Beachmount Pty Ltd v Iker Partnership & Anor [2020] QSC 379

SUPREME COURT OF QUEENSLAND CITATION: Beachmount Pty Ltd v Iker Partnership & Anor [2020] QSC 379 PARTIES: BEACHMOUNT PTY LTD ACN 088 946 801 (plaintiff) v IKER PARTNERSHIP (first defendant) EUNEEKE CATTLE COMPANY PTY LTD ACN 112 009 097 (second defendant) FILE NO/S: BS No 8370 of 2017 DIVISION: Trial Division PROCEEDING: Claim ORIGINATING COURT: Supreme Court of Queensland at Brisbane DELIVERED ON: 16 December 2020 DELIVERED AT: Brisbane HEARING DATE: 27 July 2020 to 31 July 2020; 4 September 2020 JUDGE: Williams J ORDER: 1. I direct that, by 10:00 am on 17 December 2020, the parties agree and provide to my Associate a proposed timetable in relation to the following: (a) The parties prepare draft orders to give effect to these reasons and provide them to my Associate. (b) If the parties are unable to agree on draft orders, then each party is to provide its proposed draft orders together with a brief description for the basis of the disagreement. (c) The plaintiff file and serve submissions and any supporting affidavits in relation to costs. (d) The defendants file and serve submissions and any supporting affidavits in relation to costs. (e) The plaintiff file and serve submissions in reply in relation to costs. CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – CONDITIONS – GENERAL MATTERS – where the plaintiff alleges that the defendants, -- 1 of 78 -- 2 in breach of two agreements entered into between the parties (the ESA and the New Agreement), failed to pay the plaintiff $810,460.49 for provision of services under those agreements – whether the defendants are indebted to the plaintiff for that amount CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – UNCERTAIN PROMISES – where the defendants allege that the terms of the ESA did not define with precision the ‘services’ the plaintiff was required to perform to the extent that the ESA is too uncertain to be enforceable – where the defendants further allege that the terms relating to the remuneration of the plaintiff under the ESA are uncertain to the extent that the ESA is too uncertain to be enforceable – where payments were made to the plaintiff by the defendants pursuant to the ESA on a regular basis – where the defendants do not seek to recover those amounts – whether the ESA is void for uncertainty CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – CONTRACTS IMPLIED FROM CONDUCT OF PARTIES – where the plaintiff alleges that the ESA ended by mutual agreement and the parties entered into another agreement (New Agreement) on similar terms – where the plaintiff continued to perform services for the defendants – where the defendants submit that there was no New Agreement but rather that the plaintiff was engaged on a “temporary basis” following the expiry of the ESA – whether the parties entered into the New Agreement – whether the terms of the New Agreement are certain so as to be enforceable ESTOPPEL – ESTOPPEL BY CONDUCT – PROMISSORY ESTOPPEL – PARTICULAR CASES – where the defendants allege that they were induced into entering into the ESA with the plaintiff on the basis of the plaintiff’s misrepresentations – where the defendants submit that the plaintiff should be estopped from enforcing the ESA on that basis – whether the plaintiff made the representations alleged by the defendants – whether the defendants relied upon those representations to their detriment ESTOPPEL – ESTOPPEL BY CONDUCT – ACT, OMISSION OR ASSUMPTION – REPRESENTATION GENERALLY – NATURE OF REPRESENTATION – where the defendants allege that the plaintiff made representations as to his ability to sell the defendants’ -- 2 of 78 -- 3 property “within 3 to 6 months” – where the defendants allege that the plaintiff made representations that, if he were engaged, the defendants’ businesses could only “move forward” – whether such representations were made – whether such representations were misleading or deceptive so as to give rise to a promissory estoppel ESTOPPEL – ESTOPPEL BY CONDUCT – ACT, OMISSION OR ASSUMPTION – REPRESENTATION GENERALLY – ACQUIESCENCE, ENCOURAGEMENT OR SILENCE – where the defendants allege that the plaintiff had an obligation to inform them of his prior unsuccessful business dealings – where the defendants allege that the plaintiff’s failure to do so was a representation by silence that was relied on by the defendants when entering into the ESA with the plaintiff – whether the plaintiff’s silence constitutes a representation – whether such representations were misleading or deceptive so as to give rise to a promissory estoppel ESTOPPEL – ESTOPPEL BY CONDUCT – CAUSATION – RELIANCE – where the defendants allege that, in reliance on the plaintiff’s misrepresentations, they entered into the ESA – whether, if the alleged misrepresentations were made, the defendants relied on them – whether the defendants have shown detriment by relying on the alleged misrepresentations TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – MISLEADING OR DECEPTIVE CONDUCT GENERALLY – MISLEADING OR DECEPTIVE: WHAT CONSTITUTES – where the defendants alleged that the plaintiff made three misleading or deceptive representations that induced them to enter into agreements with the plaintiff – whether the representations were made – whether the plaintiff engaged in conduct that was misleading or deceptive TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – ENFORCEMENT AND REMEDIES – ACTION FOR DAMAGES – LIMITATION PERIOD – WHEN CAUSE OF ACTION ACCRUES – where the plaintiff alleges that, even if the defendants make out a misleading or deceptive conduct claim, the limitation period prevents them from pursuing that cause of action – whether the cause of action accrues at the formation of the agreement or at a later time -- 3 of 78 -- 4 TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – ENFORCEMENT AND REMEDIES – ACTION FOR DAMAGES – ASSESSMENT OR AVAILABILITY OF DAMAGES – GENERALLY – where the defendants claim relief under s 237 and 243(c) of the Australian Consumer Law (ACL) or s 36(3) ACL, together with s 237 and 243(c) ACL – where the defendants do not seek to recover any amount against the plaintiff – where the defendants seek to apply the relief sought in the manner of a “shield” by seeking to offset any amount claimed by the plaintiff – whether the defendants are entitled to relief Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law), s 236, s 237, s 243 Civil Proceedings Act 2011 (Qld), s 58 Al Azahri, Azhari and Azhari as trustees of the Australia Islamic Educational Trust v Sheik Al-Maktoum [2020] QSC 297, cited Alford v Ebbage [2004] QCA 283, cited Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36, cited Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408; [2014] FCAFC 152, cited Bellmere Park Pty Ltd as trustee for the Bellmere Park Development Trust v Benson [2007] QCA 102, cited Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72; [2012] FCA 211, cited. Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25, cited Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130; [1946] EWHC KB 1, cited Clifford v Vegas Enterprises Pty Ltd (No. 5) (2010) 272 ALR 198; [2010] FCA 916, cited Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601, cited Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26, cited Dawson v LNG Holdings [2008] NSWSC 137, considered De Bortoli Wines Pty Ltd HIH Insurance Ltd (in liq) (2011) 200 FCR 253; [2011] FCA 645. Fraser v NRMA Holdings Ltd (1995) 55 FCR 452; [1995] FCA 9, cited. GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50, cited Hanave Pty v LFOT Pty Ltd [1999] ATPR 41-687; [1999] FCA 357, cited Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1998) 39 FCR 546; [1988] FCA 40, cited -- 4 of 78 -- 5 I&L Securities v HWT Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 4, cited Jones v Dunkel (1959) 101 CLR 298 [1959] HCA 8, cited Juniper Property Holdings No 15 Pty Ltd v Caltabiano [2016] QSC 5 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68, cited Legione v Hateley (1983) 152 CLR 406, cited Low v Bouverie [1891] 3 Ch 82, cited. Meehan v Jones & Others (1982) 149 CLR 571; [1982] HCA 52, cited Miller v BMW (2010) 241 CLR 357; [2010] HCA 31, cited Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Limited (2005) 189 FLR 14; [2005] NSWSC 20, cited POA Enterprises Pty Ltd & Others v Chemist Warehouse Southport & Others [2012] QSC 316, cited Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37, cited Razdan v Westpac Banking Corporation [2014] NSWCA 126, cited Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, cited Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7, applied Wardley Australia Limited v Western Australia (1992) 175 CLR 514; [1992] HCA 55, considered Watson v Foxman (1995) 49 NSWLR 315, cited Wright v Hamilton Island Enterprises Ltd [2003] QCA 36, cited York Airconditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11; [1949] HCA 23, cited COUNSEL: MD Martin QC for the plaintiff B Whitten for the defendants SOLICITORS: Mills Oakley for the plaintiff Kelly Legal for the defendants [1] The plaintiff’s claim is for an amount of $810,490.69 (inclusive of GST) as a debt due and owing by the defendants, consisting of: (a) The balance of bonuses payable under an Executive Services Agreement dated 17 December 2013 (with a commencement date of 1 November 2013) (ESA); and (b) The balance of fees and expenses payable pursuant to an agreement made in August 2015 (New Agreement). -- 5 of 78 -- 6 [2] The defendants’ position is less straightforward. The defendants raise a number of cascading legal arguments, including that: (a) The defendants were induced to enter into the ESA by the plaintiff’s misleading or deceptive conduct and consequently the plaintiff should not be allowed to enforce the ESA. (b) There is no New Agreement, including that if it was agreed it was done without authority. (c) The ESA and the (alleged) New Agreement are void for uncertainty. (d) The plaintiff breached the ESA and the (alleged) New Agreement on the basis that the plaintiff has failed to provide the services in accordance with the terms of the ESA and the (alleged) New Agreement and the defendants’ loss can be set off against the plaintiff’s claim. (e) The proper construction of the ESA does not provide for payment of the bonuses as claimed by the plaintiff. (f) The payments made to the plaintiff are excessive and should be set-off against the amount claimed. (g) In the pleaded circumstances, the plaintiff is estopped from bringing the claim. [3] Ultimately the defendants’ position is that the plaintiff’s claim should be dismissed, either on the basis that there is no debt due and owing or alternatively, that the ESA and the (alleged) New Agreement should not be enforced. [4] The defendants do not seek repayment of the money already paid by way of counterclaim and do not seek any compensation for loss or damage. The relief sought in effect is neutral: that is, any liability to the plaintiff is extinguished and no further amount is owing. [5] A number of allegations made by the defendants in the Fourth Further Amended Defence (4FA Defence) are expressly no longer pursued.1 These are set out in the following paragraphs of the 4FA Defence: (a) 41(c)(iv) ‒ payments of more than $20,000.00 without the prior written approval of the defendants; (b) 41(c)(v) and (vi) ‒ the plaintiff acted in a way which constituted a conflict of interest; (c) 41(c)(iiA) ‒ the plaintiff caused the defendants to overpay rates for Stay on Sullivan of approximately $800,000.00 together with legal fees; (d) 41(c)(iiB)(c)(2)2 ‒ consultancy fees in the sum of approximately $1.45 million dollars which was said to be “excessive”; and (e) 34(e) ‒ the plaintiff caused the “group level of debt” to increase by approximately $7 million dollars. 1 See defendants’ written closing submissions dated 19 August 2020. 2 Page 21 of 4FA Defence. -- 6 of 78 -- 7 [6] It also became apparent at the conclusion of the trial that the defendants were seeking to rely on a further argument that is outside of the 4FA Defence. The defendants now seek to argue that the obligations to pay: (a) the bonus payments under the ESA which had accrued by August 2015; and (b) the monthly invoices for services and expenses which accrued from August 2015 under the (alleged) New Agreement, were extinguished by a further new agreement whereby a company called Iker Group Holdings (IGH) took over the liability. The plaintiff objects to this argument being raised outside the defendants’ pleaded case. This new case is outside the pleaded case and should not be allowed. Agreed facts and list of issues to be determined [7] Prior to the commencement of trial, the parties provided a statement of agreed facts and a list of issues to be determined. This document is reproduced in full as Schedule 1. [8] The agreed facts are: 2. The parties entered into a written consultancy agreement dated 1 November 2013 (CA). 3. The parties entered into a written executive services agreement dated 17 December 2013 [the ESA].3 4. The defendants made payments to the plaintiff as pleaded in [9(b)] and [14(b)] of the further amended statement of claim (FASOC). 5. The project as defined in the CA was not completed. [9] In respect of the third agreed fact, from submissions at the trial it appears that while the defendants admit that the payments were made, they do not admit the basis of the payments. This is to be read subject to [41(c)(ii)(A)] and [45] of the 4FA Defence. The parties and background [10] The plaintiff, Beachmount Pty Ltd, was the corporate vehicle for Peter Queitzsch (Mr Queitzsch), who is the sole director and authorised representative of the plaintiff. [11] The first defendant is a partnership between Edward Alexander Iker (Mr Lex Iker), Jo-Anne Iker and Iker Pty Ltd as trustee for the Iker Family Trust. [12] The second defendant, Euneeke Cattle Company Pty Ltd, has Mr Lex Iker and Jo-Anne Iker as its directors. [13] Mr Lex Iker and Jo-Anne Iker have two sons, Clayton and Trent. Clayton Iker is married to Chrystal Iker. Trent Iker is married to Chantal Iker. 3 I further note that the commencement date in the Reference Schedule is 1 November 2013. -- 7 of 78 -- 8 [14] The Iker family have various entities, incorporated and unincorporated, through which they operate agricultural interests in and around Emerald. [15] Ikerus Pty Ltd (Ikerus) owned a property situated at Sullivan Street, Emerald, referred to as “Stay on Sullivan” (SOS) which operated as a motel or accommodation for mine workers. Ikerus was trustee for the Ikerus Unit Trust and was controlled by Mr Lex Iker and Jo-Anne Iker, who held 49 percent of the units. There were also other unit holders. [16] TLD Qld Pty Ltd (TLD) was another company that owned the adjoining property to SOS which was also being developed as mine worker accommodation. Mr Lex Iker was a director of TLD. There were also other parties who owned units in the TLD Qld Unit Trust. [17] At the hearing, the following witnesses gave evidence: (a) For the plaintiff: (i) Mr Queitzsch; (ii) Ms Leanne Daniels (former group administrative manager of the Iker Group). (b) For the defendants: (i) Mr Lex Iker; (ii) Mrs Chrystal Iker; (iii) Mr Clayton Iker; (iv) Ms Susan Williamson (bookkeeper for the Iker Group from 3 August 2015). [18] Mr Christopher Todd provided a witness summary of evidence on behalf of the defendants, but ultimately was not called to give evidence. Agreed trial bundle [19] Exhibit 1 is the agreed trial bundle which consists of three lever arch folders. [20] At the conclusion of the trial, the parties prepared a revised agreed index to Exhibit 1 reflecting the documents which had gone into evidence through the various witnesses. This resulted in some documents being removed. [21] Two documents were disputed, namely: (a) Tab 154 – Iker Group board meeting minutes 10 September 2015; (b) Tab 155 – Iker Group board meeting minutes 12 November 2015. [22] The plaintiff says that these two documents are admissible on the basis of the unchallenged evidence of Leanne Daniels that the minutes she prepared were -- 8 of 78 -- 9 accurate.4 Further the plaintiff contends that they are in substantially the same form as the board meeting notes at Tab 153, to which significant reference was made at the hearing and are agreed to be in evidence. Further, the plaintiff submits that the defendants do not contend that the minutes are wrong or inaccurate. [23] The defendants contend that Ms Daniels was not taken to each of the minutes and also gave evidence that she attended “most” of the meetings. Their submission in respect of the significantly different form may not be sustainable given the similarity in form to the document at Tab 153 (as pointed out by the plaintiff). [24] Counsel for the defendants took me to the document at Tab 154 in closing oral submissions and accepted that I could have regard to it.5 [25] I find that the documents at Tab 154 and 155 are admissible and it is then a question of what weight should be given to them given the general nature of the documents. Issues [26] The list of issues prepared by the parties and set out at Schedule 1 does not deal with the relevant issues in a logical order for the purpose of working through the issues, particularly as some issues may fall away depending on the position reached on some of the issues. [27] Accordingly, in these reasons I approach the issues under the following headings and in the following order: (a) Misleading or deceptive conduct (i) Were the three pleaded representations made? (ii) Did the plaintiff engage in conduct that was misleading or deceptive? (iii) Is any claim under the Australian Consumer Law6 (ACL) for misleading or deceptive conduct statute barred? (b) ESA (i) Is the ESA void for uncertainty? (ii) Do the pleaded warranties (defined by the defendants as “specific services”) form part of the ESA? (iii) If so, is payment conditional upon performance of the “specific services”? (iv) Has the plaintiff breached the ESA by failing to provide the Services? (v) If so, is payment conditional upon performance of all of the Services? (vi) Is the plaintiff entitled to the bonus payments? 4 Plaintiff’s written closing submissions at [139]. 5 T 6-37 L 26 and T 6-38 L 6. 6 Competition and Consumer Act 2010 (Cth), Schedule 2. -- 9 of 78 -- 10 (vii) Were the payments as identified in [9(b)] of the FASOC paid in accordance with the ESA? (viii) Were expenses as claimed in the plaintiff’s invoices to be paid? (c) New Agreement (i) Was the New Agreement entered into in August 2015 and on what terms? (ii) Is the New Agreement void for uncertainty? (iii) Were the payments identified in [14(b)] of the FASOC paid in accordance with the New Agreement? (iv) Were expenses claimed in the plaintiff’s invoices to be paid? (d) Were the payments to the plaintiff pursuant to the ESA and the New Agreement totalling $1,133,699 “excessive”? (e) Estoppel (i) Is the plaintiff estopped from relying upon the ESA or the New Agreement on the basis of the matters set out in [53] of the 4FA Defence? (f) Relief (i) Are the defendants entitled to any of the relief claimed pursuant to: (A) section 237 and 243(c) ACL? (B) section 36(3) ACL, together with s 237 and 243(c) ACL? (ii) Are the defendants indebted to the plaintiff for $810,460.49 (inclusive of GST) as pleaded in [21] of the FASOC? Misleading or deceptive conduct [28] The defendants’ claim for misleading or deceptive conduct is set out in [7] to [32] of the 4FA Defence. In summary: (a) [8] set outs the “Iker goals” on the basis that Mr Lex Iker told Mr Queitzsch matters at a meeting at the Iker’s property in August 2013. (b) [9] sets out the “Queitzsch experience representations”, being statements by Mr Queitzsch to Mr Lex Iker as to his experience, together with implied representations in the particular circumstances, including the “Iker goals”. (c) [10] sets out the “SOS sale representation” being statements by Mr Queitzsch to Mr Lex Iker about the sale and timing of the sale of SOS, together with an implied representation in the particular circumstances, including the “Iker goals”. (d) In reliance on these two representations, [12] provides that Mr Lex Iker entered into the CA. (e) [13] to [20] sets out facts and circumstances relevant to the CA. -- 10 of 78 -- 11 (f) [21] sets out the “agribusiness request”, being a request by Mr Lex Iker to Mr Queitzsch in November 2013 for assistance with the agribusiness operations of the Iker family. Three specific matters are listed, including dealing with financiers “while the process of selling SOS was engaged through the CA Services”. (g) [22] sets out certain facts alleged to have been known by both Mr Lex Iker and Mr Queitzsch at the time of the “agribusiness request”, including a link back to the “Iker goals”. (h) [23] sets out the “business improvement representation” being: (i) A statement by Mr Queitzsch that “given his experience, the business could only go forward and that he could assist the Iker family in the manner sought by the agribusiness request”; and (ii) An implied representation in the circumstances of [8], [9], [21] and [22] of the 4FA Defence that Mr Queitzsch would “satisfy the agribusiness request” and “relieve the financial stress the Iker family had been under by using skills and experience to reduce their debt level”. (i) [24] sets out the “business improvement representation” was intended to “include ensuring significant relief for the financial stress and pressure the Iker family and entities were then under”. (j) [25] sets out that, in reliance on the three representations, the defendants were induced to enter into the ESA. (k) [27] sets out that the “Queitzsch experience representation” was false, misleading or deceptive or likely to mislead or deceive because: (i) Mr Queitzsch had an obligation and duty to inform Mr Lex Iker of any businesses or companies that he had controlled7 that “had not been successful or had ceased operating”. (ii) The obligation and duty arose due to the “Queitzsch experience representation” and the nature of the information would have been important to a person in the position of Mr Lex Iker in deciding whether Mr Queitzsch “had the skills and experience to be able to successfully assist in the achievement of the Iker goals”. (iii) Mr Queitzsch did not disclose prior to entry into the CA or the ESA that he had controlled a business or company that “had not been successful or had ceased operating … or … that had failed”, nor did he correct the impression to the opposite effect. (l) [28] sets out that the “SOS sale representation” was false, misleading or deceptive or likely to mislead or deceive because Mr Queitzsch did not sell SOS within three to six months or at all and did not make the sale a priority over other matters. (m) [29] sets out that the “business improvement representation” was false, misleading or deceptive or likely to mislead or deceive because the 7 Including capacity to control. -- 11 of 78 -- 12 agribusiness operations “did not go forward”, the debt level was not reduced and financial stress and pressure increased. (n) [30] sets out that, to the extent that the “SOS sale representation” and the “business improvement representation” were future matters, there were not reasonable grounds to make the representations. (o) [31] sets out that, on the basis of all three representations viewed as a whole, the conduct of the plaintiff was misleading or deceptive or likely to mislead or deceive. (p) [32] sets out that, had Mr Lex Iker known of the facts pleaded in [27], [28] and [29] of the 4FA Defence, the defendants would not have entered into the CA or the ESA. [29] In the Reply to the 4FA Defence, the plaintiff denies the pleaded representations were made, says that parts of the pleading are vague and embarrassing or wrong, and further relies on the entire agreement clause in the ESA. Were the three pleaded representations made? [30] In cases involving oral misrepresentations, caution should be taken to ensure that the words spoken be proved with a degree of precision sufficient to enable the Court to be reasonably satisfied that they were in fact misleading in the circumstances. [31] Barker J in the case of Clifford v Vegas Enterprises Pty Ltd (No. 5)8 offers an important reminder of these evidentiary difficulties as follows: “… I should approach with caution accounts of apparently significant events that tend to go against how the evidence of the subsisting ordinary relationship of the parties would tend to suggest they would have acted, especially in the absence of a context or documentary evidence suggesting the contrary. … there can often be serious difficulties of proof for an applicant who relies upon alleged oral representations as the foundation of an action based on misleading and deceptive conduct, in the absence of some reliable contemporaneous record or other satisfactory corroboration. This is because the question of what was said may depend on relatively subtle nuances following from the use (or absence) of particular words, phrases or grammatical constructions. Ordinary human experience is that memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time. This is particularly likely when the conversation becomes the subject of dispute or litigation. It is often the case in such circumstances that perceptions or self interest in conscious attention to what should or could have been produces plausible details of a conversation which are, in truth, nothing more than a subconscious construction from a more vague memory or impression of what was in fact said or may have been generally discussed on prior unrelated occasions. Accordingly, the precise 8 (2010) 272 ALR 198. -- 12 of 78 -- 13 words alleged to have been said can be very important. For a witness to identify the substance of the words spoken can in many cases be dangerous.”9 [32] Further, the observations of McLelland CJ in Eq in Watson v Foxman10 are also of some assistance. His Honour said: “Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as ‘misleading’) within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court ‘must feel an actual persuasion of its occurrence or existence’. Such satisfaction is ‘not … attained or established independently of the nature and consequence of the fact or facts to be proved’ including the ‘seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding’: Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration.” 9 (2010) 272 ALR 198, 220. 10 (1995) 49 NSWLR 315, 318-319. -- 13 of 78 -- 14 [33] In this case the oral evidence of Mr Queitzsch and Mr Lex Iker is central to the consideration of the representations but there is also the need to consider contemporaneous documents which may, or may not, be consistent with the oral testimony. [34] Generally, in respect of the oral evidence of Mr Queitzsch and Mr Lex Iker I make the following findings: (a) Mr Queitzsch’s evidence was rational and logical and was largely consistent with the pleaded case. In answering extensive questions under cross- examination he tried to be helpful and answered questions openly and mostly directly. I find his evidence generally plausible and reliable. (b) Mr Lex Iker’s evidence was brief and narrow in its focus. His evidence in respect of the alleged representations is in a number of respects not plausible or believable. This is particularly so when analysed in conjunction with the formal written agreements. It is particularly troubling that key aspects now raised in the defence were not included in the pleading until a short time before the trial. I find it implausible that they were not included due to mere inadvertence. Even if Mr Lex Iker has given honest evidence in respect of the alleged representations, I am not satisfied that it is reliable. [35] The “scattergun” approach by the defendants in raising issues to avoid any liability to the plaintiff lacks logic and is void of commercial reality. Many allegations have been made and then not pursued. Fundamental aspects were only identified and articulated recently. Mr Lex Iker is, as described by his own Counsel, a “perceptive and decisive man” who built and ran a successful family farming business. Aspects of his evidence are plainly inconsistent with this and add additional weight to my concerns about the reliability of his evidence. Queitzsch experience representation [36] Mr Queitzsch disagreed with Mr Lex Iker that their first meeting was at the Vandyke property sometime in August 2013. Rather, Mr Queitzsch said that there were two meetings previous to that – one at the Brisbane Domestic Airport between Mr Queitzsch, Mr Lex Iker and Tony Richmond; 11 and another in Toowoomba between Mr Queitzsch, Mr Lex Iker, Tony Richmond and Damien Quinlan. 12 [37] According to Mr Queitzsch, at the Brisbane Domestic Airport Mr Queitzsch and Mr Lex Iker discussed SOS, including that they were having trouble selling individual strata-titled units. Mr Queitzsch told them that Maroon Group could be a prospective buyer for SOS. 13 Further, at the Toowoomba meeting, the group worked through the Ikerus and TLD assets and discussed “thoughts about … combining the two of them.” 14 Mr Queitzsch said that, only following those meetings did the Vandyke meeting occur. 15 11 T 1-26 L 23-28. 12 T 1-26 L 30-35. 13 T 1-26 L 41-45. 14 T 1-28 L 4-10. 15 T 2-49 L 39-40. -- 14 of 78 -- 15 [38] Mr Queitzsch’s evidence was contradicted by Mr Lex Iker, who stated that the first time he had ever met Mr Queitzsch was at Vandyke in August 2013.16 [39] The meetings described by Mr Queitzsch are significant to the context of how the parties entered into the CA and, subsequently, the ESA. This is because, especially at the Toowoomba meeting, Mr Queitzsch said the attendees went into detail about the Ikerus and TLD assets (Mr Queitzsch described how the attendees illustrated on a whiteboard describing the assets of the entities) and how they could be combined. If this meeting did occur, then it would contradict the defendants’ position that Mr Queitzsch was engaged to sell SOS, and to do so quickly, rather than develop the property over a period of time. [40] Mr Queitzsch gave evidence about the Vandyke meeting. He was not certain about the timing of the meeting, but agreed that it could have occurred in August 2013 or sometime later. 17 He agreed with Mr Lex Iker that Chris Todd, who introduced Mr Queitzsch to the Ikers, was “in and out” during the meeting. 18 He agreed that the Iker family also attended the meeting intermittently. [41] In cross-examination, Mr Queitzsch agreed that Mr Lex Iker described some “concerns” in relation to the banks (Suncorp and Westpac),19 although he said that he did not understand what the level of concern was at the time.20 He said that Mr Lex Iker told him about the market pressure that the property was under.21 He said that he did not recall that Mr Lex Iker told him that they needed to sell SOS to relieve pressure from the banks,22 or that the reason Mr Queitzsch was there was to sell the property.23 [42] Mr Lex Iker gave evidence that, at the Vandyke meeting, Mr Queitzsch told him that “he had quite a lot of financial experience and with Elders and Primac Elders, and that he was a finance manager for Queensland for Elders. … he held executive positions other than that with Elders. He had spent somewhere around 20 to 25 years with Elders.”24 [43] Mr Queitzsch, in cross-examination, agreed that he told Mr Lex Iker that he was a finance manager with Elders, had worked for Elders for 25 years, and had held “a high level position with Elders” by the time he had left.25 [44] Mr Lex Iker stated that his reaction to Mr Queitzsch telling him this was that he “immediately thought that, well, this is the sort of person we need, because to be honest to the court, I’m a cocky. I’m not a – not a person that likes the office very 16 T 4-39 L 9-10. 17 T 2-49 L 32-40. 18 T 2-57 L 6-11. 19 T 2-58 L 25-28. 20 T 2-59 L 23-26. 21 T 2-63 L 45 to T 2-64 L 2. 22 T 2-60 L 26-29. 23 T 2-60 L 31-32. 24 T 4-40 L 2-5. 25 T 2-64 L 17-23. -- 15 of 78 -- 16 much. I’m not – I am a hands-on person and – and I needed somebody. Our business had got too large for our family.”26 [45] Additionally, Mr Lex Iker stated that Mr Queitzsch said that he was a Justice of the Peace (JP), which, according to Mr Lex Iker, “was something, because I’m of the old belief that if somebody is a JP, they should be honest and be able to handle what we needed to have handled.”27 [46] Mr Lex Iker stated that those were the “main reasons” why he engaged Mr Queitzsch but also added that, “you know, I respected Chris Todd. Toddy, you know, is a very caring person and – and so I just thought, well, everything is right here.”28 [47] Mr Queitzsch and Mr Lex Iker agreed that Mr Queitzsch did not tell Mr Lex Iker about PRD Noosa Pty Ltd or Apex AM Pty Ltd, which were wound up in 2009 and 2012 respectively.29 Mr Lex Iker stated that, had he been told that at the time, he would not have engaged Mr Queitzsch.30 However, Mr Lex Iker also gave evidence that, sometime in early 2014, Mr Queitzsch told him about one of the businesses, and explained that it was “over the GFC”. Mr Lex Iker accepted that explanation from Mr Queitzsch at the time.31 Other evidence [48] The proposal for the CA provided by email on 27 September 2013 (CA Proposal) contains a statement in relation to Mr Queitzsch’s experience. It states as follows: “Peter Queitzsch will direct the project. He has 25 years commercial experience in Agribusiness having held several senior and executive management positions with Elders Limited. His time at Elders included over 5 years as state finance manager. Since leaving Elders he undertook several consulting projects and has been actively involved in a number [of] commercial property based enterprises for the past 12 years. He holds a Graduate Diploma in Business, Masters in Business Administration, Certified Practising Real Estate Agent and is a Justice of the Peace.”32 [49] The Proposal dated 20 November 2013 which preceded the ESA (ESA Proposal) contains a statement of qualifications in substantially the same form.33 [50] This is also largely consistent with the evidence of Mr Lex Iker as to his recollection of what Mr Queitzsch told him about his experience.34 26 T 4-40 L 5-8. 27 T 4-40 L 35-37. 28 T 4-40 L 39-41. 29 T 2-85 L 43-46; T 4-42 L 40-45 and T 4-43 L 1-2. 30 T 4-43 L 7. 31 T 4-57 L 30-31. On the evidence, it is unclear precisely which business Mr Queitzsch told Mr Lex Iker about in early 2014. If the business was affected by the GFC, then it is likely that it was the PRD Noosa Pty Ltd business that was wound up in 2009. 32 Court Book tab 226 page 1211. 33 Court Book tab 227 page 1216. 34 T 4-40 L 1-5; T 4-40 L 32-37. -- 16 of 78 -- 17 Consideration [51] While the statements of experience as set out in [9(a), (b) and (c)] of the 4FA Defence were made, I do not find that the “implied representation” as set out in [9(d)] of the 4FA Defence was made. [52] Given the specific nature of the statements of experience and the evidence at the trial, I consider that the representation as pleaded has not been established. [53] The implied representation purports to imply a specific link to the tasks to be undertaken: that is, the sale of SOS and the “Iker goals”. As will be further discussed below, I find that the overall evidence does not support that position.35 SOS sale representation Oral evidence [54] The oral evidence outlined at paragraphs [36] to [39] above is also relevant background to the consideration of the SOS sale representation. [55] Mr Lex Iker gave evidence of two key statements he said were made at the Vandyke meeting. First, that Mr Queitzsch said that “[Mr Queitzsch] thought that he may have a potential buyer and that he believed that … he could sell [SOS] in three to six months.”36 Second, he said that he told Mr Queitzsch that they wanted to sell SOS soon to relieve their financial pressure.37 This, according to the defendants’ counsel, was the “SOS sale representation”, and the context in which it was made. [56] Mr Queitzsch, in cross-examination, denied making that statement at all,38 and further denied that he said that he would sell SOS in priority to any other matter.39 [57] Clayton Iker gave evidence that he was not involved in much of the conversation at Vandyke as he was running the feedlot during the day.40 Clayton gave some evidence, over objection by Counsel for the plaintiff, that “[Mr Queitzsch] had a plan of three to six months to – to sell [SOS].”41 Clayton gave further evidence that Mr Queitzsch talked “multiple times” about selling SOS “within a timeframe” but those were not conversations he had at Vandyke.42 Clayton’s evidence was quite vague in this regard. [58] Chrystal Iker, the only other witness present at the Vandyke meeting, did not provide any evidence that the representation was made and said that she could not recall the specifics of the meeting.43 35 See discussion in paragraphs following in relation to the SOS sale representation. 36 T 4-40 L 10-13. 37 T 4-40 L 15-22. 38 T 3-17 L 30-33. 39 T 3-17 L 35-36. 40 T 5-7 L 1-4. 41 T 5-7 L 25-29. This had not been foreshadowed in the evidence summary for Clayton Iker. 42 T 5-11 L 7-18. 43 T 2-77 L 18-20. -- 17 of 78 -- 18 [59] Jo-Anne Iker was not called as a witness by the defendants and the plaintiff submits that the Court is entitled to assume that nothing she would say would have assisted the defendants in accordance with Jones v Dunkel.44 Consideration [60] The defendants submit at paragraph 109 of the written submissions as follows: “Furthermore, it is likely that the plaintiff made the SOS sale representation, including the timing of selling SOS given the importance of the timing to Lex as a result of the financial concerns he was then under, and because he was intent on getting out of SOS to free up finance to ease those concerns and relieve the Iker group agribusiness meeting the debts of Ikerus and TLD.” (Emphasis added) [61] This submission on behalf of the defendants seems to focus on the motivations of the defendants, particularly Mr Lex Iker, rather than the actual evidence of whether the representations were made. [62] The SOS sale representation as pleaded in [10] of the 4FA Defence is in some respects quite specific but at the same time lacks precision. [63] For example, at the time that the alleged representation was made, Mr Queitzsch was not engaged by the Iker Family and Entities in relation to other projects. [10(d)(i) and (ii)] of the 4FA Defence state the implied representations to be: (a) he would be able to sell SOS within three to six months; (b) he would in any event sell SOS as a priority to anything else he had to do. [64] Further, the lack of precision in relation to the SOS sale representation is amplified as the various parts of the SOS sale representation are not clearly established by the oral evidence. [65] For example, the plaintiff refers to the evidence of Mr Lex Iker in relation to the timing of any sale of SOS as follows: “He said that he thought that he may have a potential buyer and that he believed that ‒ when I questioned him, he believed he could sell it in three to six months.”45 [66] The plaintiff submits that this is not evidence that Mr Queitzsch said he would sell SOS “as a priority to any other matter”. Nor is it evidence that he said he was certain that he would sell SOS in three to six months. [67] The difficulties in respect of the oral evidence relating to this representation is compounded by the documentary evidence. The alleged SOS sale representation is not supported by any contemporaneous documents and is in fact contrary to the agreements signed by the parties. 44 (1959) 101 CLR 298. 45 T 4-40 L 10-15. -- 18 of 78 -- 19 [68] The CA Proposal makes no reference to the matters pleaded in [7], [8] or [10] of the 4FA Defence. The CA Proposal outlined the development of a strategy in respect of SOS and the adjoining property, TLD. Further, at the first bullet point on page 1209 of the trial bundle, the CA Proposal expressly states: “[The partners in Ikerus and TLD’s] preference is to lower their exposure and passively hold the investment going forward.” [69] This is in stark contrast to a sale of the freehold title in SOS, consistent with the SOS sale representation. [70] Further, the CA that was signed by the parties clearly envisages a period of considering options and “developing or upgrading” SOS and/or “exploitation” of SOS. [71] The CA also raises in the definition of Stage One Services the potential for freehold sale and lease. This again is inconsistent with the alleged SOS sale representation because, if Mr Lex Iker had made it clear that SOS was to be sold and Mr Queitzsch had represented that he would in effect do that, then those parts of the written CA would not be required. [72] The ESA Proposal also makes no reference to selling SOS or doing so within three to six months. In fact, by the time that the ESA was signed on or about 17 December 2013, potentially four months of that three to six month period had already expired. To the extent that the alleged SOS sale representation is relied on as being misleading or deceptive in respect of the entry into the ESA, it would suggest that it was no longer misleading if it had in fact been made because by then at least the earliest of the dates clearly had not been met. [73] The plaintiff also refers to the fact there is not one letter or email from the defendants to the plaintiff complaining that SOS was not sold within the alleged three to six month timeframe. Further, when the defendants caused a letter of termination to be sent to the plaintiff in August 2017 that letter made no reference to any misleading conduct.46 [74] The defendants also place reliance upon an email dated 1 June 2017 from Mr Queitzsch to Mr Todd. This email makes reference to Mr Queitzsch being initially introduced to Mr Lex Iker and Tony Richmond to sell SOS and the adjoining property. While this may have been the thinking behind the initial introduction by Mr Todd, the CA Proposal and the CA do not reflect that as the position upon which Mr Queitzsch was retained.47 [75] Further, the plaintiff refers to the fact that the allegations of misleading conduct did not appear in at least the first two versions of the defences filed by the defendants.48 [76] On 19 October 2017 a proposed defence and counter claim also made no reference to misleading conduct.49 46 Court Book tab 216. 47 Through the agreements with the plaintiff company. 48 Exhibits 21 and 22. 49 Exhibit 23. -- 19 of 78 -- 20 [77] In or about December 2017 an attempt was made to introduce a claim for misleading conduct however that was not allowed. The proposed draft pleading at that stage in relation to misleading conduct makes no reference to a representation that SOS would be sold within three to six months.50 [78] The amended defence filed on 21 December 201751 following the application before Justice Jackson does not contain any reference to misleading conduct in accordance with the orders of his Honour. Rather, the representation that Mr Queitzsch would procure the sale of SOS “in priority to any other matters” allegedly induced the defendants to enter into the agreements and was pleaded as either an express or implied term of the ESA and/or the CA. [79] A further amended defence filed on 2 August 201952 also made no reference to misleading conduct. [80] On 9 October 201953 a further amended defence was filed which contained an allegation in paragraph 5(b) in respect of the defendants being “induced to enter into the contract” alleging a representation from Mr Queitzsch that he would procure a sale on SOS in “priority to any other matters”. [81] The first pleaded misleading case in relation to a representation that SOS would be sold within three to six months only arose in a further amended defence dated 18 June 2020.54 Mr Lex Iker was asked to explain why such an important allegation had not been included in the pleaded case until then and he was unable to provide a plausible explanation.55 [82] In cross-examination, Mr Lex Iker suggested that the failure to plead the allegation was an “oversight on my behalf”.56 There is some suggestion in the defendants’ closing submissions that it may have been an oversight of the lawyers advising the defendants.57 [83] Given that the SOS sale representation is now such a critical component to the defendants’ position in its pleaded case, it is difficult to accept that it had merely been overlooked until June 2020. [84] The central importance of the SOS sale representation to the defendants’ case is seen by the fact that it is relied upon in relation to inducing the defendants’ entering into the CA even though no relief is sought under the CA. Further, it is alleged as part of the context for the misleading or deceptive conduct claim in relation to entry into the ESA. It is also alleged to be a breach of the ESA on the basis that the plaintiff warranted that it could and would sell the SOS within three to six months and in priority to all other matters. Given the now fundamental role that the SOS sale 50 Exhibit 24. 51 Exhibit 25. 52 Exhibit 26. 53 Exhibit 27. 54 Exhibit 28. 55 T 4-67 L 5-10. 56 T 4-66 L 40-45. 57 Defendants’ written closing submissions at [111]. -- 20 of 78 -- 21 representation takes in relation to the defendants’ case, the late inclusion of it in the defence is difficult to understand. [85] In the circumstances in which the SOS sale representation was incorporated into the defendants’ case, the lack of precision in the evidence and the fact that it is inconsistent with contemporaneous documents including the final signed CA, I am not satisfied that the defendants have established the SOS sales representation. Business improvement representation [86] The business improvement representation is pleaded in relation to the lead up to entry into the ESA. It is also relied upon in relation to the breach allegations considered separately below. [87] The circumstances that form the basis of the business improvement representation are set out in [21], [22] and [23] of the 4FA Defence: (a) A discussion between Mr Queitzsch and Mr Lex Iker in or about November 2013 constituted by “the agribusiness request” which encompassed: (i) Reliance on the Queitzsch experience representations; (ii) asking whether Mr Queitzsch could assist the agribusiness by: (A) “reviewing” and “improving” the agribusiness operations; and (B) dealing with financiers “to hold them off enforcement of debt arrangements while the process of selling SOS was engaged through the CA Services”. (b) At that time, both Mr Lex Iker and Mr Queitzsch knew: (i) “the Iker family were under significant financial stress from the financiers who had been pressuring the Iker family to secure relief from the then debt level”; (ii) “Mr Queitzsch by then had gained a level of knowledge of the Iker family business finances and operations”; (iii) “the sale of SOS would provide significant financial relief from the aforesaid stress, and would substantially satisfy the Iker goals”. (c) In response to the agribusiness request, Mr Queitzsch: (i) said words to the effect “that given his experience, the business could only go forward and that he could assist the Iker family in the manner sought by the agribusiness request”; and (ii) “gave the impression” in the circumstances of the “Iker goals”, the Queitzsch experience representation and the agribusiness request, that he would satisfy the agribusiness request and “relieve the financial stress the Iker family had been under by using his skills and experience to reduce their level of debt”. [88] I note that [23] of the 4FA Defence does not include the SOS sale representation. -- 21 of 78 -- 22 [89] At [24] of the 4FA Defence the defendants plead that the business improvement representation “was, and was understood by Mr Lex Iker, to be intended to include ensuring significant relief for the financial stress and pressure the Iker family and entities were then under”. [90] In response the plaintiff says that the agribusiness request as pleaded was not made, to the extent that [22] pleads the state of mind of Mr Queitzsch, he did not have that state of mind, Mr Queitzsch did not say the words alleged in [23] and the implied representations were not made. [91] Further the plaintiff says that the implied representations as pleaded are unintelligible and liable to be struck out. Oral evidence [92] According to Mr Lex Iker, there were further discussions with Mr Queitzsch in November 2013 about Mr Queitzsch taking over running the cattle business in conjunction with the Ikers.58 Mr Queitzsch agreed that, in November 2013, Mr Lex Iker asked him to review the Ikers’ agribusiness operations. Mr Queitzsch said that this was done to look at the agribusiness’s capability to support the program proposed for SOS (i.e. the development of the property).59 [93] Mr Queitzsch denied that, prior to entering into the ESA, he was aware of the significant financial stress the Ikers were under from their financiers. 60 [94] Mr Lex Iker gave evidence that, in the lead-up to signing the ESA, Mr Queitzsch promised that he would “corporatize” the business. 61 Further, Mr Lex Iker gave evidence that Mr Queitzsch said that “[the business] could only move forward under his watch.”62 Mr Lex Iker also said in evidence that he took that to mean that Mr Queitzsch would “get out of the hole that we’re in” and “alleviate our financial problems.”63 [95] Mr Queitzsch, in cross-examination, said that he did not recall saying that the business could “only go forward”.64 Mr Queitzsch said that he held the belief at the time that he could help the Ikers to negotiate a short-term increase with the banks leading up to Christmas.65 58 T 4-40 L 45-47 to T 4-41 L 1-10. 59 T 3-33 L 30-44. 60 T 3-36 L 40-46. 61 T 4-41 L 11-14. 62 T 4-41 L 16-17. It should be noted that this evidence was led out of Mr Lex Iker by counsel for the defendants during examination in chief. The exchange was: “Did he say anything to you about how the business might move?---Move forward. He said that it could only move forward under his watch.” 63 T 4-41 L 19-23. 64 T 3-40 L 6-10. Counsel for the defendants did not put the proposition to Mr Queitzsch that he said the words “move forward”, which was the evidence of Mr Lex Iker. Counsel for the defendants used the phrase “go forward” with Mr Queitzsch. Counsel for the defendants also put multiple propositions to Mr Queitzsch at the same time. The exchange was as follows: “All right. During those discussions with Lex Iker, when he asked you to review the business operations and other matters which you denied, you said to him, or words to the effect, that given your experience, the business could only go forward, and that you could assist the Iker family in what Lex was asking you to do?---They are not words that I recall using.” 65 T 3-40 L 40-46. -- 22 of 78 -- 23 [96] There appears to be some inconsistency about this representation between the defendants’ witnesses. For example, Chrystal Iker said that, at the Vandyke meeting, "[Mr Queitzsch said that he] had – been in positions previously that proved that he seemed to be confident to – to help us in – in moving forward.”66 It is unclear whether Chrystal Iker meant that Mr Queitzsch used those words, or whether that was her impression from what he stated about his experience. [97] Clayton Iker also used the phrase unprompted. When asked about the changes Mr Queitzsch implemented after he came on board, Clayton said, “he tried to corporatize the business, introduce the board meetings, implemented a business strategy that – that was to – to help – help the Ikers go forward.”67 Consideration [98] The plaintiff’s position is that the business improvement representation is not an actionable representation as it has no definite or precise meaning. Alternatively, the plaintiff submits that if it is an actionable representation it was a statement or prediction about future matters. As such, it is only misleading if there was no reasonable basis for making it. In this regard the plaintiff relies on Mr Queitzsch’s qualifications and work history with Elders to provide a reasonable basis for stating that the business would move forward. [99] Further, the plaintiff says that if in fact the business did not move forward then it does not necessarily prove misleading conduct and the defendants bear the onus of proving misleading conduct. [100] Whilst the plaintiff acknowledges that Mr Lex Iker gave evidence that Mr Queitzsch said the business could only move forward under his watch, he did not give other evidence about the importance of such comments to his decision making process. That is, he did not provide evidence that he was misled or fell into error because of what he was told. [101] In their submissions, the defendants refer to Mr Lex Iker’s evidence that “Peter promised he would corporatize the business, and that it would only move forward68 under his watch. In that context, Mr Lex Iker took that to give him hope that Peter was going to alleviate their financial problems69”. [102] The reference to giving him hope as to alleviating their financial problems is different from making out what is pleaded as the business improvement representation. [103] The plaintiff also refers to the ESA as containing no reference to “moving the business forward”. 66 T 2-77 L 22-24. 67 T 5-15 L 42-43. 68 A proposition that Peter Queitzsch accepted that he could have said - T3-40, 12. [I note that this reference provided by the defendants is of the following exchange: “You could’ve said it though, couldn’t you?---I could’ve said anything.”. Both before and after this exchange, Mr Queitzsch said that he did not recall using the words “go forward”.] 69 T 4-41 L 19-23. -- 23 of 78 -- 24 [104] There is a heading “Going Forward” in the ESA Proposal dated 20 November 201370 however the use of this phrase in the document is more akin to “next steps” then a representation as to the improvement in the financial position of the businesses. [105] Given the lack of precision in the evidence as to this alleged representation, in the circumstances I am not satisfied that the defendants have established the business improvement representation was made. Did the plaintiff engage in conduct that was misleading or deceptive? [106] As I have found that each of the three representations as pleaded have not been established, it is not strictly necessary for me to consider this issue further. However, I consider that it is appropriate to address some aspects in case I am wrong about whether the representations were made. SOS sale representation [107] If the SOS sale representation was made then it is likely that it would be misleading or deceptive as SOS was not sold within three to six months, nor was it sold as a matter of priority. [108] However, it is also important to keep in mind the relevant timeframe. At a point in time once the three to six month period had expired then it was obvious that the sale of SOS would not occur within three to six months. In those circumstances at a point in time it arguably became no longer misleading or deceptive because it in effect had not occurred and that was known. Business improvement representation [109] If the business improvement representation was made, it is less clear whether it was conduct that was misleading or deceptive. [110] The evidence in respect of this issue is less than satisfactory. To the extent that it is a future representation then Mr Queitzsch’s considerable experience may have provided a basis for the making of the representation. However, there is a lack of evidence as to whether the business in effect did “move forward” or not. [111] The plaintiff in its written submissions in paragraphs [116] to [119] in the context of the breach claim also addresses issues relevant to the alleged business improvement representation. The plaintiff points to evidence including the following: (a) by April 2017 an “in principle” agreement had been reached with Westpac to write-off the majority of the debt on SOS.71 (b) a contract had been entered into to sell the Outstation for $10.6 million dollars which contract settled after termination of the plaintiff’s agreement.72 [112] The plaintiff relies upon this as evidence of a significant reduction in debt as a consequence of the plaintiff’s efforts. 70 Court Book tab 227 at page 1216. 71 Court Book tab 140; T 4-17 L 25-35. 72 T 4-17 L 40-45. -- 24 of 78 -- 25 [113] Further, a final report prepared by Grant Thornton sets out historical financial performance for the first defendant.73 In this regard, the plaintiff points to the following: (a) For the financial year ending 2012, the second defendant operated at a loss of $2.3 million; (b) For the financial year ending 2013, that loss reduced to approximately $1.56 million; (c) For the financial year ending 2014, a loss of $746,000.00; (d) For the financial year ending 2015, the loss increased to $1.3 million. [114] The plaintiff relies on this to indicate that there was some improvement in profitability at least in 2014 and 2015 financial years when the plaintiff was engaged. [115] The defendants specifically plead that success was not achieved for the matters set out in [34(e)] of the 4FA Defence and the particulars including the debt set out in Table A. No evidence was adduced at trial in relation to these matters, including the debt set out in Table A. [34(e)] of the 4FA Defence (including Table A) is not being pressed by the defendants. [116] As an alternative, the defendants now seek to point to various parts of a report from Grant Thornton74 as evidence that the “organisation” was not a success. However, the plaintiff objects to the defendants’ reliance on these factual allegations as they do not form part of the defendants’ pleaded case. [117] On the evidence it is difficult to conclusively conclude that, if the business improvement representation was made, then it was misleading or deceptive. Particularly this is so given the various business entities operated by the Iker family. That is: the defendants operated a number of different businesses in the agricultural sector and it is impossible on the evidence to conclude whether individually or together they in effect “moved forward” or not. [118] The fact that events occurred which Mr Lex Iker and/or the defendants may not have been happy about in relation to the negotiations with the banks is fundamentally different to establishing that the alleged representation was misleading or deceptive. Queitzsch experience representation [119] The defendants submit that the Queitzsch experience representation in the circumstances outlined in [27] of the 4FA Defence amounts to misleading or deceptive conduct contrary to section 18 of the ACL. [120] If I am wrong and the Queitzsch experience representation as set out in [9] of the 4FA Defence was made, then whether it is misleading or deceptive requires consideration of a number of issues. 73 Court Book tab 215 at page 963. 74 Defendants’ written closing submissions at [83]. -- 25 of 78 -- 26 [121] The pleading in [27] of the 4FA Defence sets out the basis on which the defendants say that the conduct of Mr Queitzsch in making the Queitzsch experience representation was “false, misleading and deceptive or likely to mislead and deceive”. Namely: (a) Mr Queitzsch had an “obligation and duty” at the time of making the alleged representation “which continued during the entire time he was engaged” to inform Mr Lex Iker “whether any part of is working history involved him being in a position of control or having the capacity to control any businesses or companies that had not been successful or had ceased operating whilst he was in such a position”. (b) The “obligation and duty” arose because: (i) “that information would have affected the impression conveyed”; and (ii) “would have been information of importance to a person in the position of Lex Iker who had to determine whether Mr Queitzsch had the skills and experience to be able to successfully assist in the achievement of the Iker goals”; (c) Mr Queitzsch did not tell Mr Lex Iker or Jo-Anne Iker prior to entry into the CA or ESA or the making of the business improvement representation that “his previous working history also involved him being in a position of control or having the capacity to control any businesses or companies that had not been successful or had ceased operating whilst he was in such a position operating businesses or companies that had failed”; (d) Further Mr Queitzsch did not correct the “impression”; and (e) Mr Queitzsch’s working history involved him being “in a position of control or having the capacity to control any businesses or companies that had not been successful or had ceased operating whilst he was in such a position”. [122] In respect of (e) above the defendants rely on the following specific instances: “(i) Mr Queitzsch had been involved in a failed business involving the National Rental Affordability Scheme through the entity Apex AM Pty Ltd, of which he was a director. In 2012, Apex AM Pty Ltd applied to the Supreme Court of Queensland to set aside two (2) statutory demands for payment, and on 18 September 2012 proceedings were commenced in the Supreme Court of Queensland applying to wind up Apex AM Pty Ltd. On or about 5 October 2012 ASIC received notification that liquidators had been appointed by the Court. (ii) Mr Queitzsch had been involved in a failed real estate business through the entity PRD (Noosa) Pty Ltd, of which he was a director and shareholder. In July 2009 ASIC received notification of the appointment of liquidators (in a creditors’ voluntary through winding up) to PRD (Noosa) Pty Ltd. -- 26 of 78 -- 27 (iii) Mr Queitzsch had been a director of the following entities which had been deregistered: 1. Fox Sunshine Pty Ltd (which had been deregistered on 4 June2008 pursuant to an application for voluntary registration); 2. Fox Noosa Pty Ltd (which had been deregistered by ASIC on 16 June 2013); and 3. Atherton Retirement Holdings Pty Ltd (which had been voluntarily deregistered on 26 December 2012).” [123] The defendants submit that there was a failure to disclose the liquidation of Apex AM Pty Ltd and PRD (Noosa) Pty Ltd and that this amounted to misleading conduct. To the extent that other entities are mentioned in [27(e)] of the 4FA Defence these have not been made out on the evidence and are not pursued. [124] The defendants rely on the case of Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd75 in support of the proposition that silence may constitute misleading or deceptive conduct where some qualification to a statement is necessary to avoid a party being misled. [125] The defendants point to Mr Queitzsch’s failure to disclose the history of the liquidated Apex AM Pty Ltd and the PRD (Noosa) Pty Ltd as being misleading or deceptive or likely to mislead or deceive a reasonable person into believing that “[Mr Queitzsch] did not have any adverse work history involving him being in a position of control of a company or business that had been forced to cease operating or had not been successful”. [126] The defendants’ position is that in entering into the CA and the ESA, Mr Lex Iker relied on Mr Queitzsch’s stated experience and it was not accurate as it did not refer to the two prior episodes of liquidated companies. Further, the defendants submit that if the two episodes been disclosed then the defendants would not have entered into the CA or the ESA. The defendants rely on the following evidence in support of this: (a) Mr Lex Iker told Mr Queitzsch that he wanted to sell SOS because the family wanted some finance to help out in the rural business. Further, they were concerned about the finances with the banks.76 (b) Mr Lex Iker discussed the desire to get out of SOS, that a sale completed soon was important as there was a need to relieve the family’s financial pressure. Mr Lex Iker told Mr Queitzsch for the need to sell it soon.77 (c) The reference to “facilitating your specific needs” in the CA Proposal supports the defendants’ case that Mr Lex Iker told Peter Queitzsch that he wanted to 75 (1987) 72 ALR 601, 610. 76 T 4-39 L 40-46. 77 T 4-40 L 15-22. -- 27 of 78 -- 28 sell SOS to gain financial help with the family’s concerns with the banks and to help the rural business side of their operations.78 [127] At the trial Mr Lex Iker was asked whether he would have engaged Mr Queitzsch had he known about the prior company liquidations and he replied “absolutely not”.79 [128] The written submissions on behalf of the defendants expand on the basis for the obligation to disclose this information as follows: (a) Failure to disclose “would have sensibly been a serious concern” especially where his more favourable experience was displayed. (b) “In the circumstances of the financial concerns the desire to alleviate the financial pressures that Lex [Iker] informed Peter [Queitzsch] of, and also the inherent responsibility of taking over the business operations in conjunction with the family, it is difficult to see why that information should not have been required to be disclosed when entering into the ESA …”.80 (c) The role of operational management of the business included making business plans to achieve a successful outcome for the business and a “successful history of such skills would have objectively been important to any reasonable person looking to engage an acting CEO, and someone to undertake the tasks in the CA, and so naturally it also would have been important to know if there were any events displaying an unsuccessful episodes [sic] in the persons [sic] history involving corporate, executive or real estate work.”81 [129] The plaintiff relies on several matters in response: (a) Other than proving that Apex AM Pty Ltd and PRD (Noosa) Pty Ltd had been wound up, there is no evidence before the Court establishing that they were businesses that had “failed”. (b) The evidence from Mr Queitzsch was that Apex AM Pty Ltd was wound up because of an internal dispute between shareholders and directors and not as a consequence of being a “failure”. Further, at the time the company was wound up, it was not trading and had no external creditors. The company was wound up upon the application of two directors who claimed amounts for director’s fees which were in excess of the amount that was held in the bank account.82 (c) In respect of PRD (Noosa) Pty Ltd there is no evidence before the Court that this was a failed business. A company search shows that it was the subject of a creditor’s voluntary winding up on 6 July 2009.83 A voluntary administrator was appointed which then wound up the company at the second meeting of creditors. The company was wound up in 2009 but there is not further evidence before the Court. 78 Defendants’ written closing submissions at [49]. 79 T 4-43 L 7. 80 Defendants’ written closing submissions at [60]. 81 Defendants’ written closing submissions at [60] and [62]. 82 T 4-11 and exhibit 11. 83 Court Book tab 160. -- 28 of 78 -- 29 [130] The plaintiff also refers to evidence from Mr Lex Iker that he became aware in early 2014 that Mr Queitzsch had been involved in a company which had not been successful but “because it was over the GFC, I thought it was quite ok”.84 The plaintiff submits that this is obviously a reference to PRD (Noosa) Pty Ltd given it was wound up in 2009 which aligns with the period of the GFC. In this regard the plaintiff submits that if it was really of concern to Mr Lex Iker he could have taken action in early 2014 but did not do so. [131] At the hearing there was also reference to the fact that Mr Queitzsch had been a director of three companies which had been deregistered. The plaintiff submits that the fact that the companies had been deregistered was not evidence that the companies had “not been successful”. [132] The plaintiff recognises that before silence can constitute misleading conduct there must be circumstances which give rise to the reasonable expectation that if some relevant fact exists it would be disclosed.85 [133] In relation to misleading conduct by silence, the general legal principles have been expressed in a number of different ways, including as follows: (a) If the circumstances of a particular case give rise to a reasonable expectation that, if a fact existed, it would be disclosed, then the failure to disclose that fact may give rise to an inference that the fact does not exist.86 (b) Unless the information given constitutes a full and fair disclosure of all the facts which are material to enable an informed decision, the combination of what is said and what is left unsaid may, depending on the full circumstances, be likely to mislead or deceive.87 (c) Where an applicant claims to have been misled by a failure to make full and true disclosure, the applicant bears the onus of proving how what was not said was likely to mislead or deceive. Errors must be relevant and material.88 (d) The approach for determining whether the conduct created a misleading impression, which it failed to correct “is to determine whether what was actually said or done, in all the relevant circumstances, conveyed something more, such that it led the applicant into error”.89 (e) The question is whether what was actually said, in all the relevant circumstances, would convey something more to a reasonable person in the position of the other party, such that it was likely to lead into error. Merely because information would be useful does not mean Courts will impose an obligation on the defendant to disclose it.90 84 T 4-57 L 30-35. 85 POA Enterprises Pty Ltd & Others v Chemist Warehouse Southport & Others [2012] QSC 316, [20]- [23]. 86 Rafferty v Madgwicks (2012) 203 FCR 1, 68. 87 Fraser v NRMA Holdings Ltd (1995) 55 FCR 452, 467. 88 Ibid. 89 Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 202 FCR 72, 88. 90 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1998) 39 FCR 546; Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Limited (2005) 185 FLR 14. -- 29 of 78 -- 30 [134] Further, in Miller v BMW91 the High Court took two different approaches to determining whether the conduct there was misleading or deceptive. The majority analysed whether the conduct viewed as a whole conveyed a representation which was misleading. The alternative approach was to analyse whether the circumstances gave rise to a “reasonable expectation that if some relevant fact existed, it would be disclosed to the person who claimed to be misled”. In regard to this latter approach, French CJ and Kiefel J (as the Chief Justice then was) observed: “Reasonable expectation analysis is unnecessary in the case of a false representation where the undisclosed fact is the falsity of the representation. A party to pre-contractual negotiations who provides to another party a document containing a false representation which is not disclaimed will, in all probability, have engaged in misleading or deceptive conduct. When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient will be misled, absent such disclosure, into believing that the statement was complete.”92 [135] On the basis of this analysis the reasonable expectation would only arise where there is an objectively reasonable expectation on the part of the other party that the fact should be disclosed because it would be relevant or material in its decision making. There reasonableness is to be assessed objectively and is not the subjective expectation of the other party.93 [136] Where one party specifically makes known a “particular purpose or objective which that party is seeking to achieve, or specific transactional requirements for entering into the transaction” then a reasonable expectation of disclosure may be more likely to arise.94 [137] Further, the existence of something unusual may give rise to a reasonable expectation in the circumstances of a particular case. For example, if something is not able to be ascertained by conducting public searches and the information for example is only in the hands of one party. [138] The case of Dawson v LNG Holdings95 is an example of a reasonable expectation of disclosure arising in circumstances similar in some respects to the current situation. [139] In that case, Mr and Mrs Dawson, the first and second plaintiffs, claimed damages against LNG Holdings, Mr Vaughan and Mrs Nash in respect of their investments in a failed property development. The Dawsons alleged that, through various representations, Mr Vaughan, a director of LNG, and his de facto partner Mrs Nash, engaged in misleading or deceptive conduct that induced them to invest the project. In particular, the Dawsons allege that Mr Vaughan’s failure to disclose his status as an undischarged bankrupt prior to the Dawsons investing in the development was misleading or deceptive conduct. 91 (2010) 241 CLR 357. 92 (2010) 241 CLR 357, 371. 93 (2010) 241 CLR 357, 369. 94 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 583 and 587-588; Paterson, Corones’ Australian Consumer Law (4th edition) at [3.290]. 95 [2008] NSWSC 137. -- 30 of 78 -- 31 [140] His Honour Justice White set out the following in relation to representations by silence: “[86] … Silence is to be assessed as one of the factors in a party’s conduct having regard to what the party did, what it said, and what it did not say or do, in order to determine whether its conduct as a whole was misleading or deceptive (Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 34, 41). If the circumstances are such as to give rise to a reasonable expectation that if some relevant fact exists it will be disclosed, silence may support the inference that that fact does not exist (Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 at 53,195; Demagogue Pty Ltd v Ramensky at 32, 41; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 114; Warner v Elders Rural Finance (1993) 41 FCR 399 at 405).” [141] After concluding that Mr Vaughan did, in fact, know that he was an undischarged bankrupt at the relevant time, his Honour concluded that Mr Vaughan’s failure to disclose his bankruptcy was deliberate. Further, his Honour stated: “[128] Mr Vaughan submitted that his bankruptcy was not material because he was providing no financial support to the venture. However, the relevance of his bankruptcy was not confined to whether he could provide financial support to the venture. Bankruptcy carries a stigma. People invited to invest in a venture are likely to be concerned and suspicious if one of the promoters is an undischarged bankrupt. Bankruptcy may convey to a potential investor that the promoter is not a reliable or trustworthy person. At the very least, his or her financial acumen is called into question. Mr Vaughan’s bankruptcy was a material matter for potential investors to know. The fact that he had been acting as a director of LNG notwithstanding his bankruptcy would also be material, but this was not a separate particular of misleading conduct. I conclude that Mr Vaughan, in trade or commerce, engaged in misleading or deceptive conduct by not disclosing the fact of his bankruptcy. It was a matter which, if it existed, Mr and Mrs Dawson would reasonably expect to be disclosed. I accept Mr and Mrs Dawson’s evidence that had they known Mr Vaughan was an undischarged bankrupt they would not have invested in the project. [129] LNG also engaged in misleading and deceptive conduct by not disclosing Mr Vaughan’s bankruptcy. Mr Vaughan was purporting to act as an officer of LNG at his meetings with Mr and Mrs Dawson. Mr Gorman held him out to Mr and Mrs Dawson as his joint venture partner and co-director. LNG, through Mr Vaughan, engaged in misleading and deceptive conduct by not disclosing his bankruptcy.” -- 31 of 78 -- 32 [142] White J found Mrs Nash had not engaged in misleading and deceptive conduct on this issue as she had not known Mr Vaughan was an undischarged bankrupt at the relevant time. [143] In considering the particular circumstances in which the obligation to disclose arose in that case, it is important to also consider the following circumstance: “122. The lenders to LNG and PED had required tax returns, a curriculum vitae, and a statement of assets and liabilities in support of the funding application. On 5 August 2002, Mr Gorman sent an email to Mr Vaughan saying that he needed that information urgently. Mr Vaughan fobbed off the inquiry, saying he had not lodged tax returns due to divorce difficulties and that his accountant had a dispute with the Australian Taxation Office. Those were not the only difficulties facing Mr Vaughan if he were required to provide the information. I am satisfied that he was conscious in August 2002 of his status as an undischarged bankrupt.” [144] It appears from this paragraph that significant details of the “financial standing” of Mr Vaughan were requested and it is in this particular context that the obligation to disclose arose. [145] This is in contrast to the current situation where the evidence of what was said orally and the “experience” set out in the CA Proposal and the ESA Proposal are of a very general nature. [146] If a full itemised work history and curriculum vitae had been requested or provided identifying particular projects and companies including specific information about the “success” of those businesses or companies, it may be easier to objectively expect that information about unsuccessful companies should be provided. [147] However in this case, it was Mr Queitzsch’s experience with Elders which appears to be a primary focus as shown by the oral evidence. The defendants do not rely on the “experience” outlined in the CA Proposal and the ESA Proposal. In any event, the paragraphs in the CA Proposal and the ESA Proposal are largely consistent with the oral evidence. In addition, they do refer to consulting projects after Mr Queitzsch left Elders and also him having been involved in “a number [of] commercial property based enterprises for the past 12 years”. This was not explored any further in cross- examination and there is nothing in evidence before me as to what this is a reference to. [148] There is no evidence that Mr Queitzsch referred to specific “past successes” that may give rise to a reasonable expectation for disclosure of the failures as well as the successes. [149] I am also conscious of the fact that there was a personal introduction of Mr Queitzsch to Mr Lex Iker by Mr Chris Todd. Mr Lex Iker gave evidence that he trusted Mr Todd. This cuts across the reliance on the Queitzsch experience representation and also may be a relevant consideration to whether the “reasonable expectation” arises. -- 32 of 78 -- 33 [150] It is difficult to see in the particular circumstances of this case, including the nature of the statement of experience and that there was a personal introduction by a trusted third party, that a reasonable expectation arises that all business enterprises engaged in by Mr Queitzsch would be fully and frankly disclosed to Mr Lex Iker. [151] The “obligation and duty” as outlined in [27(a)] of the 4FA Defence puts it as high as an absolute obligation at all times to disclose information of the nature outlined. [27(b)] goes on to say that this information would have been of “importance” to determine whether Mr Queitzsch had the “skills and experience” to be able to successfully assist. However, it does not identify whether the information in this case which was not provided was actually material to those skills and experience. [152] The plaintiff submits that the fact that Mr Queitzsch had been involved in businesses in which there had been a dispute with fellow directors and shareholders does not establish that he had been involved in a business that “had not been successful”. The circumstances of the particular two corporate entities may not be caught by the obligation as articulated in [27] of the 4FA Defence in any event. [153] In the circumstances I am not satisfied that there is a reasonable expectation that the plaintiff would disclose the information as pleaded in [27]. In the circumstances the defendants have not established that the plaintiff engaged in misleading conduct in failing to disclose the matters pleaded in [27(e)] of the 4 FA Defence. Reliance generally [154] The defendants do not satisfactorily engage with the issue of reliance and causation in relation to each of the alleged representations and their claim that they amount to misleading conduct. [155] In [12] of the 4FA Defence the defendants plead reliance on the Queitzsch experience representations96 and the SOS sale representation that Mr Lex Iker as representative for the defendants was induced to enter into the CA. Further then at [25] the defendants allege that in reliance on the Queitzsch experience representations, the SOS sale representation, the business improvement representation and the conduct considered as a whole, they were induced to enter into the ESA. [156] Specifically at [32] of the 4FA Defence the defendants plead that had Mr Lex Iker known of the matters pleaded in [27] to [29] (being the Queitzsch experience representations being misleading or deceptive because of the failure to disclose “companies that had not been successful or had ceased operating”, that the SOS sale representation was false, misleading or deceptive and that the business improvement representation was false, misleading or deceptive) then the Iker Entities would not have entered into the CA or the ESA. There is no relief claimed in relation to the CA so the inclusion of the CA in this reliance paragraph provides nothing more than context. 96 The reference is the Queitzsch “implied representation” which I assume is a reference to the Queitzsch experience representation from the context. -- 33 of 78 -- 34 [157] The plaintiff submits that there is a need to identify contravening conduct and a causal connection between that conduct and the loss and damage allegedly suffered.97 [158] The defendants here do not seek compensation for actual loss or damage but seek to invoke relief pursuant to s 237 and 243 of the ACL so that the plaintiff not be allowed to enforce the ESA. [159] The plaintiff submits that in the absence of proving actual loss, which it says the defendants have failed to do, there is no basis for the Court to exercise its discretion not to enforce the ESA. [160] In relation to the SOS representation the plaintiff said that whatever may have been said in earlier discussions it did not find its way into the two proposals (CA Proposal and the ESA Proposal) or the two formal written agreements that were signed by the parties (CA and ESA). [161] The CA makes no reference to selling SOS but rather refers to “developing the Ikerus Project”. Selling SOS in three to six months is inconsistent with the obligations set out in the CA. [162] The ESA obligations are in relation to Mr Queitzsch acting as Chief Executive Officer of the agricultural business. [163] Further, it needs to be kept in mind that SOS was owned by Ikerus which is not a party to the ESA or to these proceedings. There were unitholders other than the Ikers of SOS and TLD. [164] In relation to the Queitzsch experience representation and the alleged nondisclosure, the plaintiff points to the fact that Mr Lex Iker did subsequently become aware of PRD (Noosa) Pty Ltd being wound up in 2009 and appeared not to be concerned about it. In these circumstances it is difficult, the plaintiff submits, to accept that had he been told about it earlier he would not have entered into the agreement. [165] Further, the plaintiff submits that if Mr Lex Iker had been told about the winding up of Apex AM Pty Ltd earlier and had also been told that it was merely a dispute between directors in respect of a non-trading company that it “cannot be rationally suggested Mr [Lex] Iker would have acted differently”. The plaintiff submits that what Mr Lex Iker would have done with such information is hypothetical and carries little weight.98 [166] Ultimately the plaintiff submits that on examining the conduct as a whole, in particular the written proposals and subsequent agreements, there was no misleading conduct. [167] While the plaintiff accepts that an entire agreement clause does not preclude a claim for misleading conduct, the plaintiff submits that a contractual disclaimer of reliance would ordinarily be considered in relation to the question of causation. 97 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 341. 98 Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408, 451. -- 34 of 78 -- 35 [168] In relation to reliance, where a party makes a positive decision to enter into a transaction based on a misrepresentation said to be material, then the applicant must prove by direct evidence that they relied upon the misrepresentation.99 [169] Courts, however, must treat a self-serving assertion of reliance cautiously and other evidence of reliance will be of considerable assistance. For example, in Hanave Pty Ltd v LFOT Pty Ltd100 Justice Kiefel (as the Chief Justice then was) stated: “Courts ought to be, and no doubt are, cautious in accepting mere assertions of reliance as essentially self-serving, and will usually attempt to assess the prospect by reference to objective criteria. This will be so particularly where the misrepresentation is not necessarily likely to be recalled as having had a strong impact.”101 [170] Further, it has been recognised in authorities that an inference of reliance is rebuttable and that any inferred reliance must be weighed in the light of all the evidence.102 [171] In De Bortoli Wines Pty Ltd v HIH Insurance Ltd, the absence of contemporaneous notes or marking on the documents to evidence the assertion that he had paid particular attention to statements highlighted by advisors nine years later could not be regarded as reliable evidence. [172] In the current case, there are considerations in relation to when the representations were included in the defendants’ pleadings. If these had in fact been such material matters to Mr Lex Iker it is difficult to apprehend how they were not conveyed to his lawyers at an earlier date if not at the outset. Given the number of iterations of the amended defence over the course of a number of years the explanation that it had been an inadvertent omission does not carry much weight. [173] All of these matters are further considerations that support the conclusion that the plaintiff did not engage in misleading or deceptive conduct. Is any claim under the ACL for misleading or deceptive conduct statute barred? [174] The issue in relation to the time limitation was first raised by the plaintiff when the defendants were seeking leave to amend in June and July 2020. The issue was not finally determined as given the “multi layered” nature of the proposed pleading it was impossible to determine when the limitation period would run without the benefit of the evidence that would be available at the trial. [175] As I have found that the representations were not made, it is not strictly necessary to consider this issue. However, for completeness I have addressed the submissions in respect of the limitation issue. 99 Wardley Australia Limited v Western Australia (1992) 175 CLR 514; I&L Securities v HWT Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109, 127. 100 [1999] FCA 357; (1999) 43 IPR 545; [1999] ATPR 41-687. 101 [1999] FCA 357, [50]; [1999] ATPR 41-687, 42,793(51). See also Razdan v Westpac Banking Corporation [2014] NSWCA 126, [15] (McColl JA); Juniper Property Holdings No 15 Pty Ltd v Caltabiano [2016] QSC 5, [75]-[76] (Jackson J). 102 De Bortoli Wines Pty Ltd v HIH Insurance Ltd (in liq) (2011) 200 FCR 253, 276 (Stone J). -- 35 of 78 -- 36 [176] The plaintiff maintains that the claim for misleading or deceptive conduct is statute barred. The plaintiff submits that the defendants’ case is that the misleading conduct induced the defendants to enter into the CA and the ESA. [177] At the heart of the representations alleged is that Mr Queitzsch did not have the relevant experience, had deliberately withheld information regarding his past failed business enterprises and was not able to either sell SOS within three to six months or otherwise assist with the defendants’ agribusiness as a whole. On the basis of the defendants’ case, the plaintiff submits that the alleged loss was suffered at the time the defendants entered into the ESA on or about 17 December 2013.103 [178] The defendants maintain that the claim for misleading or deceptive conduct is not statute barred. The argument is that the only relief sought by the defendants is relief from the enforcement of the ESA (or any new agreement) for payment of the automatic bonus pursuant to s 237(1)(a)(i) by s 243(c) of the ACL. [179] Both parties rely on the decision in Wardley Australia Limited v Western Australia104 in support of their respective positions. [180] The defendants rely on Wardley for the proposition that the limitation period commences when the disadvantageous character or effect of the agreement can be ascertained. This is not necessarily the entry into an agreement. [181] In their written submissions the defendants identify that it was not until at least 1 November 2015 upon the expiry of the ESA term that the effect of entering into the ESA was ascertainable and that is the relevant time when an inquiry could have been made into whether Mr Queitzsch had performed the required services. [182] Further, the defendants argue it was not until the plaintiff commenced these proceedings that the true disadvantageous character or effect of the ESA became clear: that is, the disadvantage was the potential enforcement of a claim for the bonuses. [183] Under s 237 of the ACL the relevant provision is sub-section (1), namely: “(1) A court may: (a) On application of a person (the injured person) who has suffered or is likely to suffer, loss or damage because of the conduct of another person that: (i) was engaged in the contravention of a provision of Chapter 2, 3 or 4; … make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.” [184] Section 237(3) provides that an application under s 237(1) may be made at any time within six years after the day on which: 103 Citing Wardley Australia Limited v Western Australia (1992) 175 CLR 514. 104 (1992) 175 CLR 514. -- 36 of 78 -- 37 “(a) If subsection (1)(a)(i) applies - the cause of action that relates to the conduct referred to in that subsection accrued.” [185] The cause of action would accrue on the date on which the applicant has suffered or is likely to suffer loss or damage. [186] The wording in s 237 is wider than s 236. Section 236 refers to a person who “suffers loss or damage because of the conduct of another person”. The wording in s 237 is “who had suffered, or is likely to suffer loss or damage because of the conduct of another person”. The inclusion of the words “likely to suffer” may mean that the cause of action arises at an earlier point in time under s 237 depending on the particular circumstances of the case. [187] In the current case it is difficult to see how the defendants identify that in relation to the ESA the only “disadvantage” is payment of the automatic bonus. This is particularly so when over $1.3 million dollars has been paid to Mr Queitzsch for provision of services under the ESA. While there is no claim for these monies to be repaid, if the defendants’ case is correct then all the fees paid under the ESA would be a loss suffered – and would have been a loss likely to be suffered at a far earlier date than the end of the ESA term or the commencement of the proceedings. This loss would be “likely” from the time that the contract was entered into if it was established that the representations amounted to misleading or deceptive conduct. [188] The ESA was entered into on or about 17 December 2013 and on the above analysis the six year period would expire on 17 December 2019. [189] It is possible that some consequences of entering into the ESA that may be loss caught by s 237 may not have occurred until a later date. It does not mean that the limitation period does not commence to run. In this regard where there may be several distinct losses it is necessary to identify with precision when they would arise. That has not occurred here. [190] In any event, even on the defendants’ case the obligation to pay the bonus pursuant to the ESA is stated to be payable at the end of the first year and the second year. It also provides that in the event of termination of the ESA other than under clause 14.4 then the bonus would be paid on a pro rata basis divided by the number of weeks in a relevant year in which the services were provided. [191] So for example, the ESA commenced in December 2013 and by the end of February 2014 it would have been apparent that the SOS property had not been sold within the six month period. At that time a liability in respect of the bonus had already arisen under the ESA, and at least to the extent of the pro rata amount a loss was “likely”. [192] While the plaintiff is taking steps to enforce the payment of the bonuses in these proceedings it is not a contingent liability. The obligation would arise in accordance with the terms of the ESA. Accordingly, the defendants’ analysis in relation to the time limitation cannot be maintained. [193] In these circumstances I consider, while it is not strictly necessary for me to decide the issue, the claim in relation to misleading or deceptive conduct would be outside the six year statutory time period and would be time barred. -- 37 of 78 -- 38 ESA Is the ESA void for uncertainty? [194] The first part of the plaintiff’s claim is based on the terms of the ESA. One of the cascading arguments raised by the defendants is that the ESA is void for uncertainty and unenforceable because the “Services” as set out in Schedule 1 and the provision regarding any “automatic bonus” are so vague, obscure and so uncertain as to be incapable of any definite or precise meaning. [195] It is therefore necessary to consider the terms of the ESA in some detail. [196] Further, given the way the CA is referred to in the ESA and the nature of the defendants’ case, it is also necessary to consider the terms of the CA. Although it is noted that no relief is claimed in respect of the CA. Terms of the ESA [197] The ESA is dated 17 December 2013 but the commencement date is stated in the Reference Schedule to be 1 November 2013. [198] The parties to the ESA are: (a) Lex Iker; (b) Jo-Anne Iker; (c) Iker Pty Ltd as trustee for the Iker Family Trust (together trading as the Iker Partnership); (d) Euneeke Cattle Company Pty Ltd; and (e) Beachmount Pty Ltd trading as Australian Agribusiness Brokers. [199] The ESA sets out the following background: “A. Iker105 carries on the Iker Business. B. The Consultant106 carries on the Consulting Business. C. Iker wishes to engage the Consultant as an independent Consultant to complete the Services. The Consultant wishes to be engaged by Iker as an independent Consultant. D. Iker agrees to engage the Consultant on the terms and conditions set out in this agreement.” [200] Pursuant to the Reference Schedule, the CA is attached as Annexure A to the ESA. [201] Relevantly, the Reference Schedule states as follows: 105 Defined as Mr Lex Iker, Jo-Anne Iker, Iker Pty Ltd as trustee for the Iker Family Trust (together trading as the Iker Partnership) and Euneeke Cattle Company Pty Ltd. 106 Defined as Beachmount Pty Ltd trading as Australian Agribusiness Brokers. -- 38 of 78 -- 39 (a) “Iker Business” is the “Diversified agribusiness, property and mining-related businesses carried on by Iker and Associated Entities”. (b) “Services” is the “Supply of a consultant to perform the function and role of Chief Executive Officer for the Iker Business and related business advisory services, more particularly described in Schedule 1.” [202] In respect of the “Contract Fee” the Reference Schedule states as follows: “Contract Fee In the 12 months following Commencement Date ‒ the monthly sum of $15,000 for the first 6 months and $20,000 for the remainder together with an automatic bonus of $450,000 at the end of the 12 months (being a total for the period of $660,000); and In the following 12 months ‒ the monthly sum of $20,000 together with a minimum automatic bonus of $450,000 at the end of that 12 month period (being a total for the period of $690,000). In the event of termination of this agreement (other than by Iker under clause 14.4, in which case no further bonus will be payable) the annual bonus will be paid by Iker on a pro rata basis determined by dividing by 26 the number of weeks in the relevant year in which the Services were provided. Relationship to Consultancy Agreement The Consultant acknowledges that the automatic bonuses above are not additional to its rights to be allotted Units under the Consultancy Agreement dated 1 November 2013. Instead: a) the automatic bonus after the first 12 months will be deducted from the ‘Project Value’ of one of the Ikerus Property or TLD Property in clause 5.2(a) and clause 5.4(a) of the Consultancy Agreement; and b) the automatic bonus after the second 12 months will be deducted from the ‘Project Value’ of one of the TLD Property or Ikerus Property in clause 5.4(a) and clause 5.2(a) of the Consultancy Agreement, prior to calculating the number of Units to which the Consultant is entitled under each. The Consultant acknowledges that this assurance is given for the benefit of Ikerus, Ikerus Trust, TLD and TLD Trust as those parties are identified in the Consultancy Agreement and may be enforced by them, or on their behalf, as if it was given directly to each of them. On a non-binding basis the parties also acknowledge that they intend to review the Consultancy Agreement during -- 39 of 78 -- 40 2014 in order to better align the bonus and Unit entitlements once details of the Iker Business are better understood.” [203] The Reference Schedule also contains special conditions including: (a) the Consultant providing the services five days per week every second week of the term of the agreement; (b) payment of reasonable accommodation and meals when the Consultant is in Emerald and to reimburse the Consultant for expenses such as car parking and flight costs; (c) reimbursement in relation to telephone and computer; and (d) an arrangement in respect of “downtime”. [204] The special conditions also include the following: “Iker business planning ‒ non-binding provision On a non-binding basis, the Consultant will also work towards completion of the scope of actions described in Schedule B but Iker agrees that the extent to which they are relevant or may need to be completed may change during the Term. Regardless of any other provision of this agreement, Iker therefore agrees that the extent of completion (or otherwise) of those actions described in Schedule B shall not affect any of its payment obligations to the Consultant under this agreement.” [205] The definition section contains a definition of “Contract Fee” as follows: “(a) means that the remuneration, allowances, costs and benefits payable by the Iker [sic] to the Consultant for performance of the Services, in accordance with the specific arrangements (if any), set out in the Reference Schedule; and (b) includes any part of the Contract Fee.” [206] Clause 2 of the ESA states: “Engagement of Consultant 2.1 Performance of Services for the Term Subject to the Special Conditions, the Consultant is engaged by Iker to perform the Services, and the Consultant accepts the engagement, upon the terms set out in this agreement, with effect from the Commencement Date. 2.2 Performance of Services after expiry of fixed Term If the Consultant is engaged by Iker to perform the Services after expiry of the Term then, unless otherwise agreed, the terms and conditions of this agreement will continue to apply to the engagement, with such variations as the circumstances of the continuing engagement require.” -- 40 of 78 -- 41 [207] Clause 5.1 of the ESA states: “5.1 Consultant’s ultimate responsibility Subject to the direction of the Board, the Consultant has ultimate responsibility for management and direction in relation to performing the Services, except as provided for in this agreement.” [208] Clause 7 in relation to the Contact Fee states as follows: “7.1 Generally Iker will pay the Consultant the Contract Fee for performing the Services. 7.2 Timing of invoices The Consultant will deliver Tax Invoices to Iker in arrears at the end of each Invoice Period. 7.3 Invoicing and time for payment Iker will pay the Consultant the amount of each Tax Invoice on or before the 3rd day of each month following the Invoice Period.” [209] Clause 10 in relation to risk states as follows: “10.1 Iker responsibility Iker acknowledge and accept all risks of, and will waive any claim against the Consultant associated with, the performance (actual or purported) by the Consultant of the Services except where the risk or claim, demand or liability is due to the Consultant’s dishonesty. 10.2 Indemnity Iker indemnifies, and keeps indemnified, the Consultant and the Consultant’s Representative from any claims, demands or liabilities (including legal costs on an indemnity basis) they (or either of them) may suffer or incur during the performance (actual or purported) of the Services other than any claim, demand or liability due to the Consultant’s dishonesty.” [210] Pursuant to clause 14.1, the ESA automatically terminates at close of business on the last day of the Term. “Term” is defined in the Reference Schedule as being two years from the commencement date; being two years from 1 November 2013, therefore 1 November 2015. [211] Further, pursuant to clause 14.2, either party may for any reason terminate the agreement upon notice to the other expiring at the end of the Term or expiring at the end of a period of three months from the date of the notice, whichever is the shorter period. Under clause 14.3 compensation for short notices will be calculated as an -- 41 of 78 -- 42 amount equivalent to the Contract Fee that could reasonably have been expected to be earned for the remainder of the Term. [212] Clause 14 also contains provisions in relation to termination by Iker or the Consultant in circumstances of default. [213] Clause 14.7 provides as follows: “14.7 Termination does not affect certain rights or obligations Termination of this agreement will not affect rights of any party accrued prior to termination or the rights or obligations of a party which, whether expressly or by implication, are intended to survive termination of the agreement.” [214] Pursuant to clause 14.8, the payment of money where payment becomes due prior to termination continues to operate following termination of the agreement. [215] Clause 15 deals with variations and states: “15.1 Requirement for written agreement An amendment or variation to this agreement is not effective unless it is in writing and signed by the parties.” [216] Clause 16 sets out a dispute resolution procedure requiring Iker and the Consultant to meet within 10 business days and to use their best endeavours to resolve the dispute. [217] Clause 19 deals with miscellaneous provisions and relevantly states as follows: “… 19.4 No assignment A party must not assign, transfer or novate all or any part of its rights or obligations under or relating to this agreement or grant, declare, create or dispose of any right or interest in it, without the prior written consent of each other party. … 19.10 Waiver (a) A party’s waiver of a right under to relating to this agreement, whether prospectively or retrospectively, is not effective unless it is in writing and signed by that party. (b) No other act, omission or delay by a party will constitute a waiver of a right. … 19.12 Whole agreement This agreement: -- 42 of 78 -- 43 (a) is the entire agreement and understanding between the parties relating to the subject matter of this agreement; and (b) supersedes any prior agreement, representation (written or oral) or understanding on anything connected with that subject matter.” [218] Clause 20 contains an acknowledgement by the Iker parties as follows: “20.1 Each of the Iker parties acknowledges: (a) this agreement has been prepared by HopgoodGanim for and on behalf of the Consultant; (b) HopgoodGanim does not act for them, and cannot advise them, with respect to this agreement; and (c) they have been advised, and have had the opportunity, to take independent legal and other advice with respect to this agreement.” [219] Schedule 1 to the ESA sets out the services as referred to in the definition of services in the Reference Schedule. It states as follows: “1. Services Position: Chief Executive Officer Location: Emerald (Fly-in fly-out) Reports To: Board Position Objective: The Chief Executive Officer serves as executive director of the Iker [sic] and, in partnership with the Board, is responsible for the success of the organisation. Together, they promote a culture that reflects the values of the Iker [sic], encourages high performance and awards productivity.” [220] Under the heading “Accountabilities” Schedule 1 then sets out a number of bullet points in respect of planning, management, financial management, HR management, company relationships and programmatic effectiveness. These statements are of a general nature and include matters such as: (a) “Creates annual operating plans in support of the strategic direction agreed with the Board”; (b) “Collaborates with the Board to define and articulate the business vision and develop strategies for achieving that vision”; (c) “Develops and monitors strategies for ensuring the long term financial viability of the business”; (d) “Develops and mentors future leadership within the business”; -- 43 of 78 -- 44 (e) “Oversees operation of the business and manages its compliance with legal and regulatory requirements”; (f) “Ensures the Board is kept up to date with all relevant information via a monthly report”; (g) “Acts as primary spokesperson for the Iker Group”; (h) “Acts as a liaison between the business, its financial institutions and others, building and maintaining relationships”; (i) “Oversees delivery and quality of services”; (j) “Remains abreast of current trends relating to the business’s products and services and anticipates future trends likely to impact upon the success of the business”. [221] Under the heading “Key Result Areas” Schedule 1 also states: “➢ Development of budget and strategic plan for each Iker business unit and execution of those plans as directed by the Board. ➢ Provide a professional, friendly first point of contact for customers, clients or visitors. ➢ Preparation of monthly Board package (containing a review of each business unit’s achievements - both practical and financial - measured against business plans and budgets approved by the Board from time-to-time). ➢ Professional support and assistance to the Board in assisting it to consider restructuring options for Iker and their associated businesses.” [222] Schedule 2 is headed “non-binding expected scope of activities (listed as at Commencement Date)”. This document appears to be what is referred to as Schedule B in the Reference Schedule under the heading “Iker business planning - non-binding provision”. This document also appears to be the spreadsheet that was provided as part of the earlier proposal (although the timeline set out in the copy of the document included as part of the Proposal appears to have been cut off in the document that is included in the exhibited copy of the ESA). [223] In Schedule 2, the section headed “Iker Group Consultancy – scope of work” sets out various tasks and functions against a timeline from November 2013 through to December 2015. Relevant terms of the CA [224] The parties agree that the CA was entered into on 1 November 2013 and that the project as defined in the CA was not completed. [225] The parties to the CA are as follows: (a) Ikerus Pty Ltd as trustee for the Ikerus Unit Trust (Ikerus); -- 44 of 78 -- 45 (b) TLD Qld Pty Ltd as trustee for TLD Qld Unit Trust (TLD); (c) Beachmount Pty Ltd trading as Australian Agribusiness Brokers (Consultant); (d) Edward Alexander Iker and Jo-Anne Iker as trustees for the Iker Family Trust and Fortgrove Industries Pty Ltd as trustee for the Fortgrove Unit Trust (Ikerus Unitholders); (e) ZWP Nominees Pty Ltd as trustee for the Iker Investment Trust and Fortgrove Industries Pty Ltd as trustee for the Fortgrove Unit Trust (TLD Unitholders). [226] The background to the CA states as follows: “A. Ikerus owns and wishes to exploit the Ikerus Property for the benefit, amongst others, of the Ikerus Unitholders. B. TLD owns and wishes to exploit the TLD Property for the benefit of, amongst others, the TLD Unitholders. C. Ikerus and the Ikerus Unitholders wish to undertake the Ikerus Project. D. TLD and the TLD Unitholders wish to undertake the TLD Project. E. Ikerus and TLD wish to consider the option of, and if thought suitable to undertake, collaborative exploitation of the Ikerus Property and the TLD Property. F. The Principals wish to engage the Consultant, and the Consultant wishes to be engaged by the Principals, to provide the Services to assist them with Project. G. The Principals engage the Consultant on the terms and conditions set out in this agreement. H. The Ikerus Unitholders hold approximately 76% of the issued Units in the Ikerus Trust. They and the Consultant have agreed that the Consultant will accept Units in the Ikerus Trust as part of the consideration for performing the Services. The Ikerus Unitholders therefore enter into this agreement to give effect to arrangements relevant to Units that will be issued to the Consultant in the TLD Trust. I. The TLD Unitholders presently hold 50% of the issued Units in the TLD Trust. They and the Consultant have agreed that the Consultant will accept Units in the TLD Trust as part of the consideration for performing the Services. The TLD Unitholders therefore enter into this agreement to give effect to arrangements relevant to Units that will be issued to the Consultant in the TLD Trust.” [227] The Reference Schedule in the CA sets out definitions of a number of key terms including: -- 45 of 78 -- 46 (a) “Exploitation” ‒ “any dealing with a legal and/or beneficial interest which produces a commercial benefit”; (b) “Ikerus Project” ‒ “(a) developing or upgrading the Ikerus Property; and/or (b) Exploitation by Ikerus of the Ikerus Property; and/or (c) Exploitation by the Ikerus Unitholders of their interest in the Ikerus Trust”. (c) “Ikerus Project Completion Date” ‒ “the first to occur of 31 December 2014 or, if any such works are undertaken, Practical Completion of the works in part (a) of the definition of the Ikerus Project”. (d) “Ikerus Property” ‒ “the land more particularly described as Lots 1 to 111 on Survey Plan 252452, County of Denison, Parish of Selma on which the Stay on Sullivan Motel is situated, together with all fixtures and improvements on the land and the business operated from that land”. (e) “Services” ‒ “the Stage One Services, the Ikerus Stage Two Services and/or the TLD Stage Two Services as to the context requires”. [228] Similar definitions of the TLD Project, the TLD Project Completion Date and the TLD Property are also contained therein with the appropriate modifications to describe the TLD land. [229] The definition section of the CA includes a specific definition in relation to “Stage One Services” as follows: “Stage One Services means any one or more of the following: (a) review the development potential of each Property; (b) with Professional Adviser support, development of a schematic for the TLD Property; (c) commission valuations of each Property on both freehold sale and lease bases; (d) ascertain market interest in each Property on both freehold sale and lease bases and summarise possible strategies under which each Principal might sell, lease or otherwise commercialise its Property, either together or independently; (e) with Professional Adviser support, development of budgets, projections and a sensitivity analysis for the Project; and (f) develop a GANTT chart to show timelines for delivery of the Project; (g) co-ordination, on behalf of a Principal, of any Professional Advisers required by the Principal to assist it to evaluate the Project; (h) miscellaneous actions reasonably required in order to carry out the services above or as further agreed between the Consultant and the Principals; and -- 46 of 78 -- 47 (i) after carrying out such of the above services as are reasonably required in order to do so, preparation and presentation to the Principals of the strategic plan for the Project (Strategic Plan) for the Project.” [230] There are then separate definitions in relation to the Ikerus Stage Two Services and the TLD Stage Two Services. [231] Relevantly, the “Ikerus Stage Two Services” is defined as follows: “Ikerus Stage Two Services means any one or more of the following services with respect to the Ikerus Project: (a) identify prospective purchaser/s of the Raintree Units; (b) with the Professional Adviser support, and subject at all times to legal requirements, assist Ikerus to identify prospective sources of debt and equity funding to undertake the Ikerus Project, including gathering of data and assisting to prepare presentations for that purpose; (c) with Professional Adviser support, and subject at all times to legal requirements, assist Ikerus to ensure its builders complete the Ikerus Project; (d) with Professional Adviser support, and subject at all times to legal requirements, assist Ikerus and/or the Ikerus Unitholders to complete the Ikerus Project and to achieve a suitable commercial return; and (e) miscellaneous actions reasonably required to carry out the services above including as otherwise agreed the Consultant, Ikerus and Ikerus Unitholders.” [232] Pursuant to clause 2.1 of the CA, the consultant was engaged jointly by Ikerus and TLD in relation to the Stage One Services and by Ikerus only in relation to the Ikerus Stage Two Services and TLD in relation to the TLD Stage Two Services. [233] Clauses 5.2 and 5.4 set out a mechanism for the issuing of units to the Consultant in respect of the Ikerus Stage Two Services and the TLD Stage Two Services respectively. Clause 5.2, in relation to Ikerus Stage Two Services, states as follows: “As payment for the Ikerus Stage Two Services, Ikerus must: (a) subject to clause 5.2(b), within 60 days of the Ikerus Project Completion Date, issue to the Consultant or its Nominee Units in the Ikerus Trust equal in value to 2.5% of the Project Value of the Ikerus Property as at the Ikerus Project Completion Date; and (b) if it achieves a Trigger Event prior to 31 December 2014, within 60 days of that Trigger Event (and if more than one then within 60 days of each Trigger Event) and in each such case prior to any distribution being made by Ikerus of the proceeds of the -- 47 of 78 -- 48 relevant Trigger Event to the Unitholders, issue to the Consultant or its Nominee Units in the Ikerus Trust equal in value to 5% of the net present value of the Trigger Event…” [234] This section then provides a number of conditions to clause 5.2(b). [235] The clause 5.4 definition of the TLD Stage Two Services is along similar lines with a Trigger Event Date being 31 December 2015. [236] Clause 18 includes: “18.10 Variation An amendment or variation to this agreement is not effective unless it is in writing and signed by the parties. … 18.13 Whole agreement This agreement: (a) is the entire agreement and understanding between the parties relating to the subject matter of this agreement; and (b) supersedes any prior agreement, representation (written or oral) or understanding on anything connected with that subject matter.” [237] Clause 19 contains an acknowledgement as follows: “19.1 Each of Ikerus, TLD, the Ikerus Unitholders and the TLD Unitholders acknowledges: (a) this agreement has been prepared by HopgoodGanim for and on behalf of the Consultant; (b) HopgoodGanim does not act for them, and cannot advise them, with respect to this agreement; and (c) they have been advised, and have had the opportunity, to take independent legal and other advice with respect to this agreement.” Consideration [238] A fundamental part of the defendants’ argument is that the relevant services which the plaintiff was to perform are not sufficiently defined. [239] This is notwithstanding that Mr Queitzsch performed as Chief Executive Officer for nearly two years and was paid money including out-of-pocket expenses during that period. Further, there is no documentary evidence of a contemporaneous complaint about Mr Queitzsch’s performance as Chief Executive Officer. -- 48 of 78 -- 49 [240] The plaintiff submits that the contract retaining the plaintiff to provide Mr Queitzsch as Chief Executive Officer is unremarkable and Schedule 1 provides for the services to be carried out through the individual Mr Queitzsch, who would act as Chief Executive Officer reporting to the Board as set out in Schedule 1. [241] The defendants point to a number of different factors in support of its argument including: (a) the “Services” in the ESA are not accompanied by key performance indicators and they refer to the fact that key performance indicators were included in the prior ESA Proposal. They argue that without key performance indicators it is impossible to objectively determine what is meant by the general statements in Schedule 1 including being responsible for the success of the organisation, developing and monitoring strategies for ensuring the long term financial liability of the business, managing compliance with legal and regulatory requirements and prudently managing the resources for the business within budget guidelines according to current laws and regulations. (b) there are no guidelines in the ESA to assist to determine what the parties had in mind when determining what “Services” had to be performed to be paid the contract fee. (c) the CA has a role to play in respect of the performance of the ESA. [242] The plaintiff relies on the contractual terms which are contained in the body of the ESA and submits that it is clear as a matter of construction that the goals and requirements in Schedule 1 are not intended to take the form of contractual preconditions to payment. [243] Schedule 2 (also referred to as Schedule B) may also support the plaintiff’s contention107 that the goals and requirements set out in Schedule 1 define the scope of the “function and role” of Chief Executive Officer as opposed to outlining the tasks or scope of work to be undertaken. Schedule 2 sets out a scope of work but by the express terms of the special conditions contained in the Reference Schedule, these are non-binding, may change during the term and the extent of completion of these tasks “shall not affect any of its payment obligations to the Consultant under the agreement”. [244] The plaintiff in its submissions refers to a number of legal principles including: (a) Courts should be astute to adopt a construction that will preserve the validity of a contract.108 (b) It is only if the Court is not able to put any definite meaning on a contract that it can be said to be uncertain.109 (c) Courts also should be astute to uphold commercial bargains.110 107 Though not raised in the plaintiff’s submissions. 108 Meehan v Jones & Others (1982) 149 CLR 571, 589 (Mason J). 109 Meehan v Jones & Others (1982) 149 CLR 571, 578 (Gibbs CJ). 110 Bellmere Park Pty Ltd as trustee for the Bellmere Park Development Trust v Benson [2007] QCA 102, [12] (Muir J). -- 49 of 78 -- 50 (d) If the Court comes to the conclusion that parties intended to make a contract it will if possible give effect to their intention no matter what difficulties of construction arise.111 [245] Given these legal principles, and the fact that Mr Queitzsch in fact performed his obligations as Chief Executive Officer for nearly two years and was paid money including out-of-pocket expenses by the defendants for that period, it is now difficult to see that the ESA could be found to be void for uncertainty. [246] One of the key contractual requirements of the ESA was that the plaintiff, the company, provide an individual who would fulfil the function and role of Chief Executive Officer. The obligations include that the key person would be made available during the term for the purpose of performance of the services. [247] The very nature of the services under the agreement is provision of a person who performs the function and role of executive management of the company or in this case, the Iker Group of businesses. The function and role is naturally one that changes over time and is subject to the operational requirements on a day-to-day basis. It would be impossible to outline in a contract the daily tasks that would need to be undertaken other than on the general nature such as those included in the function and role statement and also in Schedule 2 (Schedule B). [248] Operation management by its very nature includes circumstances that can change and evolve and it may be necessary for a change of focus which would necessarily mean a change in tasks. In these circumstances, I do not consider that the general statements of the goals and requirements as set out in Schedule 1 were intended to take the form of contractual preconditions to payment. Schedule 1 outlines the function or role that is to be performed by the individual who is to act in the position of Chief Executive Officer. [249] Accordingly, the defendants’ argument that the ESA is void for uncertainty is not made out. Do the pleaded warranties (defined as “specific services”) form part of the ESA? [250] In [33] of the 4FA Defence the defendants in effect seek to further convert the SOS sale representation and the business improvement representation into warranties which then become “specific services” which form part of the tasks to be completed in providing the services under the ESA. [251] Paragraph 33 identifies the warranties as follows: “(a) the plaintiff warranted to the defendants that it could and would sell the SOS within 3 to 6 months and in priority to all other matters; (b) the plaintiff warranted to the defendants to improve the agribusiness of including by achieving significant financial 111 York Airconditioning and Refrigeration (Australasia) Pty Ltd v The Commonwealth (1949) 80 CLR 11, 26. Cited with approval in Bellmere Park Pty Ltd as trustee for the Bellmere Park Development Trust v Benson (supra) at [10]. -- 50 of 78 -- 51 relief from the stress and pressure the defendants were then under.” [252] The defendants rely on the representations having been made during negotiations for entry into the CA and the ESA. The defendants point to these discussions as being promises to do those things as part of the services to be provided under the ESA. [253] This claim requires the services in Schedule 1 of the ESA to be construed as also requiring completion of the CA. Further, the defendants submit that if there is “any meaning” to be given to the services in Schedule 1 of the ESA then it is by these promises or warranties.112 [254] The plaintiff identifies a number of “obvious significant difficulties” with the pleading of this aspect of the defendants’ case. [255] The first of these is that it depends upon the SOS sale representation and the business improvement representation having been made. The plaintiff contends they were not. As outlined above, I have found these representations were not made. [256] Secondly, Ikerus Pty Ltd was the owner of SOS and was not a party to the ESA. At times there appears to be a lack of precision as to the various corporate entities. It is important to keep in mind that Ikerus Pty Ltd was not wholly owned by the Iker family and had another third party unitholder. [257] The plaintiff also refers to the principle that in construing a contract the Court does not rewrite the agreement between the parties if it appears to be unjust or inconvenient.113 [258] In this regard I note that the CA and the ESA provide for entirely different obligations and involve different parties. The two agreements can stand independently and are not dependent on the other. Further, the existence of one agreement does not assist in the construction of the other, other than to the extent that the CA is referred to in the ESA, specifically in relation to the bonus payments. In this regard the construction sought by the defendants seems at odds with the formal written documents that were signed by the parties and which contain entire agreement clauses. [259] The final point relied upon by the plaintiff in respect of this argument is that the ESA contained an entire agreement clause. The clause specifically refers to any “prior agreement, representation (written or oral) or understanding on anything connected with” the subject matter of the ESA. This clause would operate to limit the operation of any pre-contractual negotiations where they not expressly contained in the written agreement. [260] In all of the circumstances, the proper construction of the ESA does not include the warranties contended for by the defendants in [33] of the 4FA Defence. If so, is payment conditional upon performance of the “specific services”? 112 See paragraph 152 of the defendants’ written closing submissions. 113 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109 (Gibbs J). -- 51 of 78 -- 52 [261] The defendants argue that the contract fee is “for performing the services” under clause 7.1 of the ESA and this is to be construed as all of the services. [262] Further, the defendants submit that part performance is not envisaged and that while monthly invoices were to be paid they were only payable if the invoices were for performing “the services” (or expenses as allowed in the special conditions): i.e. all of the services. [263] The defendants ultimately submit that failure to perform the services disentitles the plaintiff to payment in circumstances where: (a) the CA was not completed; and (b) the plaintiff did not perform the services as expressed in Schedule 1 of the ESA (which included the two warranties). [264] As set out above, I am not satisfied that the “specific services” were warranties included in the ESA. Accordingly, payment pursuant to the ESA is not conditional upon performance of the “specific services”. [265] This is also discussed further below in respect of the defendants’ broader claim for breach of the ESA. Has the plaintiff breached the ESA by failing to provide the Services? [266] Apart from the “specific services” discussed above, the defendants also claim in [33(c)] of the 4FA Defence that the plaintiff breached the ESA by failing to perform the “general services” as expressed in Schedule 1. Namely: “(iii) achieves the objectives of, in partnership with the Board, being responsible for the success of the organisation. (iv) develops and monitors strategies for ensuring the long term financial viability of the business. (v) prudently manages the resources of the business within budget guidelines according to current laws and regulations”. [267] The defendants contend that the plaintiff breached the ESA as it failed to perform the services including those identified above. Specifically in respect of these “general services” the defendants plead at [34(c) and (d)] of the 4FA Defence that: “(c) … the organisation did not achieve success while the plaintiff or Mr Queitzsch was involved with the defendants as pleaded and particularised in Table A”; and “(d) develop and monitor strategies to ensuring [sic] the long term financial viability of the business, because the business did not have long term financial viability by at least June 2016 and its debt level increased rather than decreasing [sic] as pleaded and particularised in Table A”. -- 52 of 78 -- 53 [268] The defendants did not lead admissible evidence to establish the matters in Table A and abandoned the claim in [34(e)] of the 4FA Defence in respect of managing the resources of the business. [269] The defendants in their closing submissions seek to rely on the Grant Thornton report114 as evidence that the “organisation” was not a success. This was not pleaded and the plaintiff objects to the defendants now seeking to rely on that in respect of this claim. To the extent that this claim relies on the matters particularised in Table A, the defendants have not made out the breach. [270] The defendants seek to elevate the “position objectives”, “accountabilities” and “key result areas” in Schedule 1 of the ESA to terms of the ESA which must be performed. [271] The plaintiff contends that the agreement was for the plaintiff to provide Mr Queitzsch to act as chief executive officer of the business conducted by the defendants. This was done by Mr Queitzsch attending at Emerald, attending monthly meetings, dealing with banks and other day to day matters associated with being a chief executive officer of the agricultural businesses. [272] The reference in the pleading to “organisation” is also troublesome as there was more than one entity involved in the Iker businesses and this lack of precision in the pleading makes it impossible to understand the defendants’ reliance on this as a term of the ESA. [273] The ESA was for the provision of services by way of providing an individual, Mr Queitzsch, to fulfil the role and function of Chief Executive Officer, in Emerald on a fly in – fly out basis and reporting to the Board. This was done. The defendants now seek to retrospectively argue that despite Mr Queitzsch providing services as Chief Executive Officer not all of the objectives were met – or perhaps more accurately were not met to their liking – resulting in there being a breach of the ESA. [274] The issue of the SOS rates is a good example to consider. The defendants originally pleaded a breach of the ESA based on the liability of rates for SOS. That is, the plaintiff was required to take steps to have the rates category changed as part of managing the legal and regulatory requirements of the business. While it is now conceded that any loss as a result is not the defendants (but rather is Ikerus’), the defendants still seek to rely on this as evidence that the plaintiff did not properly perform the services (going to the entitlement to the Contract Fee but also the “excessive” argument dealt with separately below). [275] The plaintiff points to a number of matters in response to this allegation regarding the SOS rates including: (a) The rates issue arose as a result of SOS being strata titled into 111 separate titles since 2012. (b) Ikerus had no money to be able to pay the rates which were already in arrears significantly by December 2013.115 114 Court Book tab 215, page 950 to 1004. 115 Court Book tabs 135 to 137. -- 53 of 78 -- 54 (c) When the Central Highlands Regional Council (Council) commenced proceedings, Mr Queitzsch advised Mr Lex Iker to retain solicitors to defend the proceedings. This was not done.116 (d) In July 2017 Mr Lex Iker swore affidavits in the District Court and the Federal Court that default judgement was obtained by the Council due to his inadvertence in failing to instruct solicitors.117 (e) Ultimately a deed of settlement was entered into between Ikerus and the Council on payment of an amount less than the default judgment.118 The plaintiff contends there is nothing in the deed of settlement which suggests that the rates were improperly charged. [276] The plaintiff concludes there is no basis for saying that the plaintiff or Mr Queitzsch failed to cause Ikerus to pay the rates which had allegedly been overcharged. [277] The defendants claim no relief in respect of this example other than to point to it as a breach. But it is difficult to conclude on the evidence that there has been a breach of the ESA. Mr Queitzsch dealt with this as part of the operational issues together with the Board. Mr Lex Iker was involved in the process. There is no obligation on the plaintiff or Mr Queitzsch to take any particular steps. No breach in this regard is made out. [278] Overall, on the evidence I find that the plaintiff provided the services under the ESA and no breach has been established. If so, is payment conditional upon performance of all of the Services? [279] As I have not found there to be any breach of the ESA it is not strictly necessary for me to consider this issue. However, I do address some of the arguments raised in submissions. [280] This issue arises as the defendants seek to elevate performance of the items in Schedule 1 to prerequisites for payment. That is, the defendants contend that the ESA is an “entire agreement” and there is no payment for part performance. [281] The defendants argue that while the Contract Fee is to be paid by monthly invoices it is only payable if the invoices are for performing the Services. Failure to perform disentitles payment for each period. [282] The plaintiff submits that such a construction is “completely uncommercial and contrary to the express terms of the [ESA]”.119 The contract fee was to be invoiced and paid monthly. That is what occurred for the period of the ESA. [283] The ESA provided for a monthly fee in respect of the provision of Mr Queitzsch acting as the Chief Executive Officer. The payment of the invoiced monthly fee and expenses was not conditional on the performance of “all of the Services” as pleaded by the defendants. 116 T 4-15 L 1-15 117 Exhibit 19. 118 Exhibit 20. 119 Plaintiff’s written closing submissions at [111]. -- 54 of 78 -- 55 Is the plaintiff entitled to the bonus payments? [284] The plaintiff’s case in respect of the bonuses is relatively straightforward application of the provision dealing with the automatic bonus: the bonuses accrued in the first year by 1 November 2014 in the full amount of $495,000 (inclusive of GST) and by August 2015 the pro-rated amount of $412,500 (inclusive of GST) by operation of the mechanism in the Reference Schedule. [285] These amounts have been reduced by part payments by the defendants and the total claimed by the plaintiff in respect of the bonus payments is $679,971.69 (inclusive of GST). [286] The defendants’ arguments in relation to this issue also contain a number of different components, namely: (a) The commercial purpose of the ESA “to engage the [plaintiff] to complete the Services” (underlining added) as stated in the ESA recitals. (b) The construction that is most consistent with the object of the ESA is that the bonuses are an award for the completion of the services. (c) Reliance is placed on the word “to” in the phrase “Relationship to CA” as set out in the Reference Schedule under the heading “Contract Fee” on the basis that the CA sets the method by which bonuses are to be paid. (d) The bonuses are to be paid by “applying them in a mathematical formula to the “project value”, a term defined in the CA, before calculating the number of units to be provided to the plaintiff. Those units in turn were to be provided upon completion of Stage Two Services under the CA, the control of which was expressly provided to the plaintiff.120 [287] The defendants submit that this construction best accords with the following: (a) the background known to the parties at the time; (b) the CA and the ESA Proposals intended performance based bonuses; (c) there was a significant monthly fee being paid to the plaintiff for services provided for five days only every second week; (d) the SOS sale representation and business improvement representation and the corresponding warranties; and (e) the ESA required complete performance of the services. [288] The difficulty with the defendants’ approach is that: (a) Points (a) and (b) cannot assist with the interpretation of the bonus clause in the ESA, particularly given the whole agreement clause. (b) I have found that points (d) and (e) as contended for by the defendants have not been established. 120 Defendants’ written closing submissions at [166]. -- 55 of 78 -- 56 [289] In relation to point (c), the defendants make a separate claim in respect of the fees being “excessive” and this is dealt with separately below. Consideration [290] The “Contract Fee” would include the automatic operation of the bonus by the inclusion of the words “and benefits payable” in the definition in clause 1.2 of the ESA: “(a) [Contract Fee] means the remuneration, allowances, costs and benefits payable by the Iker to the Consultant for performance of the Services, in accordance with the specific arrangements (if any), set out in the Reference Schedule; and (b) Includes any part of the Contract Fee.” [291] The Reference Schedule sets out the actual amounts that are to be paid. The language used in the Reference Schedule under the heading “Contract Fee” refers to two distinct periods: the first 12 month period and the “following” 12 month period. It refers to a monthly sum for the first six months and for the remainder “with an automatic bonus of $450,000.00 at the end of the 12 months” and similarly for the second 12 months period “a minimum automatic bonus of $450,000.00 at the end of that 12 month period”.121 [292] Under the clause, the automatic bonus would be payable at the end of the first 12 months and at the end of the second 12 month period. The third paragraph also sets out that in the event of termination of the agreement other than under clause 14.4, the annual bonus will be paid on a pro rata basis based on the number of weeks which the services were provided. Accordingly, while the amounts and the bonus would be due and payable at the end of each 12 month period, in the event there was a termination of the agreement then it would become payable at an earlier date. [293] It is necessary to consider how the automatic bonuses interact with the CA. The provision provides an acknowledgement by the plaintiff that the automatic bonuses are not additional to the rights to be allotted units under the CA dated 1 November 2013. The language used does not make the payment of the bonuses conditional upon the CA proceeding to the stage where units were actually allotted. [294] Rather, it provides an adjustment mechanism in circumstances where units are allotted under the CA. That is, an adjustment is to be made to deduct the bonus amount from the project value prior to calculating the number of units that the plaintiff is to be entitled to under the CA. The adjustment therefore is to be made to the entitlement to the units under the CA. If there is no project value then as Stage Two of the CA has not proceeded, then there is no adjustment to be made. [295] There is also provision in the clause in the Reference Schedule in order to protect the interests of the parties to the CA, as they are not parties to the ESA, to enable them to enforce this adjustment to the project value and the underlying allocation of the number of units. Otherwise it would not be enforceable by the parties to the CA to protect their interests. This provision in effect supports the plaintiff’s contention that 121 These figures are GST exclusive. -- 56 of 78 -- 57 the ESA was not contingent upon the operation of the CA, particularly as the parties were distinctly different and contractual obligations were also different. [296] The final paragraph is a non-binding acknowledgement that the parties intend to review the CA during 2014 and align the bonus and unit entitlements. The fact that this was not done does not reflect on the existing obligation to pay the automatic bonuses as set out in the ESA. [297] The correct construction of the automatic bonuses is that they accrue during the first and second years of the term of the ESA and become payable at the conclusion of the first year and the second year. During the course of both the first and second year, the obligation in respect of the automatic bonus would be accruing so that if the agreement was terminated (other than by clause 14.4) before 31 October 2015 then an annual bonus calculated on a pro rata basis would be payable. [298] On the basis that the plaintiff otherwise performed the services, the entitlement to the bonuses would accrue with the bonus at the end of the first year due and payable by 31 October 2014. In respect of the second annual bonus, it would have been due and payable in full by 31 October 2015 if the ESA had continued to the completion of the term (as is accepted at least in part by the defendants) or alternatively the pro-rated amount as at August 2015 if the ESA was terminated earlier as alleged by the plaintiff. Were the payments as identified in [9(b)] of the FASOC paid in accordance with the ESA? [299] The payments identified in [9(b)] of the FASOC in respect of fees and expenses were made by the defendants but the basis of the payments is now contested. [300] The plaintiff rendered invoices in respect of the services provided pursuant to the ESA and expenses. The defendants made payments in respect of those invoices. [301] There is no evidence that at the time the payments were made they were conditional or were made under protest. The defendants do not seek to claim repayment of the money on the basis of restitution or mistake. [302] There is evidence that Mr Queitzsch in the relevant period acted as the Chief Executive Officer – that is not disputed. Mr Queitzsch also travelled to Emerald on numerous occasions in the period and incurred costs. Monthly invoices were rendered including for expenses. [303] There was no evidence led at trial that the expenses were not incurred or were of a nature that was not claimable. While it may be inferred from [39(d)] of the 4FA Defence that the defendants allege that some or parts of the expenses claimed in the invoices may not be within the categories pleaded, the defendants did not identify which, if any, expenses fell into this category. [304] The defendants also submit that the obligation to pay only arose on the completion of the services and pointed to the alleged breaches of the ESA and to various aspects of the services which had not been “completed” as the basis for saying that the payments were not made “in accordance with the [ESA]”. -- 57 of 78 -- 58 [305] The defendants did not otherwise analyse and identify the specific basis that the fees and expenses invoiced by the plaintiff and paid by the defendants were not properly incurred. [306] The second aspect of this issue relates to the actual payment of invoices. The defendants submit that Mr Queitzsch in effect controlled the payment of invoices and therefore these invoices were paid on that basis. [307] However, this is contrary to the evidence. [308] Leanne Daniels gave evidence that, from January 2014, she was employed by the Iker Group as an administration manager, which including “doing accounts [and] payroll”.122 She said that she reported to Mr Queitzsch.123 [309] Ms Daniels gave the following evidence about how the Group’s creditors were paid: “So I would go through [the bills] weekly with Peter to see who we were paying each week. We’d try and pay the most outstanding. These were all brought up in the board meeting as well. I would process them into the bank and then Peter would release them, unless, of course, it was something to do that Jo or Chrystal had to release. … Everyone had access to [the bank accounts], but you had to have two people to approve payments.”124 [310] In relation to payments made to the plaintiff, Ms Daniels said: “To my knowledge from what I remember, Pauline125 would send them through. I would process them and either Jo or Chrystal would release them.”126 [311] Chrystal Iker gave evidence that, when Leanne Daniels left the group in May 2016, she became more involved in the “administrative side of things.”127, which she said included “mostly accounts receivable and accounts payable”.128 She did not give evidence about releasing payments to Mr Queitzsch. As outlined above, Jo-Anne Iker was not called to give evidence. [312] These invoices begin on 2 December 2013 and go through to 31 August 2015 as identified in [9(b)] of the FASOC. I find on the evidence that the amounts in these invoices in respect of fees and expenses were paid by the defendants to the plaintiff in accordance with the ESA, except for the three payments in respect of invoices 000867, 000872 and 000882 which are dealt with separately below. 122 T 3-44 L 39-44. 123 T 3-44 L 46-47. 124 T 3-46 L 20-27. 125 A reference to Pauline Williams, Mr Queitzsch’s wife who provided administrative support for the plaintiff. 126 T 3-46 L 39-41. 127 T 2-79 L 13-15. 128 T 2-79 L 30. -- 58 of 78 -- 59 New Agreement [313] The plaintiff alleges that in August 2015 the arrangements between the plaintiff and the defendants were changed in that: (a) The ESA was terminated before the end of the term by conduct of the plaintiff and the defendants. (b) A new executive services agreement was entered into orally between Mr Queitzsch on behalf of the plaintiff and Clayton Iker and Chrystal Iker on behalf of the defendants. [314] At [13] of the FASOC the plaintiff pleads the basis of the New Agreement as follows: “13. The New Agreement was on the same terms as the Agreement [ESA] save that: (a) Clayton Iker would take over from Mr Queitzsch as Chief Executive Officer of the Iker Business from on or about 1 September 2015; (b) as at 1 September 2015, the “Board” was made up of Clayton Iker, Trent Iker, Chrystal Iker and Chantal Iker; (c) the plaintiff, by its representative Mr Queitzsch would, from on or about 1 September 2015, perform the function and role of chairperson of the Board of the Iker Business by, inter alia; (i) develop [sic] and mentor [sic] the future leadership of the business; (ii) maintain [sic] company relationships; (iii) providing guidance and advice to the Board members on strategy and operational matters; and (iv) liaising with and being the primary spokesperson for the Iker Business in relation to its dealings with financial institutions such as Suncorp Banking Corporation, Westpac Banking Corporation, Landmark and other major creditors of the Iker Business in relation to, inter alia, the projects carried on by Ikerus Pty Ltd ACN 131 714 237 as trustee for the Ikerus Unit Trust and TLD Qld Pty Ltd ACN 145 883 923 as trustee for the TLD Qld Unit Trust; (the Board Services); (d) the Board Services replaced the Services in the New Agreement; (e) the defendants would pay Mr Queitzsch for providing the Board Services: -- 59 of 78 -- 60 (i) the sum of $5,000 plus GST per month; and (ii) a daily rate of $3,000 plus GST for any time beyond two days per month spent on Iker Business matters, (the New Contract Fee); (f) the New Contract Fee replaced the Contract Fee in the New Agreement; (g) the Outstanding Contract Fee would be paid by the defendants to the plaintiff as follows: (i) a lump sum of $150,000 (plus GST) on 30 August 2015; and (ii) $15,000 plus GST per month commencing on 7 September 2015; (h) interest would accrue on the balance of the Outstanding Contract Fee at a rate of 5.5%, or alternatively in accordance with the Commonwealth Bank of Australia’s variable overdraft charge from 1 July 2015 until the Outstanding Contract Fee had been paid in full; (i) a commission would be paid to the plaintiff if it facilitated the sale of any properties owned by the Iker Business, such commission to be offset by the defendants against the balance of the Outstanding Contract Fee; (j) the term of the New Agreement would be from 1 September 2015 until the earlier of: (i) the Board resolving that it wanted the resignation of Mr Queitzsch as chairperson of the Board; or (ii) the debt of the Iker Business was substantially reduced through asset sale or Mr Queitzsch arranged to refinance the debt to their major creditors; (k) Mr Queitzsch could terminate the New Agreement by tendering his resignation as chairperson of the Board on one months [sic] notice to the defendants.” [315] The plaintiff’s claim at its simplest is that at a point in August 2015 the arrangement between the plaintiff and the defendants changed. As of 31 August 2015, the plaintiff pleads that it was owed a sum of $742,500 (including GST) (outstanding amount).129 The outstanding amount is made up as follows: (a) $330,000.00 (including GST), being the outstanding amount of the bonus of $495,000.00 (including GST) minus a lump sum payment of $165,000.00 (including GST) for the first year of the ESA; and 129 FASOC at [10]. -- 60 of 78 -- 61 (b) $412,500.00 (including GST), being a pro rata bonus for the second year of the ESA up to 31 August 2015. [316] The plaintiff alleges the New Agreement provided for the gradual payment of the outstanding amount by the lump sum payment of $165,000.00 (including GST),130 monthly payments of $16,500.00 (including GST) and further deductions in respect of commissions earnt by the plaintiff.131 At [15] of the FASOC, the plaintiff pleads that, apart from the lump sum payment of $165,000.00 (including GST), the outstanding amount was reduced in accordance with the New Agreement by the following payments made by the defendants:132 (a) $16,500.00 on or about 10 September 2015; (b) $4,376.86 on or about 30 March 2016; (c) $12,123.14 on or about 23 December 2016; (d) $2,557.38 on or about 28 June 2017 (commission payment); (e) $116,600.00 on or about 18 August 2017 (commission payment). [317] The plaintiff further alleges that a term of the New Agreement was that interest on the outstanding amount would be calculated by reference to the Commonwealth Bank of Australia variable overdraft charge rate. The plaintiff’s schedule at [16(b)] of the FASOC sets out the interest payable over time by reference to this rate. [318] Taking into account the part payments and the interest rate, the plaintiff arrives at a figure of $679,971.69 owed under the ESA. [319] The plaintiff also claims amounts in respect of the provision of the “Board Services” and expenses incurred after 1 November 2016 under the New Agreement that remain unpaid. This is the sum of $130,519.00 which is calculated as the balance of the plaintiff’s invoice of 15 December 2016 and the monthly invoices for December 2016 through to June 2017. [320] Mr Queitzsch gave evidence at the trial largely consistent with the terms of the New Agreement as set out in the FASOC. [321] The defendants argue that no such agreement was entered into or alternatively, Clayton Iker did not have the relevant authority to enter into such agreement. [322] However, Mr Queitzsch did provide services that were consistent with the New Agreement and rendered invoices for fees and expenses in relation to the provision of the “Board Services”. These invoices were paid for the period between 1 September 2015 and 30 June 2017 as set out in [14(b)] of the FASOC and admitted, subject to qualification, in the 4FA Defence. 130 This payment was made in August 2015 and reduced the first year bonus accrued under the ESA from $495,000.00 to $330,000.00. See FASOC at [14(b)]. 131 FASOC at [13]. 132 FASOC at [15]. -- 61 of 78 -- 62 Oral evidence regarding new arrangement [323] Mr Queitzsch gave evidence that, for some weeks leading up to the end of August 2015, he and Clayton Iker were in agreement that the company could not afford to keep paying Mr Queitzsch’s fees and discussed arrangements that would work for “both parties”.133 He said that the “final outcome” of those discussions was that Mr Queitzsch would finish as CEO at the end of August 2015 and remain chair of the “advisory board”.134 [324] According to Mr Queitzsch, the “nub” of the agreement was that he would paid $5000 to work for two days (including to run the board meeting), and then charge a fee of $3000 per day for any other time he put in.135 [325] The “other” arrangement136 was in relation to the debt owed under the ESA, which included the bonuses.137 Mr Queitzsch would be paid $150,000 (plus GST) and then the balance of the debt would be serviced on the basis of $15,000 per month, with interest of about 5.5%.138 [326] Mr Queitzsch said that “Clayton affirmed that, you know, he was happy with that arrangement, and for me to continue on in the business.”139 [327] In his evidence in chief, Clayton Iker gave evidence to the contrary. He said that he remembered having one telephone conversation with Mr Queitzsch about a “new deal” for Mr Queitzsch to stay on.140 Clayton Iker recalled that Mr Queitzsch said that “he would be paid on an as needed basis along the lines of his initial agreement.”141 Clayton said that there was also “talk about his automatic bonuses.”142 Clayton Iker recalled that Mr Queitzsch raised the possibility of him taking an equity share in the Ikers’ cattle, but Clayton didn’t agree to that.143 [328] In his evidence in chief, Clayton Iker said that he did not recall Mr Queitzsch making any other proposal about the payment of bonuses.144 However, in cross-examination, he walked back that position and agreed that Mr Queitzsch “proposed a proposal” “along the lines” of what was described by Mr Queitzsch’s summary of evidence (which was largely consistent with Mr Queitzsch’s evidence in chief of the new agreement).145 [329] Exhibit 3 is the extract from Mr Queitzsch’s summary of evidence which was put to Clayton Iker and states as follows: 133 T 1-43 L 10-16. 134 T 1-43 L 16-19. 135 T 1-43 L 19-30. 136 See T 1-43 L 25-26. 137 T 1-43 L 32-38. 138 T 1-44 L 10-17. 139 T 1-44 L 19-21. 140 T 5-17 L 24-26. 141 T 5-17 L 31-33. 142 T 5-17 L 35-37. 143 T 5-17 L 42-45 to T 5-18 L 7. See also T 5-18 L 35. 144 T 5-18 L 37-41. 145 T 5-29 L 5-22. -- 62 of 78 -- 63 “Peter proposed to Clayton the following solution saying words to the following effect at some stage over that two week period: ‘I could come up to Springsure and chair the meetings of an ‘advisory board’ for the business from 1 September 2015 and jointly manage the relationships together with you, the banks/financier and solicitors which would be similar to our existing agreement while I continue to support you with your transition as CEO. The business would pay me $5,000 per month and the usual expenses for my services. I would work 2 days on the business matters each month. The business would pay me $3,000 for each day I work in addition to the 2 days each month. I would have to attend meetings outside Springsure to continue to manage the relationships with the banks and solicitors etc. Further I propose the business pay two lump sums of $150,000 by end of August and $15,000 by 7 September to ensure it reduces the balance of the debt owed to Beachmount and then the remainder to be paid in the sum of $15,000 until it is paid. I will only charge you interest at 5.5% which is far cheaper than what Suncorp Bank is charging you on your loan accounts. Suncorp is charging you interest at around 8.5% so the interest I propose to charge will be about 3% lesser than the rate that Suncorp applied.” [330] Clayton Iker said that he never had any authority to agree to any proposal, and never gave Mr Queitzsch the impression that he had such authority.146 [331] Mr Lex Iker gave evidence that, after October 2015, Peter was “supposedly only coming for two days, but it didn’t seem to change things much, in my thoughts. The bills were the same.”147 Mr Lex Iker’s understanding of Mr Queitzsch’s engagement was that “it was on a temporary basis.”148 When asked about why Mr Queitzsch’s bills were still being paid, Mr Lex Iker said, “I believed that it was too hard for us to bring somebody else in to handle the banks and whatever else.”149 [332] Mr Lex Iker’s description of Mr Queitzsch’s engagement after October 2015 seems at least partially consistent with what Mr Queitzsch said entailed the “new agreement”, in that Mr Queitzsch would work for two days a month. Was the New Agreement entered into in August 2015 and on what terms? [333] What is clear from the evidence that from August 2015 until August 2017 Mr Queitzsch provided on-going services to the defendants on a basis that was largely consistent with the ESA but with some modifications. He did not travel to Emerald as regularly and there were some changes to the work he undertook in respect of the Iker Group entities. [334] Mr Lex Iker was aware of the changes at least to the extent evidenced in Mr Queitzsch’s change of involvement and routine. There was a change in invoice form 146 T 5-18 L 44-47. 147 T 4-45 L 44-47. 148 T 4-46 L 1-3. 149 T 4-46 L 5-9. -- 63 of 78 -- 64 and content, as well as the way the agreement was referred to on the invoices, but Mr Lex Iker may not have been aware of these changes. [335] It is apparent that by his conduct, and as recognised in his oral evidence, Mr Lex Iker was content for Mr Queitzsch to continue providing services as it was in the Iker Group’s interest to have him to continue to liaise with the banks on their behalf. [336] The defendants paid the invoices in relation to the fees and expenses from August 2017 up until November 2016. The invoices in respect of expenses from then until July 2017 remain unpaid. [337] In the 4FA Defence the defendants outline a number of different matters relevant to these considerations, including: (a) Any termination of the ESA was not in compliance with the terms of the ESA requiring it to be in writing and signed. (b) If not validly terminated the ESA would have continued to the end of its term being 31 October 2015 and after that “any subsequent changes to the role, services or remuneration … were carried on … with the acquiescence of Mr Lex Iker and the Board from time to time”.150 (c) There was no New Agreement as it was not approved by the Board and/or Mr Lex Iker. (d) The payments made by the defendants were not made pursuant to the New Agreement as alleged, but were made on production of invoices on the basis that “changes to the role, services or remuneration of Mr Queitzsch after the expiry of the [ESA] were not part of any new agreement but rather were carried on by Mr Queitzsch and payments made with the acquiescence of Lex Iker and the Board from time to time”.151 (e) The defendants admit the payments were made in the amounts in [15] FASOC but deny they were required to be paid as they say they were not indebted as alleged.152 (f) The defendants admit the invoices in [17] FASOC were issued but deny they relate to expenses incurred and payable in performing the Board Services. [338] The defendants’ written closing submissions accept that at the conclusion of the term of the ESA Mr Queitzsch continued to be engaged on a monthly basis.153 The defendants’ position in their closing submissions appears to be that the ESA term naturally expired on 31 October 2015 and that the conduct of the parties shows that Mr Queitzsch was not re-engaged on the terms alleged by the plaintiff (i.e. the New Agreement) or at all.154 150 [43(a)(v)] 4FA Defence. See also [44(f)]. 151 [45(b)] 4FA Defence. Note that this sub-paragraph does not appear as (b) in the 4FA Defence but it appears between sub-paragraphs (a) and (c). 152 These are the instalment payments reducing the balance of the automatic bonuses under the ESA. 153 Defendants’ written closing submissions at [90]. 154 Defendants’ written closing submissions at [93] and [94]. -- 64 of 78 -- 65 [339] But this position is plainly at odds with what actually happened: Mr Queitzsch continued to provide services and rendered invoices which were paid by the defendants post 31 October 2015. It is inconsistent for the defendants to say there was no “re-engagement”. Whether there was an engagement on a monthly basis or something more formal, there was some form of engagement of Mr Queitzsch. [340] This is also inconsistent with the letter of termination dated 12 August 2017 sent by Mr Geoff Shannon as “authorised officer” for the Iker Group.155 In the covering email to Mr Queitzsch, Mr Shannon states “confirming of [sic] termination of any agreement you may or may not rely upon in respect of your dealings with the Iker’s [sic]”. The attached letter refers to the CA and the ESA and then outlines a number of alleged breaches. It concludes by stating: “The Iker Group rely on a repudiation of both contracts given both C, D and E above. Given the repudiation of both contracts caused by the Consultant, the Iker Group demand all monies received to date to be returned within 7 days to the Iker Group.” [341] If there was no on-going engagement of the plaintiff or Mr Queitzsch as at August 2017 there would be no need to send this letter as the term of the ESA ended on 31 October 2015. The idea of giving a form of notice to bring the relationship to an end in August 2017 is consistent with there being some form of relationship at that point in time. [342] It is not in dispute that Mr Queitzsch continued to work for the defendants up until August 2017 – even the evidence of Mr Lex Iker supports this. The relevant question is then, what was the arrangement under which Mr Queitzsch continued to do work for and provide services to the defendants. [343] At the hearing much time was spent in respect of whether Clayton Iker formally took over as Chief Executive Officer or not. This in itself is not determinative of whether there was an arrangement by which plaintiff would be paid for services provided by Mr Queitzsch. However, the role actually undertaken by Clayton Iker in this period may be more consistent with one version of events than the other. [344] It is necessary to address the oral evidence, in particular the evidence of Mr Queitzsch and Clayton Iker in respect of the alleged New Agreement. In the end there are some common elements but there are also some contested facts. [345] Mr Queitzsch gave evidence over a period of just over three days, with cross- examination for over two days. Mr Queitzsch’s evidence was rational and logical and was largely consistent with the pleaded case. In answering extensive questions under cross-examination he tried to be helpful and answered questions openly and mostly directly. While at times his evidence could be described as a narrative response, this was more a result of the questions that he was asked than a reflection on him or going to his credit. Critically, I find Mr Queitzsch’s evidence as to the “New Agreement” to be plausible and believable. 155 Court Book tab 216. -- 65 of 78 -- 66 [346] Clayton Iker’s evidence had inconsistencies and some concerning aspects. His evidence was vague and imprecise and, at times was, deliberately evasive when he was under cross-examination. I find that Clayton Iker’s explanation of signing the Grant Thornton report as a “representative of the Iker Group” was implausible and not believable. Further, his original denial of the conversation with Mr Queitzsch in August 2015 and then concession that a conversation had occurred while trying to maintain a position of not agreeing with the propositions put to him supports a finding that his evidence is unreliable. [347] I prefer the evidence of Mr Queitzsch as to the discussions regarding the New Agreement over that of Clayton Iker. I accept the evidence of Clayton Iker to the limited extent that it is consistent with the evidence of Mr Queitzsch in this regard. [348] As to the terms of the “new arrangement”, as a minimum it appears that the terms were consistent with the ESA but varied to reflect the “new arrangement” regarding the roles of Mr Queitzsch and Clayton Iker. Further, this is consistent with Mr Lex Iker’s evidence and the position set out in the 4FA Defence: any changes to the role, services or remuneration were carried on with the acquiescence of Mr Lex Iker and the Board from time to time. By conduct, Mr Lex Iker and therefore the defendants agreed to Mr Queitzsch continuing to provide the services as varied. [349] In relation to the terms of the “new arrangement” on the evidence I find that: (a) The terms of the ESA continued as varied by conduct and consistent with the terms discussed between Mr Queitzsch and Clayton Iker. (b) The invoices contain the new rates and reflect the revised time Mr Queitzsch was to spend providing services (consistent with the terms discussed between Mr Queitzsch and Clayton Iker). (c) The interest rate claimed is consistent with the discussion between Mr Queitzsch and Clayton Iker, and is less than would otherwise be claimable under s 58(3) of the Civil Proceedings Act 2011. (d) Clayton Iker commenced acting consistently with being the Chief Executive Officer, even if not formally appointed. (e) Notes of a Board meeting of the Iker Group on 5 August 2015 refer to the “handover” from Mr Queitzsch to Clayton Iker consistent with the “new arrangement”.156 The notes record Mr Queitzsch’s preference to only attended monthly Board meetings from that time and that Clayton Iker would travel to Brisbane for meetings with the banks and handover with Mr Queitzsch. (f) Meeting notes in respect of the Iker group for 26 January 2016 refer to Clayton Iker acting as CEO from 1 September 2015.157 (g) The Grant Thornton report of 10 November 2015 was approved by Clayton Iker as CEO, with Clayton Iker signing a letter stating the report was accurate. This was also consistent with what was set out in the report: that Clayton Iker 156 Court Book tab 153. 157 Court Book tab 158. -- 66 of 78 -- 67 was CEO and Mr Queitzsch was chairman of the advisory board on a retainer of $5000 per month and had an accrued debt of $600,000.158 (h) Mr Lex Iker was aware that Mr Queitzsch was acting consistently with these varied terms and was content to let him continue to act on this basis.159 [350] Accordingly, I find the New Agreement on the terms set out in [13] of the FASOC. [351] The defendants raise an issue that the New Agreement, if found, would not be enforceable as it could only be a variation to the ESA which under clause 14.2 of the ESA had to be in writing. [352] The plaintiff contends that there is no statutory limitation on the ability to amend the ESA other than in writing: it is merely a term of the agreement. As such, it is possible for the parties to an agreement to vary a written contract and this could be done in writing or by oral agreement. Further, the agreement to vary a contract could be express or implied from conduct. [353] In respect of this latter point, the plaintiff relies on the decisions in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd160 and Alford v Ebbage.161 [354] The principles in those cases set out that the existence of an agreement may be inferred from the subsequent conduct of the parties.162 Further, written contracts can be varied by oral agreement unless required by law to be in writing. Though lacking legal effect in the face of a subsequent oral or implied agreement, “no oral modification” clauses can have significant evidentiary effect and their presence is a fact to be taken into account in interpreting the subsequent conduct of the parties.163 [355] I am satisfied on the evidence that the New Agreement was in effect a variation of the ESA which varied the terms consistently with the discussion between Mr Queitzsch and Clayton Iker and which was accepted by the defendants through their conduct, in particular the conduct of Mr Lex Iker. [356] Mr Lex Iker was prepared to let Mr Queitzsch continue to provide services and undertake work in accordance with the varied ESA and now seeks to, perhaps opportunistically, deny the existence of any agreement to prevent Mr Queitzsch being paid for those services and work undertaken. Clearly he was aware of the work being done and acquiesced for a significant period of time. In the pleading the defendants acknowledge that there was an “arrangement” even if a temporary one. Mr Lex Iker also in oral evidence admitted that the defendants saw it as a benefit to continue to have Mr Queitzsch’s be involved with the banks on their behalf. In these circumstances, it would now not be just for the defendants to deny Mr Queitzsch’s entitlement to payment under the New Agreement. 158 Court Book tab 202 (letter); tab 215 (Grant Thornton Report). 159 T 4-45 L 44-47; T 4-46 L 1-3; T 4-46 L 5-9. 160 (2003) 128 FCR 1. 161 [2004] QCA 283. 162 Alford v Ebbage [2004] QCA 283, [123] – [125] (Muir J). 163 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1, 61-63 (Finn J). -- 67 of 78 -- 68 [357] At trial the defendants raised a new argument outside the pleading that the liability of any outstanding amounts under the New Agreement had been transferred to IGH. This was objected to by the plaintiff. The defendants are to be held to their pleaded case. [358] In any event, I accept the evidence of Mr Queitzsch that this was done for accounting purposes and was not a change in the legal liability in respect of the outstanding amounts. This is also consistent with the email exchanges with Grant Thornton about the arrangements.164 I do not otherwise comment on the desirability or otherwise of arrangements such as this that may result in a reduced transparency to a financier of the true financial position of a company or group. Is the New Agreement void for uncertainty? [359] The terms of the New Agreement are as I have found above. [360] The arguments in respect of the New Agreement are largely the same as those made by the defendants in respect of the ESA. [361] However, this has the added complication that there is no executed written agreement in respect of all of the terms of the new arrangement from August 2015. These are however sufficiently clear from the identified conduct and consistent with the discussions between Mr Queitzsch and Clayton Iker. [362] It is accepted by the defendants that Mr Queitzsch did continue to provide services for the period from August 2015 through to the ultimate termination of his role by letter dated 12 August 2017. [363] There is evidence that between 1 September 2015 and 30 June 2017 Mr Queitzsch performed the “Board Services” in accordance with the New Agreement and issued tax invoices for the “new Contract Fee” and expenses. [364] Further, amounts were paid by the defendants in the period from 30 September 2015 through to 14 June 2017 in relation to the work undertaken by Mr Queitzsch. Although, the basis upon which the amounts were paid is contentious (see further discussion below). [365] I find that the terms of the New Agreement are sufficiently certain so as not to be void for uncertainty. Were the payments identified in [14(b)] FASOC paid in accordance with the New Agreement? [366] Again the defendants admit that payments were made but dispute the basis upon which the payments were made. [367] As I have found that Mr Queitzsch continued to provide services under the New Agreement, the amounts invoiced would be payable in accordance with the terms of the New Agreement. 164 Court Book tab 207. -- 68 of 78 -- 69 [368] These invoices begin on 30 September 2015 and go through to 15 December 2016 as identified in [14(b)] of the FASOC. [369] There is an issue as to whether these payments were authorised by Mr Queitzsch himself or were paid by Chrystal Iker following the invoices being discussed at board meetings in accordance with the usual procedure. Mr Lex Iker’s evidence is that he was not involved in the payment of invoices and that this was left to “Peter and Leanne”. But while Mr Lex Iker maintained that he did not authorise the payments, he did admit that “Chrystal” paid the bills.165 [370] There is some uncertainty as to the timing of when Chrystal Iker became involved in the payment of invoices. It appears from her evidence that she had some involvement from at least May 2016.166 [371] I find that it is more likely than not that the three payments were made consistently with the unchallenged evidence of Leanne Daniels that a list of creditors to be paid was presented at the monthly board meetings and they were discussed and a decision was made which creditors were to be paid.167 This is also consistent with Mr Lex Iker’s evidence that a list of bills to be paid would be presented at the monthly board meetings168 and that he was aware Mr Queitzsch was being paid, either by Leanne Daniels, Chrystal Iker or Clayton Iker, up to June 2017 through his review of the monthly Grant Thornton reports.169 [372] Accordingly, I find on the evidence that the amounts in these invoices in respect of fees and expenses were paid by the defendants to the plaintiff in accordance with the New Agreement. [373] The three payments in respect of invoices 000867, 000872 and 000882 relate to part payments of the automatic bonuses that had accrued under the ESA. As set out above, the New Agreement did not provide for the accrual of these amounts. There was an agreement reached as to the timing of the payment of this debt which had already accrued. These payments were made on that basis. Were expenses claimed in the plaintiff’s invoices to be paid? [374] On the basis that I have found that the terms of the New Agreement applied in this period, expenses would continue to be payable on those terms. [375] There was no evidence led at trial that the expenses were not incurred or were of a nature that was not claimable. Accordingly, I find that the expenses claimed in the plaintiff’s invoices are to be paid in accordance with the New Agreement. 165 T 4-73 L 40. 166 T 2-79 L 13-15; T 2-79 L 30. 167 T 3-46 L 15-30. 168 T 4-74 L 1-22. 169 T 4-74 L 43 to T 4-75 L 12. -- 69 of 78 -- 70 Were the payments to the plaintiff pursuant to the ESA and the New Agreement totalling $1,133,699 “excessive”? [376] No repayment of the sum of $1,133,699 paid by the defendants under the ESA and the New Agreement is sought. Rather, the defendants elect to set-off “this loss and damage” against any amounts held to be due and owing. [377] The defendants claim that the amount paid to the plaintiff in the amount of $1,133,699.10 is excessive on a number of bases: (a) The plaintiff failed to perform the services as alleged by the defendants, thereby disentitling the plaintiff to the Contract Fee. (b) The amount paid over the 42 month period was excessive “in all of the circumstances pleaded”. (c) The appropriate payment to the plaintiff for the services provided by Mr Queitzsch should have been $567,600 (inclusive of GST) and the balance of $566,099.10 is excessive.170 [378] In respect of the first basis, I refer to my previous discussion of the issues concerning performance of services under the ESA and the payment obligation, and the related issues in respect of the New Agreement. [379] In respect of the second basis, the ESA specifies the amount that is to be paid for performance of the services. That was agreed between the parties. There is no claim of unconscionability in respect of the agreement. The claims in respect of misleading or deceptive conduct made by the defendants are in respect of the services to be provided, not the amount of the fee. [380] In circumstances where I have found that there is no basis for the claim that the whole of the services has to be completed before an entitlement to payment arises, the contract fee would be payable. The defendants may now question whether they should have agreed to the amount of the contract fee but that does not justify the Court in rewriting the contract to provide for another amount. [381] This would be equally applicable in respect of the New Agreement. [382] In respect of the third basis, the defendants seek to rely on an email from Paul Hilton, an accountant who provided advice that services of a CEO would “easily equate to $12,000pm x GST” as the basis to say that Mr Queitzsch’s reasonable fees would be $12,000 per month.171 [383] The plaintiff objects to the third basis as it does not form part of the defendants’ pleaded case. Further, they object to the submission in any event as they say this is not what that the email from Mr Hilton says. [384] The email from Mr Hilton is in respect of the time spent by Mr Queitzsch in relation to the Ikerus site: that is SOS. As Ikerus was a different entity to the defendants who were the parties to the ESA, the issue was estimating an appropriate fee to be charged 170 Defendants’ written closing submissions at [187]. 171 Exhibit 12. -- 70 of 78 -- 71 between companies for the provision of services in respect of SOS. The estimate provided by Mr Hilton was in respect of that subset of work that should be charged to Ikerus (which included a unitholder outside of the Iker Group). [385] The plaintiff also relies on the minutes of meeting of 3 July 2014172 in this regard. Reference is made to “time and effort since November which has been funded by the Iker Group so far” and that “a fair and reasonable monthly figure for the board to review/accept for charges to be paid to the Iker Group”.173 [386] Further, there is reference to the CA and that “is distinctly different from the services that have been provided by the Iker Group since November 2013”.174 [387] This evidence does not support the defendants’ contention but it is in any event outside the pleaded case. [388] The plaintiff in its Reply says that the words “was excessive in all of the circumstances pleaded herein” was vague, unintelligible and liable to be struck out. That part of the 4FA Defence is not sufficiently ascertainable so as to be able to be properly evaluated. It has no foundation in the ESA and is not a legal concept. [389] The plaintiff makes a few other more general submissions relevant to this issue: (a) Schedule 1 of the ESA provides that the Chief Executive Officer “in partnership with the Board is responsible for the success of the organisation”. The individual defendants on the Board would, the plaintiff submits, be equally responsible. In this regard the plaintiff also points to the evidence of Mr Lex Iker who maintained that he made all of the significant decisions involving the defendants.175 (b) No causal connection has been identified between the alleged breach of the ESA and the alleged loss in the amount which the fees are said to be “excessive”. (c) In any event any loss suffered cannot be claimed against the plaintiff by operation of clause 10.2 of the ESA whereby the defendants indemnify the plaintiff in respect of any loss incurred as a consequence of the plaintiff’s performance (actual or purported) of the services.176 [390] I agree with these contentions raised by the plaintiff in respect of this claim. [391] A similar claim in respect of the costs paid to external consultants was abandoned by the defendants. [392] The defendants’ claim that the payments to the plaintiff totalling $1,133,699 are “excessive” is not made out. 172 Court Book tabs 7 and 8. 173 Court Book tab 7. 174 Court Book tab 8. 175 T 4-36 L 12-15; T 4-73 L 42-45. 176 Reply [28(c)(xvii)] filed 23 July 2020. -- 71 of 78 -- 72 Estoppel [393] The defendants’ claim in respect of an estoppel is contained in [53] and [54] of the 4FA Defence. [394] The claim for an estoppel is that the defendants acted to their detriment: (a) in reliance on the representations by entering into the ESA; (b) by relying on the legal firm engaged by the plaintiff to act in their interests in drawing the CA and the ESA; (c) in making the contract [sic] and all other payments to the plaintiff; (d) by making the expense invoice payments; and (e) in not terminating the ESA by the expiry of the SOS sale representation period or other period before or upon the expiry of the ESA. [395] In these circumstances, the defendants plead that the plaintiff should be estopped from relying upon the ESA or the New Agreement to seek any of the monies claimed. [396] The defendants’ outline of closing submissions does not identify the relevant legal principles relied upon in relation to the estoppel claim or the nature of the estoppel claim. [397] Paragraph 135 of the plaintiff’s written closing submissions refers to the requirements to establish promissory estoppel as set out by Brennan J in Waltons Stores (Interstate) Ltd v Maher.177 The plaintiff cites the Queensland Court of Appeal decision in Wright v Hamilton Island Enterprises Ltd,178 which applies the ‘test’ outlined in Waltons Stores. [398] In their written submissions in reply, the defendants state that the requirements outlined in Waltons Stores have been made out. I infer from this that the defendants consider that the characterisation of the estoppel claim as promissory is correct. [399] The doctrine of promissory estoppel179 was developed from the decision of Lord Denning in Central London Property Trust Ltd v High Trees House Ltd.180 This formulation was recognised by the High Court in Legione v Hateley.181 The current state of authority can be found in the decision of Waltons Stores.182 [400] In relation to how a promissory estoppel is established (described in the decision as an equitable estoppel), Brennan J stated:183 177 (1988) 164 CLR 387 (‘Waltons Stores’). 178 [2003] QCA 36. 179 Referred to as a species of the larger doctrine of equitable estoppel: see Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, 472 (Priestly JA); Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5e 2014) at [17-165]. 180 [1947] KB 130; [1946] EWHC KB 1. 181 (1983) 152 CLR 406. 182 (1988) 164 CLR 387. 183 (1988) 164 CLR 387, 428 to 429. This quote has been reformatted from the original judgment for ease of reference. -- 72 of 78 -- 73 “[I]t is necessary for the plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.” [401] The above statement of principle was adopted in Wright v Hamilton Island Enterprises Ltd,184 which was referred to by the plaintiff in its written closing submissions. [402] Further, where a representation is used to establish a promissory estoppel, such representation must be clear. In Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd,185 French CJ, Kiefel and Bell JJ stated: “It has long been recognised that for a representation to found an estoppel it must be clear.186 In Low v Bouverie it was said187 that the language used must be precise and unambiguous. This does not mean that the words used may not be open to different constructions, but rather that they must be able to be understood in a particular sense by the person to whom the words are addressed. The sense in which they may be understood provides the basis for the assumption or expectation upon which the person to whom they are addressed acts. The words must be capable of misleading a reasonable person in the way that the person relying on the estoppel claims he or she has been misled.188”189 Is the plaintiff estopped from relying upon the ESA or the New Agreement on the basis of the matters set out in [53] of the 4FA Defence? 184 [2003] QCA 36. 185 (2016) 260 CLR 1, 16. 186 Legione v Hateley (1983) 152 CLR 406, 435. 187 Low v Bouverie [1891] 3 Ch 82, 106. 188 Low v Bouverie [1891] 3 Ch 82, 113. 189 For further discussion of this case, see the recent decision of Brown J in Al Azahri, Azhari and Azhari as trustees of the Australia Islamic Educational Trust v Sheik Al-Maktoum [2020] QSC 297 at [13] to [19]. -- 73 of 78 -- 74 [403] The focus of the defendants’ contention is the SOS sale representation and the business improvement representation. As I have found that the representations have not been made out, this claim must fail. [404] However, there are a few aspects that I should address further in respect of this issue. [405] In clause 20.1 of the ESA the defendants acknowledge that HopgoodGanim were not their solicitors and that they were advised to obtain independent legal advice with respect to the agreement. The CA contains a similar clause. [406] Further, in oral evidence, Mr Lex Iker acknowledged the clause and said there was nothing stopping him getting independent advice: “All right. So he presented to you an agreement that had been done up by his lawyers?---Yes. All right. And there was nothing stopping you from getting your lawyers to look at this agreement, was there?---No. Okay. And, in fact, you acknowledged by this agreement that Hopgood Ganim weren’t acting for you and you’d been advised and had the opportunity to take independent legal advice?---Yes.”190 [407] Based on the clause and this evidence, the defendants have also not established the second aspect that they identify in [54] of the 4FA Defence to found the estoppel. [408] In relation to the last point identified in [54] of the 4FA Defence, the plaintiff also points to: (a) Mr Lex Iker’s knowledge that SOS had not been sold at a very early stage. Mr Lex Iker gave evidence that “things were stumbling around Christmas time”; that is December 2013.191 In this regard the plaintiff points to the absence of any email or letter of complaint. (b) when SOS was offered to the market in May or June 2014, the offers made were small.192 [409] The plaintiff relies upon these two points as evidence that the defendants had the opportunity to terminate the agreement (if they were entitled to do so) but they did not take any steps to do so. [410] The defendants have not established the necessary factors for a promissory estoppel. This cause of action must fail. 190 T 4-52 L 40-45 and T 4-53 L 1-5. 191 T 4-42 L 5-10. 192 T 2-71 L 35 to T 2-72 L 3. -- 74 of 78 -- 75 Relief Are the defendants entitled to any of the relief claimed pursuant to (a) s 237 and 243(c) ACL or (b) s 36(3) ACL, together with s 237 and 243(c) ACL? [411] As previously indicated the defendants did not seek repayment of any monies paid or payment of loss or damage. The relief was more in the nature of a “shield”: that is the plaintiff should not be entitled to enforce the ESA and the New Agreement in the circumstances alleged by the defendants. [412] The defendants have not established any of the matters raised by them in defence of the claim. [413] Further, if I am wrong about the representations being made and constituting misleading or deceptive conduct, any claim pursuant to s 237 of the ACL would be statute barred. [414] Otherwise, it is not necessary for me to comment further on whether the defendants could have relied on s 237 and 243(c) ACL and/or s 36(3) ACL, together with s 237 and 243(c) ACL to achieve the identified outcome. Are the defendants indebted to the plaintiff for $810,460.49 (inclusive of GST) as pleaded in [21] of the FASOC? [415] The defendants owe the plaintiff for the amount of $810,460.49 (inclusive of GST), being: (a) $679,971.69 being the Outstanding Contract Fee in accordance with [15] and [16] of the FASOC; and (b) $130, 519.00 being the unpaid Expense Invoices in accordance with [19] of the FASOC. [416] The plaintiff is also entitled to interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld). The plaintiff should prepare the interest calculations and provide them to the Court with the draft orders as set out below. Orders [417] I direct that, by 10:00 am on 17 December 2020, the parties agree and provide to my Associate a proposed timetable in relation to the following: (a) The parties prepare draft orders to give effect to these reasons and provide them to my Associate. (b) If the parties are unable to agree on draft orders, then each party is to provide its proposed draft orders together with a brief description for the basis of the disagreement. (c) The plaintiff file and serve submissions and any supporting affidavits in relation to costs. (d) The defendants file and serve submissions and any supporting affidavits in relation to costs. -- 75 of 78 -- 76 (e) The plaintiff file and serve submissions in reply in relation to costs. -- 76 of 78 -- 77 SCHEDULE 1 BEACHMOUNT PTY LTD v IKER PARTNERSHIPS & ANOR Agreed Facts 1. The parties entered in to a written consultancy agreement dated 1 November 2013 (the consultancy agreement). 2. The parties entered in to a written executive services agreement dated 17 December 2013 (the agreement). 3. The defendants made payments to the plaintiff as pleaded in paragraphs 9(b) and 14(b) of the further amended statement of claim (the statement of claim). 4. The project as defined in the consultancy agreement was not completed. List of issues to be determined 5. Is the agreement and the new agreement, or any part of those agreements, void for uncertainty. 6. Did the plaintiff make the representations pleaded in paragraphs 9, 10 and 23 of the defence. 7. If the plaintiff made the representations did it engage in conduct that was deceptive or misleading. 8. Did the plaintiff engage in misleading conduct in failing to disclose the matters pleaded in paragraph 27(e) of the defence. 9. Is any claim by the defendants pursuant to the Australian Consumer Law statute barred. 10. As a matter of constructions does the agreement include the warranties contended for by the defendants in paragraph 33 of the defence. 11. If so was payment pursuant to the agreement conditional upon performance of the services including the “specific services”. 12. As a matter of construction was the plaintiff entitled to the automatic bonuses in the agreement. 13. As at the end of August 2015 was the defendant indebted to the plaintiff in the sum of $675,000. 14. Did the parties enter into a new agreement in or about August 2015 as pleaded in paragraphs 11-13 of the statement of claim, and if so, what were the terms agreed. -- 77 of 78 -- 78 15. Where [sic] the payments pleaded in paragraph 9(b) of the statement of claim paid in accordance with the agreement. 16. Were the defendants liable for payment of the expenses claimed by the plaintiff under the clauses pleaded in paragraph 39(e) of the defendant [sic].193 17. Were the payments pleaded in paragraph 14(b) of the statement of claim paid pursuant to the new agreement. 18. Were the payments to the plaintiff pleaded in paragraphs 9(b) and 14(b) of the statement of claim paid under a mistake of fact or law. 19. Was the plaintiff in breach of the agreement as pleaded in paragraph 34 of the defence. 20. During the term of the agreement was the plaintiff in a position of conflict as pleaded in paragraph 41(c)(vi) 1-4 of the defence and thereby breached the argument. 21. Was the plaintiff in breach of the agreement with respect to the liability for rates as pleaded in paragraph 41(c)(iiA) and (iiB) of the defence. 22. What loss flows from any alleged breach of the agreement by the plaintiff. 23. What loss can the defendants set off against the plaintiff’s claim. 24. Were the payments to the plaintiff of $1,133,699.10 excessive. 25. Were the payments to external consultants of $1,448,695.03 excessive. 26. Is the plaintiff estopped from bringing its claim as alleged in paragraph 54 of the defence. 27. Did the plaintiff carry on conduct pleaded in paragraph 50 and 51 of the defence and if so, what effect has that on any relief sought by the defendants. 28. Will the defendants be likely to suffer loss and damage if relief pleaded in paragraph 55 of the defence is not granted. 29. Is the plaintiff entitled to any relief pursuant to the Australian Consumer Law, and if so, should the Court refuse to enforce the agreement and new agreement or any part thereof. 30. Are the defendants indebted to the plaintiff in the sum of $810,460.69 as pleaded in paragraph 21 of the statement of claim. 193 The reference should possibly be to [39(d)] of the 4FA Defence as that deals with expenses. -- 78 of 78 --