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Holloway Nominees (Q) Pty Ltd v George[2008] QSC 63

Holloway Nominees (Q) Pty Ltd v George[2008] QSC 63

 

SUPREME COURT OF QUEENSLAND 

 

CITATION:

Holloway Nominees (Q) P/L v George & Ors [2008] QSC 63

PARTIES:

HOLLOWAY NOMINEES (QLD) PTY LTD
ACN 056 453 368
v
IAN GEORGE
(first defendant)
BONNYVIEW PTY LTD
ACN 087 181 575
(second defendant)
DONNYVIEW PTY LTD
ACN 087 181 557
(third defendant)
RAVENSVIEW PTY LTD
ACN 087 181 548
(fourth defendant)

FILE NO/S:

7703 of 2004

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

4 April 2008

DELIVERED AT:

Brisbane 

HEARING DATE:

23, 24, 24, 25 October, 12, 13 November 2007. Final written submissions received 10 December 2007

JUDGE:

Martin J

ORDER:

Judgment for the plaintiff in the sum of $247,482.54 with interest against each defendant.  

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – Recovery of moneys had and received – Distinction between debt and damages  – whether the nominated plaintiff was the correct entity to take action

TRADE AND COMMERCE – TRADE PRACTICES AND RELATED MATTERS – CONSUMER PROTECTION – MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT – Recovery of damages/compensation for misleading and deceptive representations – representations as to future conduct – effect of not calling evidence to establish reasonableness of making representations

Trade Practices Act 1974 (Qld), s 51A, s 52, s 75B, s 82

Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1985) 61 ALR 504

Enzed Holdings Ltd v Wynthea Pty Ltd (184) 57 ALR 167

Hamilton v Whitehead (1989) 166 CLR 121

I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109

Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107

Young v Queensland Trustees Ltd (1956) 99 CLR 560

Pavey & Matthews Ltd v Paul (1987) 162 CLR 221

Port of Brisbane Corp v ANZ Securities Ltd [2001] QSC 466

COUNSEL:

D Cooper SC with him C Francis for the plaintiff

R Perry SC for the defendants

SOLICITORS:

Quinn & Scattini for the plaintiff

Lynch & Company Solicitors or the defendants

Overview

  1. Colin and Dorothy Holloway are the directors of the plaintiff (“Holloway Nominees”). That company is the trustee of the Holloway Property Trust – a property investment trust. They are also the directors of Holloway Family Company Pty Ltd which is the trustee of the Holloway Superannuation Trust. Dr and Mrs Holloway are also two of the directors of Pacific Vista Pty Ltd (“Pacific Vista”). The other director is David Colwell (“Colwell”). He is a solicitor, though not the Holloway’s solicitor.
  1. Ian George (“George”) is the sole director of the 2nd to 4th defendants (“the corporate defendants”).
  1. In 1993 the Holloways obtained an interest in Pacific Vista which was, at that time, the registered proprietor of land at Bargara near Bundaberg. The land was in the process of being developed as a residential subdivision but it did not sell as well as the Holloways had hoped. In 1994 Colwell also invested in, and became a director of, Pacific Vista. At the time of the Holloways entry into Pacific Vista, the marketing of the residential allotments was being undertaken by an experienced local real estate agent. She left the company shortly after the Holloways became involved and her departure, together with a low level of land sales, meant that Pacific Vista was in financial difficulties from at least the mid 1990s.
  1. Colwell introduced the Holloways to George in 1997 as a person who could assist in the management of Pacific Vista. In October 1997 Pacific Vista entered into an agreement with a company controlled by George – I&A Home Consultants Pty Ltd (“I&A”) – for project management of Pacific Vista. There is debate as to the effect and ambit of that agreement but it is clear that George provided the necessary services and Pacific Vista paid I&A some $125,000 for those services over the next three years. George’s work for Pacific Vista was valued highly by the Holloways as it relieved them (particularly Mrs Holloway) of a lot of the administrative tasks they had been undertaking before his arrival on the scene.
  1. Notwithstanding the work done by George/I&A, the development at Bargara continued to be a financial disaster. The allotments were not selling in sufficient numbers and by early 2001 Pacific Vista was in a precarious financial position. In order to inject the necessary funds into Pacific Vista, the Holloways had sold their family home and some of the medical practices which had been developed by Dr Holloway.
  1. In and about 2000, George was also heavily involved, through (among other entities) the corporate defendants, with a residential development at Cashmere and a commercial development at Albany Creek. He was the sole shareholder and director of each of the corporate defendants. Those developments were also experiencing straitened times. Some loans used for development purposes were expiring in the first half of 2001 and further finance was needed.
  1. A series of discussions, meetings and e-mail exchanges took place between the Holloways, Colwell and George in 2001. I will consider the content and effect of them below. The outcome of them, though, was that $250,719.36 was paid by (to put it neutrally for the moment) Holloway interests into accounts with the Suncorp-Metway Bank. One of the accounts was used as an offset against bonds lodged by the corporate defendants with the Pine Rivers Shire Council with respect to the development at Cashmere. Another account into which money was paid was used to make payments necessary for the completion of a particular part of the development at Cashmere. The money in the set-off account was withdrawn by Suncorp-Metway following the default of the corporate defendants on loans that they had with Suncorp-Metway. The money deposited by the Holloway interests has, apart from a small amount, never been repaid to, or recovered by, Holloway Nominees and it seeks recovery of that adjusted amount – $247,482.54.
  1. The plaintiff bases its claim for recovery on the following forms of relief:
  1. as monies had and received to the use and benefit of Holloway Nominees (i.e., a debt) – against the Corporate Defendants;
  1. as damages/compensation for misleading and deceptive conduct pursuant to the Trade Practices Act 1974 (Qld) (“the TPA”) – against all Defendants;
  1. as damages for negligence – against George;
  1. as damages for negligent misstatement – against the Corporate Defendants;
  1. as damages for breach of contract – against the Corporate Defendants.
  1. The defendants raise a number of issues in response to these claims which, put broadly, are:
  1. Holloway Nominees is the wrong plaintiff as it was not the source of the funds deposited in to the Suncorp-Metway accounts;
  1. there can be no claim in negligence against George as there was no relationship of trust and confidence;
  1. there were representations made by George but not those pleaded by the plaintiff;
  1. there is no case for breach of contract against the second to third defendants – if anything, there might be a case for restitution but that is not pleaded.
  1. I turn now to consider the events which led to the depositing of monies into the two Suncorp-Metway accounts.

The Holloways, Ian George and Pacific Vista

  1. Pacific Vista was incorporated in the early 1990s to develop an area of land at Bargara, a coastal resort near Bundaberg. The original shareholders were Dr Holloway and a local real estate agent, Judy Smith. Mrs Holloway became a shareholder and director as, later, did Colwell.
  1. The Holloways had no experience in land development when they entered into Pacific Vista. They relied on the knowledge and expertise of their then co-director, Judy Smith, to run the company. She left the company in the mid 1990s and her departure meant that Pacific Vista was without anyone to take care of, among other things, the company’s accounts.
  1. Pacific Vista was faced with low sales and high development costs. Dr Holloway was busy with his practices and, I think it is fair to say, was not the sort of person who was either interested in or skilled at dealing with the many details involved in the running of a land development company. On the other hand, Mrs Holloway was both interested in and, to a substantial extent, able to deal with matters of detail. It was clear that Dr Holloway left most of the management of Pacific Vista to his wife (and, in some matters, Colwell), just as he left the management of the accounts of Holloway Nominees and the family’s other company and trusts to her. In her conduct Mrs Holloway exhibited the signs of a prudent person – concerned to ensure that transactions were properly recorded and that financial risk was, so far as possible, kept to a minimum.
  1. After Judy Smith left, Colwell did a lot of the work associated with the local council, engineers, surveyors and so on. Mrs Holloway also had a role in that area but she was predominantly concerned with day to day issues. Neither of them was completely proficient in those areas and Colwell’s description of himself and Dr Holloway as “novices” was apt.
  1. Colwell had come to know George in 1990 when he was a consultant to one of Colwell’s clients. He introduced George to the Holloways and they welcomed him as the answer to their problems. After some discussion, George took over the role as project manager and relieved Colwell and Mrs Holloway of most of their work. In doing so, one of his tasks was to prepare applications for finance and reorganisation of finance. In that regard, he was given access to the Holloway’s financial records, both personal and corporate, in all their detail.
  1. In October 1997 George produced a management agreement[1] between Pacific Vista and I&A to Colwell for his signature. It provided for I&A, among other things, to “assume complete responsibility for the day to day running” of Pacific Vista. Colwell executed this agreement for Holloway Nominees and all payments by Pacific Vista for management services were made to I&A. Until George produced the management agreement there had been no mention of I&A – all dealings had been with George on the basis that he would be the project manager. All payments by Holloway Nominees for George’s services were made to I&A. The interposition of I&A was, no doubt, a convenient way for George to organise his affairs but it was clearly the case that George was the only person who performed the project management duties.[2] Consistently with this, George described himself as the “project manager” in ordinary dealings and in court documents. There is nothing to suggest that I&A performed any task other than through George.

George and the Cashmere land/development

  1. One of the issues which arose during the trial was the precise meaning of certain terms used in the Fourth Further Amended Statement of Claim (“FFASOC”), namely, the “Cashmere land” and the “Cashmere development”. Their meaning has significance because of the reference made to them in the representations which are alleged to have been made by George to the Holloways. Before I turn to the pleadings it is appropriate that I deal with some of the facts surrounding the Cashmere land/development.
  1. The corporate defendants were, at the relevant time, the registered proprietors of land at Cashmere described as lot 6 on RP 77662. The land was later subdivided but, for the purposes of these proceedings, was defined as the “Cashmere land”. So much was agreed on the pleadings.
  1. The Cashmere land was, in turn, being developed by Cashmere Creek Properties Pty Ltd (“Cashmere Creek”) another company of which George was the sole director. That company was a party to a joint venture with the corporate defendants[3] by which they all agreed to develop the project in accordance with the terms of the joint venture.[4]
  1. In its pleading, Holloway Nominees alleged that the corporate defendants were conducting, or causing to be conducted, a subdivision and development of the Cashmere land in residential lots for sale. That activity was described as the “Cashmere Development”. The defendants denied that allegation, alleging that Cashmere Creek was the developer. The true identity of the developer is not the most important factor in this area.  The issue which arose at trial was the extent of the Cashmere Development and, in particular, when the Cashmere Development was completed.
  1. The importance of the expression “Cashmere Development” arises out of the allegation by the plaintiff that George told the Holloways that he needed money to enable the Cashmere Development to be completed within 60 days and that if money was provided then it could be repaid within that period. The defendants argue that the definition in the pleading of “Cashmere Development” should be taken as being the development of all of the Cashmere land, that is, the “Cashmere Development” comprehends the entirety of the land and not some discrete part of it.
  1. In response to that argument the plaintiff points to that part of the pleading which refers to the development of the Cashmere land into “residential lots for sale” as indicative of the term “Cashmere Development” referring only to that part of the Cashmere which was subdivided into residential lots for sale. Further, the plaintiff argued that “Cashmere Development” did not refer to the balance of the land or the “en globo” lots as they were referred to during the trial.
  1. The balance of the FFASOC contains further references to Cashmere land and Cashmere Development. For example, in paragraph 10 it is pleaded:

 

“(b)That the Cashmere land was in the process of being developed into a residential subdivision,

(c)that the Cashmere Development had cash flow difficulties, particularly in respect of the release of the bank guarantees provided by Suncorp-Metway.”

  1. The plaintiff argues that the term “Cashmere Development” must be confined to the areas which were identified during the trial as stage 1 and stage 1A. Those were the areas with respect to which George required the funds to complete certain work. However, the FFASOC does provide for a lengthier time frame with respect to the development. Paragraph 4(c)(iii) alleges that the corporate defendants were “from about 3 December 1999 to about 2 May 2003 … conducting, or causing to be conducted, a subdivision and development of the Cashmere land into residential lots for sale (‘the Cashmere Development’)”. Similarly, other allegations in the FFASOC[5] refer to a much longer time frame for the Cashmere Development.
  1. The definition of the term “Cashmere Development” and its use later in the FFASOC is not a model of clarity. But the meaning urged on me by the Defendants does not accord with the balance of the pleading nor with the notion contained within the definition itself. The reference in paragraph 4(c)(iii) of the FFASOC to “subdivision and development” of the Cashmere Land into “residential blocks of land” should be read with the allegation (which was admitted)[6] that the Cashmere land was in the “process” of being developed. The extent of the Cashmere Development, that is, the development of the Cashmere Land into residential blocks of land, is not constant. It would change from time to time depending upon the extent of the work which had been done. It follows, then, that the meaning of the term “Cashmere Development” will have a different denotation according to the time to which it relates in the pleading. At the relevant time, it did not mean the development of the whole of the Cashmere land, rather it related to Stages 1 and 1A.

 

The Representations

  1. Holloway Nominees alleges it acted upon representations made by George that arise out of three separate occasions. The first was in February 2001 at Colwell’s office. The second was in early April at the Cashmere land and the third was later in April at Colwell’s office.

The February Meeting

  1. In its FFASOC the plaintiff alleges:

 

(10)In or about February 2001 George met with Dr and Mrs Holloway and David Colwell concerning the affairs of Pacific Vista at the office of David Colwell & Co, Solicitors during which George informed Dr and Mrs Holloway and David Colwell:-

  1. of the existence of the Cashmere Land;
  2. that the Cashmere Land was in the process of being developed into a residential subdivision;
  3. that the Cashmere Development had cash flow difficulties, particularly in respect of the release of the bank guarantees provided by Suncorp-Metway;
  4. the bank guarantees were provided to the Pine Rivers Shire Council (“PRSC”) and Energex as follows:-
    1. PRSC - $189,283;
    2. Energex - $5,000.00;
  5. that the 2nd to 4th Defendants needed some financial assistance that would enable them to complete the Cashmere Development within 60 days;
  6. once the 2nd to 4th Defendants completed the Cashmere Development he could move to Bundaberg to manage full-time Pacific Vista;
  7. that the 2nd to 4th Defendants required their financial assistance to complete the Cashmere Development.
  1. Although the Defendants admit that Mrs Holloway was at that meeting it is clear that she was not and that her knowledge of what occurred was drawn solely from what her husband told her later.
  1. Dr Holloway gave evidence of his recollection of what occurred at that meeting. His recollection of the conversation which took place was imprecise. In fact, his evidence with respect to many matters lacked specificity and I was not convinced that his memory was completely accurate, although I do not doubt that he was doing his best to recall what happened. In one answer in cross-examination he said: “I was always a big picture person, [Mrs Holloway] did the small details.”[7] That was an accurate depiction of the business relationship of Dr and Mrs Holloway and one which was reinforced by the way in which Mrs Holloway later required that she be directly informed by George of the proposal with respect to the advancing of funds.
  1. The effect of Dr Holloway’s evidence about the February meeting was that the following representations were made by George:
  1. That he could not go up to Bundaberg to run the affairs of Pacific Vista because he had a development at Cashmere which was running into difficulties;
  1. The difficulties centred around some bonds held by the Pine Rivers Shire Council;
  1. If he could have access to the money, he could complete his development shortly;
  1. Once he finished the development the Holloways would get their money back;
  1. That the development would be completed in two months;
  1. That any money provided would be invested in a bank account of the Holloways’ choosing, a set-off account;
  1. That he needed approximately $250,000 of which about $200,000 was required for Council bonds and about $50,000 for Council fees;
  1. That once the Engineer signed off his development, the funds would be released by the Council back to him;
  1. In a response to a statement by Holloway that it had to be 100% safe because Super Fund money was to be used, George said it was 100% safe and it could only be accessed by the Holloways and returned to them once the work was done;
  1. Once the development at Cashmere was completed he would then go up to Bundaberg;
  1. Once he had the funds from the sales of his Cashmere estate he would be sufficiently cashed up to invest $300,000 in Pacific Vista. 
  1. There are some substantial departures in Dr Holloways’s evidence from the pleading on this point. Matters which would be of importance to a person in Dr Holloway’s position, indeed for most people, such as the security of the money being requested and the interest to be paid on it are not pleaded. These are two of the matters which were of significance as they featured in Dr Holloway’s report to his wife of what had transpired at the meeting. He told her:

 

“I went home and told her what had transpired at the meeting, namely that our money was going to be 100 per cent safe and it was going to be under our control.  It would be in our bank which was Suncorp-Metway, and we would be the only people who could withdraw the money from that account and that it would be for 60 days only and at the end of that Mr George would finish his estate, our money would be released to us, and it was a very safe investment. I mentioned to her that the interest rate would be the bank interest rate and that we'd be getting two per cent over that.”[8]

  1. Just as there were matters, on Dr Holloway’s evidence, which were the subject of discussion which are not pleaded, there are matters pleaded which were not discussed. The pleading alleges that George told him:
  1. that the Cashmere Development had cash flow difficulties, particularly in respect of the release of the bank guarantees provided by Suncorp-Metway;

 

While Dr Holloway did say that George spoke about the Cashmere development running into difficulties, he agreed (in cross-examination) that George did not say that Suncorp-Metway had provided bank guarantees.[9]

 

  1. that the 2nd to 4th Defendants needed financial assistance to complete the Cashmere development;

 

He agreed (in cross-examination) that he was not told that about the 2nd to 4th defendants and that there was no mention of the corporate defendants.[10]

  1. With respect to paragraph 10(a) of the FFASOC (that George spoke about the existence of the Cashmere land and its development), Dr Holloway was cross-examined on the basis that the pleading alleged that George told him about Cashmere for the first time at the meeting. That is not what is pleaded. While the use of the word “existence” is unusual in the circumstances I do not think it necessarily bears the meaning advanced by the defendants. Dr Holloway agreed that he had heard of the Cashmere land prior to the meeting but that he did not know about its development until told in February.[11] His answer[12] that he knew about the development was, I find, not an admission that he knew about it before the February meeting.
  1. The second person present at the meeting was David Colwell. His memory of the conversation was not detailed but he was able to recall the gist of the proposal put forward by George. He said that George had initially proposed that Dr Holloway provide $300,000 to be deposited with Suncorp-Metway and used as a basis for a bank guarantee for bonds required by the Pine Rivers Shire Council (“PRSC”) which was the local authority for the Cashmere land. That would, in turn, allow George to have guarantees released by Westpac which were then securing the bonds. When that occurred it would free up money to allow George to finish what Colwell called “the Cashmere estate”. In return, George offered (once the Cashmere work was done and sales had occurred) to put $300,000 into Pacific Vista and become another shareholder. George explained that the plans were at the stage where he needed that money to pay the sealing fees to PRSC.
  1. Colwell also recalled that Dr Holloway required assurances that the money, if required, would be secure. On Colwell’s recollection, George gave those assurances.
  1. In cross-examination, Colwell accepted that a part of the proposal was that George would become a one-third shareholder in Pacific Vista and would contribute $300,000. I deal with this issue later.
  1. The third participant in this conversation was, of course, George. In his evidence, in both examination in chief and cross-examination, he was often unresponsive, frequently diffuse and rambling, and, on some issues of importance, he prevaricated. In cross-examination on the subject of this meeting and in other areas his memory would improve or deteriorate depending on which approach was more favourable to him.
  1. In evidence in chief he said that three topics were discussed at this meeting: the Cashmere development, a development at Albany Creek and Pacific Vista. He denied that he had told Dr Holloway that the corporate defendants needed financial assistance to complete the Cashmere development within 60 days.[13] He acknowledged that he had discussed needing cash for guarantees for the Cashmere development but could not say whether that took place in February or March.[14]
  1. Later he gave evidence about the readiness of Stage 1 and Stage 1A at Cashmere. Those stages contained 45 residential blocks and were the only part of the Cashmere land which was being developed at that time. His evidence about what he said to Dr Holloway concerning the state of development included this:

 

“And the Cashmere land?--  The Cashmere land, in February I told him that the Cashmere land was almost ready to be submitted to council for linen plan, sealing and so forth, was a month off, a couple of months away from that state.

 

Now, in terms of the linen plan, to what blocks on lot 6 did the linen plan apply to at that time, what number of blocks?--

36 lots.

 

Out of, I think you said, 157?--  That's right.

 

Was it those 36 that were at the linen plan stage?--  Yes.

 

The Cashmere land in terms of lot 6, other than those 36 blocks, how far away from linen plan stage was the balance of the land?--  Stage 1A, which comprised nine allotments, probably only a few months behind stage 1.

 

How many allotments on stage 1, how many on 1A?--  Nine on stage 1A. Stage 1A was a subset of the 45 lot stage, as I said earlier.

 

All right.  So that leaves 36, if you speak of all of stage 1?--  Mmm-hmm.

 

1A, nine?--  Yep.

 

45 being in the first stage or stage 1-----?--  Mmm-hmm.

 

-----of development?--  That's right.

 

Out of 157?--  Yeah, something like 112 left to develop.

 

Now, in terms of the position with respect to those nine and - or the 36, what was it that you say you said to Dr Holloway in February?--  I'm sorry, Mr Perry, could you just repeat that question?

 

Yes.  In terms of the 45 blocks, all right, 36 in one?--  Mmm.

 

Nine in 1A?--  Yes.

 

As I apprehend your evidence, they are the blocks which were at some stage nearing linen plan sealing stage; is that correct?--  Yes, the 36 and nine, yes.

 

How far away from that stage linen plan sealing, were they, as at February '01?--  Oh, stage 1 was very close and stage 1A wasn't far behind it.

 

All right.  Thank you.  But the balance of the 157 would have taken about how long?--  The balance of the development horizon - four years would be a reasonable timeframe.”[15]

  1. That was generally consistent with what he said in cross-examination on this point:

 

“Now, when you were having this discussion with Dr Holloway in February 2001, you told him that the development was nearly finished, didn't you?--  The Stage 1 was nearly ready for registration, I told him.

 

No.  I suggest you said the development was nearly finished?-- No. No, that simply didn't happen.

 

Well, in your evidence-in-chief, I suggest you were asked a question about the development, and at this meeting you said - you told them it was nearly finished?--  Stage 1 and 1A, the 45 allotments that comprise the work that we had performed for that.

 

Okay.  I just want to be clear on this.  You're saying that you told Dr Holloway in this meeting, did you, that you were speaking only about Stage 1 and Stage 1A?--  Yes, and there would have been a plan there to point that out, I'm sure.

 

So far as you could see Dr Holloway was in no doubt you were saying Stage 1 and 1A are nearly finished?--  Yes.

 

Okay.  Thanks for that.  Now, you told them that the finalisation of the development, Stage 1 and 1A, was being held up because you didn't have the funds to register the Linen Plan?--  In February 2000 that would be right.”[16]

  1. It is clear that, in February 2001, the work being undertaken by George’s interests at Cashmere had come to a halt. On 21 February 2001 George wrote (on Cashmere Creek Properties Pty Ltd letterhead)[17] to Lindsay Brown (the Business Development Manager for Suncorp-Metway) seeking finance. On the issue of the Cashmere Creek Estate he said: “Plan sealing and registration have been delayed by the exhaustion of our existing development finance facility.” George agreed that that was also what he had told Dr Holloway in February.[18]
  1. Paragraph 10 of the FFASOC alleges detailed representations. Dr Holloway’s evidence only supported a small part of them. With respect to the representations pleaded in paragraphs 10(a) and (b), the evidence satisfied me that Dr Holloway, at least, was aware, in a very general sense, of the Cashmere land and the development before the meeting in February but that the topic of the Cashmere development was a subject of considerable discussion. 
  1. I find that only part of the representation in paragraph 10(c) was made, namely, that “that the Cashmere Development had cash flow difficulties”. 
  1. While there was reference to bank guarantees (paragraph 10(d)) the amount and nature of them was not mentioned.
  1. So far as paragraphs 10(e) to (g) are concerned it is clear to me that George did mention each of those matters but did not refer to the corporate defendants either as pleaded or at all.

The visit to Cashmere

  1. Paragraph 11 of the FFASOC contains this allegation:

 

“11.Subsequent to the meeting in paragraph 10 hereof, Dr and Mrs Holloway inspected the Cashmere land with George during which he restated the matters in 10 above.”

  1. The evidence of both Dr and Mrs Holloway with respect to the inspection of the Cashmere land fell well short of the allegation that George restated the matters in paragraph 10.
  1. Dr Holloway’s recollection of the discussion which occurred contained no references to any of the matters set out in paragraph 10. In fact, he agreed, in cross-examination[19] that he couldn’t recall whether the decision to advance the money was affected by what occurred during the visit.
  1. Mrs Holloway’s evidence was in greater detail but she said nothing which supported the allegation in paragraph 11. In cross-examination she said that George had said that he needed money to “tidy up the blocks” and get the linen plan sealed for the area they were inspecting.[20]
  1. It follows, from the evidence of the Holloways, that there is no support for the allegation in paragraph 11.

The April Meeting

  1. Paragraph 12 contains these allegations:
  1. In or about the week prior to 23 April 2001 George met with Dr and Mrs Holloway and David Colwell concerning the affairs of Pacific Vista at the office of David Colwell & Co, Solicitors during which George informed Dr and Mrs Holloway and David Colwell that:
  1. the following financial assistance was required for 60 days to complete the Cashmere Development (“the Financial Assistance”):

(i)$199,568.25 (“the Offset Amount”) into account number 402000504 with Suncorp-Metway Pty Ltd ABN 660 10831722 (“Suncorp-Metway”);

(ii)$51,151.11 into Suncorp-Metway account number 2778792 (“the Loan Amount”);

  1. the profitability of the Cashmere Development would be about $1,000,000.00;
  1. if Dr and Mrs Holloway through the Plaintiff provided the Financial Assistance:

(i)George would move to Bundaberg to manage the Pacific Vista development on a full-time basis;

(ii)George would cause to be paid after completing the Cashmere Development to Dr and Mrs Holloway $300,000 to acquire half of their shareholding in Pacific Vista (equivalent to a 1/3 interest in Pacific Vista);

(iii)George would cause 2% above the Suncorp-Metway interest rate for the Offset Amount to be paid to the Plaintiff in respect of the Offset Amount and the Loan Amount;

(iv)George would cause the Loan Amount to be repaid upon completion of the Cashmere Development;

(v)The Offset Amount would be returned upon completion of the PRSC and Energex conditions associated with Cashmere Development within 60 days.

  1. Before turning to the evidence of what was or was not said at that meeting it is important to recite some of the events leading up to it.
  1. The Holloways had had a number of conversations about the proposal to advance money to George’s entities. They sought advice from their accountant, Darryl Iseppi, who told them that their superannuation fund could lend the money to the plaintiff for it then to be advanced to George’s entities. In accordance with his advice, the Holloways convened two meetings on 14 April 2001. The first was a meeting of the directors of the Holloway Family Company Pty Ltd and the minutes of that meeting record:

 

“Present:

Colin James Holloway (Chairman)

Dorothy Ann Holloway.

Purpose of special meeting:

Discussion with regards to a loan to Holloway Nominees.

Proposal:

The super fund deposits $250,719.36 into David Colwell’s Trust A/C.

These funds are a loan to Holloway Nominees at 2% over the Bank Bill rate at the time of repayment.

Such monies are to be deposited in an account set up with Suncorp-Metway in the name of Holloway Nominees, and operated by either of the directors, as an offset against bonds lodged with Pine River Shire Council by Bonnyview, Donnyview and other Ian George Entities. On Repayment of the Bonds, (expected within 3 months, on completion of the work at Cashmere Creek), the monies (plus interest) will be returned to the Holloway super fund. An accountant’s advice will be sought as to whether such use of funds complies with the Superannuation Act.

Decision:

The directors agreed to the proposal.”[21]

  1. A meeting was then held of the directors of the plaintiff and the minutes of that meeting record:

 

“Present:  Colin James Holloway (Chairman)

Dorothy Ann Holloway.

Purpose of special meeting:

Discussion with regards to a loan to Holloway Nominees.

Decision:

The directors agreed to the proposal, as outlined by the Holloway Family Co meeting dated 14th April 2001.”[22]

  1. Notwithstanding that the minutes of the meetings disclosed that the directors agreed to the proposals it was clear that there had been no finalisation of the transaction at that time. (Mrs Holloway explained that the time for repayment of three months was inserted in order to accommodate any unforseen delays.) The meeting which was held in Colwell’s office in April was held because Mrs Holloway had some concerns which she wanted satisfied and this was known to all parties. George was aware that Mrs Holloway was the “stumbling block” to his getting the money.[23] He acknowledged that if Mrs Holloway did not agree at the meeting to do the transaction in the way envisaged then the transaction would not go ahead.[24]
  1. The meeting had two purposes: first, for Mrs Holloway to have her concerns allayed; and secondly, for the funds to be advanced by way of cheque.
  1. There was disagreement between the witnesses called for the plaintiff and George about the date of the meeting in April. The disagreement was only over a matter of a few days and it had no particular relevance to any of the issues. I do prefer the evidence of Dr and Mrs Holloway and Mr Colwell on this point. Colwell’s evidence with respect to the completion of a trust account receipt and so on satisfied me that the meeting took place on 20 April 2001.
  1. Mrs Holloway took two documents to the meeting. The first was a letter which had been prepared by George and submitted to them a few days earlier. It was a direction from the plaintiff to Colwell as to the manner of disbursement of funds on the basis that the money was to be advanced. The second document was an unsigned cheque drawn on the Holloway Family Co Pty Ltd for $250,719.36. Mrs Holloway explained that the cheque had not been signed because she needed to talk to George and be quite sure in her own mind that she totally understood the proposal he was making.[25] She said that George told her that he needed the money to complete the development. He told her that he had his money tied up in Council bonds with PRSC and he was proposing that, if the Holloways put money against those Council bonds, then it would release his money to do the work that needed to be done. She said he told her: that this would take about two months; that it was just to get the linen plan sealed; as soon as it was sealed, he could start to sell the lots; and then the bonds would be released by PRSC. Mrs Holloway said that George told her that the money would be deposited into an offset maintenance account in the Holloways’ names only and that nobody could access the money.  He also said that the money would definitely be returned within two months. Finally, he told her that he would pay interest on the sum at two percent above the going rate.[26]
  1. At the meeting, George produced a two-page typed document which he provided to the Holloways to read. Mrs Holloway said that it set out exactly what she had been told in the conversations she had had with George that night. The document was executed by Dr and Mrs Holloway and George. It was witnessed by Colwell. Attempts were made to photocopy the document but, for various reasons, these were all unsuccessful and George agreed to provide the Holloways with a copy of the document. George denies that there was any such document but I find that the evidence that each of the Holloways and Colwell on this point is compelling. I find that: there was such a document; it was signed by the Holloways and George; that George agreed to provide a copy; and that he never did so.
  1. George’s account of the discussions that night was inconsistent and, in a number of respects, unbelievable. He maintained[27] that he could not recall the Holloways asking him when the money would be coming back to them. He could not recall them asking when he would repay them the money. His inability to recall was dubious.  I accept that both the Holloways did ask him about the repayment of the money and when it was to occur and that his response was to the effect that it would be returned within two months.
  1. George conceded that he said something to Mrs Holloway to the effect: “Look it’s 100 per cent sure. It’ll go into a bank account in your name. I can’t touch it. It’s totally under your control.” He accepted that Mrs Holloway was concerned and that she was concerned that she got the money back. George did agree that Mrs Holloway was an extremely careful woman in matters of finance and that he had said at some point that he would pay them interest at two per cent above the bank rate on the amount advanced.
  1. The cheque was signed and given to Colwell who caused a trust account receipt to issue.

The agreement as seen by George

  1. It was submitted, on behalf of George, that the agreement between the parties was much larger and that it was in the form of a joint venture which involved the “Holloway”funds being used to support either the Cashmere development or the medical centre and with George investing $300,000 in Pacific Vista after the sale of lots at Cashmere. Other aspects were the subject of cross-examination and related to George’s involvement in Pacific Vista, the progress of sales at Cashmere, and the completion of the medical centre.
  1. I accept, as did the Holloways and George, that there were discussions in which all these matters were raised. I do not accept that there was any agreement that there would be a joint venture. Any evidence from George was equivocal on that point and it was flatly denied by the plaintiff’s witnesses. Further, the possibility of entering into a joint venture was still being canvassed by George – and declined by Dr Holloway – in late May 2001[28]. George’s conduct when Dr and Mrs Holloway began to pursue him for the money was inconsistent with the existence of any such joint venture.

The consequences of the April meeting

  1. George then set about arranging for the monies to be deposited. Approximately $50,000 was to be transferred to a Suncorp-Metway account to be used for completion of the Cashmere development while approximately $200,000 was to be deposited in a Suncorp-Metway account as security for the bonds required by PRSC.
  1. On 4 May[29] George asked the Holloways to provide him with a copy of the Memorandum and Articles of Association of the plaintiff so that he could provide them to Suncorp-Metway. He collected the documents and gave them to the bank. 
  1. George agreed that the Holloways were never taken by him to speak to any employee of Suncorp-Metway and that he never suggested to them that they should speak to someone at the bank to get advice about any risk associated with doing the transaction that George had asked them to complete. George accepted that, by not getting that advice, the Holloways were reposing complete faith and confidence in him to do the right thing by them.[30]
  1. On 10 May 2001 George wrote, on the letterhead of the corporate defendants, to Suncorp-Metway informing the bank that the corporate defendants wished to deposit the sum of approximately $198,849 into a term deposit with the bank with the funds to be deposited in the name of the plaintiff. The letter contains the following:

 

“The directors of Holloway Nominees will assign charge over the funds as required by the bank, to secure issue of bank guarantees in favour of the Pine Rivers Shire Council.”

  1. At that time there was no charge over the monies and the words “assign charge” more likely meant “sign a charge”. George accepted that he may have meant that when he wrote the letter.[31] Contrary to what George said in his evidence about the conversation he had with Mrs Holloway at the April meeting,[32] he later said in his evidence that he told them that the funds would be secure, they would be in the bank, but the funds would be supporting the issue of the bank guarantees. He was asked:

 

“All you spoke about was them entering into an offset agreement, correct? - -   I don’t – I know that we did discuss an offset account. Whatever Metway told me was required at the meetings I had with Metway, I relayed to the Holloways, but I can’t remember exactly what that was.”’

  1. He was asked:

 

“You told them only they could get access to their money, did you not? - - I believed that - - -

Did you not tell them that? - -  Well, I can’t remember using those words, but I certainly remember saying to Mrs Holloway that I couldn’t access the money that was in the offset account, it was deposited in their name, not accessible to me. I do remember that.”

  1. George was clearly attempting to shift ground when giving that evidence[33] and I do not accept that he told them anything which would have alerted them to the possibility that their money could be at risk or that it could be used to secure debts of the corporate defendants.
  1. George did agree that he did not ever tell the Holloways that the money was going to be used as security for all the debts of the corporate defendants.[34] He said that that was not the intention. I find that difficult to believe given George’s experience in both land development and the means used to obtain finance for such developments.
  1. Neither of the Holloways recalls signing a guarantee of the debts of the corporate defendants. There is, though, such a document.[35] The guarantee purports to contain the signatures of Dr and Mrs Holloway and an acknowledgement of the guarantee signed by Mrs Holloway and witnessed by Colwell. It was signed on the same day – 16 May 2001 – as the Set Off Agreement with Suncorp-Metway.[36]
  1. This document came into existence a short time after Suncorp-Metway informed George that the conditions of the development loan had been varied to require the provision of such a guarantee. There were, in evidence[37], some e-mails between George and Dr Holloway in which reference is made to a “new guarantee document” to be provided to the bank. These were not seen by Mrs Holloway.

 

The Account is depleted

  1. By a letter dated 28 February 2002, Suncorp-Metway informed George in his capacity as director of the corporate defendants that, as had previously been discussed between the author of the letter and George, the loan facility which the corporate defendants had with Suncorp-Metway was in default, that the full balance was due and payable by 30 June 2001, and that interest only payments had not been met to the extent of over $156,000. The letter went on to inform George that if the bank was not fully paid out or the loan refinanced by 8 March 2002 the bank would immediately appoint receivers and managers over the corporate defendants.
  1. Further correspondence was received from Suncorp-Metway by letters dated 8 March and 3 April whereby further proposals for payment out of the loan were detailed. George was not able to meet any of the requirements of Suncorp-Metway with respect to the payment of the outstanding loan and, by a letter dated 9 April 2002, Suncorp-Metway informed him that the bank had exercised its rights under the terms and conditions of the set-off agreement between the bank and the plaintiff to apply $100,000 of the monies held in that account against interest owing under the loan account of the corporate defendants and that a letter had been forwarded to the plaintiff confirming such set-off.[38] By a letter dated 10 April 2002[39] Suncorp-Metway informed the plaintiff that $100,000 was being withdrawn from the set-off account.
  1. Not surprisingly, when Dr Holloway received notice of this withdrawal he immediately contacted George to find out what had happened. George told him that it was “the bank’s fault” and that he would get on to it.
  1. On 26 April 2002 George wrote to Dr Holloway, on the corporate defendants’ letterhead, setting out an explanation for what was occurring with respect to Suncorp-Metway and the resolution of the corporate defendants’ financial problems. His account was implausible. He offered to pay $60,000 cash as at the date of the letter. That payment was never made.
  1. Dr Holloway made enquiries of Suncorp-Metway bank about the transaction that had taken place but was not able to receive any satisfaction. On 22 November 2002 the directors of the plaintiff met[40] and resolved to take legal action to recover monies owing to them in the set-off account at Suncorp-Metway.

Meeting – January 2003

  1. After discussions between the Holloways and their then solicitors, a meeting was held at Colwell’s office. It was attended by the Holloways, Colwell and George. Mrs Colwell prepared and took two documents to the meeting. The first was headed “Statement by Mr Ian George”, the other did not have a heading. At the meeting, Mrs Holloway did the talking. She said to George that she was very concerned about the money that they had lent him, that he said that it would paid back in two months, that it had not been paid back and that the Holloways had had money taken out of their account. She told him that she had prepared the documents and she asked him to read them and to sign them. George read and signed the first document. It was witnessed by Colwell. The substantive part of that document reads:

 

“I, Ian George, and/or Ian George Entities and/or Bonnyview Pty Ltd, and/or Donnyview Pty Ltd, and/or Ravensview Pty Ltd, and/or any other associated entity/business or partnership, and/or any other trustee company of Ian George, state that Dr Colin Holloway and Mrs Dorothy Ann Holloway agreed to and signed a document drawn up by myself, stating that Dr Colin Holloway and Mrs Dorothy Ann Holloway on behalf of Holloway Nominees Pty Ltd would provide $250,719.36 being $200,000 against bonds lodged with Pine Rivers Shire Council and Energex, for the following:

 

Pine Rivers Shire:

1.External works Bond$100,000

2.Rezoning bond$40,000

3.Maintenance bond stage 1      $39,283.05

4.Koala bond$10,000

 

Energex:

 

1. Plan sealing bond$5000

The balance of funds were to be used for incidental expenses associated with the development of Cashmere

 

No other guarantees were given by Holloway Entitles.”[41]

George refused to sign the second document which contained an undertaking by him to repay to Holloway Nominees the sum of $250,719.36 plus interest at seven per cent from the date of the loan.

  1. When he was given that second document to sign he picked it up and left the room in which they had been sitting and went into an adjacent room. He was there for some time and when he returned he came with a handwritten document. That document provided:

 

“I Ian George am a director of Bonnyview P/L, Donnyview P/L, Ravensview P/L. On or about April 2001 Holloway Nominees and BDR entered into an arrangement whereby Holloway Nominees made available to BDR the sum of $194,283.05 to be invested with Suncorp-Metway Bank to support Bank Guarantees issued on behalf of BDR as follows;

PRSC - - - - 40,000. –
   “ - - - - - - - -100,000. –
   “ - - - - - - - -39283.05
   “ - - - - - - - -10,000. –
Energex - - - - - - - - 5,000

 

The funds invested with S/M by HN on behalf of BDR were to be used only for the purpose of supporting the issued bank guarantees above and for no other purposes.

To the best of my knowledge a standard bank guarantee was not requested by Suncorp-Metway nor was one executed by Holloway Nominees or its directors.

I can unequivically (sic) state that no guarantee was signed at any meeting between BDR & HN, and that no agreement between HN & BDR was to give effect that debts of BDR would be guaranteed by HN.”[42]

  1. That document was signed and dated by George.
  1. I observe that neither of those documents signed by George makes any mention of the joint venture which he alleged was part of the background to the amount of money being advanced by the plaintiff.
  1. When George handed his handwritten document to the Holloways he said that he would be able to repay $40,000 to them as a partial repayment. In evidence, George had no recollection of that occurring but on 9 February 2003 Dr Holloway emailed George asking amongst other things: “What is happening. You were to have $40,000 transferred into our account in Metway.”
  1. In his reply of 10 February George does not dispute that assertion by Dr Holloway and, in fact, talks about amounts on deposit and the release by Council of $40,000 in February which he would direct to be released to Dr Holloway.[43] I find that George did make that offer referred to above.

Further demands for repayment

  1. On 15 June 2003 Dr Holloway emailed George saying:

 

“As we haven’t heard from you, we can assume you have no intention of paying us what you owe us. Your promises of the last 2 years are just so much B*S*.

We now have no option but to take whatever steps are necessary to get our money back.”

  1. George replied in this way:

 

“Colin/Dorianne,

 

That is not true, and I am genuinely sorry you feel this way. I know that the delays in resolving these matters are as frustrating for you, as they have been for me. The full adavance (sic) funds have finally been drawn, these arrived only last week, which was very late as previously advised to you. I do need to recover the GST component expended on the job from the ATO before I will have full access to my funds available from this advance.

As you know, the majority of guarantee funds remain on deposit. The funds on deposit in Bonnyview and others name with Metway mature at the end of this month. I only received this email today, as I have been away from the office for a few days. I suggest that I come and meet with you next Tuesday, 24th June to finalise this matter.”

The account is emptied

  1. In January 2005 Suncorp-Metway demanded that the corporate defendants pay $149,571.80 as a result of their default in their loans. That was not paid.
  1. On 9 February 2005 Suncorp-Metway gave notice to Holloway Nominees that $96,185.52 had been withdrawn from the set-off account and transferred to the Bonnyview account.[44]
  1. By a letter of 14 February 2005 from Suncorp-Metway to Holloway Nominees[45] Suncorp-Metway advised total funds in the name of the corporate defendants had been withdrawn to complete the repayment of the corporate defendants’ debt which left a balance of $24,768.08. That amount represented accrued interest of $21,699.08 and the balance of the remaining principal sum of $3,236.82.[46]
  1. The other amount of about $50,000 was completely expended by George in finishing the Cashmere development.

The Representations

  1. The FFASOC alleges that George made a number of detailed representations. But it is only those representations pleaded in paragraph 13 which are relevant to the allegations of: breaches of the TPA, negligence, and the basis upon which the money was advanced.
  1. Those representations are:

 

a.that the Cashmere Development would be completed in 60 days;

b.that the Offset amount would be returned within 60 days; and

c.that the Loan Amount would be repaid upon completion of the Cashmere Development.

  1. It is unclear whether there had, before the money had been advanced, been a specific delineation between the Offset Amount and the Loan Amount as to the time for repayment. I do not doubt, though, that George went out of his way to assure the Holloways that the whole of the money, however described, would be returned by no later than 60 days after it was advanced.[47]
  1. George’s evidence on this point shifted. At one stage he could not recall whether or when he had discussed financial assistance:

 

“Now, at any time in February, did you say to Dr Holloway that the corporate defendants, Bonnyview, Ravensview, Donnyview, needed financial assistance in order to enable them to complete the Cashmere development within 60 days?--  I don't recall.  I did discuss the issue of needing cash for guarantees but I - I can't honestly place whether that was in February or March.”[48]

  1. Within a few minutes, his memory had improved:

 

“Prior to the break, I asked you whether at any time in February you had said to Dr Holloway that Bonnyview, Donnyview and Ravensview needed financial assistance to enable those companies to complete the Cashmere development within 60 days.  That was the question I asked you?--  Yes.

Now, what was the position with respect to that assertion?-- No, that - no.”[49]

  1. Probably more telling is his admission about the state of readiness of the Cashmere land:

 

“And the Cashmere land?--  The Cashmere land, in February I told him that the Cashmere land was almost ready to be submitted to council for linen plan, sealing and so forth, was a month off, a couple of months away from that state.”[50]

  1. Dr Holloway said that George had told him about the need for money to complete the Cashmere development. This was not denied by George. He said:

 

“Now, did you tell Dr Holloway in February that Bonnyview, Donnyview and Ravensview required financial assistance to complete stage 1 or 1A or any other part of the development of lot 6?--  I may have mentioned to him our financial circumstances as - but I don't recall specifically.”[51]

  1. It was submitted on behalf of the defendants that the disparity between the pleaded allegations of statements made by George and the evidence given by the plaintiffs’ witnesses on those matters[52] was such that their evidence should not be accepted. While such a disparity is always an issue to be taken into account when assessing credibility, in a case of this nature it is only one issue. Other matters such as: the documents drawn by Mrs Holloway and George; the whole nature of the transaction contemplated by the parties; the financial position of both the Holloways and George; the consistency of Dr and Mrs Holloway on the question of the time for repayment; and the manner in which they gave their evidence persuade me that the disparity is not such that I should not accept their evidence on these representations.
  1. The evidence of the plaintiff’s witnesses, contrasted with the equivocal nature of George’s evidence, satisfies me that the representations in paragraph 13 were made.

Who advanced the money?

  1. On the second day of trial, the defendants sought and were granted leave to amend their Defence to make clear their plea that the money advanced was advanced not by Holloway Nominees but by Holloway Family Co Pty Ltd as trustee for the Holloway Superannuation Fund. In other words, the defendants alleged that Holloway Nominees was not the proper plaintiff as it was a mere conduit for the funds which actually came from another company and that it was never intended that there would be any obligation in the corporate defendants to repay the trust funds to Holloway Nominees.
  1. It was also alleged that the payment by Holloway Family Co Pty Ltd was in breach of the terms of the Trust Deed as that deed did not allow funds to be used by way of loan or pursuant to the joint venture agreement pleaded by the defendants.
  1. It is patent that the only source of funds available for use was that held by Holloway Family Co Pty Ltd as trustee for the Holloway Superannuation Fund. Both of the Holloways gave evidence of the advice that they sought and received from their accountant (Iseppi) and the manner in which they acted in accordance with that advice. The method used has already been referred to above.[53]  No challenge was made to the fact of receiving the advice, the nature of the advice received, or the legitimacy of the meetings the subject of the minutes in Exhibit 5.
  1. The basis for the defendants’ assertion that the superannuation fund is the proper plaintiff is in two parts:

a.the monies were paid by the superannuation fund to Holloway Nominees in breach of the terms of clause 17(a) of the fund’s trust deed, and

b.when the funds were advanced, Holloway Nominees was nothing more than a conduit and it was never intended that an obligation to repay those monies to Holloway Nominees should exist nor that the advance would have any legal effect as between Holloway Nominees and the corporate defendants.

  1. There is nothing in the first point raised. The trust deed (as varied by a deed of variation in March 1995)[54] explicitly provides in clause 15(b)(iv) that the monies of the superannuation fund may be invested “…on loan to…any other person or organisations whatsoever with or without security and at such rate of interest and upon such terms as the Trustee may deem reasonable …”.
  1. The second point has two parts. First, it is said that Holloway Nominees was merely a conduit. There was no suggestion that Holloway Nominees was anything but a proper party to advance the money and the fact that it borrowed from a fund within the “Holloway group” is irrelevant. The method used was carefully explained and followed by the Holloways and as Dr Holloway explained in cross-examination:

 

“Was the reason for that - I'm sorry, let me ask you this question - these were super fund funds which were to be invested by the super fund by using Holloway Nominees as a conduit, weren't they?‑‑ As the correct method of doing it.

 

They were to use Holloway Nominees as a mere conduit, weren't they, because Holloway Nominees did not have a bank account?‑‑ Holloway Nominees was the correct vehicle to do these transactions.

 

Why was it the correct vehicle to do the transactions?‑‑ We'd been advised that by our accountant.

 

That is, your accountant advised you that it would not be prudent to have the super fund recognised as the party in fact providing the funds?‑‑ No.  We asked his advice and his advice was to do it this way.

 

And I assume you asked him why it should be done that way?‑‑ No, he said the property trust was specifically set up to invest funds for the super - funds from the super fund.”[55]

  1. Secondly, it is argued that there was no intention that there should be an obligation to repay Holloway Nominees. Given the finding that Holloway Nominees was the proper plaintiff and that it did advance the money there can be no strength in this submission as there is no evidence to support it.
  1. Finally, there is an allegation that a lack of intention to create a legal relationship can be inferred from eight matters set out in paragraph 19(o)(i) to (viii). The defendants did not establish any of the matters set out in those sub-paragraphs.
  1. The money was advanced by Holloway Nominees.[56] It borrowed it from Holloway Family Co Pty Ltd pursuant to the arrangements described in Exhibit 5. One of the constituent parts of the negotiations between George and the Holloways was that the money advanced would be paid back. When it was to be paid back is considered next.

Time for payment?

  1. The case for the plaintiff is that the whole of the advance was repayable within 60 days. George represented that, within that period, the linen plan would be sealed or the Cashmere development would be completed or both. Much of the cross-examination of the Holloways concentrated on the Cashmere land/development dichotomy referred to above and whether the Holloways could have believed that the larger project could be finished within 60 days. I do not think that is relevant. The point which was repeatedly made by George was that the money would be returned within 60 days. Occasionally the period would be referred to as two months but nothing turns on that. Although there were some inconsistencies and omissions in the evidence of the Holloways, they were constant on this point – the money was to be repaid within 60 days.[57] I reject George’s denials that he never mentioned a time frame for repayment.

The Claim in Debt

  1. The plaintiff seeks, among other things, payment of the sum of $250,719.36 as monies had and received to the use and benefit of the corporate defendants. It describes the claim as being an action for debt or indebitatus assumpsit, rather than for damages for breach of contract.
  1. The defendants argue that the case in contract is misguided and that the real position is that there is a potential claim for restitution but that has not been pleaded. They further submit that the claim for monies had and received turns upon whether it can be said that the corporate defendants have received the funds in question and reference is made to Port of Brisbane Corp v ANZ Securities Ltd.[58]
  1. The claim made by the plaintiff is for monies detained by the corporate defendants in that, having had the money advanced to them or at their direction, they have not repaid it. It can be taken that the money was advanced to the benefit of the corporate defendants because; even though a large part of it was paid into the set-off account with Suncorp-Metway, it was effectively paid there at the direction of George acting on behalf of the corporate defendants. The letter directing Colwell how to disburse the funds[59] was drawn by George[60] and, in doing so, he knew it would lead to Colwell making the money available to be used to benefit George’s companies[61].
  1. This action in debt is available to the plaintiff.[62] The action has not been framed as one for compensation for a benefit received under an unenforceable contract[63] nor is it of the type considered by Chesterman J in Port of Brisbane.
  1. The plaintiff has proved that it advanced the money and that it has not been repaid either within 60 days or at all. Although it is unnecessary to rely on this, it appears clear that, so far as George was concerned, the only thing preventing him or the corporate defendants paying the money back was that there was no money available to do so.[64] Holloway Nominees is entitled to judgment against the corporate defendants in the sum of $247,482.54.[65]

Is George liable?

  1. Holloway Nominees also claimed damages for breach of the TPA and for negligence. The important point for those claims is that, if successful, Holloway Nominees might also obtain judgment against George.

The TPA Claim

  1. Under this head, the plaintiff alleges that the “Representations”[66] were: made in trade and commerce; false; made recklessly; and made in respect of a future matter for the purposes of s 51A(2) of the TPA.  It is also alleged that, as a consequence of that conduct, the making of the representations was in breach of s 52 of the TPA.
  1. Section 51A provides:

 

“(1)  For the purposes of this Division, where a corporation makes a representation with  respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

 (2)  For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.

 (3)  Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.”

  1. Section 52 of the TPA provides:

 

“(1)  A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

 (2)  Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).”

  1. A corporation (or, in certain circumstances, an individual) which breaches s 52 can be liable for damages under s 82 of the TPA. Section 82(1) provides:

 

“(1)  Subject to subsection (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.”

  1. I have found that the representations were made. They were clearly with respect to a future act in that each of them relates to completion or repayment within 60 days. George denied making these representations and, so, did not adduce any evidence to establish that he had reasonable grounds for making the representations. It follows, then, that the section works to produce the result that George did not have reasonable grounds and, therefore, the representations were misleading.
  1. It was obvious, at any rate, that neither George nor the corporate defendants were in a position to repay the amount advanced within the 60 days or even within a short time of that. The conclusion (putting to one side the deeming provision in s 51A(2)) that George had no reasonable grounds for making the representations is inescapable.
  1. It is also clear that the Holloways relied, at least in part, on those representations in causing the advance to be made.
  1. Holloway Nominees seeks to fix George, as well as the corporate defendants, with liability for this misleading conduct. It does so through s 75B of the TPA, which provides (so far as is relevant):

 

“(1)  A reference in this Part to a person involved in a contravention of a provision of Part IV, IVA, IVB, V or VC, or of section 75AU, 75AYA or 95AZN, shall be read as a reference to a person who:

(a) has aided, abetted, counselled or procured the contravention;

(b) has induced, whether by threats or promises or otherwise, the contravention;

(c)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)has conspired with others to effect the contravention.”

  1. Section 82 is contained within the Part of the TPA to which s 75 applies. Its operation was recently explained by Gaudron, Gummow and Hayne JJ in I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd:[67]

 

“[42] … Section 82 entitles a person who suffers loss or damage by conduct of another that was done in a contravention of any of a very large number of provisions — ranging from contravention of any of the restrictive trade practices provisions of Pt IV to the so-called consumer protection provisions of Pt V — to recover the amount of that loss and damage. Section 82 can, therefore, be engaged in cases in which the contravener's conduct is intentional or even directed at harming the person who suffers loss and damage. … It can be engaged in cases, like the present…, in which the contravener can be said to have fallen short of a standard of reasonable care as well as contravene the Act, and in cases in which there was neither want of care nor intention to harm … but still a contravention of the Act.

[43] Secondly, s 82 entitles a person who suffers loss or damage by conduct done in contravention of a relevant provision, to recover not only from the contravener but also from any person involved in the contravention. Persons involved may have acted intentionally or carelessly; they may have acted with or without intention to harm.

[44] Thirdly, orders may be made for injunction under s 80, or for any of the several kinds of order mentioned in s 87(2), not only where there is a contravention of any of the provisions mentioned in s 82 but also where there is a contravention of certain other provisions of the Act. There is, therefore, a difference between the area for operation of s 82 and s 87. (The Act has been amended from time to time and the difference has not been constant, but what is important is the fact of difference, not its content.)

[45] Fourthly, s 82 is concerned only with the position of a person who has suffered loss or damage and only that person may rely on the section. By contrast, s 87 is concerned not only with cases where loss or damage has been suffered but also with cases where it is likely that it will be.”

  1. George’s behaviour comes within both s 75B(1)(a) and (c). His conduct aided in the making of the representations and he was directly knowingly concerned in (as he was the source of the representations) the making of the contravening representations. He was, effectively, the corporate defendants and their conduct was completely subject to his control.[68]
  1. He is, then, liable for damages under s 82 of the TPA. Those damages are to be assessed, in this case, by determining the loss suffered by Holloway Nominees; and that loss is the amount claimed by the plaintiff less the amount which remained in the set-off account.

Negligence

  1. Given my finding with respect to the application of the TPA it is not necessary to consider this aspect of the plaintiff’s claim.

Conclusion

  1. I give judgment for the plaintiff against each of the defendants in the sum of $247,482.54 with interest.
  1. I will hear submissions on costs.

Footnotes

[1] Ex 33.

[2] Transcript of Proceedings (“T”) 78, T 195-196, T 403-408.

[3] Ex 47.

[4] Clauses 2.2 and 23 of Ex 47.

[5] See paragraphs 5, 21.

[6] FFASOC para 10(b), Amended Defence para 10(c).

[7] T 103/10.

[8] T82/33-43.

[9] T 145.

[10] T 145, 148 -149.

[11] T 147.

[12] T 146.

[13] T 370

[14] T 369

[15] T 372-373.

[16] T 427-428.

[17] Ex 44.

[18] T 435.

[19] T 112.

[20] T 252.

[21] Ex 5.

[22] ibid.

[23] T 463.

[24] T 464.

[25] T 205-206.

[26] T 207

[27] T 466.

[28] Ex 34.

[29] Ex 10.

[30] T 471.

[31] T 473.

[32] T 467.

[33] T 475.

[34] T 478.

[35] Ex 19.

[36] Ex 11.

[37] Ex 10.

[38] Ex 59.

[39] Ex 17.

[40] Ex 20.

[41] Ex 21.

[42] Ex 22.

[43] Ex 23.

[44] Ex 30.

[45] Ex 27.

[46] Ex 31 and Ex 38.

[47] T 81, 173, 206, 256, 257.

[48] T 369.

[49] T 370.

[50] T 372.

[51] T 373.

[52] See, for example, [50]

[53] [53] and [54].

[54] Ex 36.

[55] T 134-135.

[56] George was never in doubt that the plaintiff was lending the money: T 471.

[57] T 79-80, 173, 177, 202, 206, 207, 212, 217, 249-50, 256-257, 337 and 338.

[58] [2001] QSC 466.

[59] Ex 7.

[60] T 398.

[61] T 468.

[62] See, eg, Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566-567; Pavey & Matthews Ltd v Paul (1987) 162 CLR 221 at 265.

[63] Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 174.

[64] T 409, 423-424, 444.

[65] i.e., the amount claimed by the plaintiff less the $3,236.82 which was the balance of the principal sum advanced.

[66] i.e., those set out in para. 13 of the FFASOC.

[67] (2002) 210 CLR 109 at [42]-[45].

[68] Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1985) 61 ALR 504; Enzed Holdings Ltd v Wynthea Pty Ltd (184) 57 ALR 167; Hamilton v Whitehead (1989) 166 CLR 121.

Close

Editorial Notes

  • Published Case Name:

    Holloway Nominees (Q) P/L v George & Ors

  • Shortened Case Name:

    Holloway Nominees (Q) Pty Ltd v George

  • MNC:

    [2008] QSC 63

  • Court:

    QSC

  • Judge(s):

    Martin J

  • Date:

    04 Apr 2008

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
ENZED Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167
1 citation
Jump To
Cite 1 - (1984) 57 ALR 167
Hamilton v Whitehead (1989) 166 CLR 121
2 citations
Jump To
Cite 1 - (1989) 166 CLR 121
Cite 2 - (1989) 166 CLR 121
I & L Securities Pty Ltd v HT W Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109
2 citations
Jump To
Cite 1 - (2002) 210 CLR 109
Cite 2 - (2002) 210 CLR 109
Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd (1985) 61 ALR 504
2 citations
Jump To
Cite 1 - (1985) 61 ALR 504
Cite 2 - (1985) 61 ALR 504
Pavey & Matthews Pty Ltd v Paul (1987) 162 C.L.R 221
2 citations
Jump To
Cite 1 - (1987) 162 C.L.R 221
Cite 2 - (1987) 162 C.L.R 221
Port of Brisbane Corporation v ANZ Securities Ltd [2001] QSC 466
2 citations
Jump To
Cite 1 - [2001] QSC 466
Cite 2 - [2001] QSC 466
Trident General Insurance Co Ltd v McNiece Bros Pty Limited (1988) 165 CLR 107
2 citations
Jump To
Cite 1 - (1988) 165 CLR 107
Cite 2 - (1988) 165 CLR 107
Young v Queensland Trustees Limited (1956) 99 CLR 560
2 citations
Jump To
Cite 1 - (1956) 99 CLR 560
Cite 2 - (1956) 99 CLR 560

Cases Citing

Case NameFull CitationFrequency
George v Holloway Nominees Pty Ltd [2008] QCA 2811 citation
Holloway Nominees (Q) Pty Ltd v George (No 2) [2008] QSC 711 citation
1

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