FEDERAL COURT OF AUSTRALIA

Harvard Nominees Pty Ltd v Tiller (No 2) [2020] FCA 604

ORDERS

THE COURT ORDERED ON 19 MARCH 2020 THAT:

1.    The application for the orders sought at paragraphs A, B, C and D of the amended originating application is dismissed.

2.    Judgment on the balance of the amended originating application is reserved, including in relation to costs.

3.    Pursuant to r 36.03(b) of the Federal Court Rules 2011 (Cth), the date fixed for the purpose of filing a notice of appeal from paragraph 1 of these orders is the 28th day after the date on which the Court delivers reasons for judgment.

4.    There is liberty to apply on three days' written notice in relation to paragraph 3 of these orders.

THE COURT FURTHER ORDERS THAT:

5.    The balance of the application is dismissed.

6.    On or before 25 May 2020 the respondents must file and serve an outline of written submissions, no longer than five pages, on the costs of the proceedings, including any reserved costs.

7.    On or before 8 June 2020 the applicant must file and serve an outline of written submissions, no longer than five pages, on the costs of the proceedings, including any reserved costs.

8.    The submissions referred to in paragraphs 6 and 7 must include submissions on whether an assessment of costs before a Registrar is appropriate and, if not, how the amount of costs should be determined.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKSON J:

1    Warriup Farm and Howick Farm (the Farms) are two large tracts of farming land near Esperance, Western Australia. The applicant, Harvard Nominees Pty Ltd, is the registered proprietor of Warriup Farm. John Caratti is a director of the company. He and his brother, Allen Caratti, are the registered proprietors of Howick Farm.

2    At the beginning of 2019, each of the Farms was leased to Mammoth Investments Pty Ltd, of which John Caratti is also a director. At that time the first and fifth respondents, Simon and Felicity Tiller, were sub-leasing the Farms from Mammoth. In early February 2019, Harvard and Mammoth entered into several deeds under which Harvard was to lease Warriup Farm to Mr Tiller and the second respondent, Dimension Agriculture Pty Ltd, and Harvard was to be the lessee of Howick Farm and was to sub-lease it to Mr Tiller and Dimension. As a result, Mr Tiller and Dimension became the lessees/sub-lessees of the Farms, and Harvard took Mammoth's place as lessor/sub-lessor. This took effect from 1 March 2019. I will refer to the new lease and the new sub-lease together as the New Leases.

3    This proceeding involves a claim by Harvard that it entered into the transactions of early February 2019 in reliance on misleading representations made by Mr Tiller and Dimension. The representations are said to have concealed the involvement of the third respondent, Mr Giovanni Nicoletti, in Dimension and in the Farms. Harvard claims that in making the representations, Mr Tiller and Dimension engaged in misleading or deceptive conduct in breach of s 18 of the Australian Consumer Law (ACL), as applied respectively by the Fair Trading Act 2010 (WA) (FTA) and the Competition and Consumer Act 2010 Cth) (CACA). Harvard alleges that it entered into the transactions of early February in reliance on the misleading or deceptive conduct. It claims that Mr Nicoletti and a director of Dimension, the fourth respondent Mr Damian Bryce, were involved in the misleading or deceptive conduct.

4    The proceeding also involves a claim by Harvard that, on 15 February 2019, shortly after the New Leases were signed, Mr Tiller and Dimension executed deeds (15 February Deeds) by which Mr Tiller assigned his interest in the New Leases to Dimension and relinquished any involvement in the Farms. Harvard alleges that, in the context of certain correspondence between its solicitors and the solicitors for Mr Tiller and Dimension, the omission of Mr Tiller, Dimension, Mr Nicoletti and Mr Bryce to disclose the existence of the 15 February Deeds was also misleading or deceptive conduct. Harvard did not find out about the deeds until October 2019, as a result of discovery in this proceeding.

5    Harvard claims that each of these two instances of misleading or deceptive conduct caused it to suffer loss or damage. That is because, it says, by April 2019 it had leased the Farms to third parties, the Fowler family, at a rent significantly higher than the rent under the New Leases (the Fowler Lease). The alleged misleading representations are said to have caused Harvard to have been unable to give vacant possession under the Fowler Lease and thus earn the higher rent. It will be necessary to explain that claimed causal connection in further detail later in these reasons.

6    In relation to the alleged concealment of the 15 February Deeds, Harvard says that the entry into the deeds was a fundamental breach constituting a repudiation of the New Leases. It claims that if it had known of the 15 February Deeds by April 2019, it would have accepted the repudiation and gained vacant possession of the Farms in time for the Fowler Lease to come into effect. Harvard knew of Mr Nicoletti's involvement in the Farms by that time.

7    In relation to the alleged misrepresentations of January 2019, Harvard claims orders which would result in it obtaining vacant possession of the Farms, and damages. In relation to the cause of action concerning the alleged concealment of the 15 February Deeds, it only claims damages. In both cases, the damages are equal to the difference between the first year of rent under the Fowler Lease and the annual rent under the New Leases.

8    Harvard requested that orders confirming who was entitled to possession of the Farms be made before the commencement of the current farming season, if necessary without publishing reasons at the same time. I therefore made orders dealing with that subject on 19 March 2020. These are my reasons for making those orders and for the further orders that I make on publication of these reasons.

9    The outcome is that the application will be dismissed. Harvard's claim in respect of the first instance of misleading or deceptive conduct fails because, while it has established that it relied on misleading representations made by Mr Tiller and Dimension, it has not proved that it suffered any loss or damage because of that reliance. Also, it has not established that Mr Nicoletti or Mr Bryce had sufficient knowledge of the misleading or deceptive conduct to attract liability for the conduct under the ACL. Harvard's claim in relation to the second instance of misleading or deceptive conduct fails because, while the conduct was misleading or deceptive or likely to mislead or deceive, and while the entry into the 15 February Deeds was a breach of the New Leases, it was not a fundamental breach which would have permitted Harvard to re-enter the Farms, had it been aware of it. Also, Harvard has not established that Mr Bryce engaged in the relevant conduct.

10    Given the possibility of an appeal, it is not appropriate to confine these reasons to those matters, and I will make such findings as are necessary to determine the factual issues that arise on the pleadings, as described below.

11    It is necessary to make clear at the outset that there was no allegation that the fifth respondent, Mrs Tiller, engaged in or was involved in any misleading or deceptive conduct. She appears to have been named as a respondent because some of the orders sought potentially affected her interests as a former lessee of the Farms. I will make no adverse finding against Mrs Tiller.

The pleadings and the issues to be determined

12    I gave a broad description of the pleaded issues in Harvard Nominees Pty Ltd v Tiller [2019] FCA 1672, but there have been substantial amendments since, then so it is convenient to give a full description here.

Background

13    John Caratti is a central figure in the relevant events. I will refer to him as 'Mr Caratti', except when it is necessary to avoid confusion between him and other members of his family.

14    According to the Further Further Amended Statement of Claim filed on 3 December 2019 (SOC), Mr Caratti and other entities in which he had an interest leased farming properties in the Esperance and Yilgarn districts to Mr Nicoletti and his wife. That included the Farms, which from about 1994 were leased to the Nicolettis via a sub-lease from Mammoth.

15    Harvard claims that various disputes arose about arrears of rent and other defaults. Harvard says that in or about November 2016, Mr Nicoletti told Mr Caratti that he and his wife wanted to cease farming in Esperance. It also alleges that Mr Tiller told Mr Caratti that Mr and Mrs Tiller wanted to take over operating the Farms. It is said that Mr Caratti told both Mr Nicoletti and Mr Tiller that he would agree to lease the Farms to Mr and Mrs Tiller if all arrears of rent were satisfied. It is also alleged that Mr Caratti told them, and it was the fact, that he did not want to deal with Mr Nicoletti again in relation to the Farms as he was dissatisfied with the manner in which Mr Nicoletti had addressed (or not) the alleged defaults.

16    Mr and Mrs Tiller became sub-lessees of the Farms from Mammoth for a five year term commencing on 1 March 2017 under an instrument I will call the Tiller Lease. On 18 January 2019, Mammoth issued a default notice to them for non-payment of rates. Harvard alleges that on or about 22 January 2019, Mr Tiller told Mr Caratti that Mrs Tiller had asked for a divorce.

The alleged conversations on 31 January 2019

17    On or about 31 January 2019 two conversations between Mr Caratti and Mr Tiller are claimed to have taken place, with the second of these being the occasion on which the first alleged instance of misleading or deceptive conduct occurred. It is pleaded that in the first conversation on that day, Mr Tiller told Mr Caratti that (SOC para 10):

(a)    he had formed a new company called Dimension Agriculture Pty Ltd (being the Second Respondent);

(b)    he wished to surrender the Tiller Lease and enter into a new lease of the Farms with himself and [Dimension] as lessee, in place of [Mrs Tiller], on the same terms;

(c)    the partnership between [Mr and Mrs Tiller] would need to be dissolved and all the assets in the partnership assigned to [Dimension];

(d)    [Mrs Tiller] had said she would sign a surrender of the Tiller Lease as part of implementing the divorce arrangements;

(e)    because the latest season had seen a bumper crop and good market prices for grain, he would be able to pay off all outstanding arrears and debts owed by the Tiller partnership to [Harvard] and Mammoth in return for [Harvard] and Mammoth agreeing to surrender the Tiller Lease and entering into a new lease with [Dimension].

18    Harvard alleges that immediately after that conversation, Mr Caratti obtained a company search of Dimension which revealed that Mr Tiller and the fourth respondent, Damian Bryce, were its directors, and that Mr Bryce held the only issued share. It is then pleaded that Mr Tiller, on his own behalf and on behalf of Dimension, orally represented to Mr Caratti on behalf of Harvard and Mammoth that (SOC para 12):

(a)    [Mr Bryce] had been referred to [Mr Tiller] by [Mr Nicoletti];

(b)    [Mr Bryce] was a director of [Dimension] because he was to assist [Mr Tiller] by taking over all of the work previously undertaken by [Mrs Tiller] ('the First Bryce representation');

(c)    the share in [Dimension] held by [Mr Bryce] was held by [Mr Bryce] beneficially for [Mr Tiller] ('the Second Bryce representation');

(d)    other than referring [Mr Bryce] to [Mr Tiller], [Mr Nicoletti] had no and would not have any involvement in [Dimension] ('the First Nicoletti representation'); and

(e)    [Mr Nicoletti] would not be involved in [Dimension's] activities on the Farms ('the Second Nicoletti representation').

31 January representations - reliance, falsity and loss and damage

19    The SOC pleads that in reliance on the four defined representations, Harvard entered into various transactions, the effect of which was that it replaced Mammoth as the lessor or sub-lessor of the Farms, and Mr Tiller and Dimension replaced Mr and Mrs Tiller as the lessees or sub-lessees.

20    Harvard claims that the representations defined as set out in [18] above are false because at the time they were made, Mr Nicoletti had and would continue to have an involvement in Dimension, it was intended that he would be involved in Dimension's activities on the Farms, Mr Bryce was a director of Dimension not to assist Mr Tiller but to act as Mr Nicoletti's nominee, and Mr Bryce held the share in Dimension beneficially for Mr Nicoletti.

21    The falsity of the defined representations is said to have been confirmed when Mr Nicoletti admitted to John Caratti, in a conversation on 21 March 2019, that he owned Dimension, that he had been and would continue to be involved in Dimension, and that he was taking over the operations of the Farms because Mr Tiller owed him a lot of money. It is also said to have been admitted in several items of solicitors' correspondence that Mr Nicoletti had caused Mr Bryce to be described as the sole shareholder of Dimension, when at that time Mr Nicoletti was the intended and actual beneficial owner of issued shares in Dimension.

22    The SOC also pleads, as falsifying the representations, certain transactions or proposed transactions which, broadly speaking, concerned the assignment of Mr Tiller's rights in the Farms to Dimension. The first was a proposed deed of assignment of sub-lease, by which Mr and Mrs Tiller would assign the Tiller Lease to Dimension. Mammoth was to be a party to that deed. However it is pleaded that Harvard ('the Applicant') refused to execute it, and required Mr Tiller to be a named party to the New Leases.

23    The second set of transactions said to falsify the representations was a pair of deeds (one for each Farm) by which Mr Tiller assigned his interest in the New Leases to Dimension and relinquished any involvement in the Farms; that is, the 15 February Deeds. Harvard claims that they show that even as he signed the New Leases, Mr Tiller intended to cease operating the Farms, so that executing the New Leases concealed Mr Nicoletti as the controlling mind of Dimension and as solely managing the Farms.

24    These matters are said to mean that Mr Tiller and Dimension engaged in misleading or deceptive conduct in trade or commerce, in contravention of s 18 of the ACL. Harvard alleges that Mr Nicoletti and Mr Bryce were involved in the contraventions of s 18.

25    Harvard claims that on 2 April 2019, by its solicitors Hotchkin Hanly, it gave notice of rescission of the New Leases. It says that it granted the Fowler Lease on 17 April 2019, subject to a condition precedent requiring it to give vacant possession of the Farms by 1 May 2019, which was not satisfied.

26    The conduct of each of Mr Tiller, Dimension, Mr Nicoletti and Mr Bryce is said to have caused Harvard to suffer loss and damage. By particulars, Harvard claims damages equal to the difference between the rent under the Fowler Lease and the rent under the New Leases. The claim is made only in respect of the rent for the first year of the Fowler Lease which, if the condition as to vacant possession had been satisfied, would have run from 1 May 2019 to 1 May 2020.

27    In addition to damages, Harvard seeks orders under s 237 and s 243 of the ACL declaring the New Leases to be void, alternatively requiring Mr Tiller and Dimension to execute a deed terminating the New Leases. It also seeks consequential orders for delivery up of vacant possession of the Farms, for the removal of chattels and improvements and for the removal of caveats that Mr Tiller and Dimension have lodged.

The non-disclosure case

28    Harvard also pleads that the same four respondents engaged in misleading or deceptive conduct by failing to disclose the existence of the 15 February Deeds. It alleges that entry into those deeds without Harvard's consent was a fundamental breach and a repudiation of the New Leases.

29    It will be necessary to describe the pleaded claim in more detail later on; for now, it is sufficient to say that the omission to disclose the deeds is alleged to be misleading or deceptive because the deeds falsified a letter that Mr Tiller's and Dimension's solicitors sent to Harvard's solicitors on 5 April 2019.

30    Harvard pleads that in reliance on this misleading or deceptive conduct it did not terminate the New Leases as it was then entitled to do, and was precluded from relying on its right of termination. This is said to have caused loss or damage because if the existence of the 15 February Deeds had been disclosed, Harvard would have exercised its right to terminate the New Leases before 30 April 2019, and delivered vacant possession of the Farms under the Fowler Lease by 1 May 2019. Damages are claimed in relation to the additional rent thus foregone, particularised in the same way as the damage claimed to have been caused by the alleged representations of 31 January 2019.

The Defence - the history of dealings between the respondents and Mr Caratti

31    The further amended defence dated 21 November 2019 (Defence) pleads the history of the arrangements between Mr and Mrs Nicoletti and entities associated with Mr Caratti in more detail than the SOC does. According to the Defence, there were two leases between Mr and Mrs Nicoletti and Mammoth in relation to the farms, one for a term of five years commencing on 1 March 2005, and the other for a 10 year term commencing on 1 March 2010. Six other leases of farming land in the Yilgarn and Esperance districts are also pleaded, with Mammoth as lessor and, as lessees, Mr and Mrs Nicoletti (and, in one instance, Malcolm Nicoletti) or a company controlled by Mr Nicoletti, Apache Investments Australia Pty Ltd. These cover various periods commencing in 2001 and ending in 2019.

32    The respondents deny that the Nicolettis or their associated entities were ever issued with a default notice under any of these other six leases. It is said that all the dealings Mr Nicoletti had in relation to those six leases were with John Caratti's brother, Allen.

33    In about February 2012, Mr and Mrs Nicoletti granted a sub sub-lease of the Farms to Mr and Mrs Tiller for a three year term, and this was extended for a further two years from March 2015. It is pleaded that all dealings between Mr Tiller and Mammoth were with Allen Caratti. He is said to have agreed in March 2016 that Mr and Mrs Tiller, operating as a partnership called 'SC & FH Tiller', would pay rent and other amounts due under the sub sub-lease direct to Mammoth in discharge of Mr and Mrs Nicoletti's liability under the sub-lease. From then on that is what happened, and Mammoth accepted the payments. It is pleaded that Mr Tiller only had limited dealings with John Caratti until early December 2016. It is also pleaded that, except for executing a deed of surrender for the Nicolettis' sub-lease from Mammoth, Mr Nicoletti did not have any dealings with John Caratti in relation to that sub-lease or the Farms.

34    The Defence goes on to plead that in December 2016, John Caratti raised the issue of expenses being deducted from rental payments for the Farms, and alleged that the rent was in arrears. It claims that the Tillers had paid the allegedly missing amounts to Allen Caratti on behalf of Mammoth, so there were no arrears. It is further alleged that Mr Nicoletti had no dealings with John Caratti in relation to that issue.

The conversations in late 2016

35    Harvard's allegations of conversations between Mr Caratti and each of Mr Nicoletti and Mr Tiller in late 2016 have been set out above. The respondents deny the alleged discussion with Mr Caratti in which Mr Nicoletti said he wanted to surrender the sub-lease from Mammoth because he wished to stop farming in Esperance. As for the conversation between Mr Tiller and Mr Caratti about Mr Tiller's wish to take over the Farms, it is common ground that this did take place, but the respondents plead that Mr Caratti said a new lease over the farms to Mr Tiller would be OK provided he paid the alleged arrears. Mr Tiller decided he had no choice, and he and Mr Caratti agreed to go ahead on that basis, so that the terms of the new lease of the Farms to the partnership of Mr and Mrs Tiller were agreed in December 2016.

36    It is common ground that the Tiller Lease was entered into as Harvard pleads. It is also common ground that Mammoth issued a default notice for non-payment of rates to the Tillers under that lease on 18 January 2019.

The conversation between Mr Tiller and Mr Caratti on 18 or 22 January 2019

37    I have referred to a plea by Harvard that on or about 22 January 2019, Mr Tiller told Mr Caratti that Mrs Tiller had asked for a divorce. The account of that conversation pleaded in the Defence is that Mr Caratti asked Mr Tiller after 18 January 2019 why the rates had not been paid, and Mr Tiller said that SC & FH Tiller were having some financial issues and Mr and Mrs Tiller's marriage had broken down and the partnership may have to be dissolved. The respondents also plead that Mr Tiller said he wanted to restructure the farming business and he was in discussions with two or three farmers, one of whom was Mr Nicoletti, about being a financial backer for the farming business through a corporate entity. It is alleged that Mr Caratti said that he did not care if Mr Tiller wanted to restructure and he just wanted the rates paid.

38    So, the respondents allege, Mr Caratti knew that Mr Nicoletti was potentially involved in the Farms, as a financial backer.

The alleged conversations of 31 January 2019 in the Defence

39    In relation to the key conversations between Mr Caratti and Mr Tiller that are alleged to have taken place on 31 January 2019, the respondents' pleading differs from Harvard's account in a number of material respects. The respondents do not necessarily accept that there were two key conversations on 31 January. They refer instead to a number of telephone conversations in late January 2019. They plead that when told about Dimension, Mr Caratti asked who Mr Bryce was and Mr Tiller said that he was both his (Mr Tiller's) farm consultant and Mr Nicoletti's farm consultant. It is said that Mr Caratti asked why Mr Bryce was a director of Dimension, and Mr Tiller said that Mr Bryce was assisting with the business. Mr Caratti asked where the money was coming from to finance the farming business and who was behind Dimension, and Mr Tiller said that was none of Mr Caratti's business. Mr Caratti is alleged to have said he did not care who was behind Dimension as long as the rates were paid.

40    In summary, the respondents deny each of the defined 'Bryce representations' and 'Nicoletti representations' which Harvard alleges were made in a second conversation on 31 January 2019. They allege that Mr Caratti knew that someone other than Mr Tiller was going to finance Mr Tiller's farming activities and knew that Mr Tiller would not tell him who it was, and that Mr Caratti said he did not care who it was.

Reliance, falsity, rescission, loss and damage

41    The respondents also deny that Mr Tiller said that he could pay all arrears in return for a new lease. They claim that in a conversation in early February, in return for agreeing to a new lease, Mr Caratti extracted accelerated payment of $70,000 of the $140,000 which was by then remaining from the alleged rental arrears. The respondents thus plead that Mr Caratti did not cause Harvard to enter into the New Leases in reliance on any of the alleged representations (if they are found to have been made), but that the did so in order to obtain payment of the outstanding rates and of the accelerated arrears payment.

42    The Defence goes further to allege that Mr Caratti himself engaged in misleading or deceptive conduct in saying, in effect, that he did not care who was financing, associated with or involved with Dimension or Mr Tiller. This was not raised by way of cross-claim but was said to disentitle Harvard to the relief it seeks. However at trial counsel for the respondents indicated that this aspect of the Defence was not pressed, so it is not necessary to address it further.

The defence to the non-disclosure case

43    The Defence denies Harvard's allegations that the four pleaded representations were false. Yet the respondents claim that Mr Caratti knew before he spoke to Mr Nicoletti in late March 2019 that Mr Nicoletti was involved with Dimension and the Farms. It is not clear how he is said to have become aware, since the respondents' pleas above only go so far as to say that he was told that Mr Nicoletti might become a financial backer for the farming business through a corporate entity, and that when Mr Caratti asked subsequently, Mr Tiller refused to say who was financing Mr Tiller and Dimension's activities. While the respondents accept that Mr Caratti did speak to Mr Nicoletti in late March 2019, they allege that he acknowledged Mr Nicoletti's involvement with the Farms and offered him $500,000 to cease farming the Farms because he (Mr Caratti) could get a lot more money for the Farms. Mr Nicoletti is said to have rejected that offer.

44    The respondents say that Harvard was not entitled to rescind the New Leases, as it purported to do by its solicitors' letters in early April 2019, and that the attempt to do so was a repudiation which Mr Tiller and Dimension did not accept. They deny that Mr Tiller and Dimension engaged in misleading or deceptive conduct and deny that Mr Nicoletti and Mr Bryce were involved in any such conduct. As to loss and damage, they say that even if there was misleading conduct and it was relied upon, Mr Tiller and Dimension have performed all their obligations under the New Leases. The respondents plead that if Mr Caratti, Mammoth and Harvard had not taken the actions they are alleged to have taken in reliance on the conduct, SC & FH Tiller would have remained the lessee of the Farms pursuant to the Tiller Lease with Mammoth. So, they say, Harvard has suffered no loss and damage anyway.

45    In defence of Harvard's case as to non-disclosure of the 15 February Deeds, the respondents give a number of reasons as to why the deeds were not a breach of the New Leases and did not amount to a repudiation or, if they did, why that would not have led to the termination of the Leases. First, it is said that the 15 February Deeds were never implemented or acted or relied upon. In submissions there was added to this the argument that the formal requirement of delivery of the deeds was not satisfied. Second, it is said that it was not intended that the deeds would alter the legal relationship under the New Leases between Mr Tiller and Dimension on the one part and Harvard on the other part. That was said to effect an equitable assignment only, when the prohibition on assignment in the New Leases only applied to the assignment of legal estates or interests. Third, it is said that the 15 February Deeds were in any event rescinded by a deed of rescission dated 31 July 2019 and a deed of confirmation dated 7 November 2019, so that any breach was remedied. It is alleged that relief against forfeiture would therefore have been granted. So in the end, Harvard would not have been able to rely on the 15 February Deeds in order to obtain vacant possession of the Farms anyway.

46    As far as Lawton Gillon's letter of 5 April 2015 goes, the respondents deny that there was any misleading or deceptive conduct as a result of it, and say that Mr Tiller alone instructed Lawton Gillon in respect of the letter. Reliance on the alleged conduct is denied because, it is said, the 15 February Deeds were not a repudiation of the New Leases and in any event Mr Caratti by that time believed that Mr Nicoletti was in control of farming operations on the Farms.

The key issues

47    The following issues are the main ones that arise in this proceeding. They are defined by the pleadings as I have summarised them, in light of the way the parties conducted their cases at trial. As will be seen, it has turned out not to be necessary to determine the final issue, about remedies.

(1)    What was said in conversations between Mr Caratti and Mr Tiller in late January 2019 about the involvement of Mr Bryce and Mr Nicoletti in Dimension Agriculture and its activities on the Farms? This breaks down into a number of sub-issues:

(a)    What did Mr Tiller tell Mr Caratti in late January 2019 about the issues that the Tiller partnership and his marriage were facing at that time? In particular, did he tell Mr Caratti that he was talking to Mr Nicoletti (among others) about backing his farming business?

(b)    Were any of the four pleaded representations made? Or did Mr Tiller tell Mr Caratti that it was none of Mr Caratti's business who was going to finance the farming business and who was behind Dimension?

(2)    Did Harvard enter into the instruments of early February 2019, which resulted in it leasing the Farms to Mr Tiller and Dimension, in reliance on the pleaded representations?

(a)    This raises the question of whether Mr Caratti considered Mr Nicoletti to be an unsatisfactory tenant.

(b)    It also raises the question of whether, as the respondents allege, Harvard entered into the instruments in order to bring forward receipt of the arrears payment of $70,000 and to obtain payment of the Shire rates.

(3)    Were the four pleaded representations false? It is common ground that Mr Nicoletti came to be the sole shareholder and a director of Dimension and came to be involved in the Farms. But the timing, nature and extent of Mr Nicoletti's interest in Dimension and his involvement in it and in the Farms is in issue.

(4)    Did Mr Tiller make the representations (if they were made) on behalf of Dimension? If Mr Tiller and/or Dimension did engage in misleading or deceptive conduct, were Mr Nicoletti or Mr Bryce knowingly involved?

(5)    Has Harvard suffered loss or damage because of the four pleaded representations (if they amounted to misleading or deceptive conduct)?

(6)    Was the making of the 15 February Deeds a fundamental breach or repudiation of the New Leases which would have entitled Harvard to terminate those leases? At [43] above I have set out the reasons why the respondents say that is not so.

(7)    Was the omission to disclose the existence of the 15 February Deeds to Harvard misleading or deceptive conduct? That needs to be assessed in the context as pleaded, in particular the correspondence between Hotchkin Hanly and Lawton Gillon between 25 March and 5 April 2019.

(8)    Did each of Mr Tiller, Dimension, Mr Nicoletti and Mr Bryce engage in that second instance of alleged misleading or deceptive conduct?

(9)    Did Harvard, in reliance on that misleading or deceptive conduct, become precluded from terminating the New Leases for repudiation, because it did not know about the opportunity to terminate? If the 15 February Deeds had been disclosed to Harvard on 5 April 2019 or within a reasonable time thereafter, would Harvard have terminated the lease and obtained vacant possession of the Farms before 1 May 2019, so as to comply with the condition precedent of the Fowler Lease?

(10)    What remedies should follow if loss or damage because of misleading or deceptive conduct is established?

(a)    Should the New Leases be declared to be void ab initio? In written submissions Harvard indicated that it only pursues this on the basis of the representations of late January, not on the basis of the non-disclosure of the 15 February Deeds.

(b)    What amount of damages should be awarded, if any?

The witnesses

John Michael Caratti

48    John Caratti is a director of Harvard and of Mammoth. It is Mr Caratti, on behalf of Harvard, whom Harvard claims was misled by the alleged conduct of Mr Tiller, Dimension, Mr Nicoletti and Mr Bryce. Mr Caratti gave evidence of the conversations with Mr Tiller which, it is said, comprised the first instance of alleged misleading or deceptive conduct.

49    There was little evidence before the court as to Mr Caratti's background and business history. It appears that through Harvard, Mammoth and other companies, and also in his own name with his brother Allen, Mr Caratti has acted, in effect, as the landlord of large areas of farming land in (at least), the Shire of Esperance and the Shire of Yilgarn. It can be inferred that he is a very experienced businessperson and, given the substantial amount of property apparently under his control, has had considerable success. He accepted in cross-examination that he had considerable experience in the operations of companies, and that he controlled Harvard (ts 121).

50    In the witness box Mr Caratti presented as someone with a forthright way of communicating his views. It was clear from observing him under cross-examination that he was not a credulous or trusting person. It was also clear that when it came to looking after the interests of Harvard, Mammoth and himself, Mr Caratti was far from quiescent. In matters of business, at least, he was not disposed to passively accept matters put to him by others. Rather, he presented as someone who would actively interrogate any proposition or proposal put to him, and who would be reluctant to accept it unless he was confident that it preserved or enhanced his business interests.

51    For reasons I will now give, I have approached Mr Caratti's evidence with caution.

52    One reason was how Mr Caratti conducted himself in cross-examination. He did not qualify or retract any of his evidence on key points. His answers were invariably categorical and emphatic. He had no hesitation in describing the proposed evidence of others as 'totally false'. He was often combative with the cross-examiner, and he appeared to take umbrage at any challenge to his version of events, no matter how innocuous. Of course, an unyielding approach of that sort can be a mark of conviction, and therefore of the truth of the evidence. But the overall impression left by Mr Caratti's lack of hesitation or reservations was of a wish to convey complete conviction, or perhaps a habit of doing so, which are not necessarily the same as actually holding the conviction.

53    Another cause for doubt about Mr Caratti's evidence emerged when he was cross-examined on the fact that the accounts given in his witness statements of key conversations put the words used in inverted commas. That is, there was nothing to indicate that they contained Mr Caratti's recollection only of the effect or substance of what was said. This included the alleged conversation of 22 January 2019 and much of the second alleged conversation of 31 January 2019, in which the misleading representations were said to have been made. In numerous other places, a statement that he did not remember the precise words, only the substance of what was said, did appear. That suggested that where that statement was absent, Mr Caratti was giving the exact words used. I have set out an example at [191] below.

54    It would be implausible to suggest that Mr Caratti could recollect that many conversations with such precision. That his memory was not so precise was confirmed by his answers at one point when the cross-examiner invited him, in a non-leading way, to give his recollection of the first conversation he is said to have had with Mr Tiller on 31 January 2019. His account of the conversation in the witness box omitted large parts of the account given in the witness statement. Similarly, when cross-examined in a largely non-leading way about the second alleged conversation on that day, Mr Caratti omitted several details that appear in his witness statement (ts 113). That by itself does not necessarily damage the credibility of his evidence; variability in recollection is a human phenomenon. But it does confirm that Mr Caratti does not possess any unusual faculty for recalling conversations verbatim, so it casts doubt on the reliability of his witness statements, which rather suggested that he did.

55    When cross-examined about the inverted commas in his witness statement ('direct quotes' might have been a better way of describing it) Mr Caratti did not claim that he did remember the exact words. Nevertheless, his answers on the point were unsatisfactory. At one point he said he could not recall whether they were the exact words or not (ts 115). Elsewhere, he claimed not to understand the significance of inverted commas, and to say he was never very good at English (ts 103). Whether that is so, I have no doubt that he did understand the import of what the cross-examiner was asking him. But rather than frankly say that the inverted commas did not mean that he remembered every word, Mr Caratti refused to accept any general proposition on the subject, and insisted that the cross-examiner take him to every passage in his witness statements where inverted commas were used, of which there were many. In the course of this questioning he also refused to accept that he was an experienced litigant. I consider that Mr Caratti was being less than candid at these points, and it was one of the factors that caused me to approach his evidence with caution.

56    The main factor, however, which causes me to take that approach was that several times, it appeared to me that Mr Caratti's evidence exaggerated and embellished his claims in ways that did not seem plausible, judged against the inherent probabilities, or did not seem consistent with, or at least went beyond, other evidence such as his own diary notes. I will provide specific instances of this below. In general, I was not prepared to accept Mr Caratti's evidence on such issues unless it was common ground with the respondents or supported by the documentary record or by the inherent probabilities of the relevant situation. However, as will be seen, in the end, on the main aspects of the claim his evidence had that support.

Simon Clifford Tiller

57    The first respondent, Mr Tiller, is a wheat and livestock farmer and truck driver. His parents were farmers and he grew up on a farm and worked on farms as a teenager and young man. He married the fifth respondent, Felicity Tiller, in 2004. In 2008 he took over the family farming business, which by then was in the Esperance area. He sold that farm in around 2011 and in 2012 began farming at Warriup and Howick Farms, pursuant to a sub-lease which Mr and Mrs Nicoletti granted to Mr and Mrs Tiller.

58    I did not find Mr Tiller to be a credible witness. His evidence was full of inconsistencies and implausibilities. I will refer to several instances in the course of making findings of fact below. Too often, when challenged on such matters in cross-examination, Mr Tiller retreated to equivocal answers or expressions of incomprehension. This both indicated that he did not have a satisfactory explanation, and that at the same time he was unwilling to concede that he may have been mistaken, even when faced squarely with the improbability of the evidence he had given. Also, in cross-examination his evidence changed frequently. In the witness box he often appeared to be confused as to a relevant sequence of events. He would frequently not listen to questions properly. I accept that being cross-examined in court is a stressful experience, and there was no evidence to suggest that Mr Tiller had much prior experience of the court process, if any. Nevertheless, I was left with the impression that he sometimes retreated into incomprehension as an alternative to facing the improbable consequences of the evidence he was giving.

59    An example of how Mr Tiller's account of events changed is in the following excerpt from the transcript, concerning the 15 February Deeds. At paragraph 159 of his statement he said 'I did not read the document closely. I however understood from my brief read of it at the time that it just acknowledged that I had not put anything into Dimension, which was the case'. The cross-examination on that point was as follows:

Now, you say at paragraph 159 of your statement that you did not read the document closely, but you:

… understood that I have not put anything into Dimension.

?---That's right.

Which was the case. Which bit did you read that gave you that impression? --- I ---

Go to the document. Just show us what you read?---I didn't read much of it.

Yes. I understand that. So, I want you to tell us what you did read?---Like I said, I didn't read very much of it. And I talked to [Mr Nicoletti] about this, and that's my understanding of the document.

Did you read it at all?---Not really.

Not really, or not at all?---I had a - I had a glance at it. That was it.

You signed a document that you didn't read?---Yes.

So why did you say that from your brief read of it that was your understanding? Are you now saying that your understanding is derived solely from what you were told by John Nicoletti?---No. I had a - I had a bit of a look at it and - - -

So, what bit did you look at?---I don't remember.

You don't remember? So how could you possibly testify as you did in paragraph 159?---Well, I had a brief look at it and I had a chat with John Nicoletti and - - -

So, what part did you read when you briefly looked at it?---Well, let me read it again. Just give me a moment. Well, it says in - in the first couple of lines:

Simon and Dimension agree and acknowledge that on and from the date of the lease agreement Simon has not provided a contribution in funds.

Okay. So, you stopped then, did you?---Yes.

You didn't think anything else was worth reading?---No.

60    Later in his cross-examination Mr Tiller said, 'I didn't even read the assignment and release anyway'. He was then cross-examined as follows (ts 264):

You didn't read it, or you only read it briefly?---I read it briefly, like I said.

Well, what's your story, Mr Tiller? Did you read it or not read it?---I read the first couple of lines, like I said to you.

61    So, Mr Tiller's evidence about how he knew what was in the 15 February Deeds was variously: that he had a 'brief read of it' (suggesting that he read the whole thing, albeit quickly); that he 'didn't read much of it' (suggesting that he read some, but not all of it); that he did not 'really' read it (which may mean he did not read it at all); that he 'had a glance at it' (which may also mean that he did not actually read it); that he 'had a bit of a look at it' (which could mean anything); that he did not 'even read the assignment and release anyway' (suggesting he did not read it at all); that he did not remember what part he looked at; that he read 'the first couple of lines' only; and that his understanding of the document came at least in part from Mr Nicoletti. Only the last of these matters was directly inconsistent with the others. But even so, the variations in Mr Tiller's account of his review of the 15 February Deeds were so numerous as to undermine confidence in the account he was giving.

Stephen James Vaughan

62    Mr Vaughan is a licensed real estate agent with over 30 years' experience in the rural industry and a long history of advising both John and Allen Caratti. He provided Mr Caratti with a market appraisal of the Farms in mid-2018 and he helped to negotiate the Fowler lease. He gave his evidence under cross-examination in a straightforward manner which was consistent with his position as a professional intermediary and adviser with no vested interest in the outcome of the litigation. I accept Mr Vaughan as a witness of truth.

Peter William May

63    Mr May has worked on farms for Mr Nicoletti over the past 10 years and also runs his own non-agricultural businesses. He was an employee of Mr Nicoletti at the beginning of that 10 year period but he gave evidence that in more recent years, including 2019, he has worked as a contractor (ts 186). He ran the Farms for Mr Nicoletti from April 2019. Mr May only gave evidence because he was subpoenaed to do so, and did not provide a witness statement. Like Mr Vaughan, he gave his evidence in a straightforward way, and there was nothing to suggest he had any interest in the outcome of the litigation. I accept that Mr May gave his evidence truthfully.

Giovanni Basilio Nicoletti

64    Mr Nicoletti is 65 years old. People refer to him as 'John' or 'Nico' and Mr Tiller calls him 'Nicko'. He is a very successful wheat and livestock farmer and businessman. He was born in Merredin, Western Australia, and grew up on the family farm in Westonia. He left school in Year 9 at the age of 14, and for the next 10 years he worked on a family farm in Verona, Italy, which is where he met his wife, Giuliana (Julie). He returned to Western Australia in 1978 and began farming for himself on leased land in Westonia in 1979. According to his evidence, which was not contested on this point, by around 2008 to 2009 he was the single biggest wheat grower in Western Australia. He conducted business through companies including Apache Investments Australia Pty Ltd. One business which he established in 2001 and which has since thrived is the agricultural machinery dealership Ag Implements, which is owned by his company Ag Implements Pty Ltd.

65    I did not find Mr Nicoletti to be a credible witness. Unlike Mr Tiller, his demeanour in the witness box was generally calm and measured. He did not appear to be perturbed by any of the questions he was asked in cross-examination. But like Mr Tiller, his evidence was often implausible and internally inconsistent, indeed contradictory. Once again, examples will appear in the findings of fact below. Also like Mr Tiller, in cross-examination Mr Nicoletti often retreated to a position of equivocation or apparent incomprehension, rather than either provide a satisfactory explanation for the inconsistency or implausibility of his evidence, or candidly admit that the evidence was mistaken. My impression was that Mr Nicoletti was more focussed on giving evidence that suited the respondents' case than on answering questions truthfully.

Damian Glen Bryce

66    Mr Bryce is an accountant specialising in agriculture. He lives in Queensland. He worked for PricewaterhouseCoopers until 2006 and then in chief financial officer roles in the rural sector until he set up his own 'agribusiness finance' company, Map19 Consulting, in 2016.

67    Mr Bryce was also calm and measured in the witness box and answered questions in a straightforward manner. The evidence he gave as to his involvement in Dimension Agriculture and the Farms was consistent with the nature of his role, which was to provide professional services to Mr Nicoletti. His evidence was not seriously shaken in cross-examination. The overall impression which I gained from Mr Bryce's evidence was that he did what Mr Nicoletti instructed him to do, and Mr Nicoletti did not, for the most part, disclose his reasons for giving him those instructions. Nothing about that impression was inherently implausible or falsified by the objective documentary record. So in general, there was no reason to disbelieve Mr Bryce's evidence, given on oath.

Felicity Helen Tiller

68    Mrs Tiller's witness statement was admitted by consent and she was not cross-examined, so she did not enter the witness box. I accept that her evidence was given truthfully.

An issue of admissibility

69    Before embarking on a narrative of the relevant events it is necessary to resolve one evidentiary objection. The objection was to hearsay evidence which Mr Caratti gave based on things he was told by Mr May. In broad terms, it was evidence to the effect that Mr Tiller had relinquished control of the farms to Mr Nicoletti, and when that is said to have occurred. It was evidence of things that Mr May said to Mr Caratti on three occasions, being 10 April 2019, 7 May 2019 and 20 June 2019.

70    The evidence was plainly hearsay. It was, to use the words of s 59(1) of the Evidence Act 1995 (Cth) '[e]vidence of a previous representation made by a person' that was relied upon 'to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation'. The facts sought to be proved were things that were not within Mr Caratti's knowledge from any direct observation.

71    Harvard submitted that the evidence was nevertheless admissible because it was comprised of admissions. Under s 81 of the Evidence Act, the exclusionary hearsay rule found in s 50(1) does not apply to evidence of an admission, or to evidence of a previous representation made at or shortly before or after the time the admission was made which is reasonably necessary to refer to in order to understand the admission. On the definition in the Dictionary to the Evidence Act, an admission is a previous representation that is made by a party to a proceeding and is adverse to the party's interest in the outcome of the proceeding. Section 87 provides:

(1)    For the purpose of determining whether a previous representation made by a person is also taken to be an admission by a party, the court is to admit the representation if it is reasonably open to find that:

(a)    when the representation was made, the person had authority to make statements on behalf of the party in relation to the matter with respect to which the representation was made; or

(b)    when the representation was made, the person was an employee of the party, or had authority otherwise to act for the party, and the representation related to a matter within the scope of the person's employment or authority; or

(c)    the representation was made by the person in furtherance of a common purpose (whether lawful or not) that the person had with the party or one or more persons including the party.

(2)    For the purposes of this section, the hearsay rule does not apply to a previous representation made by a person that tends to prove:

(a)    that the person had authority to make statements on behalf of another person in relation to a matter; or

(b)    that the person was an employee of another person or had authority otherwise to act for another person; or

(c)    the scope of the person's employment or authority.

72    Harvard relied on s 87(1)(b), alternatively s 87(1)(c), to submit that the things that Mr May told Mr Caratti should be taken to be representations, and therefore admissions, made by Mr Nicoletti. The standard to which Harvard was required to prove the necessary elements of each of those paragraphs was that it was reasonably open to find those elements. That means it is not necessary to make a concluded finding of the relevant employment, authority or common purpose: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [No 4] [2006] NSWSC 90 at [11]. It also means that the standard of proof on the balance of probabilities, which would otherwise apply to the relevant evidentiary question by reason of s 142 of the Evidence Act, does not apply. I do not consider it necessary to gloss the meaning of 'reasonably open' further than that: cf. Jackson v TCN Channel 9 Pty Ltd [2002] NSWSC 1229 at [40].

73    Mr May's evidence was that he had worked on and off for Mr Nicoletti for the last 10 years. He said he was employed by him in the early part of that period but in the last few years he had been 'a subcontractor' to him (ts 186).

74    There was no written contract between Mr Nicoletti and Mr May. Mr May said that, apart from working for Mr Nicoletti he had two other businesses, none of which had anything to do with Mr Nicoletti or with agriculture (ts 187). Mr May did not suggest that his recollection was precise, but he said that in late February or early March of 2019 Mr Nicoletti asked him whether he was interested in coming to manage Warriup, and that there may be an opportunity if he wanted to come and look after Warriup for him, that is, for Mr Nicoletti.

75    Mr Nicoletti did not mention that Mr May would be working for any other person or entity (such as Dimension). When asked on whose behalf he was going to manage the farm, Mr May said 'Well, John approached me', that is, Mr Nicoletti. Apache Investments paid Mr May for his work on the Farms, although Mr May readily identified that company with John Nicoletti (ts 188). Mr May rendered invoices under his Australian Business Number. He was on a day rate and Apache Investments did not deduct any tax (ts 192).

76    Mr May lived in Esperance and would sometimes, but not always, stay overnight on the Farms (ts 189). There were breaks for him to work in his tourism business. But he was at the Farms most days; on average he would be there four to five days a week, and at least eight to 10 hours per day.

77    In terms of the work he did, Mr May said that he organised the staff and managed the day to day running of the Farms (ts 187). His evidence was, 'I ask what John wants to do and I just work from day to day and run the farm' (ts 188). If Mr Nicoletti told him what to do, he would do it: 'He's the boss'.

78    Mr May did not have authority to pay creditors of the Farms (ts 188). He still manages the Farms (ts 189).

79    Mr Nicoletti gave evidence in cross-examination to the effect that he telephoned Mr May in late March 2019 - he appeared to be certain that it was March but could not be sure it was late March - and said, 'If there's a possibility I need your help, would you be there?' and Mr May said, 'If it's farming I will help you'. Although this is vague as to the nature of the relationship, Mr Nicoletti did then accept that the conversation was to appoint a farm manager 'to help me manage the farm' (ts 291).

80    Does the above evidence show that Mr May was an employee of Mr Nicoletti? There is no definition of 'employee' in the Evidence Act, so the common law meaning of the term will apply. In ACE Insurance Limited v Trifunovski [2013] FCAFC 3; (2013) 209 FCR 146, after a lengthy survey of relevant authorities, Buchanan J (Lander and Robertson JJ agreeing) observed (at [102]-[103]) that there was:

no single or unifying test to determine whether an employment relationship exists. Some features of a particular relationship may tend strongly against such a conclusion. Principal amongst such features, in my view, are contractual terms which deny any requirement for personal service or represent clear indications of the pursuit of an independent business. Even where such features are absent the proper conclusion may be that a particular relationship is not one of employment, but the analysis is less straightforward.

Of the indicia of employment it is clear that a right of control remains an important consideration in many cases. It may be found in a right of organisation and allocation of work, as much as in some theoretical right to say how actual work should be done.

81    However while the degree of control remains important, the modern approach is multifactorial and the totality of the relationship must therefore be considered: Putland v Royans Wagga Pty Limited [2017] FCA 910 at [30] (Bromwich J). It may be difficult to give much independent weight to such things as taxation arrangements, because they reflect a subjective view of the nature of the relationship and may therefore be considered in the same category as declarations of intent, which, while not necessarily wholly irrelevant, must be approached with caution and may not assist at all: Putland at [26].

82    A number of factors speak against any conclusion that Mr May was an employee in relation to his work on the Farms, let alone an employee of Mr Nicoletti. These are:

(1)    Mr Nicoletti was not personally a sub-lessee of the Farms so on the face of things the business of the Farms was not his, personally - however this factor is of little help in resolving the present issue because if I were to give it significant weight, it would point to the conclusion that Mr May was Dimension's employee, and the representations could still be admissible on that basis because they were adverse to the interests of Dimension, as a party;

(2)    Mr May was paid by Apache Investments, not Mr Nicoletti personally (or Dimension);

(3)    Mr May was paid on the basis of a day rate on the rendering of invoices and without the deduction of tax (noting Bromwich J's observations about the limited weight that may need to be placed on such factors);

(4)    it appears that Mr May had no regular and set hours to work at the Farms, he was free to continue to run his businesses that were not related to the Farms, and it was expected that he would work in his tourism business when the tourist season recommenced; and

(5)    Mr May's own statement of the legal character of his relationship with Mr Nicoletti as being a 'subcontract', although that of course cannot be conclusive and in the circumstances, including the absence of any documents evidencing the contract, I give it little weight.

83    Factors that speak in favour of the view that Mr May was an employee of Mr Nicoletti are:

(1)    there is no suggestion that Mr May supplied any tools or machinery for use at the Farms and the evidence suggests that he did not, as Mr Caratti said Mr May told him 'all Nico's gear and men are on the farm' (Mr Caratti's first witness statement dated 11 November 2019 (Caratti I), para 219.3) (that hearsay is admissible under s 87(2) of the Evidence Act);

(2)    Mr Nicoletti asked him whether he was interested in coming to 'look after Warriup for him' and did not mention any other entity - Mr Nicoletti's own evidence was in terms that Mr May would be helping Mr Nicoletti to manage the Farms;

(3)    while Mr May's hours may not have been set, and were subject to breaks, it would appear from his evidence that he worked four to five days a week and eight to 20 hours a day, so that his hours were fairly regular and consumed most of Mr May's working life during the relevant period;

(4)    it also seems that the position is a permanent one or at least long term, as Mr May still works on the Farms; and

(5)    most importantly, it was clear that Mr Nicoletti had actual and, it may be inferred, legal authority to control Mr May in the way he managed the Farms - 'He's the boss'.

84    Mr Caratti's evidence was that Mr May told him that he was employed by Mr Nicoletti to manage the Farms (Caratti I, para 212.3). While this is admissible for present purposes under s 87(2), as a characterisation of the nature of the relationship by a witness of fact I would give it little weight, and in circumstances where Mr May's sworn testimony contradicted it I give it no weight.

85    These competing indicia are perhaps finely balanced, and if the question were to be determined on the balance of probabilities as an issue at the heart of the case, it may be that one would conclude that Harvard had not discharged its onus to prove an employment relationship. But that is not the question here. In my view the indicia I have described, including importantly the clear presence of control by Mr Nicoletti over Mr May's activities on the Farms, mean it is reasonably open to find that when Mr May spoke to Mr Caratti on the three occasions I have mentioned, he was an employee of Mr Nicoletti. It is not necessary to go further than that in determining the nature of the relationship.

86    As for the scope of Mr Nicoletti's employment, Mr Caratti's admissible hearsay evidence on the point was that ' He was employed by Mr Nicoletti to manage the Farms' (Caratti I, para 212.2) and he said 'I am managing the Farm for Nico like I told you before' (Caratti I, para 219.1). Mr May's own evidence, which I have described, is to the effect that he managed the day to day operations of the Farms. With limited exceptions, the representations (according to Mr Caratti's evidence) which he made to Mr Caratti were all about that subject, including the extent and timing of Mr Tiller's involvement in the running of the Farms. I am comfortably satisfied that it is reasonably open to find that those representations related to matters within the scope of Mr May's employment with Mr Nicoletti.

87    Subject to the limited exceptions I just mentioned, I rule that Mr Caratti's hearsay evidence about the content of the three conversations he had with Mr May is admissible to prove the facts which Mr May told Mr Caratti in those conversations. The exceptions are certain statements about the repossession of Mr Tiller's machinery, how much money Mr Tiller owed, and the whereabouts of Mr Tiller's parents after they left the Farms. Those matters are not within the scope of Mr May's employment.

88    Counsel for the respondents submitted that to the extent that it was a discretionary decision whether to admit the evidence, the discretion should be exercised against doing so because, he said, Mr May's evidence in the witness box differed in material respects from Mr Caratti's evidence about what he said and 'we should [not] be saddled with two sets of evidence … from the same witness' (ts 392). I take this to be a submission that the court should exercise its discretion under s 135 of the Evidence Act to refuse to admit the evidence because its probative value is substantially outweighed by the danger that it might be misleading or confusing or (perhaps) cause or result in undue waste of time. But I do not consider that the two different accounts of what Mr May said are likely to result in either of those outcomes. There will be no impediment to reconciling the two different accounts, or choosing between them, in the usual way.

A chronological account of the evidence

89    In Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60; (2004) 218 CLR 592 at [102] and [109], McHugh J observed that s 52 of the Trade Practices Act 1974 (Cth) (TPA), the predecessor to s 18 of the ACL, required the court to examine the impugned conduct as a whole in the light of the relevant surrounding facts and circumstances, not in isolated parts. His Honour was in dissent but not on this principle: see also the majority (Gleeson CJ, Hayne and Heydon JJ) at [74]: 'in cases under s 52, read in the light of the particular structure and goals of the Act, everything must depend on an appropriately detailed examination of the specific circumstances of the case'. See also Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [102] (Gummow, Hayne, Heydon and Kiefel JJ).

90    It is convenient before making specific findings about the key factual issues to place the factual disputes in the context of the relevant course of events as a whole. That includes the documents which, with one exception, were admitted into evidence by consent. Where the testimony adduced by the parties on key issues is contradictory, I will describe the competing versions of events but defer findings until the subsequent sections of these reasons.

The history of lease dealings between the Nicolettis and Caratti interests

91    There is an extensive history of lease dealings between the Nicolettis and companies associated with them, and John and Allen Caratti and companies associated with them.

92    Mr Caratti's evidence was that he has known Mr Nicoletti for 30 years (ts 119). Mr Nicoletti's evidence was that he has farmed properties owned by the Caratti family since around 1999 (Mr Nicoletti first witness statement dated 11 November 2019 (Nicoletti I), para 21). That is borne out by the numerous leases and extensions of lease in evidence; and it is not necessary to go into detail about them.

93    Mr Nicoletti gave evidence that his dealings with the Caratti family have always been through Allen Caratti (Nicoletti I, para 19). That statement is too wide and unqualified to be accepted in its entirety, but John Caratti did accept in his evidence-in-chief that Allen Caratti was largely responsible for the management of the Nicolettis' leases up until about 2012 (Mr Caratti's responsive witness statement dated 27 November 2019 (Caratti II), para 40). He said that he (John Caratti) took a more proactive role after that, although in cross-examination, he said that Allen only stopped managing farms on behalf of Mammoth in 2015 or 2016 (ts 126). When asked whether he accepted that Mr Nicoletti dealt with Allen Caratti in relation to the management of the farms he was leasing, Mr Caratti said that 'Allen and Nicoletti were bonded together' (ts 128). I accept that until 2016, Mr Nicoletti had few if any direct dealings with John Caratti over the leases. As will be seen, by late 2016 John Caratti was taking steps to assert more active control over the leasing arrangements for the Farms. It is not necessary to make a finding as to precisely when in 2016 he began to have dealings with Mr Nicoletti about those matters.

94    Turning to those leasing arrangements for the Farms themselves, John Caratti gave evidence, which I accept, that by an undated deed of lease entered into in July 1994, Harvard and John and Allen Caratti leased the Farms to Mammoth (Caratti I, para 6). Mr Caratti cannot now find a copy of the deed of lease, and it was not produced in evidence. There is no evidence as to the rent paid under that lease, including whether it was more than nominal.

95    Mr Caratti said in evidence that there was a lease by which Mammoth sub-leased the farms to Mr and Mrs Nicoletti, although he could not locate a copy of it. There is, in evidence, an undated lease (or sub-lease) of the Farms from Mammoth to Mr and Mrs Nicoletti which seems to have been made some time in 2004 (without two particular lots which appear to have been added in 2009 - see TB pp 61-62). It is for a term of five years from March 2005. The annual rent was $800,000 plus GST. There is also in evidence a deed of lease by which it appears that in 2009 Mammoth sub-leased the Farms to Mr and Mrs Nicoletti for 10 years from March 2010 (TB 10). Once again, the annual rent was $800,000 plus GST. John Caratti claimed in cross-examination that he had not seen that deed until discovery in these proceedings and that the signature of his mother, Madeleine Caratti, as a director of Mammoth was forged, but there is no need to make a finding about that.

96    The basis of Harvard's claim that it relied on the misleading conduct which is said to have occurred on 31 January 2019 is essentially that Mr Caratti was content to have Mr Tiller as a tenant, but would not have accepted Mr Nicoletti's involvement with the Farms, because he did not think that he was a good tenant. Assessing that claim requires the court to have regard to the history of dealings between Mr Caratti and each of Mr Tiller and Mr Nicoletti concerning actual and alleged defaults under the various leases.

97    Mr Caratti said in his evidence that the Nicolettis were not good tenants of the Farms and the other properties. This is, he said, because they were regularly in breach of their leases for non-payment of rent (Caratti I, para 11). There is some support for this in the documents. Emails between Mammoth's financial controller and the Nicolettis from February 2017 and May 2018 list outstanding invoices, presumably for rent, in relation to farms at Marvel Loch and Bullfinch. The outstanding invoices were said to total $643,500. Some of them were nearly one year old, and in the course of the email exchange, Mrs Nicoletti accepted the correctness of the list (TB 21). Payments for 2017 rent were made in 2018, even though the rent under the Marvel Loch sub-lease was payable in advance (TB p 191). Despite Mr Nicoletti's evidence that he always dealt with Allen Caratti, it appears from these emails that the pressure to pay the outstanding rent came from John Caratti. There is another email exchange in December 2018 seeking rent for those farms, which had fallen due in March and September of that year (TB 61). Mr Nicoletti's evidence, however, was that he could not recall those emails and that he and Mrs Nicoletti did not leave Bullfinch and Marvel Loch with any money owing under the leases (Nicoletti I, para 139).

98    Mr Nicoletti provided a witness statement responding to many of the claims made in Mr Caratti's statement in some detail, but he did not deny being late with payment of rent, other than in respect of the Farms themselves. I find that from time to time, Mr Nicoletti was significantly late in paying rent on some of the properties he leased from Caratti interests and that John Caratti was aware of that.

99    Mr Caratti's evidence was that as at December 2018, Caratti entities claimed interest on rental arrears by Mr Nicoletti in relation to leases at Yilgarn (Caratti I, paras 31-41) but he refused to pay and the Caratti entities did not litigate over that. Mr Caratti said that the arrears were eventually paid when Mr Nicoletti needed his consent to the assignment of the Yilgarn leases to the Saudi Agricultural and Livestock Investment Company (SALIC). That was under a transaction settled in April 2019, by which Mr Nicoletti sold his farms to SALIC. Mr Bryce first met Mr Nicoletti when he began to work for him in preparing his farming business for sale in 2017, and Mr Bryce worked on the transaction throughout 2018 and into early 2019 (Mr Bryce's first witness statement (Bryce I), paras 12-13). He and Mr Nicoletti worked closely together and developed a friendship (Bryce I, para 14).

100    Mr Nicoletti denied that he needed Mr Caratti's 'assistance' (Mr Nicoletti's responsive witness statement dated 15 November 2019 (Nicoletti III), para 17) in relation to the SALIC transaction but he did not specifically deny that the Yilgarn leases were in arrears or that the consent of landlords to aspects of the transaction was needed, and it is inherently likely that it was required. Mr Caratti gave evidence elsewhere that he met SALIC representatives in relation to the transaction on numerous occasions in December 2018 concerning the assignment of the Yilgarn land (Caratti I, para 190) and there is no reason to doubt that he did. I prefer Mr Caratti's version of events concerning the Yilgarn arrears to that of Mr Nicoletti.

101    Mr Caratti also gave evidence that three homes in the Bullfinch township which the Nicolettis leased from Caratti interests were not maintained and were left derelict. Mr Caratti also gave evidence of an implied oral admission from Mr Nicoletti that he 'destroyed' a house on a Marvel Loch farm he leased from Mammoth, although Mr Nicoletti is supposed to have said that the destruction was the result of white ants (Caratti I, paras 43-44). Mr Nicoletti's evidence was that he spent a substantial amount of money on that house to make it habitable and he does not recall the discussion in which the implied admission is said to have been made (Nicoletti III, para 19). Only Mr Caratti was cross-examined on this issue, and then only briefly to confirm his denial of Mr Nicoletti's version of events (ts 147-148). It is not possible on the basis of the limited evidence to determine whose version of events is correct, but it is a peripheral issue on which it is not necessary to make a finding.

2012 sub-lease from the Nicolettis to the Tillers

102    Mr Tiller's evidence was that he first met Mr Nicoletti in February 2012, and it appears they soon began to talk about Mr Tiller taking a 'sub-sub-lease' of the Farms (Mr Tiller's first witness statement dated 11 November 2019 (Tiller I), paras 14-19). By an undated instrument which appears to have been made in 2012, Mr and Mrs Nicoletti sub-leased the Farms (TB p 294) to Mr and Mrs Tiller. The term of the sub-lease was three years, commencing on 1 March 2012, with an option for a further two years. At $1,260,000 per annum, the rent was significantly higher than the rent the Nicolettis were paying under the sub-lease from Mammoth. Mr and Mrs Tiller moved onto the Farms at around this time (Tiller I, paras 20-21). There was a market rent review scheduled for March 2015, being the commencement of the further term.

103    The sub-lease from the Nicolettis to the Tillers was extended by deed, for two years from 1 March 2015. The rent stayed at $1,260,000 per annum (TB 12).

104    Mr Caratti said that from about 2015, Mr and Mrs Tiller paid the rent under the lease directly to Mammoth (Caratti I, para 14). Mr Tiller gave evidence of a meeting he had with Mr Nicoletti and Allen Caratti at which they indicated they were happy for Mr Tiller to pay the rent direct to Mammoth (Tiller I, para 29). It is not clear how that arrangement worked, given the apparent significant difference between the rent payable under the Tillers' sub-lease and the rent payable under the sub-lease to the Nicolettis.

105    Mr Tiller's evidence was that from 2012 until an unspecified time he only dealt with Allen Caratti in relation to the leasing of the Farms (Tiller I, para 27). It appears however from evidence which is described below that Mr Tiller started dealing frequently with John Caratti from at least December 2016.

The alleged arrears in the rent on the Farms

106    According to Mr Caratti, on 3 August 2016 Mammoth issued a notice of default under the Nicolettis' sub-lease of the Farms to Mr and Mrs Nicoletti for $720,000 of unpaid rent (including GST) (Caratti I, para 18). However Mr Nicoletti's evidence was that the first time he saw that document was during discovery in this proceeding (Nicoletti I, para 135). As I have said, there was one exception to the admission of all the documents into evidence by consent, and it was this notice.

107    Mr Caratti was cross-examined for some time about whether the notice was ever sent. The cross-examination was inconclusive, although it did make it clear that if it was sent, John Caratti did not do so, and he was relying on what his son Michael told him.

108    There are reasons to doubt that the notice was sent. Unlike other examples of rental arrears mentioned above, there is no email correspondence with Mrs Nicoletti concerning the alleged arrears. And it is curious that there is no record of the arrears being drawn to Mr Tiller's attention as, by August 2016 he was paying the rent for the Farms direct to Mammoth. It is also noteworthy that there is no mention of the amount of the arrears or the issue of a default notice in a letter from John Caratti's solicitor to Mr and Mrs Nicoletti which I will mention shortly. As the party seeking to rely on the issue of the notice of default, Harvard had the onus of establishing that it was sent. The doubts I have just described, along with the lack of any direct as opposed to hearsay evidence that it was sent, mean that Harvard has not discharged that onus.

109    Mr Caratti's evidence was that he spoke to Mr Nicoletti about the alleged arrears some time after 3 August 2016, and Mr Nicoletti said he would not pay any arrears but that Mr Tiller would pay (Caratti I, para 19). Mr Nicoletti's witness statements do not refer specifically to this conversation, whether to deny it or otherwise, although he does deny ever receiving a demand from John Caratti or discussing with him the subject of reductions in rent for capital improvements which he, Mr Nicoletti, had made (Nicoletti III, para 5). His evidence was that the default notice was baseless, because by then he had agreed with Allen Caratti that Mr Tiller would pay the rent on the Farms (Nicoletti I, para 135).

110    On 30 November 2016, solicitors acting for Mammoth wrote a letter to Mr and Mrs Nicoletti claiming that on occasion deductions had been made from rental payments for the Farms (TB 18). The letter said that, while Allen Caratti had agreed to the deductions, he had no authority to do so on behalf of Mammoth. But the letter did not make any demand for arrears; rather, its purpose was to notify the Nicolettis that Allen Caratti did not have authority to agree to such offsets. The evidence was that John Caratti gave instructions to issue this letter. Mr Nicoletti's evidence was that he does not recall seeing the letter before these proceedings (Nicoletti I, para 138).

111    Mr Tiller's evidence about the deductions is that he had made capital improvements to the Farms since 2012 and that he and Allen Caratti would agree to deductions from the rent to reflect some of the cost of those improvements (Tiller I, paras 48-49). A copy of the letter of 30 November 2016 was sent to him. His evidence was that up until then he did not know that Allen Caratti may not have had authority to agree to the deductions on behalf of Mammoth (Tiller I, para 50).

112    On 8 December 2016 Mr Tiller emailed John Caratti asking him to call regarding the letter. He spoke to Mr Caratti shortly after sending the email. A few hours later, Mammoth's financial controller emailed statements showing the alleged $720,000 arrears to Mr Tiller. He said that 'John' had asked him to send it (TB 20).

113    I find that there was an arrears of $720,000 shown in Mammoth's financial records and that John Caratti believed that was the result of arrangements made with Allen Caratti about offsets. But the mailing of the statements shows that by December 2016, John Caratti perceived that it was Mr Tiller who was not paying. That was so even though Mr Nicoletti was ultimately liable, because he had the sub-lease direct with Mammoth.

Mr Nicoletti's late 2016 surrender of the Farms and the sub-lease to the Tillers

114    Mr Caratti's evidence was that in November or December 2016 he had several conversations with Mr Nicoletti about the latter's wish to surrender the lease of the Farms. Mr Nicoletti told him that he wanted to cease farming activities on the Farms and on other properties in the Esperance district, to sell the farming land he owned, and to get out of farming to concentrate on his farm machinery business. Mr Nicoletti said that Mr Tiller was a 'good operator' who would be well suited to take over the Farms in his own right. Mr Caratti said that Mr Nicoletti could not surrender the lease until the arrears were paid, and Mr Nicoletti said that Mr Tiller would pay them (Caratti I, paras 24-25).

115    Mr Nicoletti's evidence about how he came to surrender the lease was quite different. He said that from early 2016 he decided that there was no point in remaining in the lease structure for the Farms, as 'sitting in the middle I was essentially acting as Simon's guarantor' (Nicoletti I, para 40). He raised the possibility of exiting with Mr Tiller and with Allen Caratti. After further discussions with Mr Tiller, he did not hear anything until later in the year, when Julie Nicoletti told him that John Caratti was releasing them from the lease for Warriup. He said he did not speak to John Caratti at all during this process and had no dealings with him relating to surrender of his lease over Warriup (Nicoletti I, para 48).

116    I do not accept Mr Nicoletti's evidence about how the surrender came about. It is inherently implausible that Mr Caratti simply released the Nicolettis from the lease, out of the blue. It is much more likely that Mr Caratti used their desire to exit the leases as a way of trying to extract what he asserted was the $720,000 arrears. As the Tiller Lease shows, Mr Caratti ended up accepting that Mr Tiller would pay those alleged arrears. I accept Mr Caratti's evidence about the phone conversations with Mr Nicoletti in late 2016.

117    Mr Caratti also gave evidence of a telephone conversation with Mr Tiller in November or December of 2016 in which among other things, Mr Tiller said he would like a five year lease with a further five year option at the same rent as Mr Nicoletti was paying, $800,000 per annum. Mr Tiller also undertook to pay the arrears of $720,000 in five instalments over a two year period. According to Mr Caratti, at this time he thought Mr Tiller was honest, hardworking and a very good farmer (Caratti I, paras 27-28).

118    Mr Tiller gave evidence of what is probably the same conversation. But according to him, Mr Caratti referred to the arrears as his (Mr Tiller's), not Mr Nicoletti's (Mr Tiller's responsive witness statement dated 15 November 2019 (Tiller II), para 6). Given that the statements of arrears had been sent to Mr Tiller on the basis that he owed the money, I accept that is so. Mr Tiller replied to the effect that he had agreed offsets with Allen Caratti.

119    Mr Tiller said he negotiated the new sub-lease with John Caratti over the week following the emails of 8 December 2016 which I have described above. Mr Tiller's evidence was that while he did not consider there was any arrears in the rent, he understood that it was not negotiable for Mr Caratti that the arrears were to be paid as a condition of the new lease. Mr Tiller thought the deal was a good one and he decided he would agree to pay the arrears and 'would figure out how those rental arrears arose later' (Tiller I, para 60). It was not clear what Mr Tiller meant by that; given that he had agreed to pay the alleged arrears, it seems there would have been little point in working out how they arose. But it does not matter for the purposes of this case. All this part of the history of the dealings between the parties shows for present purposes is that Mr Caratti claimed the arrears from Mr Tiller, not Mr Nicoletti, and that Mr Tiller ended up agreeing to pay them.

120    Mr Caratti sent a draft sub-lease to Mr Tiller on 12 December 2016 (TB 20A). The sub-lease, that is the Tiller Lease, was executed by all parties and dated 16 December 2016 (TB 62). It was for five years commencing on 1 March 2017, with a five year option granted to the lessees. Mammoth was the sub-lessor. The rent was $800,000 per annum payable in two equal instalments. After the first year, the instalments were due in March and September. The lessees were also liable for rates and taxes. Mammoth had a right to retake possession on giving 14 days' written notice if there was any breach. There were special conditions by which the Tillers acknowledged that they were indebted to Mammoth for $720,000, 'which amount is the rental arrears owed to the Lessor under the previous lease'. The amount was to be paid in specified instalments, the last of which was $140,000 due on 15 November 2019.

121    There is also a deed of surrender of lease which Mr and Mrs Nicoletti appear to have signed around 19 December 2016 (TB 23; TB 24A.1). Mr Caratti's evidence was that in around November or December 2016 he told both Mr Tiller and Mr Nicoletti separately that he was glad to see Mr Nicoletti off the Farms once and for all, and that he did not want to deal with Mr Nicoletti again regarding the Farms as he was unhappy about the defaults that had occurred (Caratti I, para 30). Mr Nicoletti denies this was said (Nicoletti III, para 8). Mr Tiller's evidence was that the only reference to Mr Nicoletti in his conversations with Mr Caratti at this time was that Mr Caratti said that Mr and Mrs Nicoletti would need to sign a surrender of their lease (Tiller I, para 57).

Defaults under the Tiller Lease

122    According to Mr Tiller's evidence, he began to experience financial problems in 2016. He had a lower than expected wheat yield in that year (Tiller I, paras 78-80).

123    Mr Caratti gave evidence that the Tillers paid the first two arrears instalments due under the Tiller lease on time (Caratti I, para 47). But the documents suggest otherwise. There are diary notes made by Mr Caratti of conversations on 13 and 20 January 2017 in which Mr Tiller promised to pay a sum of $100,000 (possibly plus GST) or $110,000 'next week' (TB 25). This was probably the first instalment of the arrears, which was due after execution of the 'Head Landlord's Consent' to the Tiller Lease. That included Allen Caratti's consent, and it is not clear when or whether that was provided. But it seems unlikely that in January 2017 John Caratti was chasing, or Mr Tiller was promising payment of, the second instalment, which was not due until 15 February 2017. Mr Tiller's evidence was that he paid the first instalment on time (Tiller I, para 60).

124    There are also emails showing that the second instalment was not paid on time (TB 26). Mr Caratti emailed Mr Tiller at 7.45 am on the morning of 16 February 2017 saying 'You made a commitment to pay yesterday it has not arrived we don't want to chase you every time a payment is due' (lack of punctuation in original). Mr Caratti demanded payment again, in peremptory terms, in an email to Mr Tiller early on the morning of 17 February 2017. There is also correspondence between Mr Tiller and the Caratti Group's property manager, Paul Testar, which indicates that Mr Tiller said he was waiting for payment from grain sales in order to pay the second instalment, which remained unpaid as late as 9 March 2017. Mr Tiller's evidence was that he paid it on or about 10 March 2017 (Tiller I, para 63). Mr Caratti's evidence that these instalments were paid on time is an example of his tendency to embellish his evidence to support his case, in this instance to depict Mr Tiller as a more desirable tenant than Mr Nicoletti.

125    On 10 April 2017 Mr Testar sent a reminder that the third instalment was due on 15 April 2017. That instalment was also not paid on time, as on 19 April 2017 Mr Testar emailed Mr Tiller in relation to it, asking him to 'advise as a matter of urgency' (TB 27). On 2 May 2017 Mr Caratti emailed Mr Tiller saying that if it was not paid by 5 May, Mammoth would issue a default notice (TB 28).

126    John Caratti's evidence was that on or about 2 May 2017, he spoke to Mr Tiller on the telephone, and that Mr Tiller told him, relevantly, that he had not paid the third arrears instalment of $220,000 because his mortgage broker had reminded him that in June 2016 he had paid 'Mr Nicoletti's arrears' to Allen Caratti. John Caratti said he replied to the effect that he did not know what Mr Tiller was talking about and that the agreed arrears were still owed under the Tiller Lease (Caratti I, paras 50-51). He asked Mr Tiller to give him details of the payments he had made to Allen Caratti. Mr Tiller did so in the conversation, saying that he had made four cheques out as instructed by Allen, one of which was made out to 'Mammoth Investments Pty Ltd' and the other to 'just Mammoth'.

127    Mr Tiller's evidence was that John Caratti said to him on more than one occasion that Allen Caratti had stolen from him (Mr Tiller) and that he should take action against Allen (Tiller I, para 67). Mr Caratti encouraged Mr Tiller to get his bank to trace the money paid under the three cheques that were made out only to 'Mammoth' (TB 33; Caratti I, para 59). He even went so far as to urge Mr Tiller to give him (John Caratti) authority to 'drive the action on your behalf' (TB 38). But Mr Tiller said he had no interest in suing Allen Caratti.

128    It is relevant at this point to interpolate some evidence that John Caratti gave in cross-examination about his relationship with his brother Allen. John would not accept that he disliked Allen intensely, but he did say he did not trust Allen, and that he had a low opinion of him in terms of 'Untrustworthiness' (ts 120). He readily accepted the proposition that Allen 'stole' the money that Mr Tiller paid to 'Mammoth' and which, apparently, did not find its way into Mammoth Investments Pty Ltd's bank account (ts 128).

129    In a similar vein, John Caratti accepted in cross-examination that he did not regard Mr Nicoletti as a friend, although he denied disliking him and said he has a 'great deal of ability'. But he emphatically described as 'a fact' the proposition that Mr Nicoletti was 'in Allen's camp' (ts 120). He described Mr Nicoletti and Allen Caratti as 'bonded together' (ts 128).

130    To return to the narrative, by 16 May 2017, Mr Tiller remained in default of payment of the $220,000 arrears instalment and was also in arrears for the first $440,000 instalment of rent (both including GST), which fell due on 15 May 2017 (TB 34). Mr Caratti's son Michael, who is a lawyer, sent a notice of default to Mr and Mrs Tiller on 17 May 2017 giving them 14 days to remedy the breaches (TB 35). Mr Caratti's evidence was that he arranged for the notice of default to be issued quickly because he wanted to communicate that late payment would not be tolerated, but he thought that Mr Tiller 'was such a hard worker and always in the paddock that he had simply fallen behind with paper work and commitments which he relied on Felicity Tiller to do' (Caratti I, para 63).

131    It is difficult to accept that Mr Caratti held that view, at least by December 2017. Michael Caratti sent another notice of default to Mr and Mrs Tiller on 16 November 2017, claiming default in payment of $440,000 rent (including GST) (TB 41). That amount had fallen due the previous day. There is email correspondence between Mr Caratti and Mr Tiller on 22 December 2017 in which Mr Caratti said (lack of punctuation in original) (TB 43):

This situation is ridiculous the payment was due on the 15 november I feel like a begger [sic] asking for the rent payment you have a different excuse each time I talk to you you are pushing my patience to the limit unless you pay the full amount immediately I will have to bring the whole arrangement to a [sic] end we have been approached by others in the district I was warned that you would be a nightmare and iam [sic] starting to believe it

132    Mr Tiller replied 'Allens [sic] your nightmare not me'. Mr Caratti responded 'no more talk pay or get off the farm'. In light of these emails and Mr Tiller's history of late payment I do not accept the general impression created by Mr Caratti's evidence that he had a favourable opinion of Mr Tiller as a hard working farmer who had variously fallen behind in paperwork or fallen on hard times. That is another instance of Mr Caratti embellishing his evidence. According to him, Mr Tiller subsequently paid the rent, but he did not say when (Caratti I, para 62).

133    Mr Tiller's evidence was that he experienced a lower than expected yield again in 2017 (Tiller I, para 80). He owed his main financier, Landmark Operations Limited, $8.8 million by the end of the 2017. By March 2018 Mr Tiller was in discussions with Landmark about his debt. In that month Joe Mondi of Landmark told Mr Tiller that Landmark would continue to fund him for the 2018 to 2019 season, provided the debt was reduced by $3.5 million. There are subsequent emails between Landmark personnel, from August of 2018, showing that they were concerned about Mr Tiller's account, and wanted steps taken to reduce the indebtedness and improve Landmark's security position (TB 51-52).

134    Mr Tiller's evidence was that at around this time he told Mr Caratti about his separation from Mrs Tiller and that she was living in Albany permanently. There is some support for that in a diary note of Mr Caratti's, which says 'his wife is living in Albany' (TB 44). It was around this time, March 2018, that Mr and Mrs Tiller separated although as at November 2019 they had not filed for divorce (Tiller I, para 8). Mrs Tiller's evidence was that the separation was amicable and they remained in regular contact with each other (Mrs Tiller's witness statement dated 11 November 2019, para 5).

Appraisal of the Farms by Stephen Vaughan

135    On 19 June 2018 the real estate agent Stephen Vaughan inspected the Farms for Mr Caratti and on 26 June 2018 gave him a report as a result of his inspection (Mr Vaughan's witness statement dated 27 November 2019 (Vaughan I), para 9; TB 49). Mr Caratti had asked him to give a market appraisal for the lease, to see how the property was looking, and to talk to Mr Tiller (ts 179, 184).

136    Mr Vaughan met Mr Tiller on the farms. Mr Tiller showed him various capital improvements he had carried out. Mr Tiller's evidence was that at the end of the meeting, Mr Vaughan said he would advise Mr Caratti that Mr Tiller should be paying at least $1.3 million in rent (Tiller I, para 77). In cross-examination Mr Vaughan denied that he told Mr Tiller what the estimated rent would be, and said he would never discuss confidential information of that sort with a person who was not his client (ts 180). As I have said, I accept that Mr Vaughan gave his evidence truthfully and it is inherently unlikely that an experienced professional real estate agent would tell a tenant of his client his view of market rent. I find that he did not give Mr Tiller a figure as to the market rent. The fact that Mr Tiller testified that he did reflects poorly on Mr Tiller's credibility.

137    Mr Vaughan telephoned Mr Caratti after returning to Perth and told him that he thought the rent he was charging for the Farms was well below market value. Mr Caratti said there was nothing he could do about that because he was committed to the lease with Mr Tiller. He also said that Mr Tiller was a good farmer who would continue to make significant capital improvements to the farms (Vaughan I, paras 12-13).

138    Mr Vaughan gave Mr Caratti a written report on 26 June 2018. Mr Vaughan's report (TB 49) estimated the total annual rent at $1,570,000 plus GST. It also said there would be strong interest if the properties were to become available for sale. It expressed the opinion that, generally, Mr Tiller appeared 'to be maintaining the property well and has done a very good job with the Capital Investments and in particular the fencing and water'. Mr Vaughan also reported to Mr Caratti on rumours that Mr Tiller had had farm machinery (headers) repossessed, and had had to negotiate terms on some of his accounts for supplies such as fertiliser, seed and chemicals. Vague hearsay evidence of the sort found in Mr Vaughan's report is not, of course, a sound basis for any finding that Mr Tiller was in fact in financial difficulties, but it is relevant to determining Mr Caratti's view at the time as to Mr Tiller's position. Similarly, while Mr Vaughan was not qualified as an expert witness in a way that would permit the court to accept his opinion of the market rent as correct, his advice to that effect is relevant to Mr Caratti's state of mind.

139    I find that as at June 2018, Mr Caratti thought that he could obtain a much higher rent for the Farms than the $800,000 that Mr Tiller was paying under the Tiller Lease.

140    Mr Caratti's evidence was that he telephoned Mr Tiller on the same day as he received Mr Vaughan's report and asked him whether his headers had been repossessed. Mr Tiller said they had been, but he had negotiated for their return. According to Mr Caratti, he valued Mr Tiller's work ethic and the money he had spent improving and maintaining the Farms. He said he thought he should allow Mr Tiller time 'if he had fallen back on hard times for a while' (Caratti I, paras 76-77).

Shire rates

141    In November 2018 Mr Tiller was unable to pay Shire of Esperance rates of approximately $58,000 that had fallen due, and applied to the Shire to pay by instalments. The Shire had contacted Mr Caratti, who was in effect the ratepayer, and Mr Caratti had asked Mr Tiller to sort it out (TB 58-59). In the same month Mr Tiller also asked Mr Caratti for a two week extension on the arrears instalment that was due on 15 November 2018 (Caratti I, para 81; TB 60). Also in the same month, Mr Tiller signed a new security agreement with his main financier, Landmark, under which he agreed to pay down the amount borrowed under his crop facility by $3.5 million (Tiller I, paras 92-93).

142    Mr Tiller's evidence was that by late 2018 it was not clear to him whether he would be able to continue farming the Farms himself in 2019 without financial help of some kind (Tiller I, para 94). He was concerned about whether his grain deliveries would be sufficient to reduce the facility with Landmark to the extent that company required, although there was a possibility he would have a modest surplus. But in any event with the Shire rates overdue and the next $440,000 instalment of rent being due on 1 March 2019, he would soon need money urgently to continue working on the farms. According to Mr Tiller, the uncertainty meant he needed what he described in his evidence as a 'contingency plan' (Tiller I, paras 98-102). He also needed a new structure for the Farms because of his separation from Mrs Tiller earlier in 2018 (Tiller I, para 104). By late 2018, although Mrs Tiller was still cooperating about signing documents, she wanted her names taken off the Farms (Tiller I, paras 104-105). In late December 2018 Mr and Mrs Tiller had a discussion in which they informally agreed a division of property she would keep the family home, her car and superannuation and Mr Tiller would keep his car, his superannuation and the partnership assets, including the business of the Farms (Tiller I, para 106). Mrs Tiller's evidence was consistent with this. So, according to Mr Tiller, by late December 2018 he 'thought it would be a good time to put together a new structure for both the purpose of getting the Farms out of the Partnership and due to my uncertain finances' (Tiller I, para 107).

143    Mr Tiller's evidence was that in early January 2019 he made a few inquiries with various people in the finance business as well as a few farmers, one of whom was Mr Nicoletti. But except for Mr Nicoletti, none of the people to whom he spoke 'were interested'. It is not clear from this evidence exactly what they were or were not interested in (Tiller I, paras 107-109).

144    It appears that by 10 January 2019 Mr Tiller had defaulted on the instalment arrangement with the Shire. Mr Caratti emailed him on that day asking him to 'fix it', and again on 17 January 2019 (TB 71-72). On 18 January 2019, Michael Caratti sent Mr Tiller a notice of default in relation to the unpaid rates, which said that the lessor may terminate the lease and retake possession if the default was not remedied within 14 days, that is, by 1 February 2019 (TB 75). The total amount said to be outstanding in the notice was $136,577.77.

145    According to Mr Caratti's evidence he was very concerned about the non-payment of rates, because he had not been able to contact Mr Tiller from December 2018. He had called him over 10 times through December 2018 and January 2019, without any reply. He had also tried to speak to Mr Tiller's lawyer, Simon England from Lawton Gillon (speaking only to Mr England's secretary), and to Joe Mondi of Landmark. He spoke to another Landmark employee who gave him the numbers for Mr Tiller's parents, and on 21 January 2019 he ended up speaking to Mr Tiller's mother, who said Simon was in Esperance working on budgets. Mr Caratti asked her to get Simon to call him (Caratti I, paras 89-91).

Proposed assignment of the Tiller lease to Mr Nicoletti

146    There is no suggestion in the evidence that Mr Nicoletti had any involvement or interest in the Farms between the time of his surrender of the sub-lease from Mammoth in December 2016 and early 2019. Mr Nicoletti's evidence was that although he 'remained in the lease structure' he had no other involvement in the Farms from 2012, when Mr Tiller began to farm there.

147    Mr Caratti did give evidence, however, that he spoke to Mr Nicoletti on several occasions from December 2018 to February 2019 about the SALIC transaction, which included the Marvel Loch and Bulfinch farms that Mr Nicoletti was leasing from Caratti entities. Mr Caratti's evidence was that he told Mr Nicoletti, 'John if you pull this off you should get the Victoria Cross medal' (Caratti I, paras 39-40). Mr Nicoletti gave evidence of similar conversation with Mr Caratti in which he was very complementary of Mr Nicoletti in relation to the sale to SALIC (Nicoletti III, para 15).

148    Mr Nicoletti's evidence gave the impression that he was busy in January 2019 with the sale to SALIC. Foreign Investment Review Board approval had been delayed and he needed to get all of his farms ready for the sale, including 50,000 head of sheep. He appeared to be saying that he only had a limited number of full time staff on at that time to help with this, because January, after grain deliveries, is usually a holiday time at least for other part time, casual or temporary staff (Nicoletti I, paras 61-67).

149    Mr Tiller gave evidence of discussions with him and Mr Nicoletti about whether the latter would be interested in becoming involved in the Farms again. Mr Tiller could not remember exactly what was discussed in the first conversation on this subject. All his evidence-in-chief said was that he asked Mr Nicoletti whether he would be interested in becoming involved in the Farms again and Mr Nicoletti saying that he would be interested (Tiller I, para 111). Mr Tiller's evidence in cross-examination was that this conversation occurred before he received the rates default notice from Mammoth on 18 January 2019. He also said that they did not discuss what Mr Nicoletti's involvement in the Farms would mean (ts 226). There was no discussion of John Caratti in this conversation and according to Mr Tiller he did not know that Mr Caratti would not want Mr Nicoletti to be involved (ts 227).

150    According to Mr Tiller, he then over about a week had numerous conversations with Mr Nicoletti in which he told Mr Nicoletti that Mrs Tiller wanted out of the partnership and the Farms, about his financial issues with Landmark and that he would not know what was happening with them until February or March, that the Shire rates were overdue and that he may not have the money for the first instalment of rent. He said that his rent under the Tiller Lease was still very good (Tiller I, para 112).

151    According to Mr Tiller's evidence, Mr Nicoletti responded by saying that he was concerned about the financial situation and the impact it may have on the Farms. He said that he did not want to do anything that would hurt the sale of his Farms to the Saudis so they would need to keep any involvement of his for the time being confidential (Tiller I, para 112(g)). He did not explain how it would hurt the sale of the Farms (ts 230). According to Mr Tiller, Mr Nicoletti said that 'if we are to do something together' he wanted the structure to be set up correctly from the start, but he was too busy with the sale so his consultant Mr Bryce could do it (Tiller I, para 112).

152    Mr Tiller did not give evidence of any specific conversation with Mr Nicoletti at this time; he said their 'arrangements sort of evolved as they were discussed' (Tiller I, para 113). The substance of those arrangements, according to Mr Tiller's first witness statement, were as follows (numbering in original):

(a)    we would form a new company;

(b)    Nicko's involvement would be kept confidential;

(c)    I would be a director of the new company;

(d)    Damian would also be a director to assist me in setting things up;

(e)    Damian would be the shareholder until we knew who was putting what into the Farms; [according to Mr Tiller, it was Mr Nicoletti who said this]

(f)    I would arrange for the Tiller Lease to be assigned to the new company; and

(g)    once we knew how much we would each put in, we could sort out the arrangements for the farming and the share situation in more detail.

153    Mr Tiller's evidence was that they 'did not discuss in much detail how a share farming arrangement would work', but Mr Tiller said they could make management decisions together but Mr Tiller would stay in control of farming operations and Mr Nicoletti said that sounded like a good idea (Tiller I, para 116). In fact, it appears from his evidence that the idea that it would be a share farming arrangement was not discussed. That is, Mr Tiller did not give evidence about anything approaching a consensus about how the arrangement would work, even in broad terms. Whether it was to be a share farming arrangement, or whether Mr Nicoletti was to participate as an investor in the new company, or who was to run the new company, or whether Mr Nicoletti was to be a lender to Mr Tiller or the new company; according to Mr Tiller's evidence, even those basic matters were not discussed.

154    In cross-examination Mr Tiller confirmed that the intention for Mr Bryce to 'be a director to assist me in setting things up' concerned Mr Bryce setting up the company. It was not intended that Mr Bryce would take part in the operations of the Farms. Mr Tiller said he did not ask Mr Nicoletti why Mr Bryce had to be the shareholder or why Mr Tiller would not also be a shareholder (ts 231). Mr Tiller claimed in cross-examination that he did not think it necessary that he be a shareholder of the company at the outset and that he felt Mr Nicoletti did not consider it necessary either (ts 232) Yet immediately after that, he reconfirmed what is said in his main witness statement, that it was he that 'wanted to create … a company structure' (ts 233).

155    Mr Tiller's evidence was that he would need to wait to see how much grain he would deliver and how discussions were going with Landmark before deciding anything. But he did need 'something in place and ready to go because I was worried that if I received a default notice for the Rates or the rent due in March 2019 I would not be able to remedy the default and lose everything'. He 'needed to have money ready to sort these things out should it be needed and I thought that the deal I had with Nicko was the best I could do'. Yet, as I have indicated, on Mr Tiller's evidence if there was an arrangement with Mr Nicoletti that could fairly be described as a 'deal', the terms of the 'deal' were not at all clear (Tiller I, paras 117-120).

156    On Mr Nicoletti's evidence, his renewed involvement with the Farms came about this way (Nicoletti I, paras 68-94) Mr Tiller telephoned him in early January 2019 and said he might need some help that year. Mr Nicoletti then went to see him on Warriup. According to Mr Nicoletti, Mr Tiller had just finished harvest and 'looked terrible'. He said that Mr Caratti was chasing him for the rates and he was worried that if he was served with a default notice he would not be able to 'fix it up in time'. He said he could not pay the rates because he could not get any money out of Landmark and would not know until February or March whether Landmark would even support him that year.

157    Mr Tiller also said that he needed to get the farm out of the partnership anyway because Mrs Tiller had had enough. Mr Tiller was not sure if he would need Mr Nicoletti's help, but he 'needed to have something ready in case he needed to move fast and he wanted to just play it by ear' (Nicoletti I, para 73).

158    Mr Nicoletti's evidence of subsequent conversations was vague. He said to Mr Tiller that if he was to 'kick money in, it could be by way of a share in the business'. Mr Tiller did not ask to borrow any money. He did recall Mr Tiller saying at some point that the rent under the lease was 'still really good' and allowed that beyond 'simply wanting to help Simon out, this was a factor which made having an involvement with Warriup appealing' (Nicoletti I, para 74).

159    However, according to Mr Nicoletti, although he was interested in being involved, he did not at this time want his name on any new venture. His evidence was that this was because of his sale to SALIC. He told Mr Tiller that. Mr Nicoletti's explanation for this in his evidence was that he had been asked at a meeting with various representatives from SALIC in November 2018, what he was planning to do following the sale and he told them that he was planning on retiring from wheat farming and focusing mainly on his John Deere dealerships. His evidence was (Nicoletti I, para 77):

Because of this I did not think it would be good being a director in a start-up farming business. I was extremely nervous about my sale to Salic and I did not want to do anything to jeopardise it or fall out with Salic. I did not want to have to go through the time, stress and uncertainty of another sale process.

160    Mr Nicoletti also gave evidence that he was at this time busy with managing the livestock on his farms so that they would be in good condition when he transferred them to SALIC, so he did not 'have the time or energy to be running around signing documents or doing other things for a venture I might not have anything to do with' (Nicoletti I, para 79). However it was clear from evidence he gave in cross-examination that he was engaged in a supervisory role only and, while his operations were no doubt extensive enough for that to have been time consuming, Mr Nicoletti accepted he did not need to be 'in the paddock' for all day of every day (ts 277). In any event, he gave evidence that he was only 'flat out' until extra staff came on in mid-January 2019 and he ended up accepting that there was no reason why he could not sign documents from mid-January (ts 281).

161    According to Mr Nicoletti, he said to Mr Tiller that he would (Nicoletti I, para 82):

find someone to set up a new structure for us. I said to him that I will take care of the setup costs for him and he can take it and run with it if he gets the money or if he doesn't have the money, I can come in on it with him and we can work out our arrangements later.

Mr Tiller said that sounded good. In around mid-January, Mr Nicoletti asked Mr Bryce to set up a new company to be involved in a new lease of the Farms.

162    Mr Bryce's evidence was that in mid-January Mr Nicoletti, in a telephone call, said words to the effect, 'this is very confidential, but can you please set up a new company for me which may be used to put a lease into. John also said words to the effect can you please just put the company in your name for the time being' (Bryce I, para 17). He did not recall Mr Nicoletti mentioning Mr Tiller in this conversation but he did recall Mr Nicoletti saying that the rent under the lease was quite good (Bryce I, para 19).

163    In any event, Mr Tiller's grain deliveries for the 2018 season were completed by 17 January 2019 and turned out to be $3.2 million, $800,000 less than he had estimated and $300,000 less than the minimum $3.5 million Landmark required. Mr Tiller's evidence was that he nevertheless hoped Landmark would finance him for the 2019 year. But he was under pressure from Mr Caratti for non-payment of the rates (Tiller I, paras 121-124). And on 18 January 2019 he received the default notice.

164    By then the pressure must have been intense, judging from the speed of the events that followed. Within hours of receiving the default notice, Mr Tiller emailed a copy of the Tiller Lease to Mr Nicoletti's company, Ag Implements. Ag Implements emailed it to Mr Bryce on the same day, that is 18 January 2019 (TB 77).

165    That was a Friday. Early on the morning of Monday 21 January 2019, Mr Bryce emailed Mr Nicoletti's lawyers, Nova Legal, as follows:

Another unrelated but urgent piece of work.

Very confidentially - John is looking at taking the attached very basic lease on as the current tenant is in default and unable to pay. He has been issued a default notice for unpaid rates on Friday and has 14 days to remedy. We are trying to novate/assign the lease in that window.

Are you able to draft a novation document for this lease please? It will need to cover the following at a minimum:

•    Consent from the head lessor (which is a requirement of assignment).

•    Absolute clarity that the incoming lessee is only responsible for liabilities from the date of assignment.

•    Any existing default notices apply to the prior lessee and not the incoming lessee so that the assignment cannot be terminated for the prior lessees [sic] default.

The lease is a backyard job but is at significantly favourable rates for a long period - which is way [sic 'why'] terminating this lease and entering a new one is not an option.

166    'John' is a reference to Mr Nicoletti. Mr Nicoletti confirmed in cross-examination that Mr Bryce had his authority to instruct Nova Legal (ts 286). Mr Bryce's evidence was that Mr Nicoletti asked him to instruct Nova Legal to prepare an assignment (ts 317). Mr Bryce agreed with the cross-examiner that the work was urgent so as to implement the assignment within the 14 day period of the default notice (ts 317).

167    But, while Mr Nicoletti acknowledged that the rent on the Tiller Lease made it a 'good deal', he denied that his intention was to take advantage of the favourable rent rates and said it was, rather, about 'setting up a mate' (ts 287). He claimed he did not give the instructions about the incoming lessee only being responsible for liabilities from the date of assignment, and existing default notices only applying to the prior lessee (ts 287). Mr Bryce's evidence was consistent with this; he said that the three bullet points in the above email to Nova Legal were his idea in order to protect Mr Nicoletti's interests (ts 317).

168    Nova Legal sent a draft deed of assignment of the Tiller lease to Mr Bryce the next day, Tuesday 22 January 2019 (TB 82). The emails that are in evidence do not have the drafts of the deed attached, but there are drafts in evidence and it is possible to match the content of each draft to the content of a specific email. The first draft referred to Mr and Mrs Tiller as the assignor and an unnamed new entity as the assignee (TB p 612). The solicitor from Nova Legal sent the draft to Mr Bryce under cover of an email saying that it was '[f]ollowing our discussion yesterday', so I infer that Mr Bryce and the solicitor had a discussion on 21 January 2019 in which Mr Bryce said the assignee was to be a company, and he would provide the details later.

169    The draft contemplated that Mammoth would sign as lessor. It provided, in effect, for the assignor (the Tillers) to be liable under the lease until a 'Date of Assignment' which was left blank in the draft, and for the assignee to be liable after that date. The assignee covenanted with the 'Lessor' (Mammoth) to be bound by the terms of the sub-lease (the Tiller Lease) from that date, so the transaction was to have characteristics of a novation rather than an assignment. The deed included a clause requiring the assignor, that is the Tillers, to pay the lessor's costs and expenses in relation to the transaction. Nova Legal asked for instructions about that clause. There was also another clause saying that the assignor and assignee would bear their own costs and expenses in relation to the transaction.

170    Mr Bryce replied with instructions on the draft later on Tuesday 22 January 2019. The instructions included the name and ACN of the new entity, which was to be Dimension Agriculture Pty Ltd (the third respondent). Mr Bryce had registered Dimension as a company on that day (TB 152). His instructions to Nova Legal also said that Mr Tiller would sign as director of Dimension and Mr Bryce would sign as secretary, and a statement that 'John will pay costs of prep'. It is not clear whether Mr Bryce had read or properly understood what Nova Legal had asked for instructions about in that regard, namely who would pay the costs of Mammoth, the lessor. But it is unlikely that Mr Bryce was instructing that Mr Nicoletti was to be named in the deed. It is likely that what Mr Bryce in fact had in mind was that the new assignee company would be named as being liable for the costs of preparation of the document. That is consistent with the identification of Mr Nicoletti as taking on the lease, which appears in Mr Bryce's initial email quoted above, and the subsequent instruction that the assignee of the lease was to be a company. It appears that Mr Bryce identified Dimension with Mr Nicoletti.

171    This rather contrasts with Mr Nicoletti's evidence; in re-examination he said 'I originally set the company up just to help Simon ... It was a driving vehicle to help Simon, because he had financial issues. He wanted out of his partnership and his wife - his wife had enough' (ts 308).

172    Mr Bryce chased the next draft of the lease early on the following day, Wednesday 23 January 2019. Nova Legal sent back another draft shortly after midday on that day, with the covering email saying 'In relation to clause 8 (costs of document) I inserted "Assignee" to pay the costs (as John is not a party to the document)'. Mr Bryce responded asking 'With clause 8 - can we just delete 8.1? Then we have parties bearing their own costs and John can ask the lessor to reimburse him for your cost but the assignment is not held up because of it?'. Nova Legal sent the third draft back within half an hour with the clause deleted, so that the deed was silent about the lessor's costs, and provided that the assignee and assignor would each bear their own costs (TB p 591).

173    In cross-examination Mr Bryce could not give a clear explanation of why he wanted the clause deleted. He just said that he thought that back and forth about the clause between the lessor and the lessee would potentially take longer for the deed to be finalised. He denied that its purpose was to remove the need for John Caratti to be involved with the documents (ts 318-319).

174    Mr Bryce emailed back within a few minutes after receiving the email with the latest draft saying that the draft 'looks good'. The next email from him to Nova Legal, on Friday 25 January 2019, said that the deed 'is completed, agreed and is being signed' (TB p 581).

175    Each of the three drafts sent by Nova Legal bore the firm's logo on every page, and its address on the cover page.

176    Mr Bryce's evidence about the proposed assignment was that in a conversation after the one mentioned at [162] above, Mr Nicoletti asked him whether he could arrange for an assignment of lease to be prepared for the Farms and to use his lawyers Nova Legal. Mr Bryce arranged for the company to be incorporated with him as the shareholder and director. His evidence (Bryce I, para 22) was that he:

had assumed if the lease was assigned to the company and John put money in, then share and directorship would just be transferred over to John. I can't remember exactly what John said to me but the effect of it was that he thought he would know in about a month or two what was happening.

177    In cross-examination, Mr Bryce said Mr Nicoletti did not explain why he wanted Mr Bryce's name on it. Mr Bryce said he agreed to it because he anticipated that if the company ended up being used it would be transferred and it was easier for him to set it up with him as the director and shareholder while the company was dormant (ts 316). He assumed that the if the company was going to be used by John Nicoletti he would transfer the share to him (ts 317).

178    According to Mr Bryce's evidence, a day or two after he had arranged for the incorporation Mr Nicoletti asked him to make his friend, Simon Tiller, a director too because he was the current lessee. Mr Bryce did not ask and Mr Nicoletti did not say what involvement Mr Tiller was going to have with the new company and why he was going to be a director (Bryce I, paras 23-24). He added Mr Tiller as a director.

179    The entirety of Mr Nicoletti's evidence-in-chief about this proposed transaction was as follows (Nicoletti I, para 89):

I can't remember when, but I told Damian that he should get an assignment of lease prepared for the new company. I told him to contact my lawyers Nova Legal who were acting for me on the Salic sale.

Also (Nicoletti I, para 93):

Apart from giving Damian details from time to time, I can't recall having anything to do with the incorporation of Dimension or the drafting of the assignment of lease document.

This vagueness is difficult to reconcile with the urgency that was so clearly behind Mr Bryce's dealings with Nova Legal.

180    Mr Nicoletti also gave evidence that in late January and early February 2019 he was 'a bit in limbo at this stage as to whether I'd be involved in any way in Warriup' (Nicoletti I, para 96). However there was nothing 'in limbo' about Mr Bryce's focus on securing an assignment of the Tiller Lease to 'John'.

181    Mr Bryce's evidence was that he did not send the deed of assignment to Mr Tiller, but Allen Caratti did (ts 318).

The conversations between Mr Caratti and Mr Tiller of 22 and 23 January 2019

182    Mr Tiller telephoned Mr Caratti on 22 January 2019. Mr Caratti's evidence was that Mr Tiller told him that his marriage had broken down and that he was worried because everything was owned by the SC & FH Tiller partnership. He told Mr Caratti that the current crop was over 25,000 tonne and valued well over $8 million, and that the partnership had turned over $1.75 million in livestock sales and wool sales for the past 12 months. Mr Tiller was worried he could lose it all . Mr Tiller called Mr Caratti the following morning and asked for, and was given, a recommendation of a 'good divorce lawyer' (Caratti I, paras 92-93). There are diary notes of Mr Caratti in evidence which are consistent with his account of these conversations (TB 80).

183    Mr Tiller's evidence as to the conversations of 22 and 23 January 2019 was that he had two or three conversations with Mr Caratti around 22 January 2019. He could not remember specifically what was said in each conversation. Mr Caratti asked why the rates had not been paid. According to Mr Tiller, after placing the blame for his financial difficulties on Landmark, he said that he had spoken to a few farmers about providing financial backing through a new company. Mr Caratti asked who he had been speaking to. Mr Tiller said that one person was John Nicoletti. Mr Tiller said that the partnership needed to be dissolved anyway because of his and Mrs Tiller's separation. He said it made sense to restructure the farming business now. Mr Caratti asked whether the business was viable and Mr Tiller said he believed it was. According to Mr Tiller, Mr Caratti said words to the effect that he did not care if Mr Tiller needed to restructure, he just needed to get the rates paid. Mr Tiller recalled Mr Caratti giving him the name of a 'good divorce lawyer' (Tiller I, paras 129, 131). However he said he previously told Mr Caratti in early 2018 that he and Mrs Tiller had separated (Tiller I, para 13) and, while he does not expressly deny that he told Mr Caratti of his separation in the dramatic terms as related by Mr Caratti, his account of the conversation was that it was focussed on his financial difficulties with Landmark rather than the divorce.

184    In his evidence, Mr Caratti denied that Mr Tiller told him about difficulties with Landmark in this conversation, that Mr Tiller mentioned Mr Nicoletti, that Mr Caratti asked whether the business was viable, or that he said he did not care whether Mr Tiller needed to restructure (Caratti II, paras 9-16). In cross-examination he described Mr Tiller's evidence that he told Mr Caratti about a farmer providing financial backing, and that he had named Mr Nicoletti, as 'totally false' (ts 123).

The conversations of 31 January 2019

185    Mr Caratti gave evidence of two telephone conversations with Mr Tiller on 31 January 2019. In the second of these, the four pleaded representations which amount to the first alleged instance of misleading or deceptive conduct are said to have been made.

186    Mr Caratti's evidence as to the first conversation on that day was as follows. Mr Tiller said that he had been speaking to his 'accountant from Adelaide' (ts 112) regarding the breakdown of his marriage. The accountant had advised Mr Tiller to set up a new company, which he had done, and it was called Dimension Agriculture. He said he needed to get everything away from Mrs Tiller and into Dimension (Caratti I, para 94.3). He wanted all of the SC & FH Tiller partnership assets to be transferred out of the partnership and into Dimension. He was going to trade going forward with Dimension (ts 113). He said the crop for the year was valued at over $8 million and he had already delivered a fair amount of it into Dimension's name.

187    Mr Caratti asked Mr Tiller who stood behind Dimension and Mr Tiller said 'It's all me. I totally control and own Dimension' (Caratti I, para 96). Mr Tiller said that he wanted Dimension to take on the lease and he wanted all the lease terms to remain the same. Mr Caratti said in response that it sounded OK as long as Mr Tiller remained on the farm, ran the farm, and remained on the lease as the tenant in an individual capacity. According to Mr Caratti he said 'I am backing you here Simon' (Caratti I, para 97).

188    Mr Caratti then said that because Mr Tiller had had such a great season, he should have no trouble making advance payment of rent for the first period under the new lease and advance payment of the final arrears instalment. Mr Tiller replied that he agreed to the conditions save that payment of the rent for the first period under the new lease would be made by Dimension, because he did not want Mrs Tiller to think that partnership money was being used to pay rent on a lease to which she was not a tenant. Mr Caratti said he agreed with Mr Tiller's proposals. He asked Mr Tiller where Dimension would find the money to meet the costs given that it was a new company. Mr Tiller answered that he had delivered grain into Dimension's name and the name of his father, William Tiller and it had been a bumper crop. Mr Caratti said that Mr Tiller should sort things out with Mrs Tiller so that he could carry on farming without further worry and should give her assets that did not affect the farming business. The telephone discussion then ended.

189    There is a diary note by Mr Caratti in evidence which reads as follows (TB 85):

31/1    Tiller    Dimension Agriculture    new structure    new leases

Delivered 25000T - 13000 Sheep & 2000 Cattle

wife wants divorce - need to get everything away from her -he thinks he can get her to sign a surrender current lease -everything is in the partnership -has delivered the crop into Dimension Agric about $8m -wants to divest partnership completely.

190    Immediately after that conversation Mr Caratti performed a company search of Dimension. The search, which was in evidence, is time stamped 31 January 2019 at 12.07 pm, so I accept that Mr Caratti performed it then. The search showed Mr Tiller and Mr Bryce as the directors of the company and that Mr Bryce held the only issued share (TB 86).

191    According to Mr Caratti, he telephoned Mr Tiller immediately after reading the company search. He said 'I had the search in front of me and I rang Simon back' (ts 114). The account of the conversation given at paragraph 106 of Mr Caratti's first witness statement is as follows (with sub-paragraph numbering removed):

I said; 'I have just done a search on Dimension. Who is Damien Bryce?'

Simon said 'He is an ag consultant'.

I said 'How did you find him?'

He said 'Nico referred him to me'.

I said, 'Hang on a minute, is Nico getting involved in any of this?

He replied; 'Absolutely not'

I said 'The ASIC register shows Bryce is the only shareholder of Dimension. He is Dimension.'

Simon said; 'He holds his share on trust for me, I am Dimension. I run the show, John. I need to keep my distance from Felicity. My accountant said I should set it up like this.'

I said, 'That's not what the register shows, show me the trust deed'.

He said, 'It was done on a handshake John, it is my company, this is the way it needs to be done.'

I asked him; 'Who controls the money, who controls the cheque book and authorises payments?'

Simon said 'I do. I will make all the payments. I control everything.'

I asked; 'How long have you known Bryce? Can you trust him?'

Simon said; 'Long enough John, and yes of course I trust him. He is a good man and a very good ag consultant. We have sat down and gone through my operation, he knows what he is doing and understands my situation with Felicity.'

192    According to Mr Caratti, Mr Tiller also said to him in substance that Mr Bryce would be doing all the work that Mrs Tiller previously did, including book keeping and accounts in addition to preparing budgets to present to Landmark and providing assistance in dealing with financiers. He had previously used Paul McKenzie from Agrarian Management and Mr Bryce was much better. The conversation ended then. I note that if this was said, it contrasts with Mr Tiller's evidence that apart from signing documents he presented to her at various times, Mrs Tiller had very little to do with the partnership's business (Tiller I, para 11).

193    When Mr Caratti was cross-examined on this conversation in a non-leading way, his account of it was largely consistent with the account given in his witness statement, as set out above. The cross-examination did, however, add one detail: that after asking 'Who the devil is Damien Bryce' and being told, Mr Caratti said 'Well, you never mentioned this fellow's name before, and he lives over in Queensland'. More detail came out which was missing from the witness statement. In the witness box Mr Caratti recalled that after Mr Tiller said he 'did it on a handshake', Mr Caratti said 'Simon, are you fair dinkum here?' and 'Are you for real?' (ts 114). Mr Caratti's evidence was then as follows:

And he said, 'Yes. I've done it on a handshake. I trust the man. I've spoken to him. He knows how we operate, or how I operate, and he's going to be my consultant who will deal with the financiers and put budgets together - something that I lack.' And I interrogated him quite heavily that afternoon, about Dimension and the role of this Damian Bryce. I asked a - numerous questions. Who controlled the chequebook? Who controlled the bank? 'I do,' was the answer. Where is your bank account? I got answers to that.

194    Mr Caratti's evidence was that he accepted what Mr Tiller told him during the second conversation, including that he believed that Mr Nicoletti was not involved in Dimension or the operation of the farms.

195    Turning to Mr Tiller's evidence about the conversations said to have taken place on 31 January 2019, there is some commonality with Mr Caratti's evidence but there is also sharp divergence. Mr Tiller recalled two or three conversations which happened quickly on what he remembered to be the same day. He did not remember exactly what was said in which conversation. So his account of what was said potentially relates to both of the conversations of which Mr Caratti gave evidence.

196    Like Mr Caratti, in his first witness statement Mr Tiller gave evidence that he said, in effect, that a new company called Dimension Agriculture had been set up to get everything out of the partnership and take over the farming operations from the partnership. In a responsive witness statement, however, he said that the terminology used was 'new structure' and not 'new company' (Tiller II, para 14). He also recalled mentioning his accountant from Adelaide. He remembered Mr Caratti asking who was behind Dimension and where the money was coming from. And importantly, Mr Tiller's evidence was also that Mr Caratti asked who Damien Bryce was (Mr Tiller does not give evidence that he mentioned Mr Bryce before then, so he is probably remembering the second conversation, after Mr Caratti performed the company search), and that he responded that Mr Bryce was a farm consultant who had been referred to him by Mr Nicoletti (Tiller I, para 135). As far as discussion of Mrs Tiller goes, he recalled mentioning to Mr Caratti that they had agreed that she could keep the house and the car (Tiller II, para 15).

197    That is the commonality. The divergence comes with evidence that Mr Tiller gave, to the effect that he told Mr Caratti that it was none of his business and it did not matter who was behind Dimension, and all he (Mr Caratti) had ever cared about in the past was whether the rent was paid on time. According to Mr Tiller, Mr Caratti said words to the effect 'yeah as long as the rent and rates are paid I don't care who's behind Dimension'. But Mr Caratti then asked why Mr Bryce was a director of Dimension and Mr Tiller said that Mr Bryce was assisting with the business. There was also discussion about whether the transaction should be structured as an assignment of the lease - Mr Caratti is said to have agreed to do it that way and to have reminded Mr Tiller that Mrs Tiller would need to sign it (Tiller I, para 135).

198    Mr Tiller also gave evidence of a discussion between him and Mr Caratti at around this time in which Mr Caratti asked whether the farming business was still viable and Mr Tiller said he believed that it was (Tiller I, para 136). This may have been in the conversations to which Mr Tiller has already referred, or in a different conversation. Mr Caratti denied any such conversation (Caratti II, para 24).

199    Mr Tiller also recalls a conversation on the same day or the next day in which Mr Caratti told him that he had spoken to Michael Caratti, and there needed to be a new lease rather than an assignment. Mr Tiller asked John Caratti to send through what he was proposing as soon as possible (Tiller I, para 138).

200    Mr Caratti referred briefly in cross-examination to having asked Mr Tiller in January or February 2019 whether, because of his problems with Mrs Tiller, he wanted to relinquish 'the top half' of the Farms (ts 155). This is curious because he did not say it elsewhere in his evidence.

Mr Tiller sends Mr Caratti the draft assignment deed

201    On 1 February 2019 Mr Tiller emailed Mr Caratti, saying 'as per our many conversations over the past week' that he could get Mrs Tiller to sign whatever documentation was needed for an assignment, and asking Mr Caratti to send the documentation through at his earliest convenience (TB 87).

202    Although on 1 February 2019 Mr Tiller had asked Mr Caratti to send him assignment documentation, on the night of 3 February 2019, a Sunday, he sent Mr Caratti the assignment deed that had been prepared by Nova Legal (TB 88). Mr Tiller's evidence was that on the latter weekend, he was 'quite anxious about everything and spent the entire weekend worrying about everything. I wanted things sorted quickly due to the default notice and I was worried about the lease being terminated' (Tiller I, para 140). It is curious that Mr Tiller's evidence said nothing about how the deed came to be drafted and signed and where it came from. His witness statement simply described it as 'a deed of assignment', with no further explanation (Tiller I, para 141). There is a gap across all the evidence adduced on behalf of the respondents, concerning what happened to the draft deed of assignment between 25 January 2019, when Mr Bryce said in an email that it was 'completed, agreed and is being signed' (see [174] above) and 3 February 2019.

203    Mr Tiller sent the deed of assignment to Mr Caratti under cover of an email which said (TB 88):

as per our agreement last week the rates will be paid out of dimension [sic] once this is executed. If there are any amendments needed to this assignment please be sure to highlight them and return to me asap or simply hand write and initial where needed.

204    The copy of the assignment deed that was attached to the email had been executed by Mr Tiller, Mrs Tiller and Dimension, with Mr Bryce and Mr Tiller signing as directors. Execution on behalf of Mammoth, the sub-lessor to the Tillers, was required.

205    There were two other differences between the deed that Mr Tiller sent to Mr Caratti, and the draft that Nova Legal sent to Mr Bryce on 23 January 2019. One was that the previously blank defined Date of Assignment had been filled in, as 30 January 2019 (TB p 642). Mr Tiller gave evidence that he made this change, and set the date at 30 January because it was before the expiry of the 14 days set in the notice of default for non-payment of rates (ts 242). The other difference was that Nova Legal's logo had been removed from each page (probably from the header) and the firm's name and address removed from the cover page, so that there was no reference in the deed to it having been prepared by Nova Legal.

206    Mr Tiller confirmed in cross-examination that he removed the references to Nova Legal from the document before sending it to Mr Caratti (ts 240). He said that he did so because of his previous dealings with Mr Caratti, in which he found him to be 'very intrusive' (ts 240). 'He rings everybody all the time, badgering them about my business … He rings these guys, he rings Landmark, he rings everybody. My mum and dad. Everybody'. Mr Tiller said removing Nova Legal's name from the lease would stop him from telephoning Nova Legal.

207    John Caratti's evidence was that he received Mr Tiller's email with the deed of assignment when he got in to work at 7.30 am on that Monday (Caratti I, para 111). According to him, he called Mr Tiller immediately and told him he had 'jumped the gun'.