportunity for investors.

Our company policy is to provide the best of service, support and accurate information at all times. We are very interested in your opinion and response to our House / Land packages and we look forward to speaking with you again during the coming week.

Please feel free to contact one of our senior consultants on (07) 5528 0422 with any questions you may wish to discuss.

Kind regards,

Bank on Property

45. The email suggests Ms Wylie had expressed interest in the Tasmanian property opportunity, but that does not mean that that hearsay assertion is true.  It was not suggested to Ms Wylie as true and the first line might simply have been a way of trying to persuade the recipient to read the email.  On the other hand, there is a reference in Ms Wylie’s diary to this event and that might suggest that she did express interest in BOP.^[21] (Though as discussed in paragraph [60] below, it is hard to put much weight on the diary entries and they were not relied upon by the plaintiff). There is no suggestion that there was a follow up at this time, which tends to confirm that there might not have been any contact, as does the reference to “Mr Wylie”.  The email does accurately describe what BOP was selling and the kind of property Ms Wylie ultimately purchased.   The fact Ms Wylie received this email, however, might explain why she was later called in September 2010.  The selling techniques of BOP were never fully explored at trial.
46. Returning to early September 2010, one might think it unlikely BOP would have followed Ms Wylie up with a visit unless she expressed some interest, though it is possible that the caller thought that the reference to Arbonne products might provide an opening for BOP to at least get a hearing.  What is clear is that Mrs Orchard was given Ms Wylie’s contact details and made use of that information in setting up the first meeting.
47. The evidence of the two ladies differs in detail as to the first call.  Ms Wylie says Mrs Orchard called her and said she was very interested in the Arbonne products and arranged to do a facial on the 8^th of September.^[22] Mrs Orchard says she called Ms Wylie and Ms Wylie said “If I listen to your story about Tasmania, you know, you could listen to mine about Arbonne. I’m selling a product called Arbonne.”  She says she never booked a facial.^[23]  Not much turns on the difference.

The first meeting: 8 September 2010

48. Both ladies agree that this was the date of their first meeting.  As with most of the key events, their recollections differ somewhat.
49. Ms Wylie said Mrs Orchard came to Ms Wylie’s house and was given a facial first, then got into conversation.  She said Mrs Orchard “told me she’s a lawyer, financial planner, sells house and land packages in Tasmania, and the Tasmanian Government would give people that are willing to buy, rent a house, $8000. And then we started – she started questioning me on my financial.” Ms Wylie said she disclosed her financial situation as summarised in paragraph [21] – [23] above.^[24]
50. Mrs Orchard said there was no facial.  She: “… handed her a card at the door… and I had a folder that had been prepared by the real estate division, which was given to any prospective client…We sat down and I proceeded to, basically, open the folder and just put it on the table and, yeah, asked her some questions about her interest in the property and so on and so forth.” And then Ms Wylie brought up Arbonne.  Mrs Orchard said it was her daughter in law’s birthday and thought she may be interested so she purchased some Arbonne products Ms Wylie.^[25]
51. Apart from the comments about Mrs Orchard claiming to be a lawyer (which I doubt was said) and the contention about whether the facial occurred (about which I am uncertain), both these accounts can stand together.  It is consistent with Mrs Orchard’s description of her role that she would have obtained information about Ms Wylie’s ability to purchase.  And there seems no point to her visit if it was not to then try to persuade her to do so, especially given her subsequent involvement in bringing about that result.  
52. I think it very likely she would have mentioned the Tasmanian Government incentive as a way of persuading Ms Wylie, especially as that was later confirmed by Mr Tomlinson.  And it is a very short step from asking some questions about Ms Wylie’s interest in the property “and so on and so forth” to trying to persuade her to buy one.  That is exactly what Mrs Orchard was there to do. 
53. An important fact which Mrs Orchard confirmed at that first meeting was that Ms Wylie had $140,000 available in an offset account.^[26]  Another matter which I find arose at this time, or soon afterwards, was Ms Wylie’s concern about her financial security and wish to retire. 

Further contact before 29 September 2010

54. It is not in dispute that the contract was signed on 29 September 2010, though the circumstances are hotly disputed.  However, prior to that time, it seems that Mrs Orchard and Ms Wylie met on at least three occasions.
55. The first time was when Mrs Orchard came to pick up the Arbonne kits which she ordered on 8 September.  That appears to have occurred on about 10 September 2010.
56. More significantly, it appears that Mrs Orchard came to Ms Wylie’s home for dinner some time thereafter at which dinner there was some further discussions about investing in property in Tasmania in which Mrs Orchard at the least advised Ms Wylie that she had enough equity to buy a house in Tasmania.  
57. There was then a further meeting at the BP service station at Yatala.  That appears to have been the meeting point for Mrs Orchard and Ms Wylie on more than this occasion.  There is very little evidence about this meeting.  There is also the vexed question of when Ms Wylie met with Mr St Pierre.  I deal with that from paragraphs [79] – [83] below.

Events on 29 September 2010

58. After these few meetings, the parties agree that on 29 September 2010, Ms Wylie signed the contract.  The two versions of how the contract came to be signed, however, are impossible to reconcile.

Ms Wylie’s version

59. Ms Wylie said that Mrs Orchard said she wanted to meet her at the Helensvale Bowls club for coffee.  Ms Wylie agreed.  At that meeting she says she was shown the contract.  She said it was the first time she had seen the contract.  Ms Wylie said that Mrs Orchard “sort of insisted I sign the contract there and then so she could get things started.”^[27]  Ms Wylie said she had a quick glance through it and signed it.  She said Mrs Orchard took the contract with her.^[28] 
60. Ms Wylie was cross examined at length on this evidence.  The cross examination focused on the notes contained in her diary for 29 September 2010.  Ms Wylie’s evidence about the notes in this diary was uniformly unreliable.  The effect of her cross examination leads me to conclude that she inserted notes in the diary at various times after the event and that Ms Wylie rarely had any recollection of when the notes were added.  However, many of them appear to have been added after she was in dispute with Mrs Orchard.  Further, Ms Wylie sometimes suggested that the notes were made quite soon after the event in circumstances where that could not be so.  There is no doubt that some of the entries are genuine and contemporaneous notes.  There are others that seem not to be and some which might be a combination.  It is difficult to tell, and Ms Wylie’s evidence was unreliable on that distinction. 
61. The diary note for 29 September is a good example of all these aspects of the evidence.  It reads (with line breaks as in the exhibit):

Met Elizabeth at Helensvale.

to sign contract rushed to sign did not give me time to read through … (indecipherable mark)

contract or explain anything

62. I do not accept that the whole note was made contemporaneously. The second and third lines were probably made after Ms Wylie was in dispute with Mrs Orchard.  And to make matters worse, Ms Wylie gave evidence that the notes were made soon after that day.  That was plainly wrong.  It is this kind of transparently incorrect evidence about her documents which make her an unreliable historian and probably does reflect, as Mr Morris contends, a fixed version of these events built up of the years which fits her sense of grievance.  The diary was not relied upon in evidence in chief nor tendered by Ms Wylie.  However, she seems to have refreshed memory from it.  And in any event, her evidence about it in cross examination did her no credit.
63. Oddly, in this case, the first line of the note might be contemporaneous.   However, I am not sufficiently confident of that to rely the note to that extent.  Apart from my general concerns about the reliability of these notes (though they were not propounded in examination it should be noted nor tendered by the plaintiff), that line is written in the past tense and Ms Wylie’s uncontentious entries in the diary seem to reflect that she used the diary to note appointments and events to happen, rather than to record what did happen. 

Mrs Orchard’s version

64. Mrs Orchard agrees with Ms Wylie’s evidence in the first three sentences of paragraph [59] above.  However, she says this occurred prior to 29 September 2010.  She denies that the contract was signed at that time.  Rather she gave evidence that the discussion was “here’s the house and land contract for you to look at. And, you know, we’ll follow up on that – go and have a look – check it out, read through it, et cetera, et cetera. And there will be a further appointment – a follow-up appointment with David [St Pierre]”.^[29]
65. She agreed that the contract was signed on 29 September 2019, but not at the bowls club.  She said it was signed at Ms Wylie’s home and in quite a different manner from Ms Wylie’s version.  She said that^[30]:
    1. (a)
       Mr Sean Rossely, Mr Brad Silver, Mr Dennis Dwan and Mrs Orchard all attended at Ms Wylie house to sign the contract;
    2. (b)
       Mr Silver was there as vendor; 
    3. (c)
       Mr Dwan was there a company administrative manager and as a JP.  His role was normally to witness signatures on real estate contracts;
    4. (d)
       Mr Rossely was there as the real estate agent who had to take her through the process of explaining the contract and explaining the cooling off period.
66. She said in evidence in chief that her part in this signing ceremony was to witness Ms Wylie’s signature. She said that the contract was taken away by Mr Dwan to be sent to Mr St Pierre.  She said she never pressured, advised or spoke to Ms Wylie otherwise about the contract because she was not employed as a real estate agent, received no commission and had only met Ms Wylie a couple of times as Customer Service Manager.
67. Mrs Orchard was cross examined at length on this event:^[31]  
    1. (a)
       When describing the signing she first said that the signing took place with all four visitors in Ms Wylie lounge room;
    2. (b)
       She said Mr Dwan went to the meeting because he was a JP and it was his job to witness signatures;
    3. (c)
       She was asked why Mr Dwan did not witness Ms Wylie’s signature twice. She evaded the question the first time.  She said she did not know the second time;
    4. (d)
       She then said she was outside on the porch while Mr Rossely was going through “whatever [the] PAMD requirement was”;
    5. (e)
       She said that the whole event took 20 minutes;
    6. (f)
       She was asked if she thought that situation was intimidating: she avoided answering by saying only the three men were in the lounge room, she was on the porch;
    7. (g)
       She then again gave evidence that Mr Rossely went through the “PAMD, whatever the – cooling off period you know [whatever] the regulations were”, though she conceded she was not in the lounge at the time but was on the porch “taking phone calls”, though she maintained that that was what Mr Rossely was doing;
    8. (h)
       She said her understanding was that a real estate agent had to go through a PAMD–type procedure and obtain some sort of signature or acknowledgement that had to do with the cooling off period; and
    9. (i)
       Mr Jones also suggested that Mrs Orchard had not called Mr Dwan to give evidence because she knew he would not assist her case.  Mrs Orchard impliedly denied that was so.
68. Mrs Orchard was re-examined to try to address the Jones v Dunkel issue raised by Mr Jones.  Her evidence seemed to be that she had instructed her solicitors to try to contact Mr Dwan as well as Mr Rossely, though the evidence was given in an ambiguous manner.  And there was no evidence about whether either of those persons had been located or asked as to their recollection.^[32]
69. Mr Morris also led evidence of a prior statement given in August 2020 in answer to Mr Jones suggestion that the evidence about the signing was false.   While the paragraph relied upon did say that all four people attended at Ms Wylie’s home for signing, it also said that Ms Wylie’s application had been analysed by Mr St Pierre and approval of finance given by Westpac by letter of offer dated 29 September 2010.  On the evidence tendered at trial, that statement is wrong: the letter of offer only issued on 11 October 2010.^[33]  Further, as explained below, I reject Mrs Orchard’s evidence that Ms Wylie had even met Mr St Pierre at this time.  Thus the statement did not on balance add to the credibility of Mrs Orchard’s version, being marked by other clear errors of fact.

Conclusion on execution of the contract

70. This is one of the conflicts on the evidence where it is impossible for the evidence of the two witnesses to be reconciled.  Mr Jones’ submissions suggested that Mrs Orchard’s version might be accepted.   However, despite that, on this point, I reject Mrs Orchard’s evidence and accept Ms Wylie’s version.  I reach that view for the following reasons.
71. First, Ms Wylie gave evidence that she had never met Mr Rossely, Mr Dwan or Mr Silver.  Despite my significant reservations about her as a witness who could give a reliable account of events, I do accept her evidence in this respect.  It is exactly  her sense of grievance which supports that conclusion.  I think it extraordinarily unlikely that Ms Wylie would forget if she had met the person who was the vendor under the contract which caused her so much grief.   Further, it is equally unlikely that she would forget three men, previously unknown to her, descending on her home one day apparently without notice, for the signing of the contract.
72. Second, Ms Wylie does not have any motive to erase this event from her mind.  It does not undermine her narrative in any material way.  Indeed, it could be thought to enhance her complaints about illegitimate pressure to sign the contract.  Mrs Orchard, on the other hand, has every incentive to create this story.  It supports her narrative that she was just the Customer Service Manager, a narrative which is inconsistent with the facts in any event.
73. Third, Mrs Orchard’s cross examination on the subject was evasive and her answers on difficult questions were unconvincing.  Most fundamental is her insistence that Mr Dwan was there as a JP to witness signatures on land contracts.    Her story about her involvement was that she was outside, on the phone, not hearing anything and not involved in any way.  Why then did she witness Ms Wylie’s signature?  She could give no credible answer.  The obvious answer, which makes sense of the witnessing on the execution page of the contract, is that Ms Wylie signed the contract in Mrs Orchard’s presence alone, as Ms Wylie says it occurred.
74. Fourth, her evidence about what Mr Rossely was doing there was also not credible.  She spoke about his need to give PAMD type, cooling off instructions.  However, she cannot have heard that on her version, given she was on the phone most of the time.  And in any event, there is no hint that any such instructions were required or given in respect of the contract.  It was a contract for purchase of land in Tasmania.  It contains no notices, of the kind which are used in Queensland and would be expected for any similar statutory scheme in Tasmania.  I agree with Mr Jones submission that this evidence was made up by Mrs Orchard to enhance her version and distance herself from her role as chief persuader and marketer to Ms Wylie.
75. Fifth, the previous statement relied upon by Mr Morris was only made a couple of months before the trial, 10 years since the events described.  It was also wrong in material particulars relating to Mr St Pierre’s involvement.
76. Sixth, it is not ordinary practice for a vendor of property to be taken to a purchaser’s home so that the contract can be signed in each other’s presence, much less that the vendor take his own Justice of the Peace with him for the purpose, much less that three people descend on the home of the potential purchaser, apparently without notice, for the purpose.  Frankly, the only credible explanation for such an unusual practice in this context is, as Mr Jones said, to pressure the potential purchaser into signing the contract then and there.  
77. Seventh, I consider the evidence as to why none of the gentlemen who were supposed to have been at this meeting had not been called was inadequate.  Apart from the unpersuasive way that her evidence emerged about this, no evidence was led as to whether Mrs Orchard’s solicitors looked for or found Mr Dwan or Mr Rossely, much less any explanation as to if they were found, why they were not called.  The fact that Mrs Orchard might specify them as potential witnesses of itself is not compelling, given her capacity for self-delusion and the fact that she seemingly had told her solicitors by August 2020 that those men were present.
78. In my view, Mrs Orchard has reconstructed the signing event at Ms Wylie’s home on 29 September 2010, whether deliberately or not is hard to determine.  However, it reflects her on-going tendency to try to minimize her role in persuading Ms Wylie into the property transaction.  As I have found, that was exactly what her role was, and she played it with success.

Visiting Mr St Pierre

79. Both witnesses gave questionable evidence on aspects of the dealings with Mr St Pierre.
80. As to timing, Mrs Orchard says she took Ms Wylie to see Mr St Pierre on about 10 September 2010, over 2 seeks before the contract was signed.  Ms Wylie says that she was taken to see Mr St Pierre on 11 October 2010, the date on the offer of finance. 
81. I reject Mrs Orchard’s evidence.  It is highly improbable that she would have taken Ms Wylie to see Mr St Pierre just two days or so after their first meeting.  In any event, exhibit 3 (the loan application) puts the point beyond argument.  It shows that Mrs Orchard filled out most of Ms Wylie’s finance application and sent it by fax to Mr St Pierre on 27 September 2010.  It also bears Ms Wylie’s signature and the date 24 September.  Ms Wylie would not have gone to see Mr St Pierre before the form was sent to Mr St Pierre. 
82. Mr St Pierre appears to have added some further financial details and then on sent the finance application on 30 September 2010.  It is likely that this information was obtained by him from Ms Wylie and it would make sense that that interview happened immediately after the contract was signed and finance required to be confirmed promptly.  Strangely, the loan application does not appear to identify the amount sought to be borrowed.
83. Ms Wylie and Mrs Orchard gave conflicting accounts of how the interview with Mr St Pierre was conducted.  In short, Ms Wylie’s evidence is that she was banished to one side while Mrs Orchard did all the talking to Mr St Pierre.  Mrs Orchard’s version is that she played no part in the meeting.  Both versions serve the respective narratives of the key players: Ms Wylie as the innocent victim and Mrs Orchard as the arm’s length, Customer Service Manager.  Both accounts are inherently unlikely.  The most likely scenario is that Mrs Orchard participated in the meeting and guided the process from Ms Wylie’s side, though Ms Wylie would have been involved in the discussions.  This is consistent with Mrs Orchard role in keeping Ms Wylie moving towards settling on the house purchase.  However, Ms Wylie’s version of her entire exclusion is just not likely, and I do not accept it.

The contract

84. Finally, the narrative arrives at the contract to purchase Collins Street.^[34]  The relevant aspects of the contract are as follows.
    1. (a)
       The contract is a standard form Real Estate Institute of Tasmania/Law Society of Tasmania contract;
    2. (b)
       The vendor is Brad Silver and his solicitor is Mr Crotty;
    3. (c)
       The purchaser is Ms Wylie and her solicitor is nominated as being Mr Howroyd;
    4. (d)
       The purchase price is $295,000;
    5. (e)
       The deposit item in the schedule is not completed, nor is a deposit holder nominated. Read with standard condition 2, this means there was no deposit payable under the contract;
    6. (f)
       Completion was 29 October 2010;
    7. (g)
       The contract provides vacant possession of the Property and for a Property Use defined as “residential dwelling”;
    8. (h)
       There is a subject to finance clause in the schedule, which provides for a finance amount of $236,000 to be obtained within 14 days and states:

It is a condition precedent to the Purchaser’s obligation to complete this Contract that, within the Finance Period, the Financier makes available to the Purchaser a loan of the Finance Amount

85. The standard conditions are unremarkable.  The only one to note is clause 17, which provides:

17 Default

17.1 Parties may make time essential

After the Completion Date, one party may, by 14 days notice to the other, make the time for completion essential so that failure to complete will constitute a fundamental breach of this Contract justifying termination.

17.2 Vendor’s rights on termination of Contract

If the Purchaser fails to complete the Contract in accordance with its terms then, unless the failure is due to the Vendor’s willful default, on termination of the Contract:

1. (a)
   the deposit is forfeited to the Vendor;
2. (b)
   in addition to any other remedies available, the Vendor may:

   1. resell the Property and the Chattels in any manner and on any terms the Vendor chooses; and
   2. claim any loss on resale from the Purchaser as liquidated damages; and
3. (c)
   any profit on resale will belong to the Vendor.

86. The following should be noted about the contract:
    1. (a)
       First, although it emerged that Ms Wylie was buying a lot with an incomplete house being built on it, there is nothing in the contract which expressly recognises this; 
    2. (b)
       Second, Ms Wylie had no input into these terms nor had she ever met or heard of Mr Howroyd;
    3. (c)
       Third, there is nothing in the contract or otherwise before the Court to suggest any cooling off period applied or that any specific disclosures were required; and
    4. (d)
       Fourth, there was no evidence of any discussion with Ms Wylie about, nor other explanation for, the finance amount being set at $236,000.
87. There is little doubt that Mrs Orchard, on behalf of the scheme,  encouraged and procured Ms Wylie’s entry into this contract as part of the process of ensuring her commitment to purchasing one of the properties.  She gave evidence that she did not look at the contract before giving it to Ms Wylie on 29 September 2010.  If that is correct, it reflects her disregard of the suitability for Ms Wylie of the transaction into which she was leading her.  If contrary to my finding about the signing of the contract, the signing happened as sworn to by Mrs Orchard, her evidence demonstrates the kind of pressure tactics used by BOP and its associates.  The fact she gave that evidence tends to demonstrate that, even if it did not occur on this occasion, it was the kind of tactics used.

Did Mrs Orchard know the deposit terms?

88. Mrs Orchard gave inconsistent evidence on this central issue throughout the trial.  Twice she agreed that she knew that no deposit was payable under the contract.^[35]   At other points she gave evidence that she did not know that.  In one passage she referred to a note of a whiteboard in the office, which said Ms Wylie owed $100,000 seemingly as a deposit.  That evidence is unlikely and incredible.  She said she relied on this, despite also accepting she knew the price under the contract and the finance amount, and that the difference was much less than $100,000.^[36]  It is also convenient to note that Mrs Orchard confirmed in evidence that she was generally familiar with how land contracts worked and that deposits were usually paid to a stakeholder.^[37]
89. I make findings as to her state of knowledge at paragraphs [220] to [243] below.

Further steps in the property transaction up to finance notification

90. Thereafter, the involvement of Ms Wylie in the scheme continued in what appeared to be the usual way.  On or about 6 October, she was taken by Mrs Orchard to see an accountant, Mr Tomlinson, who gave advice about the Tasmanian government incentives for investors in property in that state.  This free consultation was offered to every purchaser by “the company”, presumably BOP.  There was considerable evidence about what else occurred in that meeting, whether Mr Tomlinson changed Ms Wylie’s BAS statements and if so, whether he inserted false figures.  Ms Wylie’s evidence about these BAS statements was confused and confusing.  She seems to have persuaded herself that something untoward occurred, but I doubt that the situation was as she asserted.  In any event, the point is moot.  It reflects again Ms Wylie’s unreliability and sense of grievance.  I am well aware of those problems in her evidence.
91. At around that time, Mrs Orchard also took Ms Wylie to see Mr St Pierre, the consequence of that being that a finance application was prepared, seemingly by 30 September 2010. 
92. Finance was due to be notified by 13 October 2010.  On 11 October 2010, Westpac offered finance to Ms Wylie for $310,000.^[38]  It is unclear why this amount was offered, and there was no evidence about the negotiation of this sum.  As I have noted already, there was no finance amount in the loan application.   Nor is there a signed version of the loan application in evidence.  However, on 13 October 2010, Ms Wylie confirmed Mr Howroyd’s instructions to act as her solicitor in the transaction.
93. Strangely, on 14 October 2010, Mr Howroyd accepted instructions to act for Ms Wylie and then wrote “Westpac have advised me that your finance is approved.  I will advise the vendor’s solicitors as to this”.^[39]  There is no reason to doubt that Mr Howroyd did so advise. 
94. One wonders why Westpac (presumably Mr St Pierre) is giving Mr Howroyd direct information about Ms Wylie’s affairs.  One wonders even more why Mr Howroyd is assuming that it is proper to act on the instructions of Westpac and why he is assuming that the offer of finance is acceptable to Ms Wylie.  I am conscious I do not know everything about this aspect of the matter, but it is odd.
95. In any event, by 14 October 2010, Ms Wylie had secured finance and was a party to an unconditional contract to buy the land plus (presumably) house under construction at Collins Street, Brighton, due to settle on 29 October 2010.  The process begun by Mrs Orchard on 6 September 2010 had met with success.  
96. She had secured Ms Wylie’s commitment to a contract to buy one of the properties for sale in the scheme by a combination of befriending Ms Wylie, giving her advice and suggestions about the wisdom of investing in Tasmania (notably no-one else provided any such advice) and facilitating her involvement in the various steps in the carrying of the investment scheme: the visit to the accountant, obtaining finance from Mr St Pierre and signing the contract produced by Mr Silver.
97. Mr Jones, for Ms Wylie, submitted that Mrs Orchard was a knowingly dishonest and active participant in the scheme with Mr Silver and Mr St Pierre (and presumably Mr Rossely and Messrs Silver and Rossely senior) to enrich the promoters of the scheme rather than acting in the interest of investors.^[40] 
98. While the submission might go a little too far, Mrs Orchard was well aware that BOP was the marketing arm of a scheme which was designed to persuade buyers into buying property in the Tasmanian development regardless of whether it was in the particular buyer’s interest, so long as the buyer had enough resources to secure finance and was susceptible to persuasion. 
99. I also consider Mrs Orchard was the principal architect of persuading Ms Wylie to do so and shepherding her through the various stages of the scheme.  While she might not have been aware whether and to what extent the properties purchased were good value, I consider she did not turn her mind to that question at all.   I reject her repeated self-serving assertions that she had no interest in securing sales for the scheme.  Even if she did not receive commissions, she had invested capital in CGIC and it is a strong inference that CGIC’s fate was connected to the success of the scheme,^[41] as she seemed to concede in an unguarded moment^[42] (despite continually stating she had no interest in Ms Wylie entering into a contract).^[43] 
100. There is no claim made against Mrs Orchard on the property contract.  However, these events are relevant for two reasons:
     1. (a)
        First, because they provide the context to the claims arising out of the payment by Ms Wylie to Mrs Orchard of $100,000 by bank cheque on 19 October 2010.   Most importantly, it should be noted at this point that by 13 October 2010, the contract was unconditional, no deposit was required and Ms Wylie had secured finance to complete the contract; and
     2. (b)
        Second, because they demonstrate the nature of Mrs Orchard’s relationship with Ms Wylie.  Ms Wylie was and is plainly a person of little sophistication who aspired to financial security, tried hard to achieve it, but did not have the skills to reach her goal, but who had modest assets available.  She was   vulnerable to influence and demonstrably able to be influenced.  Given my findings about Mrs Orchard’s dealing with her up to that point, I conclude that Mrs Orchard had made those observations of her at the time.   

The loan agreement and the bank cheque

Mrs Orchard’s evidence about events up to payment of the $100,000

101. At about the time the land contract became unconditional, Mrs Orchard obtained another $100,000 from Ms Wylie.   It is uncontentious from Mrs Orchard’s side that the genesis of this demand was the need of the scheme for $100,000 to deal with a cashflow crisis.
102. Mrs Orchard said that the genesis of the idea that Ms Wylie should pay $100,000 was a telephone call from Mr St Pierre.  This call seems to have occurred in early to mid-October.  Mrs Orchard said that he asked if she had a non-Westpac account.  He said that there had been some kind of title problem with four properties ready for settlement in Tasmania and that Westpac would not permit settlement until this problem was resolved.  This was causing a cash flow problem for “the company”, seemingly CGIC and/or BOP (they are the only candidates). 
103. She said Mr St Pierre then said that there was a $100,000 deposit due from Ms Wylie’s contract and that he would arrange for her to pay the money to Mrs Orchard.  Mrs Orchard said that there was no way anyone would do that, and Mr St Pierre said it was all above board and all she had to do was disburse the funds through Mr Silver.  He said ‘the company” could be insolvent if this did not happen.  He continued that everything was fine and that it was a temporary situation and that an agreement would be drawn up by “the office” because the deposit was not going into a stakeholder account.^[44]
104. She also said that in about June or July 2010, Brad Silver or David St Pierre had asked her to investigate Refund Home Loan franchises, which she did.  She said that in mid-October, Mr Silver asked her if she could work with Ms Wylie in a Refund Home Loan Franchise.  She answered that she could not see any problem in working with anybody in such a franchise.
105. She then said that on 19 October, David St Pierre rang Mrs Orchard and told her that he had organised for Ms Wylie to draw a cheque and that the office would give her an agreement.  She said she was given one on a USB stick but did not look at it until she printed it out at Ms Wylie’s home.  She says she went there that day, printed out the loan agreement on the USB and went through it paragraph by paragraph with Ms Wylie and then signed it.
106. She finally said that her intention “at all times was to protect Ms Wylie’s interests at all times and Refund became a totally unviable proposition, so I directed all funds possible towards the property and that – my understanding was that the property contract would be satisfied, that the house would be built, and she would own a home and have either rental income or the choice to sell it at a later date.” She said she received none of the $100,000 into her pocket.
107. She later gave evidence that in her view, the loan agreement was not an investment agreement.   She gave this evidence: “Other than what – than the Refund Home Loan aspect of it, the rest of it was for property. Everything was to do with the property – was instigated by the property contract. It was predicated on the property contract.”  The loan agreement does not mention the contract.
108. In cross examination, Mrs Orchard expanded on these matters.
109. She said that she understood that $100,000 was about 1/3 of the purchase price and that she did not think that odd because of Ms Wylie’s age.^[45]
110. She said that she believed the company with the cashflow problem was CGIC,^[46] though she denied being a shareholder (having ceased in 2010).
111. She said her belief was that Mr St Pierre approached Ms Wylie about Ms Wylie paying $100,000.  She accepted that her intention when she obtained the $100,000 was to pay it to Mr Silver or at his direction even though the property was not due to settle and the house was under construction.  She said it did not cross her mind to consider whether Mr Silver had any capacity to repay the $100,000.  
112. She confirmed that she read though the loan agreement carefully.  She agreed that the document referred to acquisition of a Refund Home Loan franchise.   She said that she told Ms Wylie that the $100,000 was paid to Mr Silver as part of her property deposit.
113. Mr Jones then asked how the money could be paid to Mr Silver and used to buy a Refund Home Loan Franchise at the same time.  I will not set out her evidence on this issue.  What it demonstrated to me was that it was not possible for both things to happen.  Ultimately, Mrs Orchard’s best effort the first time this was examined was to suggest that Mr Silver might have used some of the money to buy such a franchise. However, she again confirmed that he needed $100,000 to cover the cashflow problems of CGIC.  And Mrs Orchard said that as an employee it was her duty to the company and its clients (including Ms Wylie it seems) to keep the company afloat.  
114. She was cross examined about whether she turned her mind to the consequences for Ms Wylie if her contract terminated and the money could not be recovered from Mr Silver.  Her evidence ultimately was that she never did so and never had reason to do so because she trusted Mr St Pierre.  Mr Jones then asked her whether she was concerned about Mr St Pierre’s request that the money go into a non-Westpac account.  She recognised in the witness box it was suspicious but accepted his reassurances that everything was fine, even though she said he told her money might be frozen if paid to Westpac (and bearing in mind of course that he was a Westpac manager).  
115. Mrs Orchard came back to the Refund franchise issue later in her cross examination.
116. The gravamen of her evidence was that whole amount of $100,000 was for the benefit of Mr Silver but Mr Silver and Mr St Pierre had discussed a franchise earlier.  It “would” have been for the benefit of “all parties”.  Mr St Pierre (so he could fund separately from Westpac and have a job) for the benefit of Mr Silver (as a source of funds), for the benefit of Mrs Orchard (so she had a job) and for the benefit if Ms Wylie (so she would have a job).  Mr Silver “would” have paid the $25,000 needed for the franchise “allocated at his discretion”.^[47]  Her evidence about this matter was in my view a reconstruction of events, not a recollection of events.   Her later evidence about whether there had been any discussion to this effect with Mr Silver was evasive.  She never gave evidence that such a discussion happened.^[48]
117. As to how much of this was told to Ms Wylie, Mrs Orchard said that there had been a couple of discussions about a Refund franchise with Ms Wylie as few days before 19 October.  She said the acquisition of a franchise was discussed on 19 October as well.  She said she told Ms Wylie about Mr St Pierre also getting a job out of the franchise. 
118. She was asked again about how the $100,000 could be used for a franchise if all the money was Brad Silver’s money.  She gave this answer^[49]:

But Ms Wylie would supply all of the money?---Ms Wylie’s money, in my opinion, was Mr Brad Silver’s money, that he was actually supplying – allocating funds towards a Refund franchise for the benefit of getting finance from a – through Refund other than dep – depending on Westpac. Because Mr – Mr St Pierre had shared with me information that Westpac were basically changing their – their loan conditions.

119. She then gave a more detailed account of the place of the franchise in Mr St Pierre’s plans.  She said he told her he could not compete with Westpac for a period of time (presumably after resignation), but he was going to hold the AFSL license required for the franchise which neither of Ms Wylie or Mrs Orchard had or would be able to obtain.
120. Mr Jones suggested to Mrs Orchard that the only quality which recommended Ms Wylie as a partner in a Refund franchise was that she had $100,000.
121. There was then this exchange^[50]:

I suggest to you that the only thing Ms Wylie had going for her as a Refund Home Loan – as a Refund franchise participant was that she had $100,000?---Well, you can say that now, Mr Jones, but you asked me what – what was operating at the time. I had no interest in Ms Wylie’s money. I got no part of her $100,000 as – as – as you’re implying, in my opinion, and the arrangement was done without me being anything other than involved from a point of view of getting a job and – and – the company owed me money as well because I was an investor.

So this is a way for you to get money back from Mr Silver’s business; is it?---It was a way – the way I – I saw it – I can it put it simply, your Honour. I saw it as a way for Ms Wylie to be – to have her money protected by a property contract that was going to settle, that – where it was going to be her deposit in full, that she would get the property and she would also get a job and I would get a job.

122. She then said she believed the property contract would settle because all the contracts had settled.  She then accepted that there were four which were in difficulty (incidentally, the four which precipitated the plan for getting $100,000 from Ms Wylie.)
123. When pressed with the proposition that she went to Ms Wylie’s home on 19 October to get money from her, she again invoked Mr St Pierre’s involvement and said that she was not trying to procure money, but delivering a heads of agreement on behalf of the company.^[51] 

Mr La Torre’s evidence

124. Although Mr La Torre had no dealings with Ms Wylie, he was involved in these events.  Mr La Torre was working as a project manager in the scheme, dealing with contractors working on houses being constructed.
125. He said that in early to mid-October he was invited to a meeting at the offices of BOP/CGIC on Cavill Avenue.  Brad and Tony Silver, Mr St Pierre and Mr Dawn were present.   He was told that Westpac was about to start investigating Brad Silver’s accounts because of the amount of money going through them.  Mr St Pierre then told Mr La Torre that the business was basically insolvent because a cashflow problem.  He said he had a contract for Ms Wylie in his hand and that money was coming in from this contract as a deposit but could not go into any account in the name of Silver.  Someone said the amount of $100,000.  (I note here that if this was said, it must have been a deliberate lie by Mr St Pierre, who must have known no deposit was payable).
126. Mr La Torre said that he spoke about the proposal and seemed to say that the result was that the money could go to either his account or his mothers’ (Mrs Orchard), it was in his view just happenstance it was his mother’s account, and $60,000 was later transferred to his account because his mother was going to Melbourne to see clients and Brad Silver wanted the money accessible to him at the Gold Coast.
127. In cross examination, Mr La Torre said that he did not discuss the $60,000 payment with Mrs Orchard before receiving it into his account, nor did he tell her what he was doing with the money.^[52]

Ms Wylie’s evidence about events up to payment of the $100,000

128. Ms Wylie gave evidence that Mrs Orchard rang her up and invited her out to dinner at the Logan RSL on the Friday before the loan agreement was signed (which would have been 15 October 2010).   She said that at that dinner, Mrs Orchard kept asking about her financial wellbeing.  She said Mrs Orchard encouraged her to buy a house in Tasmania.  She also said Mrs Orchard said she wanted to help her out financially and said if she gave her $100,000, she would give her 15 per cent interest for three years and give her all her money back.  She did not mention the Refund franchise at the time.
129. On the following Monday she said that she rang and said she’d just been to a weekend seminar with Refund Home Loan and she thought it’d be a great idea to go in a franchise together.  She said Mrs Orchard said if she could come up with $100,000, they could work the business together and sell it later.
130. She then said Mrs Orchard arrived on 19 October with the loan agreement.  She said Mrs Orchard spoke more about the Tasmanian property purchase and also spoke about how they could invest in the Refund franchise.   Ms Wylie said the discussion about the $100,000 was not to do with the Tasmanian purchase, it was to do with the Refund franchise.^[53]  She said there was no mention of the $100,000 being a form of deposit for the property purchase.
131. Notably, Ms Wylie gave no evidence about how it came to be that she had a bank cheque for $100,000 ready for Mrs Orchard on the day she arrived.  Nor was she asked about this in cross examination. 
132. Further, notwithstanding Mr Morris’ searching cross examination, he did not put to Ms Wylie that Mrs Orchard told her on or prior to 19 October that the $100,000 was to be used as a deposit,^[54] something Mr Morris would have been certain to put if he thought his client would give that evidence (given the centrality of the point to Mrs Orchard’s case). 

The loan agreement

133. The loan agreement signed by the parties provides:

The purpose of this Agreement is to confirm the arrangements agreed to by the parties named, and documenting their Deed of Acknowledgement of Debt as follows:

Ms Lyn WYLIE or LW, of 11 Bindi Street, Logan Central, QLD as the Lender.

AND

Ms Elizabeth ORCHARD or EO, of 14 Surrey Court, Helensvale, QLD as the borrower.

As at October 16, 2010 it was discussed and agreed between LW and EO that they would form a business alliance for commercial purposes, to capitalise on their skills and experience in the following manner:

1. To purchase a ‘Partner’ franchise from REFUND home loans in both names at the earliest possible time in order to procure an ongoing income for both parties.

2. To establish a REFUND Financial Planning franchise based on the prior knowledge and experience of EO in that field, at the best possible cost, subject to successful negotiations with REFUND management at Brisbane Head Office.

3. LW to receive a dividend of 15$ per annum for an initial period of Three (3) years by investing an amount of capital from her own resources to EO.

4. The agreed Loan amount of One Hundred and Fifteen thousand Dollars (115,000 Dollars) to be advanced as agreed, under the following terms and conditions:

1. A bank cheque is to be obtained by LW for the amount of One Hundred thousand Dollars (100,000 Dollars) payable to EO is to be provided on October 19, 2010. Interest is payable in advance of 15% per annum.

2. Fifteen thousand Dollars (15,000) will remain in the account of LW, being a major portion of the initial interest paid in advance. Annual interest payable is calculated as $17,500, with the balance being $2,500 to be paid within 7 days to LW with a receipt to be issued for $17,500 interest paid in full.

3. The next anniversary of this Loan shall be October 19, 2011 at which time the second interest installment of $17,500 shall be due and payable to LW.

4. The third anniversary of this Loan shall be October 19, 2012 at which time the third interest installment of $17,500 p.a. shall be due and payable to LW.

5. The term of this Loan is to remain fixed for three (3) years from the date of this Agreement, and at the end of the three year term the capital amount of One hundred and Fifteen thousand dollars (115,000 Dollars) is due and payable in full, unless otherwise agreed by the parties to extend the term by a further one, two or three year term.

This agreement is entered into with the utmost good faith from both parties, and shall be for the purpose of achieving commercial success with best efforts being put forth by both parties at all times. EO shall have full discretion as to how Loan funds are dispersed in order to achieve mutually beneficial objectives and provide ongoing employment opportunities for both parties.

LW and EO shall make joint decisions wherever practical with regard to conducting their REFUND franchise or any other mutual business in accordance with their qualifications and experience, and with honesty and integrity at all times.

If at any time the REFUND franchises reach a potentially marketable and profitable level, either party shall have first option to buy the others share, or be compensated on a 50/50 basis upon sale of the business(s) to any third party acceptable to both LW and EO.

This Agreement is entered into on this Nineteenth day of October, 2010 by the undersigned, being named as follows:

Ms Lyn Wylie:………………………………….

AND

Ms Elizabeth ORCHARD……………………...

Attachments: copy of bank cheque no 652941 for 100,000 dollars

         Deposit slip: copy to be provide to LW by EO on October 20, 2010.

134. Following signing of the agreement, Ms Wylie gave Mrs Orchard a bank cheque for $100,000 made out to Mrs Orchard.

The funds are disbursed

135. Mrs Orchard collected the bank cheque to a personal account held in her name.  It is convenient to explain how the funds were dispersed and when at this point^[55]:
     1. (a)
        $60,000 was paid from Mrs Orchard’s account to the account of her son, Lewace La Torre, on 21 October 2020.^[56] Mrs Orchard said she did not know at the time how the money transferred to her son was used and did not inquire;
     2. (b)
        $20,060.50 to Mr Brad Silver’s lawyer, James Crotty, on 22 October 2010 according to the admissions or on 29 October 2020 according to Mr La Torre’s bank statement^[57], Mrs Orchard said she was not “privy” to that transaction, though she was familiar with the circumstances of the payment in the witness box;^[58]
     3. (c)
        $23,136.75 paid to Bunnings on 29 October 2010,^[59] but it passed first, it seems, through the account of Mr La Torre;^[60]
     4. (d)
        $25,375.50 paid to the company “No Diggity Pty Ltd” on 4 November 2020, directly from Mrs Orchard’s account, with the reference “No Diggity Property Solutions”;^[61]
     5. (e)
        $8,598.30 paid to Bradley Silver’s staff as wages between 20 October 2010 and 10 January 2011;
     6. (f)
        $13,625.00 to Bradley Silver;
     7. (g)
        $5,790.00 paid to the “Safety in the Market” program on 22 October 2010, directly from Mrs Orchard’s account; 
     8. (h)
        $3,000 was paid to the “Staunch” program on 1 December 2010. 
136. Those payments deposed to by Mrs Orchard total $99,586.05.
137. At the time of receipt into Mrs Orchard’s account, she had a balance of $29.22.^[62]  The balance had been below $21.00 since 20 June 2010.  By 4 November 2010, the balance was back down to $7,112.72.
138. Other amounts were withdrawn as cash, which can be seen from the bank statement of Mrs Orchard.^[63]  Mrs Orchard accepted that amounts from the amount paid into her account went to her benefit.
139. Further, it can be seen from Mrs Orchard’s bank statements in evidence that the payment to Mr La Torre was not by bank cheque.^[64] So much is clear because it is described as an “RTGS” transaction whereas the bank cheque debits are so designated.
140. These seemingly undisputed facts call for some more analysis, however.
141. The consequence of the payment of $60,000 to Mr La Torre is that only $40,000 remained in Mrs Orchard’s account.  Mr La Torre explained the payments from the money paid to his account this way:
     1. (a)
        He said that $3000 went as wages BOP staff^[65];
     2. (b)
        He said that $23,136.75 was paid to Bunnings to reduce a credit facility which Mr Brad Silver maintained for the builder for houses in the scheme, No Diggity, a company controlled by Justin Nube;
     3. (c)
        He said the $20,060.50 was payment for a deposit owed by Mr Brad Silver on a block of land associated with the scheme;
     4. (d)
        A further sum of about $2000 was seemingly paid^[66] at Mr Silver’s direction. (although Mr La Torre was not asked about this directly. See TS3-71.4 to 71.7). It seems likely it was a payment characterised as interest by Mrs Orchard in December 2010, referred to below; and
     5. (e)
        the balance of about $12,000 was paid on wages owed to Mr La Torre.
142. It is difficult to resolve the admissions and the evidence given by Mr La Torre and Mrs Orchard down to the last dollar and it is unnecessary to do so.  Most of the money is accounted for and there is no reason to doubt it was all paid to or to the order of Mr Silver based on instructions given to Mrs Orchard and Mr La Torre. 
143. I mention finally the cash sums which were drawn by Mrs Orchard, some $2500 by 15 November 2010.^[67]  Mrs Orchard accepted $300 of this was drawn and spent by her for her own purposes, in lieu of wages owed to her by BOP with Mr Silver’s permission.  (Note Mr Silver was not a director of officer of BOP).^[68]  Mrs Orchard rejected the suggestion she was benefitting from Ms Wylie’s money because she considered it Mr Silver’s money, though this sits awkwardly with her statement that she did not benefit from Ms Wylie’s money at all.^[69]

Mrs Orchard state of mind relating to the $100,000

144. I have reviewed the evidence from each party on this issue.   Given the centrality of the point, I make findings about it in paragraphs [212] to [243] below.

The parties’ dealings from 19 October until termination of the contract

145. Whatever the ambiguities at the margins, the above evidence, read with Mrs Orchard’s bank statements, shows that by 4 November 2010, only $7,100 remained of the $100,000 deposited to Mrs Orchard’s account (recalling that Mrs Orchard said she considered the money to be Mr Silver’s).  It is also to be recalled that the loan agreement contemplated purchase of a Refund franchise and that both parties agreed that was discussed at the time.  The parties also agreed that nothing came of that idea.

Refund franchise idea abandoned

146. Ms Wylie accepted that Mrs Orchard told her, shortly after the loan agreement was signed, that she did not think the Refund franchise was a safe investment.^[70] 
147. Mrs Orchard gave extensive evidence about her efforts to investigate acquiring a Refund franchise.^[71]  She said she was aware that seemingly from well before 19 October, that franchises were $65,000 and sub-franchises $35,000 with only sub-franchises available.  There was no suggestion she ever told Ms Wylie this.  Further she said after 19 October, she made inquiries as to a sub-franchise and discovered one available in Currumbin, she told Ms Wylie about her inquiries and that almost immediately Refund got into financial trouble. 
148. Some of her evidence on these issues was extremely improbable. For example, she said that the owners of the franchisor business asked her, a person visiting the office to look into a sub-franchise, if she knew where they could get a $5m loan facility.  I do not believe that occurred.  Further, she gave evidence that all her inquiries were after 19 October (including arranging a meeting with the Currumbin sub-franchisee which Ms Wylie allegedly did not attend), but by 22 October, just two clear days later, she was using funds from her deposit for the alleged Safety in the Market investment.   Further, she said she discussed this both with Mr Silver and Ms Wylie before taking that course.  In the next section, I reject entirely her evidence about that matter. 
149. Ironically, that might mean that there was time for Ms Wylie to make the inquiries she did and tell Ms Wylie about it in the period after 19 October 2010.  The difficulty though is that Mrs Orchard’s evidence is so unreliable about events following 19 October that I simply cannot accept the detail of her evidence about Refund at all.
150. I certainly think it likely that she made some such inquiries, but the only aspect of her evidence I accept in relation to Ms Wylie is that immediately following 19 October 2010, Mrs Orchard told Ms Wylie that the Refund franchise was not a good idea.   If she did make the inquiries that she claims she made, I am unpersuaded that they were carried out promptly after 19 October 2010.  I am also unpersuaded that they were carried out for the purpose of investigating a Refund franchise for Ms Wylie to acquire.  Rather I consider it was part of the process she undertook for Mr St Pierre. 

Safety in the Market

151. It appears Safety in the Market (SITM) was promoted as some form of share trading scheme.  Its promoter fell afoul of ASIC and the Federal Court, though whether that related to the SITM scheme referred to by Mrs Orchard or another scheme promoted by the corporate entity behind SITM is unclear. 
152. The evidence from both parties about SITM is also diametrically opposed. Ms Wylie said she knew nothing of SITM and only heard about it much later during Ms Wylie’s criminal trial.
153. Mrs Orchard said Ms Wylie suggested (SITM) as a potential investment. Mrs Orchard said this^[72]:

Did you look at any other forms of temporary investment?---Well, Ms Wylie and I  had some discussion about, you know, the ways in which one could generate income and the Refund was to provide an opportunity for both of us to have a job and she had heard an advertisement about a company called Safety in the Market and we did meet and she discussed that this might be worth following up and it was some sort of share trading platform. I’ve never done share trading, so I said I would follow it up. She gave me the number from an advertisement that she’d seen.

And what did arrangements did you make, having been given that number?---Well, I basically contacted Brad, because that was – I mean, that money wasn’t – I considered it to be deposit funds and under Brad’s control, because it was his property, and I said – because Refund is looking, basically, not viable at this point, I said, Lynn suggested to look into Safety in the Market and he said, “No problem.” And I said – well, by that time I’d realised that it’s $3300 per head for a three-day seminar, so I booked us both in for Safety in the Market, with Lynn’s agreement, of course, and I paid a cash deposit and I also paid a bank cheque to the company - - - hand delivered the bank cheque

And how much was that for, all up?---The bank – it was 6600 all up - - -

Right?--- - - - and the bank cheque was five thousand seven hundred and something.

Right. And what occurred in relation to the seminar?---I called Ms Wylie the morning of the seminar, to pick her up, and she declined.

Did you attend the seminar?---I did.

154. In cross examination^[73], Mrs Orchard was referred to her email of 6 December 2010 referred to in paragraph [173] below where she asserted that she had “with [Ms Wylie’s] agreement bought a program which will make money regularly by trading, for $6000 which will benefit us both…”.  She maintained the correctness of that allegation.
155. I reject entirely her evidence about SITM.  It was replete with confusion, inconsistencies and improbabilities.  To name just a few:
     1. (a)
        The evidence she bought a program for Ms Wylie is inconsistent with her evidence that she used the money taken from her bank account to pay for a three-day seminar;
     2. (b)
        The money paid to SITM is not the same amount as either the program amount ($6000) or the seminar amount ($6600);
     3. (c)
        There was no reason for Mr Silver to agree to use ‘his’ money to buy a SITM program for Ms Wylie.  I reject the evidence any such conversation happened, especially as it must have happened (on Mrs Orchard’s account) within 2 days of the payment and Mr Silver was desperate for the money for cashflow; and
     4. (d)
        Whatever other deficiencies there were in Ms Wylie’s evidence, I do not consider she is not someone who had the experience or the knowledge to fancy herself as a share trader.   Mrs Orchard’s brand of self-confidence, however, is consistent with such an aspiration.
     5. (e)
        There is also the admitted fact that Ms Wylie never accessed the SITM platform. 
     6. (f)
        Finally, the subsequent email correspondence from Ms Wylie refers to Staunch, the $100,000 amount and the contract, but never to SITM, in circumstances where she had no reason not to refer to it at that stage if it had been promoted to Ms Wylie as she now says.
156. I can accept that Mrs Orchard might at some stage after 19 October have mentioned SITM to Ms Wylie and Ms Wylie has forgotten.  It might have gone as far as Mrs Orchard floating it as a way for Ms Wylie to earn money.  However, I otherwise reject the detail of Mrs Orchard’s evidence on this.  I do not know exactly what Mrs Orchard was doing with the SITM or how she was involved in it, but I consider her entire detailed account of Ms Wylie’s active involvement in it to be highly improbable.  I reject it entirely.  

Staunch

157. I can deal briefly with this issue.  Staunch was a telecommunications marketing business.  Mr Jones described it as a pyramid scheme, although it was not clear exactly how the business worked beyond the fact that participants were to sell certain telecommunications data products and introduce others to do so.  
158. Ms Wylie had something to do with Staunch quite soon after 19 October.  On 1 November 2010, she paid USD 599 to Staunch Energy Pty Ltd for a “Staunch elite signup”.  Ms Wylie said that she did so after being invited along to a meeting about Staunch by Mrs Orchard.
159. Mrs Orchard again gives a different account in which the driver of the Staunch investment is Ms Wylie.  Again, I reject that evidence.  I agree with the Mr Jones’ submissions that:
     1. (a)
        Staunch was plainly recommended to Ms Wylie by Mrs Orchard.^[74]  By emails of 16 November 2010, Mrs Orchard purported to explain the merits of the program to Ms Wylie.^[75]
     2. (b)
        The description gives the program the appearance of a pyramid scheme – Mrs Orchard described that as a “multi-level”.^[76]
     3. (c)
        It should not be accepted that Ms Wylie found and recommended Staunch.  There is no other explanation for Ms Wylie emailing Mrs Orchard to ask why she joined Staunch.^[77] Such a finding is consistent with Ms Wylie’s email to Mr Howroyd on 5 March 2011^[78]
     4. (d)
        Mrs Orchard purported to explain to Ms Wylie the benefits and prospects of Staunch.^[79]  However, she had no idea how it worked.^[80]   
160. In my view, Mrs Orchard introduced Ms Wylie to a speculative investment she knew little about and the reason for that was to give the impression that she was in some vague way assisting her with investments (even though Ms Wylie clearly paid further money from her own funds).

Time for completion passes

161. It will be recalled that the contract was due to settle on 29 October 2010 (just 10 days after the $100,000 was paid).   One of Mr Howroyd’s staff sought to get the settlement process underway on 27 October 2010 without success.^[81]  It precipitated a letter from Mr Silver’s solicitor to him seeking confirmation of the discharge of the Westpac mortgage on the property.  However, there is no evidence of any query about the passing of the settlement date until around 2 November 2010.  On that date, and regularly thereafter, there were queries about settlement issues^[82] until 17 November 2010, when Mr Silver’s solicitor wrote to Mr Howroyd stating that there had been considerable delay in completing the building works, but they were expected to be finished in 30 days.
162. Of course, if Mr Silver had not been able to settle and Ms Wylie had insisted on settlement on 29 October 2010, she could have terminated the contract.  Unquestionably as at 19 October 2010, there was that prospect.  I comment here that if Mrs Orchard believed that the $100,000 was a deposit, one wonders how she thought it would be repaid by Mr Silver if the contract did not settle on 29 October 2010, given his apparent cash flow problems. 
163. Further, I note at this point that there is no evidence that Mr Silver told his solicitors that any amount he was paid was received on account of the contract with Ms Wylie, and that was confirmed by Mr Crotty: see paragraph [186] below. As will be seen, the contract was never ready for settlement and was terminated in March 2011, with the house seemingly still incomplete.

Mrs Wylie demands her money back: November 2010 to January 2011

164. Around 16 November 2010 Ms Wylie first demanded the return of her $100,000.  She did so in an email sent at 5.59am that morning.  There is an exchange of four emails that morning, two from Ms Wylie and two from Mrs Orchard.^[83]  I will not set them out, but the emails from Ms Wylie reflect acute anxiety about her financial and tax position, bordering on bewilderment.  Mrs Orchard’s emails are reassuring in tone.  They offer optimistic advice about her affairs, especially about the prospects of Staunch.  As I have found, she had no sufficient understanding of Staunch to justify her comments about that.  She gave tax advice which she was not qualified to give.  She assured her she would get substantial deductions on purchase of the Tasmanian house. She did not mention the $100,000 at all.   She said she was going to Launceston and Melbourne so they could email or phone each other. There is no evidence she did either. 
165. On 27 November 2010, Ms Wylie emailed^[84], relevantly:

Hi Liz,

Just touching base with you regard to the money I have given you I want the $100,000 returned plus interest that I have not received form you that you said I would get.  I have already made one request on the 16^th November for all the money to be returned to me plus the interest which has not been given to me and ignored.

I am continually paying out and do not see anything in return it is not worth being involved. The school finishes up in 2 weeks so I will be finding it hard until I get someone in, not a good time unfortunately.

I do not receive a weekly wage. I have also paid $599 USD to Staunch I am asking myself what for, I have not hear from them either

I am starting to wonder about both these companies, they do not have any integrity why am I getting involved with them.  I want all that money no later than Tuesday 30^th November 2010 and no excuses.

Regards Lyn

166. Mrs Orchard responded that day with a complaint about a faulty Arbonne bottle, and a strong endorsement of how well Staunch was going.^[85]  As I have explained in paragraph [159] above,  I do not accept she had any proper basis to make that assertion. She responded again on 29 November, saying she would catch up with Ms Wylie the next day to update everything, and complaining again about the Arbonne bottle.^[86]
167. There was evidence from both witnesses that there might have been a meeting at BP Yatala prior to 3 December 2010, however, I am not satisfied that occurred. The evidence given was vague and it appears inconsistent with the tenor of the email correspondence.   It is also unclear when it would have occurred, given Mrs Orchard was apparently away from 16 to 27 November in Melbourne and Launceston and she was planning a future meeting on 29 November (according to her contemporaneous emails anyway).   I therefore also reject Mrs Orchard’s evidence that at any such meeting she told Ms Wylie her $100,000 had been paid to “the developer”.  However, her evidence about that does demonstrate she was aware that the contract was unconditional at the time.^[87]
168. There is uncontentious evidence, however, that confirms there was a meeting of some kind on about 3 December 2010 at which Mrs Orchard paid Ms Wylie $2000.  Ms Wylie gave evidence that she did not raise the question of her $100,000 at that meeting.  As unlikely as that might seem, Mrs Orchard’s email of 6 December 2010 makes that assertion.  It might well be true.^[88]   It appears to be common ground that the $2000 was characterised as interest paid under the loan agreement.
169. The $2000 was in the form of a bank cheque.  It was drawn on Mr La Torre’s account. His recollection of that was vague. Mrs Orchard gave evidence she discussed this with Mr Silver.  Why Mr Silver would be paying “his” money to Ms Wylie as interest on a loan to Mrs Orchard is unclear.  Mr Jones put to Mrs Orchard that this was done to slow down Ms Wylie’s complaining.^[89]  That is certainly a rational explanation for the payment in the circumstances.  That inference gets stronger when the subsequent email exchange is considered.

Emails on 5 and 6 December 2010

170. These emails are very important.  They are contemporaneous, sent at a time before the dispute between the parties had fully arisen, and can be compared to the versions given at trial as to what the parties knew and did up to that point.  The comparison is very damaging to Mrs Orchard.
171. On 5 December 2010, Ms Wylie wrote:

Hi Liz,

I have been doing a lot of thinking about this money I have leant [sic] to you I want the $100,000 given back to me by Wednesday 8^th December 2010, you are telling me want [sic what] you want to do with that money, you have not asked me what I want to do with it.  I have asked for it back twice previously now and have not receive [sic] it.

Since I have taken that money out of my account I have paid nearly $1,400.00 in interest which I will be charge approx. another $800 in interest in a couple of weeks, I have been given $2,000 from you I cannot see any benefits from this exercise.

Another thing this house is a bad debt which I need to clear and at this rate I will never get any where I am going around in circles getting nowhere fast.

I would appreciate that money given back to me ASAP because I know you are going away on Tuesday and I would like to see that back in my account before you go NO if or buts I can give you my bank account details if that would help me get it back into my account quicker.

172. Importantly, if Ms Wylie had been told that the $100,000 had been paid to Mr Silver as a deposit or otherwise as part payment of the contract price, it is extremely improbable that Ms Wylie would have written in those terms.  It is almost certain she would have referred to that matter if she had been told.  (Even her email to her solicitors three months later is vague as to exactly what she understood had been done with the $100,000).
173. Mrs Orchard replied on 6 December 2010^[90]:

 hi Lyn,

I am a bit confused about your demands…and it seems that you dont understand how much you are benefiting by receiving interest. You agreed to lend the money for three years, it has been out of your account for barely 6 weeks and you have earned $2000 already. You already had a loan and it was not free. Now you are getting enough to cover you, so what you are saying does not really reflect what is happening in real terms with your loans. The loan will not be going for 3  years, but will be  repaid when  the property settles and not earlier. which will be less than 3 months in total

Firstly let me explain very clearly that the interest you are getting is  15percent  per year, and what you are paying to the bank is aroundf 7%.

Therefore 100,000 is  costing you around 7000 per year but is earning you 15000 which would be 8000 profit per year.

Secondly you had an existing debt so it makes no sense to demand money that is earning you money. You seem to have very little understanding of what we agreed upon  and yet you said you did at the time. The property in Tasmania is being reduced by 100000 at settlement which will occur in approx. 6 or 7 weeks and the developer is paying interest on the money until settlement. You have been paid interest over and above the monthly amount  due and have benefited already from the properties in Tasmania going up. By the time the property settles, it will already have gone up by about 15000 dollars.  thats  more than your rental on the unit per year and thats just in 3 months. I have with your agreement bought a program which will make  money regularly by trading,  for $6000  which will benefit us both, as will Staunch so that’s all positive cashflow ;potential

BY settlement, your 100000 will be repaid in full and there wont be any further debt between us whatsoever. I dont understand what all the panic is about, and you said nothing  whatsoever when we met

You must understand that money in a bank does not earn you 15 percent, and the money is not in my possession, its working for you and fully secured by property until settlement by the developer. That was the agreement and you were consulted and informed about all relevant details.   You still have available funds in your line of credit so the interest you are getting is paying for your previous  debt as well as the 100,000 so you are much better off than  before. I will  call you tomorrow.

Kind regards, :Liz

174. I note the following:
     1. (a)
        First, the email asserts that the property in Tasmania will settle in 6 to 7 weeks.  Other contemporaneous documents show that that was never likely to occur.  Mr Dwan told Mr Silver’s solicitors that the works were some way behind in January 2011.^[91]  It is unclear on what basis Mrs Orchard made her statement (though Mr Dwan or someone else in the scheme might have told her that I suppose);
     2. (b)
        Second, Mrs Orchard seeks unilaterally to change her obligation from a debt due from her to Ms Wylie under the loan agreement to repayment when the property settles.  It is not for the debtor to tell the creditor that the debtor will discharge the debt by paying a third party;
     3. (c)
        Third, the statement that the developer is paying interest on the $100,000 until settlement appears to have been false. 

        1. While the $2000 was paid a couple of days before, that was supposed to be interest on Mrs Orchard’s debt to Ms Wylie. 
        2. Mrs Orchard gave no evidence that Mr Silver agreed to pay interest on the $100,000;
        3. $2000 paid on 3 December represented a rate of 24% per annum;
        4. There was no obligation under the contract or elsewhere for “the developer” to pay interest on the $100,000;
     4. (d)
        Fourth, there appears to be no basis for Mrs Orchard to assert that the property would have gone up by $15,000 by the time it settled.  There was no prospect of settlement at that time and it is hard to see what proper basis Mrs Orchard had for giving an assurance about the property values in Tasmania;
     5. (e)
        Fifth, the Staunch statement was nonsense and made without any foundation; and
     6. (f)
        Sixth, the assertion that the $100,000 was fully secured was false and it must have been knowingly false.  Mrs Orchard had paid the money to Mr Silver, she repeatedly asserted at trial it was his money, she gave evidence of no promise by Mr Silver about allocating the funds to settlement, a fortiori there was no evidence at all that the money was “fully secured until settlement”.  Further she had made no inquiries as to whether Mr Silver could repay the money if the contract did not settle but understood that in the context of the cashflow crisis she had been told about, that was a possibility.^[92]   
175. This email is more harmful to Mrs Orchard’s case if it is accepted as being the first time Mrs Orchard told Ms Wylie about the money being used in some way to assist in settling on the contract.   I am able at this point in the narrative to find that it was.  That is such a fundamental change from what was contemplated by the loan agreement and the discussions which even Mrs Orchard accepts occurred with Ms Wylie in the days before, that if it had been said to Ms Wylie before this email, it would have been referred to in her email correspondence.   Not only is it not mentioned, but the tenor of her emails is entirely inconsistent with her having been told that that was the fate of her money, and of course Mrs Orchard’s emails do not mention it either, despite being the object of emails demanding return of the money from 16 November to 5 December. 
176. Given that conclusion, the statement “That was the agreement and you were consulted and informed about all the relevant details” was false and it is hard to avoid the further conclusion that it was said to try to verbal Ms Wylie and confuse her about the situation.
177. Given the case advanced by Mrs Orchard that the payment was a “deposit” in relation to the contract, it is also worth observing that Mrs Orchard’s email does not say that the sum was a deposit as such.  This is a remarkable omission if, as she swore at trial, she had been told that the $100,000 was a deposit due under the contract (see paragraph [103] above).
178. It is unclear what happened as between the parties between the 6 December 2010 email and Ms Wylie’s next email of 22 January 2011.^[93]  One infers that whatever had occurred, there had not at this stage been any final breakdown in the relationship, if the salutation in the 22 January email is anything to go by.  In any event, in that email, Ms Wylie wrote:

Hi Liz  Hope all is okay with you and your family

I am making 3 requests from you and I do want each one finalised by 31^st January 2011 which gives you 9 days to complete

1. To pay me back all the money I leant you plus interest which is outstanding

2. To cancel the contract I signed to buy the property in Tasmania or let me know how I can do that

3. To cancel my staunch membership and return the money I paid back to me or let me know how I can do that

If each of these requests are not met I will be going to a onbudsman [sic] next week to put in a complain about each one

Regards Lyn

179. Mrs Orchard was asked what she did in response to this email.  Her response was indirect and for that reason unpersuasive.^[94]  Assuming in her favour she was giving evidence about her response to that email, she said that she said the matter was out of her hands and she should speak to Mr St Pierre or Mr Silver because she had nothing to do with her property.  (If she did say that, it was inconsistent with her willingness to advise about the value and likely settlement date of the property in her 6 December 2010 email.)   I do not accept this evidence.  Mrs Orchard said, immediately before giving it, that she always responded to Ms Wylie’s emails by emailing back.  There is no email from Mrs Orchard in evidence which makes this assertion.  Despite the difficulties which Ms Wylie asserts in relation to documents, I can see no reason why Ms Wylie would not have preserved that email.  
180. Further, Ms Wylie’s communications with Mr Howroyd are not consistent with her having been referred to Mr St Pierre or Mr Silver. As to the former, she says nothing about him in her emails.  As to the latter, she was chasing the identity of the “developer” for some time in emails to Mr Howroyd.^[95]  This is inconsistent with being told Mr Brad Silver was the person to approach about the money. 
181. Not much turns on whether Mrs Orchard said this or not in response to the 22 January 2011 (note I reject the defendant’s submission in paragraph 80 of the initial submission in any event).
182. The 22 January 2011 was the last direct communication between Ms Wylie and Mrs Orchard. 

Events through to termination of the contract

183. On 31 January 2011, some three months after settlement was due, Mr Silver’s solicitor asked Mr Dwan whether settlement was close.^[96]   The response was that the building works were “someway behind” and that he could not give an anticipated completion date.^[97] On 15 February 2011, Mr Crotty made a request for an open-ended extension of time.^[98]   On 23 February 2011, Mr Crotty proposed to Mr Howroyd that the contract be amended to allow up to September 2011 for the building work to be completed (ie nearly a year from the contract date).^[99] Mr Howroyd sought instructions from Ms Wylie.^[100]
184. On 24 February 2011, Ms Wylie emailed Mr Howroyd writing relevantly:

Just wondering if you can give me some advice with regards to the Tasmanian property

Have you heard from there [sic] solicitors as to the status of how it is progressing at this stage I am very concerned about the whole thing they do not contact me to let me know how things are going or what is happening

I have given them $100,000 that I borrowed from my own home because they said they would give me 15% interest until the house goes through then they would give it back I have Liz Orchard a cheque on the 18^th October 2010 all I have received from them is $2000 on 3^rd December which I kept complaining about before they gave that to me

185. It can be seen from this email that Ms Wylie was even at that stage vague as to the link between the $100,000 and the contract.  The word deposit is still not mentioned, and I think it very likely that if it had been, she would have said so.  Mr Howroyd responded explaining that no deposit was payable under the contract.  On 28 February 2011, Ms Wylie gave Mr Howroyd instructions to terminate the Contract of Sale.^[101]
186. It is fair to say that Mr Howroyd gave effect to those instructions in an informal manner.  By 2 March 2011, he had written to Mr Silver’s solicitors saying that Ms Wylie did not wish to extend the contract and asked for the return of $100,000.^[102] Mr Howroyd was told by Mr Crotty that their instructions were that Brad Silver knew nothing about the “deposit” and that it was a matter between Mrs Orchard and Ms Wylie.^[103]
187. On 18 March 2011, Mr Howroyd made time of the essence under the contract and called for settlement within 14 days.^[104]  There is no suggestion that Mr Silver tried to settle.  On 19 April 2011, Mr Howroyd advised Ms Wylie that “we can safely say that the contract is at an end”.^[105]

The criminal litigation

188. BOP and CGIC went into liquidation in or about March 2011.   Ms Wylie then tried various means to discover what had become of her money.   She went to the Police in April 2011 and spoke to a Constable Anderson.  This might have been the trigger for a Police investigation into Mrs Orchard’s role in the scheme.  However, an investigation might already have been underway. 
189. In about February 2017, Mr St Pierre was convicted for fraud in relation to the business operated by BOP and CGIC.  At about the same time, Brad Silver pleaded guilty to 13 dishonesty charges, seemingly also in relation to the scheme.
190. Mrs Orchard was also prosecuted for an offence against s. 408C of the Criminal Code.  The matter went to trial before Judge Devereaux SC of this Court (as the Chief Judge then was). His Honour summed up to the jury 5 June 2017.  The Verdict and Judgment Record (VJR) is before the Court.  It records that Mrs Orchard was convicted of a breach of sections 408C(1)(b) and 408C(2)(d) of the Code on 21 June 2017 and that his Honour imposed a sentence of 2 years with parole release on 21 February 2018.
191. The offence concerned the exact payment which is the subject of these proceedings.  So much is evident from his Honour’s summing up:

Members of the jury, Mrs Orchard is charged with one offence – and you have a copy of it – that on the 19th day of October 2010 at Logan Central in the State of Queensland she dishonestly obtained a sum of money from Lynette Margaret Wylie, and the sum was of a value of $100,000.

…

Before you could convict, the prosecution must prove, first, that the defendant obtained property from any person. And “obtained” includes to get or to gain or to receive, to acquire in any way. Second, that the action of the defendant must have been done dishonestly. And in this case it is the obtaining. To prove that the defendant acted dishonestly, the prosecution must prove that what the defendant did was dishonest by the standards of ordinary honest people. So that is the standard by which you have to judge whether what the accused person did was dishonest.

And then there is the extra allegation here about the value of what was obtained. Of those, really, three ingredients, it does seem to me that as, in line with the way counsel have made their submissions, there is just one real issue for you to decide. But before you could convict, you have to be satisfied of all of the ingredients beyond reasonable doubt, that the defendant obtained – and it is pleaded to be money, and she obtained it, and that it more – it was $100,000, and that she obtained it dishonestly. The real contest seems to be whether she obtained it dishonestly, because there is no real dispute about the fact that the complainant drew a cheque for $100,000 in the defendant’s name and the defendant obtained the cheque.

…

And the prosecution case seems to be that there was an agreed plan, that there was evidence of discussions before the heads of the agreement was signed, and then the document itself, and that the fund was put to a different purpose to that set out in the documents and the discussions. And so the accused obtained the money dishonestly.

The defence case, as I follow it, is that the defendant believed the complainant knew the heads of the agreement was merely a mechanism. And the word used was a “ruse” for a purpose of this entity Bank On Property. And so there was no deception. And that there is no evidence that the accused did not plan to allocate the money according to what was understood. And so you would at least have a reasonable doubt that the defendant dishonestly obtained the money. But I will come back – hopefully more clarity will be given when I review counsels’’ arguments.

…

192. Mrs Orchard appealed her conviction.  The appeal was dismissed.^[106]   The grounds of appeal are not relevant to this application.  After summarising Ms Wylie’s evidence, however, the Court of Appeal summarised the crown case in this way:

[18] The prosecution case was a circumstantial one in which the jury was invited to draw an inference of dishonesty on the appellant’s part in obtaining the $100,000 from the complainant.  The inference arose from the contrast between the use to which the $100,000 was to be put according to the terms of the Heads of Agreement and the uses to which it was in fact put.

193. In my respectful view, that is an accurate summary of the way that the prosecution case was advanced at trial as articulated by Devereux DCJ. The appeal was heard on 27 November 2017 and dismissed on 29 March 2018. 

The civil litigation

194. These proceedings were commenced on 2 August 2017. The only claim initially advanced was under the Loan Agreement.  Mrs Orchard appears to have been served while in custody.  Ms Wylie obtained default judgment on 9 April 2018.  Mrs Orchard applied to set aside the default judgment in June 2018.  It was set aside in July 2018.
195. A defence was filed on 10 July 2018. It alleged that the claim in contract was filed outside the statutory limitation period of 6 years and raised various defences.
196. There were various amendments to the claim and statement of claim and considerable interlocutory litigation, including two summary judgment applications.  The pleadings only reached the form taken to trial this year.  
197. The amended claim and second further amended statement of claim were filed on 23 June 2020.  The defence to that pleading was filed on 10 August 2020 and the reply filed on promptly on 13 August 2020.  

The issues^[107]

198. Ms Wylie advances three causes of action: a claim in debt based on the loan agreement, a claim for equitable compensation for breach of trust and a claim for damages for deceit.  These claims are advanced in the alternative.

The contract claim

199. Ms Wylie pleads that the advance was made and that:
     1. (a)
        The instalments of interest provided for under the loan agreement were not paid as required by the express terms of the loan agreement on 19 October 2011, 19 October 2012 nor 19 October 2013;
     2. (b)
        The principal was not repaid as provided by 19 October 2013;
     3. (c)
        Despite demand on 13 July 2017, the defendant had not repaid the loan.
200. Mrs Orchard’s case by way of defence can be summarised as follows.
201. First, she contends that Ms Wylie has been repaid the debt because:
     1. (a)
        Mrs Orchard paid the $100,000 advanced under the loan agreement for Ms Wylie’s benefit by paying it on account of her liability under the contract, and by paying it for the Staunch and SITM purposes;
     2. (b)
        On the proper construction of the loan agreement, investment of the money in this way discharged the debt.
202. Second, she contends that:
     1. (a)
        Ms Wylie repudiated the loan agreement by demanding repayment of the loan on four occasions between 16 November 2010 and 22 January 2011;
     2. (b)
        Mrs Orchard accepted the repudiation of the loan agreement by referring Mrs Orchard to Mr St Pierre and Mr Silver in response to the email of 22 January 2011 thus leading to a clear “parting of the ways” at that time; and
     3. (c)
        The contract claim was not commenced until August 2017, more than 6 years after the termination of the loan agreement.
203. Ms Wylie contends in reply as follows.
204. As to the proper construction of the contract, she submits that the loan agreement on its proper construction does not allow Mrs Orchard to repay the debt by paying the money to a third party for Ms Wylie’s benefit and that in any event Mrs Orchard did not do that as a matter of fact.
205. As to the limitations issue, Ms Wylie submits:
     1. (a)
        Demanding the money back before the due date could not amount to repudiation because Ms Wylie had no executory obligations under the contract;
     2. (b)
        Mrs Orchard never accepted any repudiation which did occur and never terminated the loan agreement; and
     3. (c)
        The loan was therefore repayable on the terms of the loan agreement which, for the principal sum and almost all the interest payments, was within 6 years of commencement of the proceedings.

The deceit claim

206. The plaintiff’s case for damages for deceit was narrowed a little in submissions.  The case as advanced in submissions was this:
     1. (a)
        Mrs Orchard, by her own admission and on the face of the loan agreement, represented to Ms Wylie that the funds would be used to acquire a Refund Home Loan franchise or otherwise to invest for Ms Wylie’s benefit;
     2. (b)
        Mrs Orchard’s representation was knowingly false when made because her purpose in obtaining the money was not as represented;
     3. (c)
        The representation was intended to be relied upon;
     4. (d)
        The representations were relied upon by Ms Wylie paying over the $100,000; and
     5. (e)
        She lost the $100,000 by reason of that deceit.
207. The defendant’s case on the substantive cause of action was as follows.
     1. (a)
        First, and predictably, the defendant contends that she did not mispresent her intention because at all times she intended to invest the money for Ms Wylie’s benefit and in fact did so;
     2. (b)
        Second, it was submitted that there was no evidence that Ms Wylie relied on any fraudulent misrepresentation; and
     3. (c)
        Third, the defendant contended that Ms Wylie caused the loss of the $100,000 by her termination of the contract and/or by her failure to pursue Mr Silver to recover the money. 
208. The defendant also raised a limitations defence to the deceit claim.  It is not disputed that the proceeding was commenced more than 6 years after the cause of action in deceit accrued.  The dispute between the parties focuses on whether the limitation period has been extended under the s. 38 Limitations of Actions Act (LAA).  Relying on that section, Ms Wylie contends that time did not begin to run until she discovered “the fraud” or could have discovered “the fraud” through reasonable diligence.  She contends that as at 3 August 2011, she did not know what had become of her money and still entertained the possibility that it was paid in relation to the contract.  The defendant contends that Ms Wylie was advised to pursue recovery of the $100,000 in separate proceedings by her solicitor in February 2011 and therefore s. 38 LAA is not applicable after that date.

The trust claim

209. Ms Wylie’s claim for equitable compensation arises from her contention that a constructive trust arose over the $100,000 on its receipt because it was obtained by fraud.   She submits that a constructive trust arose over the funds obtained which was breached by payment out of the money other than for Ms Wylie’s benefit.   Although this did not involve theft of the $100,000 as such, the plaintiff contends that authorities which recognise a constructive trust in that context such as Black v S  Freedman & Co (1910) 12 CLR 105 apply by analogy where specific property is obtained by deceit.
210. Mrs Orchard defends that claim on three grounds.
     1. (a)
        First, no trust could arise where the funds were advanced under a loan agreement which expressly provided that Mrs Orchard would have “full discretion as to how the funds are dispersed” [sic disbursed].  Accordingly, no Quistclose trust could arise over the funds;
     2. (b)
        Second, the money paid under the loan agreement was not paid out other than for Ms Wylie’s benefit, because it was paid on account of her liability under the contract; and
     3. (c)
        Third, the 6-year limitation period should apply by analogy with tort and contract and/or that the claim should be refused on laches grounds.
211. Ms Wylie’s arguments in response are that:
     1. (a)
        To the first point, the trust advanced is not a Quistclose trust but one which arises because the loan agreement was used as tool of dishonesty and it is that dishonesty which gives rise to the equity;
     2. (b)
        To the second point, the plaintiff relies on its contentions on the deceit case; and
     3. (c)
        To the third point, there is no place for the application of a limitation period by analogy because the claim is for a fraudulent breach of trust for which no limitation period is applied by statute: see s. 27(1)(a) Limitations of Actions Act 1974 and that no laches defence arises.

Mrs Orchard’s dealing with the $100,000

212. Many of the issues in this case raise the related questions of:
     1. (a)
        Mrs Orchard’s state of mind when she obtained the $100,000 bank cheque and paid out those funds; and
     2. (b)
        The objective consequence of the way she disposed of those funds.   

Did Mrs Orchard make representations about use of the money?

213. As a matter of form, the bank cheque was provided pursuant to a loan agreement.  Ordinarily, in the absence of some express or implied undertaking or representation to the lender about the use of borrowed funds, a person who borrows money can do with it what they will.  Ms Wylie contends, however, that Mrs Orchard represented that the money would be used for Ms Wylie’s benefit.^[108]  The representation is said to arise from what was said to Ms Wylie immediately prior to the loan agreement and from the terms of the loan agreement itself. 
214. It was not clear to me that that contention was ultimately actively resisted in Mrs Orchard’s trial submissions.  Those submissions seemed to be willing to defend on the assumption that such a representation was made.^[109] However, a fair reading does not extract any concession of this allegation.  I therefore will make findings about it.
215. I find that Mrs Orchard did represent that she would invest the money paid to her by Ms Wylie for her benefit.  I make that finding for the following reasons.
216. First, it is a remarkable thing, looked at objectively, that Ms Wylie, a person of limited means who had already committed to a substantial investment purchase, would hand over just 10 days later, a further $100,000 (seemingly most of her existing available cash and an enormous sum in her world) to Mrs Orchard without good cause, at least in her eyes.  It is breathtakingly unlikely that she would have done so except on an assurance that it would be to her benefit.
217. Second, it is uncontentious that the proposition of acquiring a Refund franchise was discussed.  Given the timing of events and the text of the loan agreement, there is no reason to doubt Ms Wylie’s evidence that it was raised by Mrs Orchard on the Friday at the Logan dinner and raised again on the day before the loan agreement.   Clearly Ms Wylie expected reference to the Refund franchise in the loan agreement, and of course it loomed large in that document, which was discussed at the time.
218. Third, the loan agreement contemplated that it was more broadly “entered into with the utmost good faith from both parties, and shall be for the purpose of achieving commercial success with best efforts being put forth by both parties at all times. EO shall have full discretion as to how Loan funds are dispersed in order to achieve mutually beneficial objectives and provide ongoing employment opportunities for both parties.”
219. It might be fair to modify a little the precise nature of the representation.  In light of the terms of the loan agreement, it is probably more correctly stated as being that Mrs Orchard would invest the funds in a Refund franchise or failing that, some other investment for the mutual financial benefit of Mrs Orchard and Ms Wylie.  The difference between the pleaded representation and my formulation of it is moot given my finding of fact.

Mrs Orchard’s state of mind

220. It is important to articulate with precision the matter to be determined.  In my view, the question to be determined is whether, when she received the bank cheque, Mrs Orchard did not intend to apply the money to a Refund franchise or failing that, to invest otherwise for their mutual financial benefit.^[110] To avoid doubt on the matter, I am conscious that this requires me to consider the evidence bearing in mind the seriousness of the allegation.^[111]
221. I am firmly of the view that when Mrs Orchard obtained the bank cheque and entered into the loan agreement, she had no intention of applying the money to a Refund franchise or otherwise in accordance with her representations.  I explain my reasons as follows.
222. It is first important to make findings as to the context in which the loan agreement came into existence.
223. First, as I found in paragraphs [97] to [99] above, Mrs Orchard’s dealings with Ms Wylie in relation to the property were unconcerned with Ms Wylie’s best interests.  Rather, Mrs Orchard’s role, carried out with success, was to persuade Ms Wylie to buy the property.  Her dealings in that regard were predatory.
224. Second, as at mid-October 2010, Mrs Orchard had successfully inveigled her way into Ms Wylie’s confidence.  Ms Wylie was clearly a vulnerable and trusting person and Mrs Orchard knew that. 
225. Third, at the time Mrs Orchard approached Ms Wylie, she knew (or at least believed) that the scheme (to be clear, BOP and CGIC and its participants) was in financial difficulty and that money was needed to bail it out of a cash flow crisis.  On her own admission, she was asked to get money from Ms Wylie to meet that need.  There is no way that she could possibly have thought that taking Ms Wylie’s money and paying it to cover a cash flow crisis (secretly to avoid an investigation by Westpac, Mr St Pierre’s own bank) could be in Ms Wylie’s interests.
226. Fourth, at the time Mrs Orchard approached Ms Wylie first about this issue on Friday 15 October 2010, Ms Wylie’s contract was unconditional, and she had secured finance by 11 October 2010.  There is no evidence that permits me to be certain that Mrs Orchard knew that.  However, she plainly understood the finance process well, and was closely involved with Ms Wylie’s finance application process and was in touch with Mr St Pierre just prior to 15 October.  I think it highly likely that she knew finance had been approved or at best, simply did not turn her mind to it.  What she did know, however, was that Ms Wylie had already incurred a very large financial commitment for a person in her position.
227. Fifth, on her own admission, she had already investigated a Refund franchise to be used for the benefit of the scheme, including Mr St Pierre, some months before and taken no further steps in that regard.  I refer to my finding in paragraph [150] above.
228. Sixth, her evidence was that she knew that Mr St Pierre would have to be involved because he was the only one with an AFSL required to conduct the business: see paragraph [119] above.  Mrs Orchard knew she could not do so.  A fortiori, she knew before approaching Ms Wylie that she could not do so.
229. Seventh, I find that Mrs Orchard had no reason to want to be in business with Ms Wylie nor that she needed employment or mutually beneficial investments with Ms Wylie.  She had a job with BOP.  She knew from her dealings with Ms Wylie that she was not a successful or particularly capable businesswoman.   I reject the proposition (reflected in the loan agreement) that she wanted or intended to be in business with Ms Wylie.
230. It was in that context that Mrs Orchard broached the idea with Ms Wylie on about 15 October of her investing $100,000 in a Refund franchise.  Looked in that way, it seems difficult to accept that Mrs Orchard ever intended to apply those funds to acquire a Refund franchise or for any other purpose for their mutual benefit and employment.
231. However, it is necessary to consider the case advanced on her behalf with care.  The argument begins with the proposition that Mrs Orchard was an innocent and naïve person well out of her depth in dealing with the “hoodwinkers and swindlers” who stood behind BOP.  
232. There is certainly one consideration which provides support for that characterisation of her role: the fact that by the loan agreement she accepted personal liability to repay funds which were going to be immediately paid away to Mr Silver to prop up BOP/CGIC in a cashflow crisis and at the exorbitant rate of 15%.  That certainly was an odd thing to do if she knew that the money was going to be paid away, leaving her with the liability but not the asset.
233. Further, as I have set out above,^[112] Mrs Orchard gave an explanation as to how she could have understood the transaction in a manner which was consistent with what she represented to Ms Wylie.  Her story can be summarised as follows:
     1. (a)
        Mr St Pierre told her that a $100,000 deposit was due under Ms Wylie’s contract and she believed him;
     2. (b)
        By paying the $100,000 to Mr Silver, the vendor under the contract, she believed she was paying the money for Ms Wylie’s benefit because it was a payment towards Ms Wylie’s obligation on settlement under the contract; and
     3. (c)
        She said she told Ms Wylie on 19 October that she was paying the money to Mr Silver as a deposit and that Mr St Pierre would be a partner in the Refund franchise business.
234. There is one other event which must have occurred which might support Mrs Orchard’s story, though it was not examined by either party.  When Mrs Orchard arrived on 19 October 2010, Ms Wylie already had a bank cheque for $100,000.  It was never explored with Ms Wylie how that came to be, or what was said to her and by whom, to precipitate her visit to the bank to buy the bank cheque.  This is consistent with Mrs Orchard’s account that Mr St Pierre had arranged the cheque and therefore with her being told by him it was part of the deposit.
235. I reject Mrs Orchard’s account.  I do not believe that any of the matters in paragraph [233] are true.  I explain why.
236. First, I do not accept that Mrs Orchard would have believed that the $100,000 was a deposit under the contract, even if she was told that:
     1. (a)
        She knew the contract price was $295,000 and she was sufficiently experienced in property matters to know that $100,000 would not be the deposit on a contract for that sum;
     2. (b)
        Her evidence about her knowledge of the deposit terms for the contract was inconsistent and unreliable.  In my view, it reflects a confused evasiveness, wherein she was trying to give the evidence she thought useful in examination in chief and avoid admissions in cross examination.   Ultimately, in my judgment, it reflected an attempt to give the evidence which would suit her case best on this issue, even if she did not quite know how to do so.  I find that Mrs Orchard either knew that no deposit was payable or believed that was unlikely and chose not to check.
237. Second, I find her evidence that she told Ms Wylie about payment to Mr Silver of the $100,000 as a deposit and about Mr St Pierre’s role in the Refund franchise was untrue and almost certainly invented after the event (if not in the witness box itself).   Such statements would have been inconsistent with the idea that the money was to be used for the Refund franchise.  It would have been inconsistent with the idea that Ms Wylie and Mrs Orchard would run the franchise.  Even someone as trusting as Ms Wylie would have noticed that inconsistency.
238. Third, Mrs Orchard’s conduct and statements after 19 October are inconsistent with her believing that the money was a deposit or that it was in Ms Wylie’s financial interest for her to pay the money away to Mr Silver before settlement:
     1. (a)
        She maintained the fiction that the money was available to be expended for Ms Wylie’s benefit (on the Refund franchise and the Staunch program) despite it having never been intended for those purposes and despite it mostly having been paid away by early November 2010.  Her evidence that she went to Mr Silver and asked him if she could use his money for Ms Wylie, when Mr Silver apparently was desperate for cashflow, was incredible and I reject it;
     2. (b)
        Her fabrication of the account of Ms Wylie’s interest in SITM^[113] reveals an unedifying attempt to bolster the impression of a person seeking to invest for Ms Wylie’s benefit;
     3. (c)
        She never mentioned this very significant fact to Ms Wylie until she was under pressure to repay the money on 6 December 2010.  If she had mentioned it earlier, it would have figured in Ms Wylie’s earlier emails: Ms Wylie at that time had no reason to omit reference to it;
     4. (d)
        When she did mention the payment on 6 December 2010, it was not the story now told at trial in a key respect: there was nothing about it being a “deposit”;
     5. (e)
        Further, the deceptions and half-truths in the 6 December 2010 email set out in paragraphs 173 and 174 above strongly tell against Mrs Orchard having a clear conscience about the disposition of the $100,000.  It has all the marks of a calculated attempt to confuse and obfuscate.
239. Fourth, there is a lack of any statement at the time by Mrs Orchard that she had been deceived and exploited by Mr Silver nor was there any attempt by Mrs Orchard to assist Ms Wylie in recovering the “deposit”.   If she had been duped herself, one would have expected some such steps.
240. Fifth, there was Mrs Orchard’s attempt to bolster her story by alleging that she provided copies of bank cheques to Ms Wylie.  I reject that evidence.  Almost all of the money was paid out immediately to Mr La Torre, without a bank cheque, so no bank cheque could have been given for that payment.  Apart from SITM, the only bank cheque drawn was for No Diggity Property Solutions and it is extremely improbable that Ms Wylie would not have queried that payee if such a bank cheque was given to her.  Nowhere does Mrs Orchard or Ms Wylie refer to this payment in their subsequent correspondence.  Mrs Orchard’s evidence on this was self-serving and it is difficult to accept that she did not know it was untrue when she gave it.
241. Sixth, but by no means last, there is Mrs Orchard’s evidence that she did not turn her mind to how Mr Silver would pay the money back if the contract did not complete.  Mrs Orchard knew enough about property contracts to know that that was a prospect.  If indeed she genuinely believed the payment was for Ms Wylie’s benefit, she would have turned her mind to this issue, especially given that she was asked to get the money because of the financial problems of the companies or Mr Silver.
242. I find that Mrs Orchard was instructed to get $100,000 from Ms Wylie and pay it to Mr Silver.  I find that:
     1. (a)
        She did not believe that was in Ms Wylie’s interests, 
     2. (b)
        She did know it was inconsistent with what she had represented to Ms Wylie as to the use to be made of the funds, 
     3. (c)
        She pretended that the arrangement contemplated by the loan agreement was being pursued by her; and
     4. (d)
        She concealed her conduct until 6 December 2010 at which point, she attempted to confuse Ms Wylie about what had happened. 
243. It might be that Mrs Orchard simply signed the loan agreement drafted by others in the scheme and foolishly committed herself to obligations to Ms Wylie.  However, there are three things to be said about that:
     1. (a)
        First, it might have been Mrs Orchard’s view that Ms Wylie was not the sort of person who would have the resources or ability to pursue her on the loan agreement, even if it turned out the money could not be repaid somehow. On the evidence in this case, one could well imagine her forming such a view;
     2. (b)
        Second, it might have been Mrs Orchard’s view that her capital in CGIC and her work with BOP was at risk and she had to try to help save the undertaking, with the problem of Ms Wylie to be left to later; and
     3. (c)
        Finally, it might indeed have been foolish to sign the loan agreement while paying the money over to Mr Silver, but one can be foolish and still be deceitful, indeed the two frequently go together.

The evidentiary effect of the conviction

244. Ms Wylie relies on s. 79(3) Evidence Act 1977 (Qld). The whole section is relevant.  Section 79 provides:

79 Convictions as evidence in civil proceedings

1. (1)
   In this section—

civil proceeding does not include an action for defamation.

convicted means a finding of guilt for an offence, on a plea of guilty or otherwise, and whether or not a conviction was recorded.

2. (2)
   In any civil proceeding the fact that a person has been convicted by a court of an offence is admissible in evidence for the purpose of proving, where to do so is relevant to any issue in that proceeding, that the person committed that offence.

3. (3)
   In any civil proceeding in which by virtue of this section a person is proved to have been convicted by a court of an offence the person shall, unless the contrary is proved, be taken to have committed the acts and to have possessed the state of mind (if any) which at law constitute that offence.

4. (4)
   This section applies—

(a) whether or not a person was convicted upon a plea of guilty; and

(b) whether or not the person convicted is a party to the civil proceeding. 

245. It is necessary in applying subsection (3) to identify “the acts” committed and the “state of mind” possessed which “at law constitute that offence”.  I have dealt with the law relating to this provision elsewhere.^[114]
246. There was considerable attention paid to this issue in submissions at trial.  However, the matter can be shortly dealt with.  The state of mind possessed which constituted the offence was that of dishonesty.  The act which constituted the offence was obtaining the bank cheque.  The effect of the section is that in this trial, Mrs Orchard is taken to have obtained the bank cheque dishonestly.  While that is not exactly the question which arose in respect of the deceit and constructive trust causes of action as developed, obtaining the bank cheque dishonestly is inconsistent with the gravamen on the case articulated by Mrs Orchard in answer to the deceit and trust cases at the least. 
247. However, the effect of s. 79(3) is moot, as I have reached my conclusion on the evidence before me and without regard to that evidentiary consequences of that subsection.   

The contract claim

The loan has not been repaid

248. The first issue which arises is the defendant’s argument that the loan had been repaid because, on the proper construction of the contract, payments made by Mrs Orchard for Ms Wylie’s benefit comprised repayment of the loan.
249. This issue is easily disposed of.  I have found that the payment to Mr Silver or at his direction were not believed to be for Ms Wylie’s benefit. 
250. Further, I find that (regardless of the intention of Mrs Orchard) they were not in fact to Ms Wylie’s benefit.  The payments were made to Mr Silver or at his direction.  There is no evidence that they were paid on account of the liability under the contract except Mrs Orchard’s assertions.  Her evidence has been shown to be so unreliable that I am frankly unpersuaded that those assertions are true.  Further, the evidence before the Court from Mr Silver’s solicitors is that he rejects that the payments were a deposit under the contract.  Once Mrs Orchard’s version is not accepted, there is no reason to ignore that evidence.  I do not accept that Mr Silver ever undertook to Mrs Orchard to apply the funds paid to him to reduction of the contract price on the land.  
251. Further, as will be seen, Ms Wylie was perfectly entitled to terminate the contract.  On doing so, if the money had indeed been paid on account of the contract, she should have been entitled to recover it.  As a result of Mrs Orchard’s conduct, however, the money was lost.
252. In that context, whatever the defects in the form of the loan agreement (and there are many), it is not possible to construe it in a manner whereby Mrs Orchard could repay the loan by unilaterally deciding to pay the money to some third party, so long as she subjectively believed it would be for Ms Wylie’s benefit.  Such a construction would leave it open to Mrs Orchard to pay away the money in a manner to which Ms Wylie would have or could have objected and claim to have repaid the loan.  Such a construction is extremely unlikely and inconsistent with a commercial interpretation of the loan agreement.   A debtor must pay a debt to, or at the direction of, a creditor.  It would take clear words to permit a construction whereby the debtor could unilaterally decide that the debt would be repaid by payment to a third party, even if they believed it would benefit the creditor.
253. If Ms Wylie had got the benefit of a payment on account of the contract, Mrs Orchard might have had a restitutionary claim for that money if Ms Wylie had pressed for repayment of the loan.  However, the money was lost, as was always likely. 
254. Further, even if Mrs Orchard had believed that the payment to Mr Silver was in Ms Wylie’s interests and even if it turned out to be so, I reject the construction advanced that such payment would discharge the debt to the extent of the payment.
255. The loan agreement is undoubtedly an odd document.   It was not well thought out.  It reflects the fact that, in my view, the persons who drafted the document intended it to be no more than a device to secure the $100,000 from Ms Wylie under the cover of a document which made it all look “legal”.  However, neither party alleged it was void for uncertainty.  Where no investment was made as contemplated and where the money had not otherwise been repaid, there is no reason why the liability to pay the sums required under the contract did not arise.

Contract claim not statute barred

256. On the proper construction of the loan agreement, distinct causes of action accrued at several dates. There is some ambiguity as to how the initial $15,000 referred to in clause 4 b. was to be paid.  However, that clause was plainly intended to provide security for the first interest payment due under clause 4 c. (and $2000 of that sum which was paid on 3 December was payment of part of the sum required under 4 b.).  No claim in respect of breach of the obligation to pay the security amount is advanced so it is unnecessary to consider that further.
257. It is also clear that the loan agreement was not one which permitted the principal to be recovered on demand.  Quite the contrary:
     1. (a)
        Mrs Orchard was required to pay interest in the sum of $17,500 on 19 October 2011 (clause 4 c.);
     2. (b)
        Mrs Orchard was required to pay interest in the sum of $17,500 on 19 October 2012 (clause 4 d.); and
     3. (c)
        Mrs Orchard was required to repay principle and interest of $117,500 on 19 October 2013 (clause 4 e.).
258. Ms Wylie’s causes of action in debt therefore accrued to Ms Wylie on each of those dates.  Each of those dates is less than six years before the proceeding was commenced.  They are therefore prima facie within time.  Mrs Orchard did not submit to the contrary.
259. Mr Morris QC contended, however, that all claims on the loan agreement were statute barred because Ms Wylie repudiated the loan agreement on each occasion that she demanded repayment of the principal before its due date.  He identified demands made on November and December 2010 and January 2011 (see paragraphs [164], [165], [171] and [178] above).  The argument seems to have been that Mrs Orchard accepted the repudiation by referring Ms Wylie to speak with Mr Silver (the vendor) and Mr St Pierre  and saying the matter was out of her hands (see paragraph [179] above).  The implication must be that this conduct, looked at objectively, communicated acceptance of the repudiation and termination of the loan agreement.^[115]  
260. I reject the argument for the following reasons.
261. First, for the reasons given in paragraph [179] above, I am not persuaded that Mrs Orchard made the statement relied upon as comprising acceptance of the alleged repudiation.  The only other relevant response to Ms Wylie’s demands was Mrs Orchard’s email of 6 December which, whatever its other failings, plainly affirms the loan agreement as remaining on foot.  As it is not submitted Mrs Orchard made any other communication with Ms Wylie thereafter, there has been no termination of the loan agreement, even accepting all the other steps in the argument.
262. Second, Mr Jones submitted that the words said to amount to acceptance of the repudiation could not be construed objectively as any such acceptance.  He submitted, correctly in my view, that the effect of what Mrs Orchard said was to propound that she had discharged her obligation under the loan agreement by paying it to Mr Silver (in accordance with her implied assertion as to what comprised performance of her obligations under the loan agreement).  There is merit in that proposition. 
263. Third, Mr Jones submitted that Ms Wylie’s conduct in demanding repayment of the $100,000 before the due date could not amount to repudiation of the loan agreement because Ms Wylie had no executory obligations under the loan agreement.   Mr Jones did not cite authority for the proposition but Mr Morris did not advance legal argument to the contrary.  (His submissions did not even open the window in preparation for defenestration.^[116])
264. I would have been assisted by submissions on the law in this regard.   However, it seems to me that Mr Jones submission is correct.   Repudiation can take one of two forms.  It can occur when a party to a contract evinces a lack of readiness, willingness or ability to perform at the time when performance is required.  It can also arise where a party to a contract evinces, before the time for performance of an obligation, a lack of readiness, willingness or ability to perform when the time for performance arrives (otherwise referred to as anticipatory breach).^[117]
265. Mr Heydon explains the position in more detail as follows:

[24.170] Terminology: “repudiation”/“anticipatory breach”

In relation to termination for breach, the word “repudiation” is commonly used to mean that at the time when performance is required, the promisor shows an absence of readiness, willingness or ability to perform.^[118] The words “anticipatory breach” mean that at the time before the time when performance is required, the promisor shows an absence of readiness, willingness or ability to perform when the time for performance arrives.^[119] Lord Denning MR’s suggestion that the “word ‘repudiation’ should be confined to cases of anticipatory breach” has not been followed. Indeed, he conceded that the word “is also used in connection with cases of an actual breach going to the root of the contract”.^[120] And, as that quotation shows, the metaphor “going to the root of the contract” is also used to refer to breaches of condition, and sufficiently serious breaches of intermediate terms.^[121] In Afovos Shipping Co SA v R Pagnan & Fratelli (The “Afovos”),^[122] Lord Diplock saw the doctrine of anticipatory breach as a species of the genus of repudiation. He saw it as applying only to the fundamental breach in the sense that the “threatened non-performance would have the effect of depriving [the promisee] of substantially the whole benefit which it was the intention of the parties that [the promisee] should obtain from the primary obligations of the parties under the contract then remaining unperformed”.

266. At the time she demanded back the $100,000, it is strongly arguable that Ms Wylie had no remaining promise under the loan agreement which remained to be performed. None was identified by Mr Morris.   It is difficult to see then how her demand for early repayment can amount to repudiation of her obligation to perform any obligation.
267. That is not to say that demanding repayment before repayment was due under a loan for a fixed term might not be a breach of the loan agreement.  One could credibly argue that where a person makes a loan for a fixed term, they impliedly promise not to demand payment before that time.  However, not every breach of contract gives rise to a right to terminate for breach.  And it is difficult to see why demanding repayment early would comprise a breach of a condition of the contract which would enliven a right to terminate, particularly where the debtor does not respond to that demand by reminding the creditor of the fixed term and requiring the creditor to respect it.  
268. In my view, Ms Wylie’s conduct in demanding early repayment did not constitute repudiation of the loan agreement. The repudiation argument fails and therefore the limitations defence fails.

Contract claim succeeds

269. For the above reasons, Ms Wylie is entitled to judgment on her claim on the loan agreement in the amount of $150,500.

The deceit claim

Deceit claim as an alternative

270. Neither side made an issue of whether the claim for damages for deceit could only be advanced if the loan agreement was first terminated.  It is not strictly necessary to rescind a contract induced by deceit to claim damages, though whether the contract is terminated or not might affect the measure of damages.^[123]  Where the deceit induced payment away of money under a loan agreement, it makes little difference whether the contract is terminated or not, at least in this case.

Fraudulent misrepresentation and reliance

271. I have already found that when Mrs Orchard obtained the bank cheque and entered into the loan agreement, she had no intention of applying the money to a Refund franchise or failing that, to invest otherwise for their mutual financial benefit.  The circumstances are such that there is no doubt that she intended Ms Wylie to rely on the representation, nor that Ms Wylie did so.
272. On the last point, Mr Morris submitted that Ms Wylie did not give direct evidence that she relied on the misrepresentation by Mrs Orchard as to her intentions in relation to the funds in lending her the money.  Assuming that to be so (I have not exhaustively searched the transcript), I do not consider it to stand in the way of this finding.  It is not fatal to a claim of reliance that a witness does not give direct evidence of the reliance.^[124] In Hobson v Taylor [2019] QCA 265 at [70]-[71], it was observed:

[70] Undoubtedly, it was necessary for the respondents to prove that the making of the agreement was induced by one [or] more of these representations.  It was sufficient for them to prove that at least one of the representations was a substantial inducement.  It was not the respondents’ case that it was only by a combination of each and every representation which they had pleaded that they were induced to have Wandani enter into the agreement.

[71] The inducement could have been proved by direct evidence, which of course could have come only from Mr Taylor, by a process of inference from other facts or by a combination of the two.  In Hanave Pty Ltd v LFOT Pty Ltd, Kiefel J (with whom Wilcox J agreed) said:

‘The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entry into contract, but by a court determining what effect must be taken to have resulted.  Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point.  In Gould v Vaggelas at CLR 236, Wilson J held that if a material representation is calculated (which is to say, objectively likely: Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993) 41 FCR 229; 113 ALR 30; Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1 at 166; 140 ALR 391) to induce the representee to enter into a contract and the person in fact enters into a contract, a fair inference arises that the representation operated as an inducement, adding that it need not be the only cause.

…

A conclusion of inducement may then be reached where a combination of factors, including the quality of the representation itself, goes unanswered.  In relation to the representation itself it would need to be of a kind likely to provide that inducement and such that: “;… common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract” (per Wilson J at CLR 238), a statement regarded by the full court in Ricochet as providing a practical guide to the drawing of inferences in such cases.’”

273. Given the facts as I have found them, there is no other rational inference other than that Ms Wylie lent Mrs Orchard the money in reliance on Mrs Orchard’s false representations as to what Mrs Orchard intended to do with it.   

Loss was caused by the fraud

274. Mrs Orchard contends that Ms Wylie’s loss was caused not by Mrs Orchard’s fraudulent misrepresentation but rather by Ms Wylie’s decision to terminate the contract and/or Ms Wylie’s failure to pursue Mr Silver.
275. Both contentions must be rejected.

Decision to terminate

276. There are at least two reasons why this contention fails.
277. First, it is an essential element of this contention that Mr Silver would have been ready willing and able to settle the contract at some stage and that when that occurred, he would have given credit for the $100,000 Mrs Orchard said had been paid on account of the contract.  I am not persuaded that either fact has been established.  Indeed I am confident that neither matter would ever have come to pass.
278. As to settlement, at the time that Ms Wylie terminated the contract, it had been some four months since the completion date under the contract, the vendor was unable to say when he would be ready to complete and he had sought an extension on settlement to September 2011.^[125]  Given the troubles which overtook BOP, CGIC and undoubtedly Mr Silver on the winding up of those companies in February 2011, and the questionable nature of the contract in any event (where it was sold on a short settlement as a house and land where the house was still not complete months later), I am not persuaded that Mr Silver would ever have been in a position to settle.
279. I also find that Mr Silver would not have credited the $100,000 to Ms Wylie in any settlement.  Mr Silver’s solicitors made clear he did not accept that he had any obligation to do so and there is little room for doubt that he would have maintained that position if (as was unlikely) he ever reached settlement.   There was in my view no prospect at all that Ms Wylie would in fact have avoided the loss she suffered if she had pursued completion of the contract. 
280. Second, causation is to be assessed using the commonsense approach identified in March v Stramare (1991) 171 CLR 506^[126] and it must be borne in mind that the misrepresentation only has to be a substantial cause of the loss, not the only cause.  It was Mrs Orchard fraudulent misrepresentation that caused Ms Wylie to pay away $100,000 in circumstances which left her at the mercy of Mrs Orchard and/or Mr Silver. In those circumstances, I consider that regardless of how she dealt with the contract, the loss was materially contributed to by Mrs Orchard’s deceit.

Decision not to pursue Mr Silver

281. This can be shortly dealt with.  The contention must be rejected for at least three reasons.
282. First, for the reasons given in paragraphs [278] and [279], attempts to sue Mr Silver would have almost certainly been contested and difficult and there was no evidence that he could have ever met a judgment. Such evidence as there was suggested the contrary.
283. Second, the only point of suing Mr Silver would have been if it was true that the money was paid to or to the benefit of Mr Silver.  I am far from persuaded that is correct.  There is only Mrs Orchard’s evidence that that was true and, quite apart from her lack of credit as a witness, it could easily have been the case that the money was, technically, paid to or for the benefit of some other entity; CGIC or BOP.
284. Third, there is no particular reason why Ms Wylie should have had to pursue (speculatively) Mr Silver.  She was perfectly entitled to sue Mrs Orchard and if Mrs Orchard was so confident that Mr Silver was the person who received the benefit of the funds, she could have sued him for indemnity or on some other basis.  Notably, she did not.

The deceit claim is statute barred

285. Ms Wylie first suffered loss by Mrs Orchard’s deceit on delivery of the bank cheque.  That occurred on 19 October 2010.  Ms Wylie therefore had to commence her action against Mrs Orchard within 6 years after that date^[127] unless she can rely on a statutory extension of that period.
286. Ms Wylie invokes s. 38 LAA.  That provision relevantly provides:

38 POSTPONEMENT IN CASES OF FRAUD OR MISTAKE

(1) Where in an action for which a period of limitation is prescribed by this Act—

(a) the action is based upon the fraud of the defendant or the defendant’s agent or of a person through whom he or she claims or his or her agent; or

(b) the right of action is concealed by the fraud of a person referred to in paragraph (a); or

(c) the action is for relief from the consequences of mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it.

287. It was not disputed (correctly in my view) that the deceit case was an action based upon the fraud of the defendant.  The area of dispute related to when Ms Wylie “discovered the fraud or could with reasonable diligence have discovered it”.  The onus of making out that the limitation period is extended sufficiently by s. 38 LAA lies on Ms Wylie.^[128]
288. Mr Jones submits that I should find that Ms Wylie acted with diligence in investigating “what happened to her money” but despite that, still did had not discovered the fraud on 29 May 2012 (well after the August 2011 date 6 years before commencement of the litigation^[129]).  He submitted her state of mind at that date is revealed in her email to a Mr Neal where she wrote:

I was told that $100,000 was withdrawn from [Mrs Orchard’s] account and was put onto the house and land package in Tasmania can you please track that down and see if she did take it back out and put it onto the house…and moved it to someone else or to some where else I have a feeling she has kept the money.

289. Mr Morris’ submissions relied on both limbs of the provision:
     1. (a)
        He invoked the first limb of the definition in submitting that Ms Wylie was aware she had been defrauded by Mrs Orchard from at least March 2011 (when Mr Howroyd told her that Mr Silver denied receiving the money on account of the contract); and
     2. (b)
        He invoked the second limb of the definition in this way.  He emphasised that Mr Howroyd advised Ms Wylie on 25 February 2011 that she might have to take “separate action” to recover the money.  He submitted that if she had, she would have obtained disclosure and lodged a caveat over the Tasmanian property to secure the benefits of that claim.^[130] 
290. The first task in determining this matter is to identify what constitutes “the fraud” for the purposes of this case.  As set out above, the fraud alleged was the act of representing that the $100,000 would be used to acquire a Refund franchise or otherwise for the benefit of Ms Wylie (or perhaps as I read the loan agreement, for Ms Wylie and Mrs Orchard together), while having no intention of using the money in that way.  That is the fraud.  Time will run therefore from the point at which Ms Wylie discovered the falsity of the representation as to the use of the $100,000 or could with reasonable diligence have discovered that falsity.  But how exactly is that test to be applied?
291. There is a surprising lack of authority on how to construe and apply the phrase “the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it”.^[131]   Where a potential plaintiff is concerned with the ‘state of mind’ element of fraud, the plaintiff will struggle to find direct evidence of that fact.  States of mind must always be inferences from other facts.  Absent a clear admission, the potential plaintiff in a deceit case must always infer the dishonest state of mind which he or she must allege in a pleading.  It is a difficult question exactly when the potential plaintiff knows enough facts from which he or she could properly conclude that fraud has occurred.   It could not be before the potential plaintiff knows enough ethically to plead a case in deceit.  But does the cause of action accrue at that point?  Or is more evidence consistent with the state of mind to deceive required (or reasonably discoverable) before the cause of action accrues?
292. Further, the “can you plead it” test is an uncertain basis for identifying the point at which a person is to be taken to have discovered a dishonest mind.  For example, the application of Rules 59 and 60 of the Queensland Barristers’ Rules leave room for a range of opinions as to when an allegation of fraud might be justified.
293. This is not a matter easily resolved in this case because of the part played by Mrs Orchard in dishonestly misleading Ms Wylie to the effect that she had applied the money for her benefit or at least tried honestly to do so, by asserting that she had paid the money towards the obligation on settlement of the contract.
294. If Mrs Orchard had not made that further misleading statement on 6 December 2010, then Ms Wylie would have been left, in early 2011, with the knowledge that Mrs Orchard had promised to use the money for her benefit, had produced no such benefit and was not explaining what had been done with the money.  At that point, it is arguable that a reasonable person would have had a sufficient basis to believe that the representations were false as properly to plead fraud.  A fortiori where the property scheme in which Mrs Orchard was a participant collapsed with the winding up of BOP and CGIC in January 2011.
295. However, considering the Briginshaw principal, Ms Wylie was entitled in my view to investigate Mrs Orchard’s story before she could be taken to have discovered the fraud.  A key event in that analysis was when she was informed by Mr Howroyd that Mr Silver’s solicitor had said Mr Silver rejected Mrs Orchard’s version of the fate of the money obtained from Ms Wylie.  That occurred on 17 March 2011.  It seems to me that before that time, Ms Wylie had not discovered that there had been a fraud by Mrs Orchard.
296. However, even at that point, Ms Wylie knew that Mrs Orchard said one thing and Mr Silver, apparently said another.  As no other explanation had been given by Mrs Orchard as to the fate of the money, she was left not knowing who out of Mrs Orchard and Mr Silver were telling the truth (if either).  I do not consider that in that situation, Ms Wylie had discovered the deceit of Mrs Orchard. 
297. However, in my opinion, once it was evident that there was no justifiable explanation for the application of the money to the contract, then she had discovered the fraud by Mrs Orchard (that is by excluding the only explanation given consistent, in broad terms, with honesty).
298. In April 2011, Ms Wylie went to the police with complaints about Mrs Orchard.  There is no suggestion she had heard anything else from her at that point. It is probably correct, as Mr Jones submitted, that Ms Wylie was confused as to what had happened and that she believed that everyone involved with the transaction was in cahoots (as indicated by her unjustified complaint about Mr Howroyd in May 2012).   Quite when and on what facts Ms Wylie reached the view that the whole scheme was dishonest is impossible to tell from the evidence.  However, the onus of proving the extension conferred by s. 38 LAA lay on Ms Wylie and I am not satisfied she has established that she did not reasonably conclude that the deposit explanation was bunkum until after August 2011.
299. In reaching that conclusion, I recall that by May 2011 she had been told that the money was not paid against the contract by Mr Silver’s lawyer, she had complained to the police, she had terminated the contract with no prospect of recovering money as part of that process, and she had heard no other explanation from Mrs Orchard for nearly 6 months.  If she did not conclude that the loan agreement was a cloak to defraud her of her $100,000 by that point, it is highly likely she would have been so advised by competent lawyers.  It is three further months until the date which would have made the deceit case one which was commenced in time.  Bearing in mind that the onus lies with Ms Wylie to invoke the extension in s. 38(1) LAA, I am not satisfied that Ms Wylie has established that she did not discover the fraud until after August 2011.  Accordingly, I cannot conclude that the deceit case was within time.
300. I should deal directly with Mr Jones’ arguments about this.  He submitted that Ms Wylie did not know how the $100,000 had been paid out until well after August 2011.  That is surely correct.  However, in my view the question is not when did Ms Wylie discover that Mrs Orchard had paid the money out as she did.  The question is when Ms Wylie discovered that Mrs Orchard had not paid the money as she had represented.  That is entirely another question.  Once Ms Wylie discovered that the money was not paid for her benefit, what difference did it make whether it was paid to bail out the scheme and/or Mr Silver or used to buy an expensive motor car?  This could only avail Ms Wylie if it could be said that until Ms Wylie found out how Mrs Orchard had paid the money, she had not discovered the fraud because she had not excluded an innocent explanation for the use of the funds.  Whatever the precise test to be applied in s. 38(1) LAA, I do not think that is correct.  Once it was reasonably clear that Mrs Orchard had not paid the money for Ms Wylie’s benefit and any explanation given by Mrs Orchard ceased to appear credible, I consider Ms Wylie discovered the fraud she pleaded in this case.
301. For completeness, I should also deal with an argument put forward by Mr Morris.  It will be recalled he submitted that if Ms Wylie had sued Mr Silver, she would have discovered what occurred with the payment in interlocutory and pleading steps.  I think this extremely unlikely, given Mr Silver’s attitude in this solicitor’s correspondence and his ultimate convictions for fraud in relation to the scheme.  Similarly, I think it very unlikely that Mrs Orchard would have been forthcoming with those details early in the dispute, with police investigations underway.  Certainly nothing said in evidence persuaded me she would have done.  And in any event, it is improbable that the details would have been provided before August 2011, given the time it would likely have taken to bring matters to a head in interlocutory steps, even if she had commenced proceedings promptly after the recommendation by Mr Howroyd in February 2011.
302. In the circumstances of this case, the conclusion that the deceit case is statute barred is not an attractive one.  However, Ms Wylie bore the onus of proving the conditions in s. 38(1) LAA and I am not satisfied that she did so. 

The trust claim

303. I refer to paragraphs [209] to [211] above.  The plaintiff is correct that the defendant’s first and second responses to the trust claim fail.   The defendant’s submissions fail to grapple with the basis upon which the trust is said to arise.  While the trust case was put as a Quistclose type trust in the summary judgment hearing, the basis of the trust now contended for is different.  Further, for the reasons already given, the defendant’s second point also fails.  
304. Given my findings that the cheque was obtained as a result of fraudulent misrepresentation, the two questions which arise for determination are these:
     1. (a)
        Does the principle articulated in Black v S Freedman in relation to theft extend to the situation where property is obtained with consent vitiated by deceit; and
     2. (b)
        If so, is the defence of laches available in the face of s. 27(1)(a) LAA and if it is, can Mrs Orchard rely upon it?
305.   Both questions are of some complexity.

Relevant principles

306. The starting point is Black v S. Freedman & Co Ltd (1910) 12 CLR 105.  That case recognised for the first time in Australia that a trust arose over stolen property immediately on its theft by the thief.   A summary of the case is as follows (footnotes omitted)^[132]:

Mr Black was employed as an accountant of Freedman & Co. Black stole at least £1,394 in cash from his employer. From the stolen money Black deposited £754 into his wife’s bank account and used £250 to buy circular notes (an early form of traveller’s cheque) in the name of Mrs Black. The £754 was deposited to Mrs Black’s account between November 1909 and April 1910. The money remained in the account which had a balance of £759 at the time of the trial. The proceeds of Black’s theft therefore existed in two forms: the money in Mrs Black’s bank account and the circular notes. The plaintiff claimed a declaration that £754 of the money in Mrs Black’s bank account was their property and that the £250 of circular notes were also their property. The framing of the claim by the plaintiffs in this way turned out to be critical. Instead of claiming a money remedy for conversion they sought a declaration that they had a continuing legal property right in the proceeds of the stolen money.

In the High Court, Griffith CJ proceeded on the basis that the stolen money could be traced in equity as trust property. He made no attempt to explain why it was trust property other than to refer to property being disposed of by a person in a fiduciary position. Black was an employee and thus a fiduciary and therefore it may have been that Griffith CJ considered that the money was trust property because of this fiduciary relationship and not solely because of the theft. O'Connor J agreed with Griffith CJ but observed that where money is stolen it is trust money in the hands of the thief. The significance of O'Connor J’s statement is that it suggests that a trust will arise from a theft even in the absence of a fiduciary relationship. He also held that, when given to a third party without consideration, “the money” retained its character as trust money. This would suggest that a trust arose at the moment of the theft. The conclusion of the High Court that a thief becomes a trustee of stolen money has been described as heretical. However, heretical or not, it is the position in Australia.

307. The principle for which the case is widely known was not the subject of detailed consideration in the judgments, perhaps because the Court considered the answer obvious.  (Barton J, in agreeing with Griffith CJ, merely added “I do not wish to waste words on this endeavour to retain the fruits of a crime”. O'Connor J’s judgment referred to above was very brief). 
308. However, any ambiguity about the principle was dispelled when the High Court dealt with the point again in Creak v James Moore & Sons Pty Ltd (1912) 15 CLR 246.  That case is less often cited, but it has particular relevance for this case.  There the High Court confirmed the principle articulated by O'Connor J in Black, but in this context.  It is again helpfully summarised by Mr Tarrant as follows (footnotes omitted)^[133]:

Black held his possessory property right to the money on trust for Freedman & Co. Freedman & Co therefore had the benefit of two property rights to the money. But when the theft principle is applied to stolen goods that are sold a victim of a theft obtains an equitable property right to the proceeds while retaining a legal property right to the goods. That is, unlike in Black, the victim has property rights to two separate things. The operation of this multiplication of property rights is demonstrated by the High Court decision in Creak. In Creak, Watson, an employee of James Moore & Sons Pty Ltd, stole cash and galvanized iron from his employer. Quine, an accomplice of Watson’s then sold the iron to Creak and deposited the proceeds in a bank account in the name of Watson. Watson was subsequently arrested by Detective Lonsdale who arranged for Watson to withdraw the funds from the bank account and Detective Lonsdale then delivered those funds to James Moore.

Therefore, James Moore had received the proceeds of the sale of the stolen goods but continued to pursue a claim for conversion against Creak. James Moore justified this on the basis that Watson owed them other moneys and they applied the money received from Detective Lonsdale to that other debt on the basis that they had no knowledge that the money represented the traceable proceeds of the sale of the goods to Creak. Accordingly they continued to pursue an action in conversion against Creak.

When the case came before the High Court, Griffiths CJ observed that the case raised the question as to whether James Moore were “entitled to recover the value of the goods and also to keep a sum of money which was in fact the actual proceeds of the goods when sold by the thief”. He went on to observe that the issue was “free from direct authority, and must be determined by the application of general principles of law”. In discussing James Moore’s right to the proceeds Griffiths CJ referred to “their independent equitable title to it”. As a result James Moore had continuing legal title to the stolen iron as well as equitable title to the proceeds received by the thief. This prima facie provided them with two remedies: damages for conversion and the ability to vindicate their right to the trust property. But Griffiths CJ held that James Moore could not obtain both remedies. He held that:

In my opinion the following proposition is good law: If a man, having received a sum of money which is identified as being in fact the proceeds of property of his that has been sold without his authority, afterwards becomes aware of the fact, he is prima facie bound to elect whether he will affirm or disaffirm the sale. That is to say, he cannot keep the money and recover the full value of the goods.

Barton J agreed with Griffith CJ, observing that it would “be monstrous to hold that they are entitled to keep both the money and the goods”. 

309. In both decisions, the source of the trust obligations is the theft of property from the plaintiff.  That is not the position here.  In this case, Ms Wylie intended to confer title in the bank cheque on Mrs Orchard, albeit that intention was defeasible because the transfer was induced by fraud.  That is a very significant distinction with the Black and Creak line of authority.
310. Can the principle identified in those cases apply where property is obtained by deceit?  In my summary judgment reasons, I opined that “it would be arguable that a constructive trust arose even in that circumstance: see Halley v Law Society [2003] EWCA Civ 97 especially per Carnwath LJ at [47] to [48].^[134]  A fortiori, perhaps, where it can be argued that the contract itself is drafted by the alleged rogue, provided to the victim without legal advice, and on its face an “obscure and ambiguous document.”^[135] 
311. Again, Mr Tarrant has set out a more detailed analysis of the key elements of that case which I gratefully adopt (footnotes omitted).^[136] 

In Halley v Law Society [2003] EWCA Civ 97, the English Court of Appeal developed a principle identical to the theft principle developed in Black and Creak. The importance of the decision in Halley is that money was paid pursuant to what the payer believed to be a valid contract. A number of payers were persuaded to make a number of payments for various investments. In reality the transactions were entirely fraudulent. Nevertheless the parties had appeared to enter into valid contracts. In such circumstances, under traditional contract principles, for a payer to claim a proprietary right to the money paid they would first need to rescind the contract to revest their title to the money. In Halley, money had been paid to a solicitor, Wilson-Smith, who was acting as an escrow agent. The Law Society intervened in Wilson-Smith’s legal practice on the grounds of suspected dishonesty and as a result his trust account fell under the control of the Law Society. At issue was approximately US$114,000 which Wilson-Smith held as escrow agent. Halley claimed that he was entitled to the money as his commission for the investment transactions. The funds had been paid to Wilson-Smith by an entity called Toro and by other payers involved in the investments.

Counsel for the Law Society argued that in this case the usual position that a contract must first be rescinded to revest title did not apply because the contract was nothing more than a device to obtain money and was akin to theft. In discussing this submission, Carnwath LJ stated that “[w]here property is stolen, no beneficial interest passes to the thief” (at [47]). This is in essence identical to the theft principle established in Australia in Black. Carnwath LJ went on to make an important distinction between a contract that has been induced by fraud on the one hand and a contract that is nothing more than an instrument of fraud (at [47]). If a contract was induced by fraud there would be a valid contract and the traditional requirement of rescission would be required to revest title. But in cases where the contract was an instrument of fraud Carnwath LJ held that it would be meaningless to require rescission (at [48]). He concluded that because the contract itself “was the instrument of fraud, the Court is not required to give effect to it” (at [54]). Accordingly he held that the transaction “did not result in the transfer of the beneficial interest in the money” (at [56]). Both Hale LJ and Mummery LJ agreed with Carnwath LJ. This approach maintained the traditional position to some extent. The legal title to the money still transferred as a result of the contract. But the court used equitable principles to deny the fraudster equitable title to the money.

The decision in Halley is consistent with the theft principle developed in Australia. It is quite possible that the theft principle could be extended in Australia to cases similar to Halley. This has obvious implications for the law of contract and for priorities in insolvency. A payer will be in a stronger position if they can successfully argue that the entire contract was an instrument of fraud. This will relieve the payer of the need to rescind and create equitable property rights to any money paid at the moment of the payment.

[underlined]

312. Mr Jones relied on several authorities supporting the proposition that the principle applied on the facts of this case.  However, the submission did not grapple with the application of the distinction underlined above which is central to the application of the Black principle where the property claimed passes under a contract, (at least on the authority of Halley).
313. All of the cases cited by Mr Jones dealt with orthodox theft situations,^[137] or situations even more distant from theft cases.^[138]  The only case which approximates the facts of this case is Re Courtenay (2018) 125 ACSR 149.  In that case, the companies in liquidation had conducted effectively, an unregistered managed investment scheme whereby they solicited investments using a client information booklet and investor pack.  Once an investor decided to proceed, there followed an application process accompanied by payment of the investment sum.
314. The investment scheme was in fact a ponzi scheme.  The liquidators of the relevant companies sought advice as to how to distribute the funds between various claimant groups of investors.  It is important to bear in mind the character of the application.  The giving of directions to a liquidator does not bind third parties and is not determinative of substantive matters in dispute between the liquidator or the company and third parties.^[139] 
315. In that case, Justice Brereton was concerned with submissions from one group of investors that no trust arose over subscriptions from another group such as to justify the liquidator treating the latter subscriptions as being held on trust.   His Honour was sufficiently persuaded that that was incorrect to give directions based on the assumption that such a trust arose.  His Honour found that to be justified on three separate grounds: there was an express trust established, a Quistclose trust established and a Black v Freedman trust.  The latter conclusion was dealt with briefly.  His Honour held:

[30] Where money has been stolen, or obtained by fraud, it is held on trust by the recipient.  Here, contrary to what was represented to investors, funds were procured by the companies, not for the purpose of undertaking foreign exchange trading, but to return capital and return on investment to earlier investors, in the course of a Ponzi scheme. While the non-Brexit investors submitted that whether a trust arose must depend on the facts of each individual case, and that - as the Brexit Investors were all existing clients with an established relationship with the companies - there may well be more to the relationship, in my view it is inconceivable that any would have invested had they understood that their funds were to be used not for foreign exchange trading, but to pay out earlier investors, and that repayment to them would be dependent upon the survival of the scheme. Accordingly, this is a further alternative basis for concluding that the funds invested with Courtenay House were held on trust for the investors.

[Footnotes omitted]

316. While this does appear to involve the application of the Black principle to a contract which is an instrument of fraud (assuming that the subscription process gave rise to a contract), the judgment did not grapple with the matters of principle which arise in that regard as identified in Halley.
317. I do not consider there has been any authoritative consideration or application of Halley in Australia. 
318. However, a very similar principle is in any event evidence in cases in New South Wales.  In Orix Australia Corporation Ltd v Moody Kendall & Partners Pty Ltd [2005] NSWSC 1209, Justice White reasoned to the same conclusion as occurred in Halley (at least on my reading of the judgment).  There, Orix (an equipment financier) acquired six cranes from a seller for hire to a hirer.  The cranes did not exist, and the transaction was entirely fraudulent.  Orix sought to recover from the defendant finance broker and person (Mr Nelson) who stood behind the seller, inter alia, on a Barnes v Addy basis. 
319. In that context, Justice White observed:

 154 Orix also claimed equitable compensation from Mr Nelson as an accessory who knowingly, or dishonestly, assisted in Nelson Equipment’s breach of trust. 

155 There was no fiduciary relationship between Nelson Equipment and Orix.  I accept that Nelson Equipment held the purchase moneys paid to it by Orix on trust for Orix immediately it received the funds.  It obtained the funds through fraud.  Stolen property is trust money in the hands of the thief.  (Black v S Freedman & Co (1910) 12 CLR 105 at 110).  In Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 Lord Browne-Wilkinson said (at 716):

“…when property is obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity.”

In Robb Evans v European Bank Ltd (2004) 61 NSWLR 75, moneys obtained by fraud were deposited by the fraudster into an account with a company called Benford Ltd which the fraudster controlled.  Spigelman CJ, with whom Handley and Santow JJA agreed, held that Benford Ltd held the stolen funds as trustee for the defrauded credit card holders.  (At 99, [111]).  His Honour said that the trust was better described as a presumed or resulting trust, rather than as a constructive trust.  However the trust is classified, it arises upon the receipt by Nelson Equipment of the moneys.  (Robb Evans v European Bank Ltd at [113]-[115], 100; Westdeutsche Landesbank Girozentrale v Islington London Borough Council at 714-715). 

156 Moreover, the fraud went to the heart of the contract so that Nelson Equipment received the price from Orix, but gave nothing in return such that there was a total failure of consideration for the payment of the purchase price.  It is not merely the fact that the purchase price was received by Nelson Equipment by a fraudulent representation that gives rise to the trust, but the fact that Nelson Equipment gave nothing of value in return.  This was explained in a judgment of the Court of Appeal of Vanuatu, (noted in 79 ALJ 600), of Barrett & Sinclair v McCormack [1999] VUCA 11.  The Court, after referring to Neste Oy v Lloyds Bank plc [1983] 2 Lloyd’s Rep 658, Re Goldcorp Exchange Ltd [1995] 1 AC 74, Westdeutsche Landesbank Girozentrale v Islington LBC, Cowern v Nield [1912] 2 KB 419, Stocks v Wilson [1913] 2 KB 235, and Bankers Trust Co v Shapira [1980] 1 WLR 1274, said:

“The fraud here goes to the heart of the contract resulting in a total failure or absence of consideration. The appellants [scil vendor] in essence provided nothing in exchange for the respondent’s money. The shares … were a scam. This amounted to theft, the taking of something for nothing in return. The taking of something without anything in return, not qualifying as a gift or some other lawful assignment, is the very basis for the imposition of constructive trusts in the above cases of Nest Oy, Cowern, Stocks and Bankers Trust. In Nest Oy, the payee received money when it knew it could not perform the contract. Likewise, the payee in Cowern provided the payer with nothing in return as the goods the payee supplied were worthless. Further, Cowern, like Stocks, are cases involving infants who could not at law contract for non-necessities. The promises of infants were not legally enforceable against them by the other party. Thus, these infants provided no consideration at the formation of executory contracts where consideration is the exchange of legally enforceable promises. There was an absence of consideration as the party contracting with the infant received nothing in exchange for its promise to provide and subsequent provision of property. The infants in Cowern and Stocks had fraudulently misrepresented their age. The fraud of the infants in Cowern and Stocks went to the heart of the contract as it concerned their ability to contract and provide consideration. In like fashion, though [the vendor] had fraudulently misrepresented the true value of the shares in an arms length vendor-purchaser transaction, their fraud went to the heart of the contract, resulting in the total failure or absence of consideration. [The vendor] was getting something for nothing. In Bankers Trust, the fraudulent parties had defrauded the bank with the use of forged cheques. Again, there was the taking of something without something in return. In every case, a proprietary remedy was appropriate.”

320. In my respectful view, there is a co-incidence in the underlying reasoning of Halley and Orix.   Justice White’s focus on the fact that Nelson gave nothing in return for the sale price (except a fraudulent promise) which attracted the principle in Black is apt to identify a contract which is nothing more than an instrument of fraud.
321. The same analysis recommended itself to Hodgson JA (with whom Ipp JA agreed) in MBF Australia v Malouf [2008] NSWCA 214 at [31].  That case had some similarity to this.  There the fraudster had fraudulently promised to use certain funds from the victim to acquire an insurance policy for a large business loan with no intention of doing so.  In fact, the funds were obtained in a bank cheque made payable to the landlord of the fraudster’s company and collected by the landlord.
322. On the trust question, Hodgson JA observed:

30 The cheque was handed to Mr Hill either by Ms Waters or by Mr Malouf.  If it was handed to Mr Hill by Ms Waters, she did so as Mr Malouf’s agent.  The result intended and achieved was that the cheque, previously owned by Mr Malouf, became the property of Mr Hill, subject to whatever contractual or equitable rights might have arisen from the transaction. 

31 It is true that payment of the cheque to MBF was consistent with the intention of Mr Malouf and Mr Hill; and it is also true that Mr Malouf had not, prior to 6 December 2000 when the cheque was sent to MBF, terminated his contract with Isagila.  However, this was a case not merely of a fraudulent misrepresentation inducing entry into a contract, but one where, on the evidence and findings of the primary judge, the whole transaction was a fraud perpetrated by Mr Hill.  As found by the primary judge (Judgment [30]), Mr Hill never intended to carry out any part of the purported transaction: that is, he never intended to use overseas funds or acquire a Lloyds’ policy, and he never intended to provide a loan to Mr Malouf. 

323. In my view, although Halley does not appear to have been directly considered, the principle it represents has already been recognised in the two authorities to which I have just referred, with the added clarity that the contract can be ignored where the fraudster provided nothing for the money other than the false promise.  

Mrs Orchard received the bank cheque on constructive trust

324. Having reached that conclusion on the point of principle, I find that Mrs Orchard received the bank cheque on constructive trust.  Like the cases I have examined, in this case there was nothing provided under the contract except the false promise.   
325. Once that conclusion is reached, it is evident that Ms Wylie is entitled to equitable compensation for the breach of the trust resulting from the dissipation of the funds by Mrs Orchard.

No defence of laches arises

326. The submissions on the limitations and laches points are brief.  Once again, this case gives rise to complex questions which have not been fully examined (no criticism of counsel is intended here, both counsel committed a very substantial effort to what was on any view a relatively small claim). 
327. The first point to deal with is Mr Jones’ contention that on the proper construction of s. 27(1) LAA, the defence of laches is excluded because the Act (impliedly at least) provides that there is no limitation period for fraudulent breach of trust.  Section 27(1) provides:

27 Actions in respect of trust property

(1) A period of limitation prescribed by this Act shall not apply to an action by a beneficiary under a trust, being an action—

(a) in respect of a fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to the trustee’s use.

(2) Subject to subsection (1) , an action by a beneficiary to recover trust property or in respect of a breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of 6 years from the date on which the right of action accrued.

328. Section. 43 LAA provides that nothing in the LAA affects equitable defences.  However, there is an interaction of sorts between the LAA and equitable defences in relation to claims for fraudulent breach of trust.  In that respect, Professor Dal Pont has observed (footnotes omitted)^[140]:

Interaction between time bars at law and in equity

3.31 Limitation statutes, accordingly, do not exhaust the defences available to a defendant because of the passage of time. As, under Australian law, equitable defences can only be pleaded against claims in equity, there is arguably only some overlap between limitations statutes and equitable defences where the former purport to impose time bars on claims in equity. In this event, there arises the legitimate, and still unsettled, question as to whether an equitable defence can bar a claim commenced within the statutory limitation period, operating either expressly or by way of analogy. Those who argue that equity an outflank the statutory time bar point to laches as a doctrine independent of statute, grounded in more than mere delay that underscores time bars imposed by statute, despite the legislative policy underscoring an otherwise applicable limitation period. The upshot is that, provided that delay is accompanied by actionable prejudice, laches can bar a claim within the limitation period.

3.32 Those who oppose such an outcome cite the preeminence of statute – and the policy underscoring it – over the general law. While this arguably better represents how equity and statute should interact – after all, it seems odd that equity would preclude a plaintiff from bringing a claim within the period that Parliament has set for that claim – the balance of Australian authority seems to favour the former view. The point retains arguably the greatest significance now in the Australian Capital Territory and Western Australia, where the limitations legislation applies broadly to causes of action in equity; it has less scope to apply elsewhere in the face of limited application of limitations legislation to equitable claims.

329. However, I do not agree with Mr Jones’ submission that s. 27(1) LAA has the effect that would attract the primacy of the statute in any event because it does not say that a claim for fraudulent breach of trust is within time, just that no period of limitation in the Act applies to it.  That is language apt to leave open in my view the application of s. 43 LAA.  That is the view that I adopt.
330. It is then necessary to consider the nature of the laches arguments advanced by Mr Morris.  Although there are various specific circumstances where a laches defence might arise, the central consideration is whether the defence can identify any circumstance which would make it unjust to grant the relief sought.   Mere delay is not of itself enough.^[141]  
331. Mr Morris pointed to the failure of Ms Wylie to take action promptly against Mr Silver.  He said Ms Wylie’s failure to do so meant that the opportunity to recover the money had long since passed.
332. I reject this argument for the reasons in paragraphs [281] to [284] above.  As articulated there, I do not think that pursuing Mr Silver had any realistic prospect of leading to recovery of the advance.  Certainly, the defendant did not prove that it would have and all the evidence at trial suggested the contrary.  There is also another consideration.  I do not think that equity would assist a person who had obtained money by a fraud and paid it away to defend on the basis that the victim did not pursue the money in the hands of the persons to whom the fraudster paid the money.
333. Accordingly, if the contract claim had failed, I would have upheld the claim for equitable compensation for the amount paid to Mrs Orchard, being $98,000 plus interest.  I note the only pleaded claim for interest is under the statute.