Car Mojo Pty Ltd v Lin [2021] QDC 178

DISTRICT COURT OF QUEENSLAND CITATION: Car Mojo Pty Ltd v Lin [2021] QDC 178 PARTIES: CAR MOJO PTY LTD ACN 616 727 201 (Plaintiff) v XU HONG LIN AS TRUSTEE FOR THE RAMS FAMILY TRUST ABN 29 399 102 637 (Defendant) FILE NO: 2162 of 2020 DIVISION: Civil PROCEEDING: Trial ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 11 August 2021 DELIVERED AT: Brisbane HEARING DATE: 25, 27-29 January 2021, 17-19 March 2021 and written submissions of 1 April, 8 April and 9 April 2021 JUDGE: Reid DCJ ORDER: I will hear submissions on the form of final orders. CATCHWORDS: TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT – FALSE REPRESENTATIONS GENERALLY – where the defendant owned a panel beating business whose income was predominantly from a contract with Suncorp Insurance – where Suncorp Insurance put the defendant on notice that it was not renewing that contract – where the defendant sold the business to the plaintiff – where the defendant denied signing a guarantee associated with the sale of the business which otherwise prima facie contained his signature – whether the defendant made deliberate false representations to the plaintiff in order to induce the plaintiff to purchase – where the contract contained an entire agreement clause – whether the defendant engaged in conduct that was misleading or deceptive or was likely to mislead or deceive TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – UNCONSCIONABLE CONDUCT – GENERALLY – where the plaintiff asked the defendant to sign a guarantee as to the -- 1 of 34 -- 2 accuracy of financial records and statements made associated with the sale of a business – where the guarantee prima facie contained the defendant’s signature – where the defendant denied signing the guarantee – whether the plaintiff engaged in unconscionable conduct by having the defendant sign the guarantee – where the defendant counterclaims relating to particular work and a clause of the contract relating to agents or employees of the defendant training staff of the plaintiff LEGISLATION: Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), s 18 CASES: AON Risk Services Australia Limited v ANU (2009) 239 CLR 175; [2009] HCA 27, considered Campbell v Backoffice Investment Pty Ltd (2009) 238 CLR 304; [2009] HCA 25, considered Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, considered COUNSEL: M T De Waard for the plaintiff M J Harris for the defendant SOLICITORS: Shine Lawyers for the plaintiff Birchgrove Legal for the defendant -- 2 of 34 -- 3 Introduction The plaintiff has sued the defendant in relation to issues arising out of the sale of a panel beating business in early 2017. The plaintiff’s primary cause of action is for misleading and deceptive conduct contrary to s 18 of Schedule 2 of the Competition and Consumer Act (the Australian Consumer Law) (“ACL”) for which it seeks a declaration and damages. It is submitted by the plaintiff’s counsel that if the plaintiff is successful in that claim there is no need to determine other causes of action for breach of contract, deceit, negligent misrepresentation, monies had and received and restitution for unjust enrichment. Under its primary cause of action the plaintiff seeks $652,497 (as at 31 January 2020) as pleaded in [40] of the Further Amended Statement of Claim (“FASC”), and further interest (up to 7 February 2021) in the sum of $121,173. It also seeks an order that $35,000, together with accretions thereon and held in the trust account of Nelson Shum Solicitor, be released to the plaintiff. The defendant opposes the granting of any relief to the plaintiff and counterclaims in relation to 2 matters: a claim for $992.20 in respect of a particular job (referred to as job number 10587) and the sum of $45,000 in relation to a special clause of the contract of sale related to an obligation for agents or employees of the defendant to train staff of the plaintiff. Of the $45,000 sum, $35,000 of it is held in the trust account earlier referred to, and the defendant seeks an order for it to be released to him. A feature of the case was that evidence in chief of all witnesses was by way of statements pursuant to an order of Justice Bond made when the matter was in the Supreme Court. Those statements are part of a bundle of documents which became Exhibit 1 at the trial. The defendant’s decision to sell Prior to selling it to the plaintiff, the defendant conducted a panel beating business, as trustee for the RAMS Family Trust. The business, known as Summit Collision Repairs (hereafter “Summit”), appeared successful. In an advertisement for the sale of the business of about 17 November 2016 it was described as having an average weekly turnover of $48,000 and “average weekly net to working owner” of $7,225. It was also said to have equipment to the value of “$200,000 plus (approx.)”. -- 3 of 34 -- 4 Prior to that time, Suncorp, in various guises, had been the business’ largest client. It is admitted in the pleadings that “prior to late 2016 Summit, as conducted by Mr Lin, entered into a contract with Suncorp Insurance pursuant to which Summit was appointed, on certain terms, to be an approved motor vehicle repairer for insurance claim repairs carried out for the benefit of Suncorp Insurance” (“the Suncorp contract”). It is also admitted that on or about 28 October 2016, Mr Lin was told by officers of Suncorp that the company would not be renewing the Suncorp contract with Summit when it expired on 31 March 2017. Subsequently Mr Lin, by letter of 1 November 2016, sought to persuade Suncorp Insurance to renew the Suncorp contract. 1 On 11 November 2016 Suncorp, however, wrote to Mr Lin stating that the agreement would expire on 31 March 2017 and that from 1 April 2017 the business would no longer be permitted to display signage associated with Suncorp. The business was then advertised for sale, on about 17 November, as I earlier described. Prior to that advertisement Mr Lin spoke to a business broker, Mr Hurst, about selling the business. Tab 26 of the trial bundle contains a text from Mr Hurst to Mr Lin to arrange a meeting on 17 November “re selling your business”. As a result, the advertisement was prepared and approved by Mr Lin and ultimately came to Mr Fitzpatrick’s notice. The letter from Mr Lin to Suncorp of 1 November notes that he was “very shocked to be notified… that Suncorp will not be renewing their contract as a preferred provider with Summit Collision Repairs in April 2017”. The letter notes that when Mr Lin took over the business from the previous owner in 2015 he had been told by Suncorp’s motor claim manager that “there won’t be problem in renewing the contract in the future as Suncorp and Summit Collision Repairs had a long standing relationship”. The letter also notes that “Suncorp accounts for 80%-85% per cent of our business. We can provide our bank statements as proof of this”. The letter notes: “There is no way that with this short notice we received that we can build up a clientele of our own to fight back in this market.” Mr Lin requested that Suncorp review its decision but, as I said, Suncorp on 11 November reiterated its decision communicated in a meeting on 28 October. 1 The letter from Summit to Suncorp and signed by Mr Lin (Ex 1) of 1 November 2016 is at Tab 27 of the trial bundle. Although that document is on its face dated 1 November 2011 it is, as I have said, admitted in the pleadings that it was written on 1 November 2016. -- 4 of 34 -- 5 I also note the cessation of the Suncorp contract was not entirely unexpected. In their letter of 11 November Suncorp refers to a communication earlier that year that the terms of the repair agreement would expire on 31 March 2017. In a letter of 28 June 2016 (Tab 22) Suncorp wrote to Mr Lin in these terms: “As we discussed Tuesday 28 June, there had been multiple quality issues identified on vehicles you have repaired within the past quarter resulting in further rectification from alternate repairers. This puts your rectification percentage well above the maximum target of 5%. This is in direct breach of your Suncorp personal insurance repairer agreement.” The letter then says it constituted a first written warning and advised that a repeat of the behaviour or other serious breach of the agreement over the next three year period may result in the immediate termination of the Suncorp personal insurance repairer agreement. No doubt as a result of being advised by Suncorp of their ending of the contract, Mr Lin retained solicitors, Mahon Legal, to provide advice in relation to the actions of Suncorp. A written advice from that firm to Mr Lin of 22 November 2016 is included in the trial bundle (Tab 37). It is clear from that letter of advice that the defendant had attended on them with Ms Pan on 14 November. It is also clear from that letter that he instructed his solicitors: (i) that Suncorp repairs make up 80% of his business; and (ii) that he had no knowledge of having received a notice from Suncorp in early 2016 indicating it did not propose to renew the Repair Panel Agreement and that only on 28 October 2016, at a meeting he had with representatives of Suncorp, was he first made aware that the agreement would not be renewed in April 2017. I infer his decision to advertise the sale of the business was made at the time he became aware of the devastating effect the loss of Suncorp’s business would have. Formation of the contract Luke Fitzpatrick is the sole director of the plaintiff. The plaintiff, a company, was incorporated for the sole purpose of carrying out its business transaction with Mr Lin. In 2016 Mr Fitzpatrick worked as a real estate agent but he always had an interest in -- 5 of 34 -- 6 cars and mechanics and had experience, by way of a hobby, of rebuilding cars, motorbikes and engines. He had a desire to buy a business and was particularly interested in the automotive industry. In order to locate a suitable business to buy, he signed up to a number of business brokers’ mailing lists including LINK Business Brokerage. Kevin Hurst works for that firm as a business sales broker. He was in fact the broker involved in the sale of Summit to the defendant in 2015. It was purchased at that time for $410,000. That contract settled on 1 July 2015. Mr Hurst said that in early November 2016 he was contacted by Mr Lin in relation to the sale of the business “as a going concern”. This was shortly after the meeting Mr Lin had with representatives of Suncorp on 28 October in which he was advised the Suncorp contract was not to be renewed. In any case the written appointment of LINK Business Brokerage as agent for the sale of the business is dated 18 November. The document notes the business was for sale for “$375,000 WIWO”, a reference to “walk-in walk-out”. I have noted already Mr Hurst’s text to Mr Lin to discuss the sale at a meeting on 17 November. During the negotiations for the purchase of the business in 2015, and for its sale in 2016, Mr Lin himself conducted all negotiations. Mr Hurst said Mr Lin did not at any time use a translator or have any person explain matters to him. He said Mr Lin spoke with an Asian accent but did not appear to have any difficulty in understanding English. This is of some relevance because at the trial it was said Mr Lin struggled with English. He had an interpreter when he gave evidence. I shall refer to this issue in due course. Mr Hurst said Mr Lin brought with him to the November meeting “details about the business which were to be used in advertising it”. He also said Mr Lin told him “he wanted to price it attractively so he could get a quick sale”, so he could return to living in Sydney. In order to achieve “the quickest and easiest” sale, Mr Hurst recommended, and Mr Lin agreed to, a walk-in walk-out contract. Mr Lin nominated a sale price of $375,000. Mr Hurst said Mr Lin was clear in saying that the business did not have any existing contracts with any companies. Indeed he said he checked this with Mr Lin as it was -- 6 of 34 -- 7 “standard practice” to list existing contracts in the executive summary prepared and provided to potential purchasers. Mr Lin’s denial of any such contracts is of course entirely inconsistent with the contract with Suncorp which Mr Lin had been advised was to be terminated and on which he had obtained advice from his solicitors. He could not have forgotten that contract when speaking to Mr Hurst. I shall refer to this aspect later, but it casts extreme doubt on Mr Lin’s credibility. He also says Mr Lin said “most of his income comes from the Asian community” and that the business “did repair work for all the leading insurers and fleet companies, including Suncorp”. Mr Hurst said he asked Mr Lin if the business had purchased any equipment since Mr Lin had purchased it. Mr Lin, he said, told him that nothing had changed and that he could reuse the earlier plant and equipment list. Mr Hurst also said that at no point did Mr Lin say “that he was selling equipment only”. Mr Hurst then prepared an advertisement incorporating the latest sales and income information that Mr Lin had provided. Mr Lin on 18 November approved that advertisement for publication and it was placed online. Mr Lin later emailed Mr Hurst his financial statements and BAS statements. These discussions between Mr Hurst and Mr Lin, without any involvement of Ms Pan, are also relevant to my finding that Mr Lin was conversant with the financial arrangements of the business. It is inconsistent with the view he was merely a panel beater who did not know of or understand the business’ financial or business arrangements, as he asserted. In any case, the advertisement set out, inter alia, details of the business’ turnover and return to a working owner. More importantly, it included the following detail: “The income stream is guaranteed with … the fact that the business is the preferred repairer by all leading insurance companies … including Suncorp” Mr Hurst said Mr Fitzpatrick on 25 November 2016 contacted LINK via its website. On 28 November Mr Hurst emailed Mr Fitzpatrick all of the financial information that had been provided by Mr Lin, together with what Mr Hurst called an executive summary, the 2015 financial statements and a plant and equipment list.2 2 This information is all at pages 723 – 729 of the trial bundle. -- 7 of 34 -- 8 I accept Mr Fitzpatrick contacted Mr Hurst and later met Mr Lin because of his reliance on the terms of the advertisement. Mr Fitzpatrick said he attempted to contact Mr Hurst a number of times between 28 November and 9 December, but was unsuccessful. Eventually on 9 December Mr Hurst and Mr Fitzpatrick did speak. They discussed Mr Fitzpatrick visiting the business. Mr Fitzpatrick said Mr Hurst was to arrange that but in fact that was not done. Consequently he simply visited the site himself on 13 December and spoke directly to Mr Lin. They went to a nearby McDonald’s restaurant and discussed the possible sale. I find nothing untoward in his doing so. Mr Fitzpatrick said that he had a list of questions which they discussed, and that he made notes as he went. Those notes were before me (Trial Bundle, Tab 44, pages 735 – 736). The notes record, and Mr Fitzpatrick confirmed in his evidence, which I accept, that Mr Lin told him: (i) That the business turned over almost $2.3 m in the 2016 financial year and was doing “lots of cash work”, amounting to some $17,000 so far in December. (ii) When asked who were his major clients, and which clients provided the majority of his income, that he did work for all insurers and it was “hard to say who was the biggest client”. He also said he had “a very diverse cash flow”. (iii) He had no problems with any ongoing clients, no complaints from clients and no clients were planning on leaving in the next 12 months. (iv) He was expecting to get $350,000 for the business on a walk in walk out basis, including work in progress. The statements of (ii) and (iii) above were very clearly incorrect. I find Mr Lin deliberately misled Mr Fitzpatrick about the critical loss of the Suncorp contract and the fact that Suncorp work comprised at least 80% of the turnover of the business. I also find he did that so as to induce Mr Fitzpatrick to purchase the business. -- 8 of 34 -- 9 Mr Fitzpatrick says Mr Lin also told him that about 30 per cent of his customers were people of Asian descent. Mr Fitzpatrick gave evidence that he believed he may lose that clientele, in the event that he purchased the business, because in his experience people of Asian descent often prefer to do business with other people of Asian descent. He said that at the time he calculated that on the basis of the financial records the business would still be profitable even with such a loss of Asian customers. During that discussion Mr Fitzpatrick said Mr Lin told him, consistently with Mr Hurst’s evidence, that all of the equipment that had come with the business when he purchased it in June 2015 was still there and that nothing new had been bought. Mr Lin’s evidence about the meeting of 13 December is set out at paragraphs 51 and following of his statement. He denied ever seeing Mr Fitzpatrick prepare a document at the meeting of 13 December. Mr Lin said he told Mr Fitzpatrick that he could not rely on insurers providing work as they “changed the rules”. He also said he did not tell Mr Fitzpatrick what the turnover of the business was, because, he said, he did not himself know. He said his knowledge of the financial side of the business was limited to quotes he gave, and that all financial matters were handled by Linda Pan. I do not accept what Mr Lin says about such conversations, or of his lack of knowledge of the finances of the business. His evidence was inconsistent with the evidence of both Mr Hurst and Mr Fitzpatrick, and with Mr Fitzpatrick’s contemporaneous note of the meeting of 13 December. It is improbable that Mr Lin would be unaware of the business turnover. It is contradicted by notes that Mr Fitzpatrick made on 13 December as to the weekly payroll of the business, the monthly rent of the business, the 2016 turnover and the extent of cash business in December. I might also add that the nature of the discussions of 13 December is entirely inconsistent with the notion of an equipment only sale. Mr Fitzpatrick’s questions and Mr Lin’s answers are far more consistent with the sale of the business as a going concern. In coming to the conclusions I have about Mr Lin’s credibility I am also conscious of a number of other issues concerning Mr Lin’s credit. Mr Lin says he did not tell Mr Fitzpatrick who his largest customer was. This is of course consistent in some respects with Mr Fitzpatrick’s evidence. I reject the -- 9 of 34 -- 10 evidence Mr Lin did not say who his largest customer was because, as Mr Lin said, he did not want to disclose that information to a stranger. Mr Fitzpatrick said and I accept that Mr Lin in fact said it was “hard to say who is my biggest client”. To say that would of course be a lie. Suncorp was by far the biggest customer of the business as Mr Lin well knew. He had instructed his solicitors about that very fact to enable them to write the letter to Suncorp earlier referred to. To suggest that he did not want to disclose such information to a prospective purchaser, as he suggested, was I find, dishonest. I conclude he did in fact tell Mr Fitzpatrick it was “hard to say” who his major customer was as he knew that to disclose that it was Suncorp , and they accounted for almost 80% of his turnover, might put Mr Fitzpatrick on a course of enquiry with Suncorp that was highly likely to have undermined the possible sale of the business to Mr Fitzpatrick. Mr Lin also says he told Mr Fitzpatrick he did not have any contracts in place as “insurers don’t give you contracts”. This too was grossly dishonest. He had a contract with Suncorp, though it was, as he knew, soon to end. On 1 November his solicitors had written to Suncorp indicating he was “very concerned… that Suncorp will not be renewing their contract” with the Summit business. On 22 November he received written advice from his solicitors about the “Suncorp Panel Repair Agreement”. That advice referred to the “wording” of the agreement, and to the possibility Suncorp may have been in breach of it. I am satisfied Mr Lin did not want to disclose these matters to Mr Fitzpatrick, and in order to avoid doing so made the deliberately false assertions that it was hard to say who his major customer was, that there were no relevant contracts and he knew of no client who was planning on “leaving” in the next 12 months. “Leaving” in such circumstances very clearly meant stopping directing work to the business. Such matters seriously impact on the credibility of Mr Lin. I do not accept he was a credible witness. Indeed, I find he had little regard for the truth. This finding reflects findings I make about a number of issues – in particular involving his execution of a guarantee on 15 November, his non-disclosure of the difficulties he had with Suncorp, -- 10 of 34 -- 11 the content of recorded conversations with Mr Fitzpatrick and the absurd suggestion the contract with the plaintiff was an equipment only sale. Mr Lin’s demeanour when giving evidence strongly supports that finding. I have said that when giving evidence Mr Lin had the use of an interpreter. Whilst I accept he was not as fluent as a witness whose first language was English, I find he conducted all negotiations with Mr Hurst – both when buying the business in 2015 and when selling it to Mr Fitzpatrick – in English. He spoke to Mr Fitzpatrick in English. He had meetings with representatives of Suncorp and presumably spoke to them in English. Neither Mr Hurst nor Mr Fitzpatrick suggested he had had difficulties in communicating. When giving evidence he routinely answered without the aid of the interpreter. Clearly he was able to understand questions and able to answer in English. His answers were sometimes non-responsive and sometimes prolix and rambling, but this I conclude reflected his personal manner. It did not cause me to conclude he misunderstood questions or had great difficulty in effectively communicating. Ultimately, I determine that Mr Fitzpatrick’s evidence should be very strongly preferred to Mr Lin’s primarily because of the issues earlier referred to. His demeanour however scarcely enhanced his credit. Mr Hurst said that after emailing Mr Fitzpatrick the relevant financial information he subsequently spilt a drink over his work laptop, destroying it. He says he lost some information and emails that he had not “backed up”. This may explain Mr Fitzpatrick’s inability to contact Mr Hurst from 28 November until 9 December and his contacting Mr Lin directly on 13 December. Having determined to make an offer for the business Mr Fitzpatrick again contacted Mr Hurst. Mr Hurst arranged to meet Mr Fitzpatrick at the Summit premises on 15 December. This was of course after Mr Fitzpatrick had himself spoken to Mr Lin at McDonald’s on 13 December as I earlier indicated. In any case on 15 December Mr Hurst said he arrived about 5.00 pm and found Mr Fitzpatrick and his then partner, Deborah Marshall, talking to Mr Lin and Linda Pan who was then Mr Lin’s fiancée and is now his wife, though I was told they are currently separated. Mr Fitzpatrick gave Mr Hurst a written offer of purchase of the business for $300,000. Mr Hurst says that he and -- 11 of 34 -- 12 Mr Fitzpatrick went outside and spoke out of earshot of Mr Lin. He says that Mr Fitzpatrick told him that that offer was all he had and it could not be increased. After some discussion he and Ms Marshall left. Mr Fitzpatrick did not tell Mr Hurst that he had spoken to Mr Lin on that day, and that Mr Lin had signed a guarantee to which I shall shortly refer. Mr Hurst says that he then discussed the offer with Mr Lin who said he would accept the offer provided a training period provided for in the proposed contract was reduced from 90 days to 30 days. Subsequently, there were negotiations over this issue and the parties ultimately agreed to 45 days post-settlement training and five days pre-settlement training, and that a retainer of $35,000 would be kept back from the settlement and paid upon completion of training. The contract also provided for a payment of $10,000 to the defendant if training in accordance with the contract was provided. Mr Fitzpatrick signed the proposed contract on 20 December. When that was forwarded to Mr Lin he signed it, but only after deleting the due diligence clause and that relating to retention of the $35,000 training retainer. On 22 December Mr Fitzpatrick, having considered those changes, told Mr Hurst as Mr Lin’s agent that such amendments were totally unacceptable. It appears that impasse was ultimately overcome by the parties and the contract was signed at Mr Lin’s solicitors’ on 9 January 2017. A copy of that contract is included in the trial bundle. The purchaser was the plaintiff, which had been incorporated solely to carry out the transaction. The contract subsequently settled on 9 February. Mr Hurst confirmed in his evidence, which I accept, that at no point had Mr Lin ever said to Mr Hurst: 1. that there were to be any adjustments or allowances for any work in progress; 2. that he had any contract with Suncorp or any other insurer; 3. that the majority of his income came from Suncorp; 4. that any contract with Suncorp was to soon expire; 5. that the sale was an equipment only sale. -- 12 of 34 -- 13 The Guarantee [51] Mr Fitzpatrick said in evidence that when he saw Mr Lin on 15 December, and prior to the arrival of Mr Hurst, he gave Mr Lin a folder containing a guarantee, which he had prepared and the financial records of the defendant (as set out in paragraph 2A of the FASC). The financial records had been provided to him by Mr Lin and Mr Hurst as earlier outlined in the days prior to 15 December. I accept Mr Fitzpatrick’s evidence about that. [52] He said he asked Mr Lin to sign the guarantee document which he had prepared. He also said he told Mr Lin the guarantee was “to confirm in writing the verbal claims you made to me during the first meeting including but not limited to your claim that you could not foresee any changes in business relationships or conditions which would lead to a change in the business income and performance in the foreseeable future.” In his statement (paragraph 59), he says that Mr Hurst had provided the financial documents to him by email early on the morning of 15 December. He says in the statement that before Mr Lin executed the guarantee he said to Mr Lin that “I just want to be completely clear and make sure that there are no surprises and that nothing that you know of is going to change with the business. I would like you to sign this guarantee. It basically says that everything you have told me and the financials you have provided are true and correct and nothing you know of is going to change in the business”. He says he then gave the documents to Mr Lin who he says read the guarantee. Mr Fitzpatrick says he then said “that’s just to say everything you told me the other day is true and correct and there’s nothing changing with the business. It’s just covering all bases.” He says Mr Lin says “I’m an honest man, I’ve got nothing to hide” and then signed the guarantee before handing it back to Mr Fitzpatrick who signed as a witness. [53] The guarantee is at page 789 of the trial bundle. It is in these terms: “Rams Family Trust Tax Return & BAS Statements Guarantee I, Xu Hong Lin (Andrew Lin) hereby guarantee personally and in my capacity as the Trustee of the Rams Family Trust that the attached 2016 Rams Family Trust Tax Return along with the 2015/2016 BAS statements are true and correct. I also guarantee that Summit Collision Repairs has not and will not in the foreseeable future be changing or ceasing any business relationship with it’s [sic] suppliers, contractors, partnerships, contracts, ongoing clients, insurers or any other agreement that may adversely affect the Summit Collision Repairs -- 13 of 34 -- 14 business, or any new owner of the business, from operating in a similar manner and achieving comparative sales figures as those stated in the attached 2016 Rams Family Trust Tax Return and 2015/2016 BAS statements.” [54] Mr Fitzpatrick says Mr Lin signed it and he witnessed it. The document on its face carries the signature of Mr Lin, and the signature of Mr Fitzpatrick as witness. [55] In paragraph 2A of the FASC, filed 2 March 2020, the plaintiff alleges that at the meeting of 15 December between Mr Fitzpatrick and Mr Lin, Mr Fitzpatrick requested the defendant sign the guarantee. It is alleged that Mr Lin read and signed it before handing it back to Mr Fitzpatrick. [56] In paragraph 2A(d) of the Further Amended Defence and counter-claim (“FAD”) the defendant alleges: 1. the guarantee was prepared by Mr Fitzpatrick; 2. the defendant had not received any legal advice about that document; 3. the guarantee was “not a document which the defendant signed or authorised anyone else to affix his signature”; and 4. the guarantee was “a document that the defendant would not have signed had he seen it without first obtaining independent legal advice”. [57] The defendant also alleges in paragraph 2B of the FAD that if the guarantee was signed by him, it is unconscionable for the plaintiff to rely on the document. It is said to be unconscionable as Mr Lin is said to have been under a disability, evident to Mr Fitzpatrick, and Mr Fitzpatrick unconscionably took advantage of that disability. [58] In paragraphs 80 and 81 of his statement Mr Lin swears that Mr Fitzpatrick discussed the guarantee with him whilst Ms Pan was not present. He says Mr Fitzpatrick explained it as indicating “that the financial statements you gave me were true and correct”. He says in the statement that Mr Fitzpatrick never told him that it also dealt with Mr Lin guaranteeing that the business would not be changing or ceasing any business relationships with clients or insurers, as set out in the document. He says he was “very comfortable to sign it”, inferring that he was comfortable because it only dealt with the accuracy of the financial documents. -- 14 of 34 -- 15 [59] The FAD was filed in March 2020. [60] No doubt because of the conflict made clear in the pleadings as to whether Mr Lin’s signature was on the guarantee, the parties obtained a joint expert report of a forensic document examiner, Ms Melanie Holt. [61] That of course would have been entirely unnecessary if Mr Lin’s instructions were that he had in fact signed the document, though without understanding the import of the guarantee. Obtaining such an expert report is consistent only with his then asserting he had not signed the guarantee. [62] That is made clear in the letter of instruction to the expert, jointly from both the plaintiff’s and the defendant’s solicitor. Paragraph 3 of those instructions is in these terms. “3. The plaintiff says the defendant signed the Disputed Document. The defendant denies signing the Disputed Document and says he did not authorise any person to affix his signature on to the Disputed Document. The defendant does not plead who affixed his signature.” [63] Ms Holt concludes that the evidence of other documents signed by Mr Lin, “provide very strong support” for the fact he signed the guarantee. [64] In view of his statement that he was “very comfortable” to sign the guarantee and did in fact sign it, that opinion is unsurprising and of no current importance. [65] The history I have outlined is critical however in relation to the issue of Mr Lin’s credit. [66] I find that, consistent with his own evidence and that of Mr Fitzpatrick, the defendant did sign the guarantee. I find he did so in the circumstance Mr Fitzpatrick described. But I also find Mr Lin initially asserted to his solicitors, falsely, that he had not signed it because he feared, understandably, that admitting he had signed it would significantly adversely impact his case. It does. I simply cannot accept him as a truthful witness in respect of this and other issues. [67] I also reject his assertion that he did not understand the meaning and effect of the guarantee. He has conducted businesses in Australia for some 20 years, apparently -- 15 of 34 -- 16 successfully. He negotiated the purchase of this business directly with Mr Hurst. He also negotiated its sale. He did not require assistance from others in doing so. [68] The guarantee itself is not a complicated legal document. On its face it guaranteed that: 1. attached tax returns and BAS statements were true and accurate; and 2. the business “has not and will not in the foreseeable future be changing or ceasing any business relationship” with, inter alia, insurers “that may adversely affect the … business”. [69] I find Mr Lin signed the guarantee document and generally knew the effect of the document. The very reason he initially denied signing it was because he knew of its effect on his credit. [70] An assertion in the defence that Mr Fitzpatrick engaged in unconscionable conduct in having Mr Lin sign the guarantee is untenable in circumstances where I find that: 1. Mr Lin read, understood and signed the guarantee; 2. he was not under any relevant disability or impaired capacity; 3. Mr Fitzpatrick had no reason to believe Mr Lin had an impaired capacity to understand the meaning of the guarantee and was unaware of any disability which affected Mr Lin’s capacity to understand the nature of the document. [71] I also find that Mr Fitzpatrick entered into the contract with the defendant on behalf of the plaintiff, because of his reliance on: (i) the content of the advertisement prepared by Mr Hurst and approved by Mr Lin, as set out in [20] above; (ii) the content of Mr Lin’s discussions with Mr Fitzpatrick on 13 December as set out in [26](i), (ii) and (iii); and (iii) Mr Lin’s executing the guarantee on 15 November. [72] In fact, Mr Lin knew during the whole of the time, from when he first met Mr Fitzpatrick: -- 16 of 34 -- 17 (i) that Suncorp would not be renewing its contract; (ii) that Suncorp was, overwhelmingly, the biggest client of the business, accounting for at least 80% of its turnover; (iii) that consequently, the business would thereafter not be able to achieve anything like its past turnover or projections; (iv) that due to the loss of Suncorp, the nature of the business would be totally transformed, and would have almost no value other than the value of plant and equipment. [73] Mr Lin’s knowledge of the effect of the loss of the Suncorp contract on the business, can be inferred as a matter of common sense, but is confirmed by the content of the letter to Suncorp of 1 November. I have no doubt Mr Lin’s decision to sell the business in November 2016, his dishonesty in his dealing with Mr Fitzpatrick and his quick acceptance of Mr Fitzpatrick’s offer on 15 November (despite the subsequent negotiations over terms) can all be explained by his knowledge of the devastating effect on the business of losing Suncorp work. [74] The contract for sale of Summit was completed on 9 February 2017. In order to do so the plaintiff paid the defendant the contract sum, entered into a new lease of the premises with the landlord and took the burden of various equipment leases. It also borrowed a substantial sum to enable it to complete the contract. [75] I accept the evidence of Mr Fitzpatrick that but for his reliance on the representations made to him by Mr Lin concerning the profitability and turnover of the business, and his representations that he expected no change in business arrangements, including no disruption with any potential source of income as set out in the FASC, that the plaintiff would not have entered into the contract, would not have completed the contract, and so would not have done the things referred to in the previous paragraph. [76] The conduct of Mr Lin on behalf of the defendant was misleading and deceptive. There was simply no reasonable basis for his conduct set out herein. -- 17 of 34 -- 18 Breach [77] Moreover his conduct constituted misleading and deceptive conduct in breach of s 18 of the ACL as alleged in the FASC. [78] Under s 18(1)(a) a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The conduct of Mr Lin did involve conduct occurring in the course of dealings having a commercial character or nature. His actions, I find, caused Mr Fitzpatrick on behalf of the plaintiff to believe what had been represented to him by Mr Lin was true, when it was in fact false. He was simply mislead by Mr Lin’s false, and deliberately false assertions. [79] Insofar as it might be said the representations of Mr Lin in the advertisement concerning guaranteed future income stream can be said to amount to a representation as to future matters, there are two matters of importance. [80] First, the alleged “guaranteed” income stream was said to be because the business was “the preferred repairer of all insurance companies… including Suncorp”. I have indicated that, by the time the advertisement was sent to Mr Fitzpatrick, Mr Lin knew that was not so. Second, in any case a representation as to future matters without there being reasonable grounds for such a representation constitutes a breach of s 4 of the ACL. There was no ground for the defendant making the representation contained in the advertisement which I have set out. [81] In written submissions counsel for the defendant relies on observations of French CJ and Kiefel J in Miller and Associates Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, concerning non-disclosure and silence. [82] Submissions that Mr Lin was not obliged to disclose the loss of the Suncorp contract and the alleged lack of a pleading that Mr Lin was obliged to disclose Suncorp was not going to renew Summit as a preferred repairer are misplaced. [83] The effect of the plaintiff’s allegation, in [27] of the FASC is, inter alia, that the defendant engaged in misleading or deceptive conduct for failing to disclose the importance of the Suncorp business to Summit’s turnover and income, and of the loss of that business in circumstances where the pleading alleged, and I accept, that Mr Lin: -- 18 of 34 -- 19 a) had on 13 December represented that Summit had not ceased any business relationship with suppliers, clients or insurers; b) had not lost any contracts and nothing had changed with the business; c) had on 15 December represented that the business had not and could not be changing or ceasing any business relationships. Post Settlement Events [84] There were a number of issues concerning compliance with the precise terms of the contract. One of those concerned the issue of post contract training. Ultimately the parties agreed in terms of clause 14 of the special conditions of the contract. That clause effectively provided that Mr Lin and his fiancée Ms Pan were to continue working in the business fulltime, carrying out all day to day business operations and training of “the buyer or any other person the buyer specifies so as to facilitate a seamless transition of the business” for no less than 45 days from the settlement date. [85] The plaintiff agreed to pay $10,000 to the defendant for such training “at the end of the 45 day training period upon successful completion”. [86] Furthermore, clause 14.1 of the contract provided: “The seller agrees to the Buyer’s Solicitor holding $35,000 of the sale price as a training retainer to be released to the Seller upon the successful completion of the 45 day post settlement training and handover period. The Buyer must notify the Buyer’s Solicitor in writing prior to the end of the 45 day training period if special condition 14 has not been completed. The withheld sale amount shall be dispersed to the seller upon satisfactory completion of the training period. If the seller and his relations fail to successfully complete the 45 day training period in full the Seller agrees to forfeit the retainer and the training payment.” [87] That $35,000 was paid to and remains in the trust account of the solicitors who acted for the plaintiff in the settlement, Nelson Shum. [88] The defendant’s completion of the training was in issue. Mr Fitzpatrick says Mr Lin attended the business premises only for 31 days between 10 February and 24 March 2017, and for far less than fulltime, as particularised in paragraph 56A of the FASC. He also says Ms Pan attended over that same period but only for 21 days and also not -- 19 of 34 -- 20 fulltime. The plaintiff alleges Ms Lin and Ms Pan regularly failed to provide other than minimal training when at the premises and did not work fulltime in the Summit business. The plaintiff claims therefore that the defendant is not entitled to the $10,000 payment, and that the $35,000 should be paid to it. [89] The defendant pleads that Mr Lin worked fulltime during the training period and that Ms Pan worked fulltime until on the 19th day of the training period when the plaintiff released her from any further obligation to perform training work at the premises due to her being pregnant. [90] After the acceptance of the offer of Mr Fitzpatrick of 15 November the ultimate contract itself was not signed until 9 January 2017. The cause of that delay is not of present importance. In anticipation of entering into a final contract Mr Fitzpatrick on 23 December arranged a loan for the sum of $328,000 through Suncorp, and for the mortgage of his house to secure that loan. The loan was for this sum to meet both the purchase costs and to provide some working capital for the Summit business. [91] After signing the contract Mr Fitzpatrick was contacted by Mr Harry Nicholson, the landlord of Summit who advised that the defendant’s lease of the business premises had in fact expired on 31 October 2016 and had not been renewed. [92] Ultimately, after some issues about payment of the February rental, the plaintiff entered into a new lease with the landlord on 9 February, the day before settlement of the contract of sale of the business. [93] I accept that thereafter: 1. Mr Lin did not perform the training he was required to do and did not work fulltime in the business, or for anything approaching fulltime; and 2. Ms Pan also did not work as required by the contractor and did not work at all past the 19 days I have referred to. I also accept that the plaintiff did not agree that she was not required to work beyond that time. [94] After taking over the business on 10 February Mr Fitzpatrick on 13 February received a phonecall from a former employee of the business whom he knew as Linze (in fact Linze Goussard). What she said in that call is not relevant except for the fact that she -- 20 of 34 -- 21 told Mr Fitzpatrick that “Suncorp Insurance had pulled their contract with the business”. This I find is the first that Mr Fitzpatrick knew of that fact. As a result of that call he rang Suncorp on a number of occasions. Eventually he was, on 18 February, able to speak to Paul Milligan, an employee of Suncorp, who told Mr Fitzpatrick that Suncorp would not renew the Summit contract as a supplier as of 30 March 2017. [95] On that same day Mr Milligan attended the premises and spoke to Mr Lin and Mr Fitzpatrick. [96] It is also important to understand that at that point Mr Fitzpatrick still did not know how important Suncorp work was to the business’ turnover or profitability, just that a contract with Suncorp was lost. [97] Subsequently, on Saturday 18 February Mr Fitzpatrick went to the premises and searched documents concerning the Suncorp contract, and the computer records of the business. By reference to the business computer system he calculated Suncorp business, through its various guises, accounted for about 91 per cent of the turnover of Summit. The precise accuracy of that figure is not important. That it was overwhelmingly important is. [98] He also found correspondence between Suncorp and Summit, including the letter of 11 November 2016 from Suncorp to Mr Lin confirming the Suncorp contract would expire on 31 March 2017 and would not be renewed. That letter, at tab 31 of the trial bundle, has been earlier referred to. He also found the letter of advice from Mahon Legal to which I also earlier referred. [99] Once can imagine the devastating effect that this must have had on Mr Fitzpatrick’s equanimity. He clearly understood the devastating effect on Summit of the withdrawal of Suncorp business. [100] On Monday, 20 February Mr Fitzpatrick arranged a meeting with Mr Lin and Ms Pan. The conversation was recorded by Mr Fitzpatrick. His partner, Deborah Marshall was present and in fact it was she who recorded the conversation. I accept that she did so by placing a recording device on the table and that Ms Pan and Mr Lin would have known it was being recorded. In any case, I do not think anything turns on the question of whether or not Mr Lin and Ms Pan knew the conversation was being recorded. A -- 21 of 34 -- 22 transcript of that recording is part of the trial bundle. I said in the previous paragraph that Mr Fitzpatrick understood the devastating effect on the business of the loss of the Suncorp business. This is reflected in the conversation he had in which he told Ms Pan and Mr Lin: “I know that the Suncorp contract has been lost…I know it’s going to end on 31 March and I also know that the business will go broke then. And I’m going to go broke as well, and I know that.” [101] He told Mr Lin and Ms Pan that over the past 12 months he calculated Suncorp jobs accounted for 91.23 per cent of the business of Summit. [102] Neither Ms Pan nor Mr Lin demurred to that suggestion. Ms Pan just said “Jesus”. Mr Lin said “but you not calculated the last couple of months”, perhaps to suggest that over that time Suncorp was of lesser importance to the business. Mr Lin then said, “I don’t think it is this bad” and suggested, it seems, to Mr Fitzpatrick that with Mr Lin’s help they might try to attract more Asian clientele to overcome the problem. [103] Mr Fitzpatrick told Mr Lin that he had seen Mr Lin had tried to secure work from other insurers, without success; a suggestion Mr Lin agreed he had done. Mr Lin also acknowledged writing to Suncorp in November and said he knew 80 per cent of the jobs are from Suncorp, a comment completely at odds with what he had told Mr Fitzpatrick in November – namely that he did not know who his largest customer was. It is also at odds with the suggestion he did not know or understand the financial state of the business. [104] Mr Lin said that, in fact, Suncorp had already stopped sending business to Summit. He suggested that Mr Fitzpatrick could “pass the hard time” by hard work and various business strategies saying “we’ll still survive”. Mr Fitzpatrick said to them that they knew of the problem with Suncorp from April 2016. Again, curiously, Mr Lin said in response; “This one, even my previous owner knows about it too. He never said it to me until I run the business and then I found out. So this is why I say, OK, I keep it quiet”. Why Mr Lin thought he was justified in misrepresenting matters to Mr Fitzpatrick because of the fact that he felt the previous owner had not been frank with him, if it in fact is true, is beyond me. -- 22 of 34 -- 23 [105] Mr Fitzpatrick reiterated that the loss of so much of the business would inevitably cause the plaintiff company “to go bust”. Again, neither Mr Lin nor Ms Pan (who it must be remembered Mr Lin had said was the one with financial acumen and knowledge of the business finances of Summit) did not suggest Mr Fitzpatrick was wrong in his understanding of that matter. Indeed, Mr Lin said: “This is why I told you I already started changing the structure…taking a lot of cash money”. He said: “You can survive but it’s a harder time” and reiterated Mr Fitzpatrick should “change the structure” of the business, especially attempting to attract Chinese customers. [106] Mr Lin suggested that he could assist in that regard, doing quotes and finding parts. He also suggested he could represent to the customers that he was still a partner in the business, presumably to continue to attract Chinese customers. [107] This obviously outlandish and untenable proposal must have been obvious even to Mr Lin. The absurdity of Mr Fitzpatrick seeking a remedy which depended on a false representation about Mr Lin, whose dishonesty had caused Mr Fitzpatrick’s financial world to crash upon him, must have been apparent to everyone at that meeting. [108] Three more things need to be said about the conversation of 20 February. [109] First, there was nothing in it to suggest Mr Lin needed the assistance of Ms Pan as an interpreter to understand anything Mr Fitzpatrick said or to communicate his own thoughts. Indeed, Ms Pan said very little at all during the one hour conversation. [110] Second, there is nothing to suggest Mr Lin did not understand the business aspects of the Summit business or the consequences of the loss of the Suncorp work. His knowledge of the business was not confined to the mere work of a panel beater as he suggested in his evidence before me. He knew about the financial and business side of Summit. [111] Third, it is clear Mr Lin knew of the loss of the Suncorp business and of its devastating effect. There is nothing to suggest that in the conversation that he had at McDonald’s in November 2016 he told Mr Fitzpatrick that the Suncorp business was to be lost to Summit, or that he said anything to suggest the business was about to collapse. [112] On 21 February, Paul Milligan of Suncorp emailed Mr Lin at the Summit email address. That email is at tab 87 of the trial bundle. The email noted that pursuant to -- 23 of 34 -- 24 the Suncorp contract, Suncorp was meant to be given 28 days’ notice of the sale and sought details of the purchase and the day when the sale had been effected. [113] The failure of Mr Lin to give such notice to Suncorp, in my view, indicates Mr Lin’s acceptance of the fact that the Suncorp business had been lost to Summit at the date of the sale. Mr Fitzpatrick, of course, did not know of the need to give such notice, since he did not know that there was any Suncorp contract or indeed of the fact that Suncorp was responsible for the vast bulk of Summit’s business. [114] Subsequently, a number of disputes occurred between Mr Lin and Mr Fitzpatrick about who was entitled to remuneration for particular jobs commenced or completed on or prior to the date of the settlement. The litigation involved a number of these issues but all except one have been resolved. I shall refer to that particular job claimed in the defendant’s counter claim in due course. [115] Mr Fitzpatrick said in evidence that not only did Mr Lin and Ms Pan fail to complete the number of days training that they had contracted to do but also provided little actual training even when they were at Summit. Ms Pan, he said, did not attend for significant periods because, Mr Lin said to him, she was unwell. Later he said Mr Fitzpatrick told him that Ms Pan “has finalised all her training and does not need to attend anymore”. Mr Fitzpatrick, of course, denied that. Mr Fitzpatrick’s evidence was that he told Mr Lin he needed to be told more things including the RACQ invoicing procedures and training about computer software by Ms Pan. Mr Lin also said in evidence that Mr Fitzpatrick told him that Ms Pan “has another job and she can’t be in full-time anymore”. The days they were said to have attended, being 31 and 19 respectively, as previously stated, was a figure arrived at by Mr Fitzpatrick as a result of his viewing the CCTV footage from the premises. The schedule he prepared is at tab 95 of the trial bundle. [116] I accept Mr Fitzpatrick’s evidence about these matters in preference to the evidence of Mr Lin and Ms Pan. In particular, I do not accept that Mr Fitzpatrick at any time told Ms Pan or Mr Lin that Ms Pan was released from her obligation to attend. Apart from credit issues already discussed, it is in my view inherently unlikely that he would do so in circumstances where he must have been irate as a result of the position he found himself in due to the dishonesty of Mr Lin. -- 24 of 34 -- 25 [117] On 24 March 2017 Mr Fitzpatrick again spoke to Mr Lin and Ms Pan and again recorded the conversation. That recording is at tab 93 and the transcript at tab 92 of the trial bundle. Much of the conversations concern issues about repaying money said to have been taken from the business by Mr Lin. That is not presently of importance. But there was discussion too about the loss of the Suncorp contract. Mr Fitzpatrick accused Mr Lin of deceiving him about that matter. He said to Mr Lin, “you know back in November that it was going to be changed. You knew. They told you back in April last year. You knew. Linda did you know?” Ms Pan answered “Yeah, we had a discussion…but we don’t have the final…”. There was then a discussion between Ms Pan and Mr Lin in Chinese before Ms Pan said, “Yeah we did”. [118] There was then this further exchange; “MR FITZPATRICK: The letter is there from the 1 November last year. You knew. That was before you even had it advertised for sale. And then you sold it showing all this business that you were doing. Here’s my accounts. Look, I’m turning over $2.3 million and you sold it to me on that knowing that nearly 90 per cent of the business is going to go at the end of March. You ripped me off, thoroughly.” MR LIN: This is the way I sell business. MR FITZPATRICK: This is the way to do it? Is that right? Is that it? MR LIN: This is the way that people sell it to me. This is the way I sell the business.” Later, there was this further exchange: “MR FITZPATRICK: Yes, I want you to tell me why, why did you do that to me. MR LIN: Of course I want to sell out my business. This is simple. MR FITZPATRICK: Because you wanted to get out before it went bust? Is that what it is? You just didn’t want to lose your money? MR LIN: Doesn’t matter if it’s going to go bust or not bust. -- 25 of 34 -- 26 MR FITZPATRICK: You wanted to get out before you lose your money. MR LIN: This is why I want to get out of the business. This is what I want to do. I don’t care what happens later.” [119] In fairness to Mr Lin, I should add that he then said: “This is why I said to you it’s only equipment,” to which Mr Fitzpatrick said, “No it was not.” Mr Lin then said that Mr Hurst “asked me to put it at 450. I said no I just wanted to sell equipment only.” [120] I do not accept Mr Lin ever said to Mr Fitzpatrick or to Mr Hurst at the time of negotiating the contract that it was to be an equipment only sale. Mr Hurst’s evidence was to the contrary, as I have earlier indicated. Mr Fitzpatrick’s evidence was also to the contrary. If it was an equipment only sale, what was the purpose of advertising the turnover and profitability of the business? Why would Mr Fitzpatrick have sought the guarantee? Why would Mr Lin have lied about signing the guarantee? Why would he not readily have disclosed the loss of the Suncorp contract to Mr Fitzpatrick or indeed, in any advertisement for sale of equipment only? [121] The proposition is absurd and I entirely reject it. [122] The suggestion in the earlier passage that I set out that Mr Lin simply misled Mr Fitzpatrick about the nature of the business he was selling was later revisited by Mr Fitzpatrick in the following exchange: “MR LIN: Listen, if you not buy this business somebody will buy it. I don’t care who buys it. MR FITZPATRICK: You rip off anybody that comes along and lie to them? MR LIN: I don’t mind. They rip off me. I sell the business. MR FITZPATRICK: You don’t mind ripping them off? MR LIN: No.” [123] Finally, there was an exchange of some importance involving Ms Pan. Mr Fitzpatrick asked about the conversation that he had in which Mr Lin on 13 November 2016 had been asked if any business relationships were to be lost to the business. Ms Pan was asked “Do you remember me asking that Linda?” Ms Pan initially said, “I didn’t see -- 26 of 34 -- 27 anything. I’m staying out of this…I didn’t say anything…I was quiet.” Mr Fitzpatrick responded: “I know you were quiet. You didn’t say anything but did Andrew say ‘everything will be fine if you work hard. Everything will be fine. No contracts have been lost’.” [124] Tellingly, Ms Pan said: “he said that many times…I know he said that many times”. [125] Consideration of that recording very strongly supports the factual findings I have made. [126] Mr Fitzpatrick said that from 24 March Suncorp sent no damaged vehicles to the business for repair and effectively the business had no work to do. [127] On 28 March Mr Fitzpatrick and Mr Lin again spoke by phone. Mr Fitzpatrick told Mr Lin he did not think Mr Lin should receive the training payment due to the non- performance of he and Ms Pan. It was only during that conversation that Mr Lin, for what Mr Fitzpatrick said was the first time, said that Ms Pan was pregnant. I accept that to be so. [128] Mr Fitzpatrick thereafter tried his best to source work for the business from other sources but this was unsuccessful. On 28 April he dismissed all employees and closed the doors of the business. I might add that if it had been an equipment only sale, as Mr Lin falsely suggested, there would have been no need for the plaintiff to have employed these people from 9 February to 28 April. [129] I accept such matters were the inevitable consequence of Mr Lin’s gross deception. The rental expenses and fixed expenses of the business, including wages, simply could not withstand the loss of such a large part of the turnover that Suncorp was responsible for. [130] I also accept Mr Lin knew this would be the inevitable consequence of the loss of the contract and that he determined to sell the business as soon as he could after being told of Suncorp’s attitude in November 2016. Effectively, he sought to pass on the consequences of that loss of business, which arose for a variety of reasons but included Suncorp’s high level of dissatisfaction with his own work, from himself to any purchaser. -- 27 of 34 -- 28 [131] In reality, Mr Fitzpatrick had no alternative but to close the doors. [132] Following the closure of the business, Mr Fitzpatrick negotiated with the landlord concerning the reletting of the premises. In order to do so, he first needed to dispose, by sale or otherwise, of equipment, some of which had been affixed to the premises. [133] The plaintiff therefore advertised equipment for sale on two internet sites, Seek Business and Gumtree. Eventually, a contract for sale of the business assets was signed on 9 June 2017 for the sum of $50,000.00. That agreement is at tab 102. [134] Under the terms of the lease the plaintiff was required to pay rental of $8,668.33 per month plus rates and GST (see tab 73). This continued until July 2017. At that time a new tenant for part of the premises was found and the plaintiff was required only to pay the balance, being the shortfall of $4,267.13 per month, plus rates and GST. [135] I have mentioned that the plaintiff financed the purchase of the business from Mr Lin by a loan from Suncorp for $328,000.00. Details of that are set out at tab 69. The interest charge was at the bank’s Small Business Mortgage rate, less a margin of 2.36 per cent. At the time of the loan, this was an effective interest rate of 4.44 per cent per annum. For a period of five years, the loan was an interest only loan; that is for the period up until February 2022. At the initial interest rate this would have required interest repayments of only $14,432.00 per annum, paid monthly. [136] Car Mojo’s liability to Suncorp under this loan agreement was guaranteed by Mr Fitzpatrick whose home was mortgaged to secure the loan. Under it, Mr Fitzpatrick would, if the loan agreement had not been refinanced in circumstances I will shortly set out, have had to pay to Suncorp such monthly repayments up to February 2022 (assuming there was no significant change in interest rates, which have been notoriously stable over this time). [137] Instead Mr Fitzpatrick says he was required to refinance the loan because he could not afford to make those monthly repayments of interest, and could find no financier prepared to enter into an arrangement whereby repayments were delayed pending the determination of this action, since he could not afford such payments and the monthly rental payments. Mr Fitzpatrick says such an arrangement was his only prospect of avoiding the sale of his property and bankruptcy. Consequently, he entered into an arrangement to borrow from his partner, Ms Marshall. His initial loan agreement of -- 28 of 34 -- 29 7 April 2017 is at tab 100 of the trial bundle and a subsequent agreement of 19 March 2020 is at tab 107. Reliance [138] The defendant in paragraph 25 of the FAD denies that the plaintiff relied on the representations contained in the advertisement of 17 November, or those made by Mr Lin to Mr Fitzpatrick on 13 and 15 November, as alleged in paragraphs 5, 8 and 9 of the FASC. More especially the defendant alleges that, if made, the plaintiff did not and could not rely upon those representations for a variety of reasons as set out in subparagraphs (a) to (g) thereof. [139] In essence, these relate to considerations of Special Condition 1 of the Contract which relevantly provides: “This Contract contains the whole of the agreement between the parties and there are no other collateral bargains, agreements, representations or understandings. The Buyer acknowledges that the Buyer has not relied on and has not been induced to enter this Contract by virtue of any representation whether oral or in writing by the Seller, or any servant or Agent of the Seller, which is not set out in this Contract.” [140] The representations relied on by the plaintiff were not set out in the contract. [141] Furthermore, the defendant alleges that in circumstances where the plaintiff undertook due diligence by a solicitor and accountant “the reasonable inference to be drawn” is that the plaintiff did not rely on the alleged representations. [142] I do not accept this to be so. I have no doubt the plaintiff was induced to enter the contract by reason of the defendant’s representations, even taking into account the fact that the parties entered into a contract containing Special Condition 1. In any case, reliance is not an essential element of a claim for damages for misleading and deceptive conduct. In Campbell v Backoffice Investment Pty Ltd (2009) 238 CLR 304, Gummow, Hayne, Heydon and Kiefel JJ said at paragraph [130] thereof: “… of itself, neither the inclusion of an entire agreement clause in an agreement nor the inclusion of a provision expressly denying reliance upon pre-contractual representations will necessarily prevent the provision of misleading information before a contract was made constituting a contravention of the prohibition against misleading or deceptive conduct by which loss or damage was sustained.” -- 29 of 34 -- 30 [143] Indeed, in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, Lockhart J (with whom Burchett and Foster JJ agreed) said at page 561: “It has been held that exclusion clauses … cannot operate to defeat claims under s 52.” [144] Section 52 of the Trade Practices Act was of course the precursor to s 18 of the ACL. [145] Even taking into account the clause relied on, I am nonetheless persuaded the plaintiff did rely on the defendant’s misrepresentations and also on the representation he made about no insurers or other customers leaving Summit, and his failure to disclose the true position about Suncorp, in deciding to enter into and complete the contract. Indeed, it was not suggested otherwise to Mr Fitzpatrick when he was cross- examined. Damages [146] In circumstances where I find the plaintiff has established its claim for misleading and deceptive conduct, it is necessary to consider the question of damages. It is, because of my finding, also unnecessary to finally determine the other causes of action although issues of credit in this case very strongly support the plaintiff’s claim for damages for the other causes of action. Different considerations may apply in respect of the plaintiff’s claim concerning breach of Special Condition 2 of Annexure A to the contract of sale. The special condition provided that “notwithstanding the provision of standard condition 8.1(i), the seller warrants the accuracy of the financial statements made available to the buyer”. In my view, the guarantee on which that claim is based is not a financial statement within the meaning of that term as used in the special condition. In my view the plaintiff’s claim cannot be “dressed up” as one for breach of contract based on the effect of Special Condition 2 of the Contract. It may well also have a claim for breach of the guarantee. In any case I find that it has established its claim for misleading and deceptive conduct contrary to the ACL. [147] In paragraph 38 of the FASC, the plaintiff pleads that as a result of entering into the contract, Car Mojo has liabilities greater than its assets, Summit has no value and the plaintiff remains indebted in respect of borrowings applied to the purchase price paid under the contract. Particulars of such circumstances are said to be that as at 31 January 2020, the plaintiff had liabilities in the amount of $652,497, primarily -- 30 of 34 -- 31 comprising trade creditors and an indebtedness under the loan from Deborah Marshall in the amount of $472,995. [148] Furthermore, in paragraph 40 of the FASC, the plaintiff pleads that due to the defendant’s contraventions of the ACL and Mr Fitzpatrick’s reliance on the representations made by the defendant, the plaintiff entered into and completed the contract and thereby suffered such loss and damage in the amount of $652,497. In paragraph 40 the loss is pleaded on an annual basis as follows: a. 30 June 2017 $427,250. b. 30 June 2018 $118,584. c. 30 June 2019 $52,860. d. 31 January 2020 $53,803. [149] It can be seen from these particulars that no rental payments have been required to be made since June 2018. Indeed it is said in the pleading that the landlord re-leased the remaining half of the premises in July 2018. The overwhelming bulk of damages since then relates to interest on the loan from Ms Marshall. [150] The defendant, in its FAD fails to plead anything in respect of the particular allegations of loss. Furthermore, the defendant’s pleading, in response to paragraph 40 of the FASC referred to previously, denies the facts therein and pleads a number of matters, including a denial that the defendant contravened the ACL or that the plaintiff relied on any pre-contractual representations, and an assertion that Mr Fitzpatrick ought, through due diligence, to have known there was no basis for believing Suncorp would give work to the plaintiff. Importantly however, the pleading says that “by reason of those matters” – matters I have found to be without foundation – the plaintiff suffered no damage. [151] The defendant’s FAD does not address the question of the plaintiff’s loss and damages in the event the plaintiff were to prove the defendant’s breach of the ACL. The defendant simply does not dispute the quantum of damages alleged. [152] The trial commenced on the basis of those pleadings, that is, the FASC and FAD, and the amended reply and answer of the plaintiff. On day three of the trial, 28 January, -- 31 of 34 -- 32 the defendant’s counsel sought leave to amend in accordance with a proposed Further Further Amended Defence and Counter-Claim (“FFAD”). After some changes, that pleading was ultimately marked “E” for identification. [153] I allowed those amendments set out in paragraphs 2A(a)(3), 38(a), 42, 47(3) and 57 to 59 thereof, but refused the application to otherwise amend paragraphs 38 and 40 of the FAD. I delivered reasons for those rulings the next day. These are set out in the transcript (T4-2/6). [154] I noted the proposed FFAD sought to amend by adding [38(c)], which, for its first time denied the allegations in paragraph 38(c) of the FASC, that the plaintiff remains indebted in respect to borrowings to enable it to purchase Summit. Furthermore, in [40] the defendant sought to significantly change the conduct of the trial by for the first time alleging he did not admit the quantum of the plaintiff’s loss for the defendant’s breach of the ACL. [155] Pursuant to the orders made by Justice Bond, the evidence in chief of the parties had been by affidavit. Two of the plaintiff’s witnesses were cross-examined on Wednesday 27 January. On Thursday, when the defendant first sought the amendments, Mr Fitzpatrick, the plaintiff company’s director was due to be cross- examined. [156] I determined that having regard to the effect of r 166(1) of the UCPR the facts alleged concerning the plaintiff’s damage suffered in paragraphs 38(c) and 40 of the FASC were deemed to be admitted. [157] At no time until 28 January had the defendant sought to amend that pleading. The plaintiff had prepared for trial on the basis that the assertions about the quantum of loss in the FASC had been so admitted. [158] The defendant by then seeking to amend, was for the first time seeking to put the quantum of damages in dispute. He asserted in the FFAD that the plaintiff, by its director Luke Fitzpatrick, had told the defendant he was a cash buyer and would not need to borrow the purchase price. It was alleged that it was consequently not reasonably foreseeable that the plaintiff would borrow $328,000 as it had in fact done. He also now sought to allege that it was not reasonably foreseeable that the initial loan from Suncorp would be re-financed through Mr Fitzpatrick’s domestic partner, -- 32 of 34 -- 33 Deborah Marshall, at a far higher compound interest rate or that it would subsequently be renegotiated at an even higher compound interest rate. It was said that by reason of such matters the plaintiff had failed to mitigate its losses. [159] It appeared to me that it was inevitable, if the amendments were allowed, that the trial would need to be adjourned. Mr Fitzpatrick would need to be reproofed. Ms Marshall would need to be reproofed and recalled. Perhaps there would be a need to proof and call the plaintiff’s accountant or financial advisers or to call evidence concerning the availability of loans from commercial financiers. In short, I concluded it would very significantly affect the conduct and duration of the trial which had already commenced. [160] I ultimately determined it was appropriate to refuse the proposed amendments although the effect of it would be to deprive the defendant of now disputing the quantum of the plaintiff’s claim. [161] In this regard, I observed that the High Court decision in AON Risk Services Australia Limited v ANU3 was of very significant relevance in making the determination I did. In my view, the interest of justice very strongly dictated that the amendment should be refused. [162] The consequence of that of course is that the quantum of the plaintiff’s claim is now not in dispute. Up to 31 January 2021 it amounted to the sum of $652,407. In the period from 31 January 2020 to 7 February 2021 further interest charges in the sum of $121,173 (particularised in Exhibit 3) were incurred, meaning that damages up to 7 February 2021 amounted to $773,610. Further losses have been incurred under the Deborah Marshall loan since that time. The jurisdictional limit of the Court confines any such damages however to the sum of $750,000. [163] In addition, I find that the sum of $35,000, together with accretions held in the trust account, of Nelson Shum should be paid out by that firm to the plaintiff. That order does not require any corresponding reduction in the judgment sum but it is a separate declaratory order which does not affect the jurisdiction limit of the Court. [164] I also order that the defendants counter claim for $10,000 be dismissed. 3 (2009) 239 CLR 175. -- 33 of 34 -- 34 [165] One remaining issue concerns the sum of $992.20 sought in the defendant’s counterclaim. [166] In the circumstances where that sum, if recovered, would be offset against any sum owing to the defendant it is unnecessary to determine that matter. [167] Accordingly, I will give judgment for the plaintiff. I will hear submissions about the form of the order, and about costs. -- 34 of 34 --