Julian Emmanuel Levy v Peter Bablis & Anor

Mr Peter Bablis practises as a chiropractor in Sydney's Central Business District ("CBD") and in Double Bay. From September 1999 until August 2006 Mr Julian Levy was one of his patients. Mr Bablis offered special therapies to patients such as Mr Levy, including Neuro Emotional Technique ("NET"), chiropractic adjustments, acupuncture and kinesiology. Mr Levy believed these therapies alleviated the effects of his chronic fatigue syndrome.

But especially from mid 2004 Mr Bablis and Mr Levy were more than just health professional and patient. Attracted by mutual empathy, compatible personalities and a passionate common interest in commercial investing, they saw one another regularly during and outside chiropractic consultations. Mr Levy described Mr Bablis as his confidante by late 2004. Mr Bablis described them both as firm friends.

For the first five years of their acquaintance they discussed investments but did not commit to any joint business endeavour. Their first mutual commercial transaction was in February 2005 when Mr Levy made a short-term loan of $175,000 to Mr Bablis. This sum was repaid within its terms.

Shortly after the February 2005 loan Mr Levy entered two substantial transactions totalling $1,000,000. The first of these transactions was in June 2005 and the second in October the same year. In these proceedings Mr Levy seeks the recovery of this sum and what he claims was an agreed return upon it. A central issue in the proceedings is whether Mr Levy entered these two transactions solely with the corporate entity, United Producers and Associates Limited ("UPA"), or whether Mr Bablis was also a party to them. Mr Levy commenced these proceedings against Mr Bablis as first defendant and UPA as second defendant.

Mr Levy says that in June 2005 he advanced $500,000 in an investment that he describes variously as a "private placement" or a "placement". A "private placement" is said to be a risk-free deposit with a reliable U.S. or European bank, which deposit could be used for the bank's purposes but which nevertheless could generate the startlingly attractive risk-free return of 100% per annum. For such a high rate of return the depositor was required to leave the private placement with the European or US bank for a full 12 months, at which time the principal and interest would be repayable. Other terms of private placements are described later in these reasons.

In June 2005 Mr Levy deposited his first $500,000 directly into a UPA bank account. Despite this, Mr Levy says: that he made his private placement with Mr Bablis; and, that because of the arrangements made orally between them that UPA received it in the capacity either of Mr Bablis' agent or business partner. Mr Bablis says: that he never accepted Mr Levy's money; but, that Mr Levy deposited it with UPA, not as a private placement but for some form of currency trading. Whether the June 2005 transaction was a private placement effected by way of loan or was an investment for currency trading is another central issue in these proceedings. Because of this contest about its nature, this first transaction will be described neutrally throughout these reasons simply as either "the June 2005 transaction" or the "June 2005 advance".

A few months later, in October 2005, Mr Levy made a second $500,000 advance ("the October 2005 transaction" or the "October 2005 advance"). This advance exhibited the same ambiguous features as the first advance. Mr Levy claims that it too was a private placement made by way of loan to Mr Bablis. But Mr Bablis contends that Mr Levy also entered the October 2005 transaction with UPA, not with him and that it too was a currency trading investment, and not one with a guaranteed 100% return.

Neither of Mr Levy's $500,000 advances in June and October 2005 was repaid upon its respective 12 month anniversary in June and October 2006. Mr Levy did not gain a 100% return on his capital. Rather he lost the full $1,000,000 he had advanced. After pursuing Mr Bablis personally between July and September 2006 for the return of his funds, Mr Levy put his claim in the hands of solicitors.

Mr Brendan O'Dowd is a controlling figure in UPA. He was described somewhat colourfully in the proceedings as an Irish "scientist, inventor and investor". Mr O'Dowd's UPA is undoubtedly responsible for the non-return of Mr Levy's $1 million investment. Mr O'Dowd admitted in oral evidence given by telephone early in the hearing and in writing that UPA owes Mr Levy $1,000,000.

Mr S.J. Stanton and Mr M.B. Holmes represented the plaintiff, Mr Levy. Mr J. Simpkins SC, Mr M. Condon and Ms P.M. McEniery appeared for the first defendant, Mr Bablis. Mr A. W. Street SC and Ms D. Hawkins represented UPA for a few days at the beginning of the hearing in July 2009. Later Mr Street SC and his junior no longer appeared at the hearing and UPA did not actively pursue any defence to the claim Mr Levy made against it in the alternative. The Court has received thorough assistance from all counsel and solicitors in these factually complex proceedings.

The principal issues in contest between the parties are whether Mr Levy made a "private placement" at all or whether he entered some different transaction; whether the transaction he did enter was with Mr Bablis and UPA or was just a transaction with UPA; and, even if the transaction was with UPA, whether Mr Bablis accepted some form of legal responsibility for advising Mr Levy to enter the transactions or for the return to Mr Levy of the value of his investment.

Mr Levy sues Mr Bablis in contract for breach of fiduciary duty; in tort for negligent misstatement; and, for various forms of statutory misleading and deceptive conduct. All these causes of action are considered in more detail at the end of these reasons. (a) Mr Levy's contract case is that on 17 June 2005 Mr Levy agreed to lend Mr Bablis $500,000 on or before 1 July 2005, which Mr Bablis agreed to repay by 30 June 2006 at an interest rate of 100 per cent. Mr Levy alleges a second loan agreement was made in similar terms in October 2005, and that neither of these loans were repaid. In the alternative to the loan contract allegations against Mr Bablis, Mr Levy pleads parallel loan agreements against UPA. (b) Mr Levy's breach of fiduciary duty case is that Mr Bablis owed fiduciary duties to Mr Levy in relation to the investment of the $1 million. The fiduciary duties are alleged to arise out of Mr Bablis' position of influence over Mr Levy and Mr Levy's vulnerability and dependence on Mr Bablis and trust in him. Mr Levy alleges that in breach of this fiduciary duty, Mr Bablis took a benefit directly or indirectly from the proceeds of the loan agreements and otherwise misused his position as Mr Levy's fiduciary. Mr Levy further alleges that UPA received the money through the June and October 2005 transactions knowing of Mr Bablis' breaches of fiduciary duty to Mr Levy. (c) Mr Levy's misrepresentation case is grounded either in negligent misstatement or in the statutory action for misleading and deceptive conduct provided under Fair Trading Act 1987 (Cth), s 41, Australian Securities and Investments Commission Act ("ASIC") 2001 (Cth), s 12BB and Corporations Act (Cth) 2001, s 769C. Mr Levy alleges Mr Bablis made representations as to the future security of the funds to be advanced, as to Mr Bablis' control over and experience with such advances, and as to the existence of binding and enforceable loan contracts. Mr Levy alleges that he advanced $1 million and suffered loss and damage when neither Mr Bablis nor UPA repaid that sum.

In response Mr Bablis says: that none of these causes of action are made out; that there was no loan contract; that he owed Mr Levy no fiduciary duty, nor did he breach any such duty; that he owed Mr Levy no duty of care in making statements to him; that he did not engage in any relevant conduct in "trade or commerce" with Mr Levy; and, that he did not make the pleaded representations to Mr Levy.

But first it is necessary to decide what actually happened in a case in which most facts were in contest. The circumstances of the June 2005 and October 2005 transactions are the principal points of factual contest between the parties. But many other lesser factual issues help determine which of Mr Levy's or Mr Bablis' very different versions of the June and October 2005 transactions are correct. The Court's approach to the fact-finding task is to consider a chronological account of the principal facts, recording relevant uncontested matters and deciding the important matters in contest through that account. It is neither possible nor useful, in a case of such dense factual conflict as this one, for the Court to decide every factual issue.

These proceedings were originally set down for a five-day hearing. That time estimate was inadequate. After extensive cross-examination of the principals on both sides, the hearing occupied 16 days in blocks of reserved time from late July 2009 to late April 2010. The parties made oral submissions on the last hearing day, 30 April 2010. Even then, the parties were given an opportunity to put in short supplementary written submissions. When this process was complete judgment was finally reserved on 3 June 2010. The many contests about the extensive communications between Mr Levy and Mr Bablis over a four-year period between late 2002 and late 2006 has required the Court's consideration over an extended period.

The story starts with some background about Mr Levy and Mr Bablis and their first meeting in September 1999.

Both Mr Levy and Mr Bablis are complex and driven individuals. An account of their personal backgrounds assists in understanding the motives and the outlook that each brought to their mutual contact in these disputed transactions. In this section I record my findings about their respective backgrounds.

Mr Levy is the youngest of five children and was born in November 1974. His father died in 1980 when he was only five years old. His memory of his father is limited. He grew up in a financially secure household and received a private school education.

After leaving school he pursued an Advanced Certificate in Hospitality and Catering at the Ryde College of Tertiary and Further Education. Apart from taking an accounting module in basic bookkeeping in this Advanced Certificate course, Mr Levy gained no formal education in accounting, in legal matters, or in investment or financial management. Despite this lack of formal commercial education he was an energetic, effective and practical businessman who was able to create two successful food retail businesses.

After gaining his Advanced Certificate in January 1995 Mr Levy together with his eldest brother David opened a chicken shop in Rose Bay. They did so with the assistance of their mother who negotiated the shop's lease and arranged a business loan from Citibank. Mr Levy's brother executed the shop's fit out. The chicken shop opened and prospered in large part due to Mr Levy's and his brother's long hours and hard work. Mr Levy sold his interest in this shop to his brother in March 1999.

Mr Levy stayed within the restaurant and hospitality industry. In September 1999 he and a school friend formed a partnership trading as "Sapore" and took a lease of restaurant premises in Leichhardt. As he had with the chicken shop, Mr Levy again worked seven days a week to launch this business. After six months Mr Levy purchased his partner's interest in Sapore and then operated the restaurant on his own.

Mr Levy's hard work paid off. In August 2002 he sold his interest in the restaurant together with the lease of its premises for $1.1 million, banking the proceeds into his account at the Martin Place Branch of Westpac Bank. Since the sale of the restaurant Mr Levy has not worked in a vocation that requires his daily attendance at a workplace. Rather he has turned his attention to a variety of commercial investment activities, a direction in which he was naturally inclined.

Becoming an investor was a good fit for Mr Levy's situation for another reason. From the late 1990's he seemed increasingly to suffer from ill health. His daily attendance at a workplace to perform the demanding hours required to operate either a chicken shop or a restaurant, was probably beyond him after he sold the restaurant in November 2002. Although he was then only 28, he suffered from a number of illnesses. His account of these illnesses was not seriously contested in the proceedings and is one that I accept.

The next phase of Mr Levy's career briefly took him into private mortgage lending through solicitors. Initially Mr Levy invested the proceeds of sale of the Leichhardt restaurant conservatively, depositing it with major banks. In January 2004 he moved all his funds to City Pacific Limited, investing $850,000 for a period of 12 months at 8.75% per annum. He kept about $150,000 on call with ING.

Then in 2004 Mr Levy's accountant, Mr Lee La Rocca, introduced him to some of Mr La Rocca's accounting clients, who were looking for second mortgage funds. These clients were prepared to pay high rates of interest to secure those funds outside the banking system. In late July 2004, Mr La Rocca introduced Mr Levy to a mortgage broker, Ms Michelle Fleming, who sourced funds for borrowers who were looking for bridging finance.

Mr Levy's mother died in August 2004. He gave little thought to commercial investments of any kind until the end of that year. Then between December 2004 and March 2005 he loaned money on first or second mortgages in four transactions, which are detailed later in these reasons. Apart from Mr Levy's experience in the chicken shop, in the Sapore restaurant, and his purchase of two domestic properties, these four mortgage lending arrangements were the only commercial transactions in which he had been involved before he entered the June and October 2005 transactions.

Mr Levy was able to acquire residential property from his earnings in the chicken shop and in the restaurant. He purchased a studio apartment in Stanley Street, Woollahra in 1998, an apartment situated in the same block of units in which his mother was then living. He wanted to be closer to her and available for her care, as she was then unwell. The mortgage he signed over that unit was his first mortgage. Because of the pressures of work at the restaurant he moved out of the studio apartment in late 2000, let it out and rented in Leichhardt above the restaurant. This made his long hours working at the restaurant a little easier. Then in February 2002 he purchased and moved into a house in Prospect Street, Leichhardt. But later the same year, after he had sold the restaurant, he moved into his mother's household to assist in her care. At that time she was suffering from advanced emphysema. Apart from a trip he took overseas in the middle of 2003, Mr Levy then lived with his mother until she died in August 2004.

Mr Levy had suffered from poor health since August 1997. Whether this was exacerbated by the long hours he worked at the chicken shop until March 1999 and at the restaurant until August 2002 is unclear. But the genuineness of his symptoms and equally the genuineness of Mr Bablis' treatment of them are not in issue in these proceedings.

From August 1997 Mr Levy began to experience flu like symptoms including fever, severe headaches and neurological problems. He had difficulties with his balance and vision. He suffered from a perceived lack of mental clarity and from debilitating mental and physical fatigue. Initially, Mr Levy put his symptoms down to stress induced by his commencing new businesses and his long working hours. But in 1999 he was diagnosed with chronic fatigue syndrome. By mid 1999 Mr Levy's symptoms had worsened. He was then suffering from recurrent migraine headaches, swollen glands and a sore throat, fevers and night sweats and muscle weakness, neck pains and general stiffness. Although he was only 24 years old in 1999, he would nevertheless sometimes need to sleep for 9 or 10 hours at night and need to sleep during the day due to his excessive tiredness. He also suffered from feelings of depression and anxiety, was highly sensitive to light and sound, had blurry vision and experienced occasional loss of balance. He was sensitive to particular foods and suffered at times abdominal pain, cramps and gastro intestinal problems.

The correct diagnosis of Mr Levy's precise medical condition eluded medical professionals for quite a long time. It was not until the issues between Mr Levy and Mr Bablis were coming to a head in late 2006 that doctors from the Breakspear Hospital in the United Kingdom informed Mr Levy that he was suffering from a bacterial infection known as Lyme disease. Mr Levy has been treated in the United Kingdom and in the USA, for this disorder since then. His treatment has involved the administration of antibiotics and the taking of nutritional supplements. His overseas treatments were suspended in 2008 pending the outcome of these proceedings.

These health issues led Mr Levy to Mr Bablis in 1999. Mr Levy felt that conventional medical treatment was not solving his health problems. Mr Rick Schlederer, an old school friend of Mr Levy's, was then working as a chiropractor for Mr Bablis at the Double Bay clinic. In casual conversation Mr Schlederer suggested to Mr Levy that he consult Mr Bablis. Mr Levy responded by making his first appointment with Mr Bablis on 9 September 1999.

Mr Bablis is about 8 years older than Mr Levy. He was born in December 1966. When they met in 1999 Mr Bablis was 32 and Mr Levy 24. Mr Bablis has a University based tertiary education.

Mr Bablis is a chiropractor and specialist health care professional. At the time of the hearing he had practised as a chiropractor for well over 20 years. In 1988 he graduated with a Bachelor of Science from the University of New South Wales, majoring in Anatomy, Physiology and Pharmacology. He was awarded a Graduate Diploma in Chiropractic in the 1990s. He acquired other qualifications in acupuncture, exercise and sport science and homeopathy in the 1990s. After 2000, he gained a Post Graduate Diploma in Clinical Nutrition and Diplomas in Iridology, Medical Herbalism and Naturopathy.

Mr Bablis is registered with the New South Wales Chiropractic and Osteopath Registration Board, the Australian Traditional Medicine Society - Acupuncture, Medical Herbalism, Homeopathy, Naturopathy, Iridology and Kinesiology. He has served as both vice president and president of the Acupuncture Association of Australia.

Mr Bablis has published in the field of NET and chiropractic. NET is taught as an auxiliary study for chiropractic students. It is taught through NET Clubs at tertiary institutions in Australia and the United States of America, specifically at Macquarie University in New South Wales, and Parker College of Chiropractic in the USA.

Mr Bablis owns and operates two Holistic Health Care Clinics, trading under the name "Universal Health", one at Sydney Central Business District ("CBD") and the other at Double Bay. He, his family and his family trust control those clinics through a corporate structure, the detail of which is not relevant to the matters in issue in these proceedings.

Like Mr Levy's work schedule in a different context, Mr Bablis set a busy work schedule for himself in both the CBD and Double Bay clinics. That work schedule is relevant to determining some of the factual issues in the proceedings. He works 7am to 7pm each Monday, Tuesday, Thursday and Friday, treating patients at the Double Bay clinic, and from 7am to 1pm each Wednesday, treating patients in the CBD clinic. He completes practice administration each Wednesday at the Double Bay clinic between 2pm and 7pm.

Mr Bablis' consultations can run from about five minutes to about half an hour, depending on the patient's needs. Like many health professionals he moves fairly rapidly from one patient to the next apart from taking a break for lunch. This results in him quite often running over time and being late for appointments. Just how much time Mr Bablis had spare during consultations and whether he had any time between consultations to talk to Mr Levy is one of the issues in the proceedings. On this I accept the evidence of Mr Bablis' staff such as Ms Polly Georgeou and Ms Nicole Donald that he had little time between patients and thus very little time to talk to Mr Levy between consultations.

Mr Bablis is a busy chiropractor. On average he would see 80 to 100 patients per day. The precise therapeutic benefits of Mr Bablis' treatments were no doubt clearer to his patients than they at times sounded in the Courtroom. But the evidence in these proceedings gave the Court no reason to doubt Mr Bablis' capacity in his chosen field as a health professional. I find that Mr Bablis would tell a patient that he did not need treatment if he genuinely thought that the patient did not need his treatment. Mr Bablis never doubted that Mr Levy needed his frequent therapy and I find that Mr Levy did need that therapy.

Mr Bablis says that he does not have time to talk to patients on a casual basis during consultations. Mr Levy says that many of their discussions took place during or between consultations. On this issue I accept Mr Levy's evidence, not that of Mr Bablis. The factors of Mr Bablis' personality that I observed in Court, complemented by Mr Levy's enthusiasm to talk about his business life, together with Mr Bablis' own medical notes, recording for example in 2002 that Mr Levy was proposing to sell his restaurant for $1.1 million, are a basis to infer that Mr Bablis did sometimes discuss investments with Mr Levy in the course of consultations, despite his managing high volumes of patients through the clinics. Mr Bablis' evidence routinely attempted to quarantine all his investment related conversations with Mr Levy to periods outside therapeutic consultations. But I do not think they were contained this way, especially after mid 2004 when their relationship widened and became more informal. However, most of their discussions about investment took place outside therapy.

Both Mr Bablis and Mr Levy had an irrepressible interest in commercial investment. This interest was a dominant feature of all their personal contact. Their mutual interest in the subject was a mainspring of their friendship. Mr Levy describes, and I accept, that they were both passionate about examining commercial investment opportunities. This led to wide ranging and numerous discussions between them about the subject, resulting in them becoming firm friends. Some of the stressors that Mr Bablis was investigating in his consultations with Mr Levy, related to financial matters. According to Mr Levy, Mr Bablis' examination of these stressors led to discussion about Mr Levy's financial circumstances. Mr Bablis has a highly communicative nature. He has a well-developed emotional intelligence and is adept at projecting empathy and reassurance. I doubt that he could readily constrain himself from communicating ideas that he thought would be helpful to or of interest to his patients, including investment ideas. This is partly a product of his enthusiasm for his professional work but also partly a product of his specialised communication skills. Mr Levy too was a man who could not easily be stopped from talking about his investment interests. l accept Mr Levy's account that many of his face to face conversations with Mr Bablis about commercial investment opportunities took place during their treatment consultations but most of them were outside. They clearly reserved time outside consultations for more detailed discussions about commercial investment, generally on a Wednesday afternoon. The discussions for the June 2005 transaction were outside consultations and require special findings.

Nor do I accept that Mr Bablis gave formal warnings to Mr Levy, to corral all their discussions about commercial investment to times outside their consultations. Such artificiality did not appear to be a characteristic of the easy relationship that they enjoyed. For example, Mr Bablis says that when Mr Levy began to mention investments in the treatment room in January 2005 at the Double Bay clinic, that Mr Bablis said " Jules [a nickname that Mr Levy called himself and by which Mr Bablis also often addressed him in 2004 - 2005], we need to be clear now. Treatment is treatment and business is business. If we can't do this, you need to see Rick from now on ." Mr Bablis says that Mr Levy then agreed to keep their discussions separate. I do not accept this warning conversation or any of the other ones like it to which Mr Bablis deposes actually took place. Indeed Mr Bablis advancing such conversations in evidence as having occured did him no credit. But for the reasons, which follow later, I do not accept Mr Levy's account of the content of the critical conversations that took place. Neuro Emotional Technique (NET)

NET therapy featured throughout the proceedings as the backdrop to many of the conversations between Mr Levy and Mr Bablis. I make findings in this section as to the NET practice based on Mr Bablis' evidence, which was not relevantly contested on this issue. The Court is not here making findings as to whether NET has a proper scientific basis or even whether its therapeutic effects are even scientifically measurable. Rather, the technique has been accepted by both parties to the proceedings as valid and my findings in this section are only based on that consensus.

NET is a therapy apparently based upon the premise that emotions such as fear, anger, grief (and many others) can negatively affect a person long after the original trigger for the emotions in the person has subsided. As described by Mr Bablis, NET is used to identify emotional patterns and to assist patients in becoming physiologically more congruent with their personal issues and to minimise or eliminate emotions that have a negative impact on them.

NET operates according to a defined protocol. NET techniques involve asking the patient a series of protocol questions in three identified areas, relating to relationships, family and business. By assessing the patient's physiological response to the protocol questions, the NET practitioner can determine what particular emotions are troubling the patient at the time.

The discipline of kinesiology is a therapeutic sub-component of NET. Kinesiology involves the practitioner assessing whether a patient exhibits muscle weakness in response to certain statements. Demonstration of that weakness determines whether the patient is harbouring unresolved emotional responses in relation to the area of his or her life under question.

The NET protocol questions, together with other diagnostic techniques, uncover for the practitioner, the treatment that is required. With the information so gained the practitioner then deploys acupuncture or chiropractic adjustment to resolve the physiological pain that may result from the patient's unresolved emotional patterns. Mr Bablis says, and on this I accept his evidence, that he does not use counselling or provide what he calls "advice therapy". Mr Bablis says that when he forms an opinion that a patient may benefit from counselling or advice therapy, that he would refer the patient to a counsellor.

The NET protocol questions are designed to encourage the patient to think about any problem that then concerns the patient, so the patient can deal with any accompanying emotion. This then allows the NET practitioner to measure physiological sub-conscious responses to muscle strength tests. The practitioner can infer the patient's conscious or sub-conscious stresses from these measured physiological factors.

The attraction of these techniques to therapists such as Mr Bablis is that they are said to be objective, based as they are, on a patient's apparently involuntary physiological response to protocol questions. Mr Bablis says that he does not deal with patients' mental health. Where such treatment is required he refers patients for counselling or advice to a counsellor, a psychologist, or other medical professional.

Rather, as Mr Bablis explains, the NET therapists specifically adjust the patient's body, restoring physiological congruency and function by removing aberrations that are related to the emotional and physio-pathological patterns identified in the NET protocol. Acupuncture and other physical techniques are used for this purpose. Mr Bablis and Investment

Mr Bablis is an avid investor in shares, real property and any commodity that may realise a return. He denied making private placements and I accept this evidence. He has been an investor for 20 years and habitually looks at investments at night on his computer. He is keen to seek out any investment opportunity that comes his way. Mr Bablis bought his first property when he was 24. He is now 43. He has developed 9 or 10 properties over his business life. His email correspondence with Mr Levy shows a strong interest in investments almost to the point of obsession.

One of the ill defined but key relationships in these proceedings is that between Mr Bablis and Mr O'Dowd. Despite Mr Bablis' extensive apparently successful investment experience, he was nevertheless prepared to try the unusual and he could show very poor investment judgment. For example, he was impressed by the offerings of Mr Brendan O'Dowd and UPA, to which Mr Levy committed and lost his money. I have no doubt that Mr Bablis represented Mr O'Dowd in a good light to Mr Levy. His relationship with Mr O'Dowd is analysed later in these reasons.

Mr Levy and Mr Bablis did not have a social relationship beyond their contact through Mr Bablis' professional practice and through their mutual interest in investment discussions. They mainly pursued the latter interest in discussions at the Double Bay Clinic, by email or on the telephone. Mr Bablis invited Mr Levy to his home only on one occasion in late 2004.

From Mr Levy's first appointment with Mr Bablis on 9 September 1999, he felt that Mr Bablis' treatment assisted him. Mr Bablis explained the NET treatment and protocols to Mr Levy and told him what to expect from NET therapy. Mr Bablis recommended at the first consultation that Mr Levy attend in the future for therapy twice a week for four weeks. The plan was that Mr Levy would then be reviewed.

But Mr Levy became very excited about the positive NET results he felt that he was obtaining. He came back to Mr Bablis for daily appointments. In just the first month, September - October 2009, he came into the Double Bay Clinic for 19 sessions with a combination of Mr Bablis and Mr Schlederer.

Mr Levy embraced NET treatment. He felt it provided him with short-term relief. He also found that the acupuncture and the chiropractic adjustments helped him cope with his regular migraine headaches. He thought that NET therapy also helped him to cope with the psychological aspects of chronic illness and associated negative feelings. Mr Bablis says, and I accept, that Mr Levy attended the Double Bay Clinic between 1999 and 2006 on average twice a week until their last consultation together on 3 August 2006. During this whole period Mr Bablis gave Mr Levy 480 treatments and Mr Schlederer gave him a further 260 treatments. Other practitioners including chiropractors, naturopaths, laser therapists and doctors also treated Mr Levy during this period through the practice. Mr Levy became something of an ambassador for the Double Bay practice by referring other people to it for treatment.

So frequent were Mr Levy's visits to the practice that by 2001 he became what was described in the evidence as a "VIP" patient of the practice. Mr Levy's impression of that status was that it enabled him to receive treatment without a prior appointment. Mr Bablis' description of it was that he had "VIP slots" reserved in the practice diary for VIP patients at particular times of the day but that Mr Levy would arrive at the Clinic without making any prior booking and ignoring the designated times for VIP slots. I preferred Mr Bablis' evidence about this. He understood the system, which he had created. Mr Levy appears to have taken liberties and to have forgotten where the VIP boundaries originally were. Analysis of the content of Mr Levy's NET treatments is best dealt with in the course of the chronological account of the events relevant to the issues in these proceedings.

By mid 2002, after almost three years of frequent treatments, Mr Levy and Mr Bablis had a close relationship but one mostly explained by the exercise of functions of a therapist with his patient. Mr Levy says, and I accept, that by about this time he came to trust Mr Bablis completely, was confiding in him about matters with whom he could speak to no other close friend and that he lent on Mr Bablis in relation to his medical problems in a way he could not do with any other member of his family.

Mr Levy says and I accept that he came to place a great degree of trust and confidence in Mr Bablis because he was very sympathetic and understanding and because, through his therapy, he gave Mr Levy short-term relief of his symptoms. Mr Bablis' capacity to display quite intense empathy was demonstrated in the witness box. But Mr Bablis' display at times seemed as much the external habit of an accomplished health professional as it was of genuine feeling. On Mr Levy's side he viewed his relationship with Mr Bablis as one deep of trust in his therapist.

Mr Levy says, and I accept, that he looked up to Mr Bablis as something of a mentor. Mr Levy saw Mr Bablis as a self-made man, a successful professional living comfortably in the Eastern Suburbs, and a man in his prime with a satisfying career. Mr Levy says and I accept that he felt inspired by Mr Bablis and could continue to work in the restaurant without feeling pain and fatigue after his treatments from Mr Bablis.

Mr Bablis was keen to distance himself in evidence from giving any emotional or other kind of advice in his NET treatment to Mr Levy. Mr Levy says that in the course of any treatments he would tell Mr Bablis matters of a personal nature and Mr Bablis would offer opinions on the information he had given about all sorts of matters in Mr Levy's life. I generally accept Mr Levy's evidence about this, not the evidence of Mr Bablis. The advice that Mr Levy says that Mr Bablis gave related to family matters, "you need to distance yourself from your family"; covered relationship issues, "you probably will sue your brother and you will probably break up with your girlfriend"; included home spun philosophy, "when it comes to money people change"; and embraced the recommendation of possible professional advisors. Mr Bablis is an intensively engaging individual who is likely to have given such advice and I find that he did. The only odd part of Mr Levy's evidence about Mr Bablis giving this advice is in relation to the financial matters the subject of these proceedings. Mr Levy says that at one therapy appointment Mr Bablis said, "stop, I can get you 10% per month for 12 months". Mr Levy's statements about Mr Bablis' alleged financial offerings to him are the least reliable part of Mr Levy's evidence. When Mr Levy said that Mr Bablis acted as a money broker or directly offered Mr Levy financial opportunities his account is distorted by self-interest and profound dislike of Mr Bablis and must be approached with caution.

Mr Levy and Mr Bablis became distinctly closer friends in the second half of 2004. Mr Bablis admits this and describes them as "firm friends" from this period until late 2006. Their conversations about commercial investment intensified about this time. They both disagree about details of Mr Levy's attendances from mid 2004 at the Double Bay practice and about Mr Levy's relationships with its staff other than Mr Bablis. But on this I accept the evidence of Mr Bablis' staff in preference to Mr Levy's evidence. He was frequently at the Double Bay Clinic outside his therapy treatment. The strengthening of their friendship provided the platform for their first commercial transaction in February 2005.

When a close relationship fails it can be difficult for its parties to see their joint history clearly. So it is with this case. Both Mr Levy and Mr Bablis were most unsatisfactory witnesses, not because either of them was consciously dishonest but rather, because each was dominated by self interest and by a sense of betrayal of each by the other. Contemporaneous documents, the objective probabilities and the evidence of the few other witnesses in the case, who were all far more reliable than either Mr Levy or Mr Bablis, were an especially useful guide to the truth. To start though some observations about the credit of both the principal witnesses are required.

A great obstacle to acceptance of Mr Levy's account of his dealings with Mr Bablis is that through his cross-examination the Court progressively lost confidence in the reliability of his evidence. His evidence could not be accepted on important events on the history and also on simple issues only relevant to credit. Despite these problems at times I preferred parts of his evidence to that of Mr Bablis, which at times was not credible. There are many examples of this throughout the chronological account of important events below.

Mr Levy's reliability as a witness was severely impaired by his strange account of his friendships with Mr Bablis and others such as Mr Banovec. He initially denied Mr Banovec was a "friend" at the time that Mr Levy attended Mr Banovec's wedding in Austria. Then he admitted he was Mr Banovec's "friend" at the time of the wedding, and a "close friend" of Mr Banovec's by July 2006.

At times Mr Levy addressed Mr Bablis in emails as a "champion" or "brother", terms of obvious familiarity. But he was not prepared to agree in cross-examination that Mr Bablis was a friend. Mr Levy could not give any example of any other person that he addressed as "brother", who was not a friend. Mr Levy used the nickname "Jules" to describe himself in many of his emails to Mr Bablis in 2005, another sign of familiarity. But Mr Levy avoided questions about whether he used nicknames such as "Jules" with any other class of persons other than friends.

Mr Bablis submitted that Mr Levy had memorised his evidence. I agree with this submission. At times he had to go back to earlier parts of conversations in order to try to remember specific words in conversations, as though they were in his mind in a memorised sequence. He seemed best able to find things if they were part of a recital commencing at the beginning of a conversation. This impaired his credibility.

Mr Levy's credibility was also impaired by his statements at times in answer to potentially embarrassing questions, "I can't recall" when I did not think the answer was always genuine. For example on the issue of the level of friendship that he had with Mr Bablis (Mr Levy strangely disputed in evidence that it was close - see above), Mr Levy was challenged as to why in one email he had called Mr Bablis, "you old bastard". He said in reply that he "can't recall" whether he had called anyone who was not a friend, "you old bastard". The expression seemed to be one that Mr Levy could hardly have used to anyone other than a friend.

Mr Bablis was well cross-examined and also proved to be a most unsatisfactory witness. In the result he was a little more credible than Mr Levy. His general credibility was boosted by the fact that all of his staff members were highly credible witnesses who corroborated elements of his account. Chief among these staff members was Mr Rick Schlederer to whom Mr Levy made some critical admissions. Findings about Mr Bablis' credit appear in the course of my detailed findings below.

Events relevant to making the Courts findings start in 2001, before Mr Bablis is alleged to have made his first representation about private placements to Mr Levy.

Mr Levy sold his interest in the Leichhardt restaurant and the sale settled shortly prior to November 2002. Mr Levy says he then recalls a treatment session with Mr Bablis in November of that year during which they had a discussion about private placements. This discussion is the source of Mr Levy's first pleaded representation and was said to be to the following effect:- "Mr Bablis: 'The emotion (he then named an emotion from the muscle testing that I can no longer recall) is related to money or investments. What's happening around money or investments?' Mr Levy: 'I have a certain amount of money, around a million dollars, that is invested in a major bank.' Mr Bablis: 'I can double your million dollars in twelve months in a Private Placement within a major European or US Bank. This investment is not open to the public, but only to a privileged few who are generally very wealthy and high up in the banking world. It would be extremely difficult for you to understand the complexity of how it works. This placement is completely safe. All you need to know is that it returns 100%, carries absolutely no risk and runs for twelve months. I have a close friend called Brendan O'Dowd who has access to the investment. I first met Brendan in 1999 when he came in for a treatment as one of my patients. Brendan had a bad leg and was compelled to use a walking stick. Brendan said to me that he had been to numerous doctors and surgeons about his leg, but nobody could fix it. He said he would give me a million dollars if I could make him walk again without his stick. So I treated Brendan and fixed him of his problem and then Brendan paid me one million dollars!! At a doctor's conference I donated the million dollars. It was written up in an article and what I wanted to do was actually put the article up in the practice but I thought it might make me look a little too show-offish. There is a Professor at Sydney University who has written an entire paper on private placements."

Mr Bablis denes that he had this discussion with Mr Levy. Many parts of it are objectively wrong. I accept Mr Bablis' evidence that Mr O'Dowd had not then paid him $1 million. I do not think Mr Bablis would have misstated this. Rather Mr Levy seems to be confused with something else that Mr Bablis told him. Mr O'Dowd did pledge $1 million to a foundation, the One Research Foundation, which Mr Bablis helped set up and which opened a study centre in Oxford, England in May 2004.

Moreover, Mr Levy's version of this conversation about when Mr O'Dowd became a patient of the practice is wrong. Mr O'Dowd became a patient in 2002 not 1999. Ms Catherine Pritchard, a therapist from the Double Bay Clinic, recalls Mr O'Dowd because he was her first client whom she saw in May 2002 after she had graduated as a naturopath in April 2002. Her recollection of her first client and that he first came to the practice in May 2002 is likely to be accurate. A patient record (Exhibit 6) showing she first saw Mr O'Dowd in May 2002, confirms her recollection. She was a highly credible witness who is likely to have remembered Mr O'Dowd not only because he was her first client but because as she says he was a rather loud man of larger build. She had an actual recollection of him as a patient of the practice from that time. She treated him once every two to three months after May 2002. There is no objective evidence to support a finding that Mr O'Dowd was a patient of the practice in 1999.

Mr Bablis somewhat surprisingly recorded in his clinical notes a reference to the amount of $1.1 million that Mr Levy received for the sale of his restaurant, in the circled words "1:1 sold" on 22 July 2003. This odd entry in the medical notes is one indicator that Mr Bablis was interested in recording and remembering how much Mr Levy had received from the restaurant sale. The entry does not seem necessary for purely health reasons. It is difficult to understand why Mr Bablis would want to record for any health related purpose the exact amount of the sale proceeds. This entry is in my view one small indication of Mr Bablis' almost obsessive interest in furthering investment activity at all times. There was a conversation in July 2002 in which Mr Levy did mention the amount of proceeds of the sale of his restaurant. It is likely also in my view that there was a conversation at this time about how Mr Levy would invest these funds. But it is unlikely that the conversation Mr Levy and Mr Bablis had was like the account Mr Levy gives of their conversation in November 2002.

Mr Levy's version has inherent improbabilities. Mr Levy thought that when it was made, the offer of him being able to double his money in 12 months was very attractive. It is odd that when offered an opportunity to invest in such an opportunity, that even on his own story, Mr Levy said nothing to Mr Bablis to pursue an interest in such an attractive idea. Particularly when Mr Bablis said that he "could double your million dollars in twelve months", it is improbable that Mr Levy would not have responded, if he actually then believed in the authenticity of what Mr Bablis was offering him. If no such offer were made, this is just the part of Mr Levy's evidence where weakness would be expected. The proper conclusion is that no such offer was made at this time. Rather I find that there was some discussion at the time between Mr Levy and Mr Bablis about the characteristics of private placements and about Mr O'Dowd in the context of Mr Levy investing the proceeds of sale of the restaurant, but no more.

The second representation that Mr Levy relies upon is said to have occurred almost two years after the first. Mr Levy says that during the afternoon of 13 August 2004 he had an appointment with Mr Bablis during which NET was conducted. Mr Levy's account is that the same morning his accountant Mr La Rocca, had told him of a prospective second mortgage investment deal that would return 5% per month, although finance checks on the prospective borrower were still underway.

At the appointment Mr Bablis conducted the muscle testing required under the NET protocol and evaluated the responses. Mr Levy and Mr Bablis had, according to Mr Levy, a discussion to the following effect:- "Mr Bablis: 'What's happening around investments?' Mr Levy: 'I've been offered to invest in a bridging loan that is returning 5% per month for three months, secured by way of a second mortgage'. Mr Bablis: 'Stop. I can get you 10% per month for 12 months in a private placement where the money is never at risk. The way it works is that major banks in Europe or the USA offer contracts to place your money in one of their accounts for a period of 12 months. You can't touch your money over the course of the investment but the money doesn't leave the account and it returns 100%. The banks can leverage off these funds ten fold and use them for home loans, that is why the return is so high. The banking system is all done on paper transactions, this is why the funds don't leave the account they just have to show they have them available on their ledger. This is not open to the public. It's generally open to only very wealthy individuals high up in the banking world. Brendan O'Dowd advised me to set up a non profit medical research facility in London, to use as a vehicle in which to run the placements through. The research facility is based at Oxford University. Boy, it cost me a hell of a lot of money to set up, but now I can run my own placements.'"

Mr Levy says that when Mr Bablis mentioned Mr O'Dowd's name in this conversation that he realised that he had recognised it from the previous time Mr Bablis had mentioned it in connection with private placements. Mr Levy says that Mr Bablis then continued to explain: "Mr Bablis: 'I recently did a placement, personally for $500,000.00 and doubled my money in twelve months. I used the money to pay off my father's mortgage because he has cancer and I didn't want to feel bad if anything happened to him.'"

Mr Bablis denies having this conversation with Mr Levy and I accept that denial and Mr Bablis' corrections to the factual assertions that Mr Levy attributes to him. There are many implausibilities in Mr Levy's version. His evidence did not persuade me that this conversation happened the way he said it did.

Mr Levy appeared to have constructed his version of this conversation from fragments of other conversations between the pair. I accept Mr Bablis' evidence that he did not then have and Mr O'Dowd did not advise him to set up a non-profit medical research facility in London to run placements through. Such an idea seems unusual. There is no evidence Mr Bablis did organise private placements of any kind through such a facility. Indeed if this had been said it is a curiosity of Mr Levy's case that he did not inquire of Mr Bablis in 2005 about investing in a placement through Mr Bablis' facility in London rather than in UPA.

The private placements were supposed to be with a "major bank" but Mr Levy never asked Mr Bablis which major bank either on this occasion or at any other time, and strangely even after his money was not returned in 2006. This is odd and is good reason to doubt Mr Levy's version of this conversation. Mr Levy is someone who I find spontaneously seeks out commercial information. If he had truly seen Mr Bablis as the counterparty to the transaction he had no reason to hesitate in asking Mr Bablis what Mr Bablis knew about the banks that were involved. Their identity is a central feature of the security of the allegedly proferred scheme.

I do not accept that Mr Bablis made an offer to Mr Levy on this occasion that he, Mr Bablis "can get you 10% per month for 12 months in a private placement where the money is never at risk..." For the same reasons as apply to the November 2002 conversation, Mr Levy's version is doubtful because he does not give a complete account of what he said or did in response to this offer. There probably was some discussion between them about the subject of private placements but not in these terms.

Between December 2004 and March 2005 Mr Levy began to actively use the restaurant sale proceeds to make mortgage advances to mortgagors referred through his accountant Mr La Rocca and Ms Fleming. The fact of these advances and the timing of repayment of one of them is relevant to some contested events in the proceedings. Mr Levy's first advance on 15 December 2004 was a small one, of $30,000 to a Mr Lo Sordo for 30 days at 40% per annum. Mr Levy soon continued with high interest rate transactions.

A few days later, on 17 December 2004, Mr Levy advanced $108,000 to a Mr Ferrando for one month term at 5% per month. Again this transaction was introduced by Ms Fleming. Mr Levy engaged specialist solicitors on this transaction at Mr La Rocca's suggestion. Mr Levy engaged Northwest Property Legal. Mr Levy took a registered first mortgage over a property in Mount Victoria. This loan was repaid on 1 February 2005.

The success of these first two smaller transactions induced Mr Levy to lift the scale of his investment in high interest rate mortgage lending. On 10 January 2005 he advanced $500,000 to Dr Van Nguyen Pty Limited for a three month term at 5% per month. The interest on the Van Nguyen loan was received in three payments on 31 October 2005, 3 November 2005 and April 2006. Mr Levy found this transaction through Mr La Rocca and Ms Fleming. He retained a Queensland firm of lawyers, Appleyard Lawyers, to act on the transaction because the security properties were based in Queensland. The borrower defaulted in repayment of this advance which was not recovered until after the middle of 2005, long past the original three month term. The repayment of this $500,000 enabled Mr Levy to source funds for the October 2005 transaction. Mr Levy suspended high interest rate mortgage lending from about April 2005 for reasons that I accept: the default on the Van Nguyen loan concerned him; he was planning to go overseas; and, he had already lent $175,000 to Mr Bablis in February 2005.

Finally on 9 March 2005 Mr Levy advanced $505,002 to Colys Investments Pty Limited for one month at a rate of 5% per month, as one part of a larger composite loan advance. Again Mr Levy retained Northwest Property Legal Limited to act on this transaction and took a second mortgage over a property in Kiama, New South Wales. The advance was paid on 28 April 2005 with total interest received being $49,500. These mortgage transactions gave him the confidence both to lend to Mr Bablis when the opportunity first arose early in 2005 and to enter the June and October 2005 transactions when even higher returns were offered to him.

Mr Levy and Mr Bablis made their first mutual commercial arrangement in February 2005. In an atmosphere of mutual informality Mr Levy lent Mr Bablis $175,000. Although this loan was made on terms that are not in dispute between the parties and indeed was repaid, the circumstances that gave rise to the lending are nevertheless controversial. This transaction is important because on Mr Levy's version it is the reason why Mr Bablis later offers him the opportunity to enter the June 2005 transaction. Although I reject much of Mr Levy's evidence about the June and October 2005 transactions, what he says about making this $175,000 loan I largely accept.

Mr Levy says that the idea of a loan arose when he went for one of his regular treatments with Mr Bablis. From his prior discussions with Mr Levy Mr Bablis did know that Mr Levy lent money on a short term basis. Mr Levy recalls and I accept that during a treatment Mr Levy had a discussion to the following effect with Mr Bablis:- "Mr Bablis: 'I need a bridging loan of $175,000 for about one month'. Mr Levy: 'I have just been offered another deal and I am waiting to see if it is going ahead or not. If it doesn't, I can do it.' Mr Bablis: 'Okay, can you let me know once you hear'."

Mr Levy did follow up. The other lending deal he was contemplating did not proceed. He then emailed Mr Bablis in the following terms:- "Hi Pete, The deal fell through this afternoon. I have $140,000 available straight away. I receive 7.5% PA not per month....! Another $35,000 is coming back next week. I also have $500,000 but this in a 1 year fixed term. It expires in one month. It can be broken but the interest goes down from 8.75% to 6.75% PA. So if you require the funds send your BSB & account name & number. I will charge you what I am receiving 7.5% PA. I am assuming you require the funds for approx 1 month? Regards Julian"

These terms were generous. Mr Levy had been receiving returns on his various mortgage transactions of the order of 7.5% per month. His offer of a loan to Mr Bablis was a friendly gesture. Later on the same evening of 22 February 2005, Mr Bablis replied in the following terms:- "Hi Julian, Sorry the deal fell through. I am happy to borrow the $140 straight away with the $35 to follow next week at the rate of 7.5% PA. So if you can remit the $140 into my account tomorrow and the $35 to follow next week that would be much appreciated. My account details are:- NAME BABLIS INVESTMENTS PTY LTD BSB NO:- ###003 ACC NO:- ####263 BANK:- ANZ I will require the funds for a minimum of 1 month to a maximum of 4 months. Will confirm term of period with you tomorrow. Once again much appreciated, Pete"

Mr Bablis' reply shows that he thought Mr Levy was doing him a favour. Despite the relative informality of the transaction, both of them record in their emails the essential terms of their bargain: $140,000 to be loaned immediately with a $35,000 advance to follow the next week; interest at 7.5% per annum; payment into an identified account of Mr Bablis; and, a defined term for the advance of between one and four months. But the important feature of the correspondence is that both Mr Levy and Mr Bablis took steps to document the essential terms of their loan transaction. This is to be contrasted with what happened later with the June and October 2005 transactions.

Mr Levy trusted Mr Bablis to pay the $175,000 borrowing back. But the parties' evidence differed markedly on the issues of security and interest associated with the borrowing.

On the issue of security, the level of friendship between them at this time was inconsistent with Mr Levy requesting security for his advance. Mr Bablis admitted that Mr Levy trusted him to repay this sum. I find that security was not discussed between them.

Mr Bablis said that security was discussed the following way:- "Mr Bablis: 'Do you need me to sign any legal paperwork? Do you want to take a second mortgage as security for the money I've borrowed?' Mr Levy: 'It's no problem, buddy. We'll work around it.'"

But I do not accept Mr Bablis' version of this conversation. Mr Bablis could not place "it's no problem buddy. We'll work around it" in any wider conversational context. It is unclear what "we'll work around it" means. It may mean that the security paperwork can be done later or it may mean such paperwork is not needed at all. Mr Bablis did not seem to be able to explain what he meant by this statement. In my view the issue of security was not discussed between them.

On 23 February 2005 Mr Levy withdrew $140,000 from his cheque account and deposited it into Mr Bablis' bank account. On 15 March 2005 he transferred the remaining $35,000 into Mr Bablis' account. Sometime after this in late February or March 2005, Mr Levy says that during a treatment with Mr Bablis, the issue of interest was discussed when Mr Bablis said to him:- "Thank you very much for lending me the money. In addition to our agreement I am going to offer you 20 free treatments because you have helped me out. I will credit that to your account."

Mr Levy's version is that he was grateful for this offer of free treatments from Mr Bablis because there was a limit on the number of treatments he could receive and claim from his health fund. But Mr Levy's version, which I accept is that the 20 free treatments were in addition to the interest owing on the loan agreement.

Mr Bablis repaid the $175,000 loan without interest on 26 July 2005. Mr Levy explains the repayment without interest was the product of discussion between himself and Mr Bablis on 20 July 2005 in which Mr Levy, claims that he waived the interest. Mr Levy claims that he said to Mr Bablis "in regards to interest don't worry, there is no way I can charge you interest when you just invited me to do a placement where I will double my money over 12 months". Mr Levy says that Mr Bablis thanked him for this and that settled the matter between them.

Mr Bablis disagrees with this conversation. He says that Mr Levy said to him "I'd prefer payment of the interest in free treatments. I normally run out of health cover and this way I won't have to pay tax on the interest". Mr Bablis suggests that Mr Levy agreed "20 free treatments will cover it [meaning the interest]". I do not accept Mr Bablis' version. Mr Levy did agree to waive interest in July 2005 because of his gratitude for Mr Bablis putting him in touch with Mr O'Dowd in June of that year. But I do not accept that Mr Levy said on this occasion that Mr Bablis had "just invited me to do a placement". As my findings below show Mr Bablis had introduced Mr Levy to Mr O'Dowd and therefore to the opportunity of doing a private placement. But Mr Bablis did not "invite" Mr Levy to make a private placement.

Apart from this detail, I prefer Mr Levy's version that he waived the interest in gratitude for several reasons. First, as Mr Levy submits, the value of interest payments was considerably in excess of the $1100 in free treatments Mr Levy would receive under the arrangement. It is unlikely Mr Levy would just give up this interest unless he had received something more than the value of these free treatments.

Secondly, it is not easy to reconcile Mr Bablis' version with an email he sends to Mr Levy on 20 July 2005, in which Mr Bablis says, "I've got your $175K plus whatever the interest is". Mr Bablis thought in July 2005 that interest was still required to be paid to Mr Levy on the $175,000 loan.

Thirdly, there was no discussion on Mr Bablis' version of the differences between the interest due and the amount of the free treatments. Such a discussion would be expected if his version were correct.

It is common ground that Mr Bablis did not pay interest to Mr Levy. The best explanation for this non-payment is that Mr Levy waived the interest in gratitude for Mr Bablis' role in referring him to Mr O'Dowd and UPA. But this does not make good Mr Levy's contention that Mr Bablis was a party with Mr Levy to the June 2005 transaction. All it means is that Mr Levy was grateful for Mr Bablis facilitating Mr Levy's access to Mr O'Dowd and UPA.

Mr Levy also claims that this transaction was entered into in contravention of the Chiropractors Code of Professional Conduct, Rule 6 ("the Code") established under Chiropractors Act 2001 which provides that "A chiropractor must not exploit his or her relationship with a patient in any way". A contravention of the Code, Rule 6 might occur, whether or not Mr Bablis' request for a loan from Mr Levy occurred during a treatment. The event may still be able to be characterised as exploiting his relationship with his client. But it is not necessary for this Court to make a finding whether Mr Bablis has contravened the Code, Rule 6 because Mr Levy does not found any cause of action or claim for damages on such a breach if established.

But I do find that in February 2005 Mr Bablis requested his patient Mr Levy make a loan of $175,000 to him. Although Mr Bablis in part thought that his request was professionally justified because of his by then well developed friendship with Mr Levy outside therapy, I find that Mr Bablis' request Mr Levy was objectively more likely to accede to the request and Mr Levy did accede to it because of his existing patient/therapist relationship with Mr Bablis.

Between March and June 2005 Mr Levy and Mr Bablis continued to meet. They continued to discuss commercial investment opportunities, mainly outside therapy sessions but occasionally within them. I accept Mr Bablis' account of this three month period. Mr Levy was excited about travelling overseas, which he saw as an opportunity to expend his investment horizons. I find Mr Levy said to Mr Bablis, "I'll see if I can find anything worthwhile for us to invest in. If I do I'll bring it back and we can import it". I accept Mr Bablis' evidence that Mr Levy was also keen to take advantage of their mutual relationship on his trip and to take abroad any investment opportunities that Mr Bablis could give him. Mr Levy was excited to be meeting up overseas with a friend of his, Oliver Gilly. Mr Levy said to Mr Bablis about investment ideas that Mr Levy could take with him on his trip "Give me everything you've got. When I'm over there I'll suss it out." I accept Mr Bablis' version of these conversations and that Mr Levy was asking him to pass on whatever investment opportunities Mr Bablis had so that they could find investors and earn a commission together.

In fact Mr Bablis did refer a number of investment opportunities on to Mr Levy. Mr Levy identifies them as relating to the three businesses, Roses Only, Green Onion and NHI. Mr Bablis forwarded information to Mr Levy about all of these businesses whilst he was overseas. But this was at Mr Levy's invitation. In their friendship in 2004-2005 they both wanted to give investment information to the other. In their enthusiasm for commercial investment they both invited an open exchange of opportunities with the other. Mr Levy's evidence tended to suggest that Mr Bablis was pressing these investment opportunities upon him and that he had not solicited them from Mr Bablis. That is not the case. In their investment friendship there was a surprising degree of equality, founded on the open exchange of any information that would lead to profitable investment.

With this background the first of the major transactions in issue in the proceedings takes place in June 2005. This transaction fits well into the pattern of mutual exchange of information and joint facilitation of investment opportunities of one to the other that then characterised the relationship between Mr Levy and Mr Bablis.

Mr Levy says the important conversation leading to the June 2005 transaction occurred at a consultation between Mr Levy and Mr Bablis on 17 June 2005. Mr Bablis disputed this conversation. This led to a contest about the content of the conversation and the dates on which the pair actually met at this time. Mr Bablis said that two relevant conversations occurred, one on 15 June 2005 and the other on 17 June 2005, and that the content of these conversations was very different from Mr Levy's version. In the result I find in this section that Mr Bablis' version of conversations on two occasions is generally to be preferred but I do not fully accept his version because of its inherent flaws.

But the starting point is Mr Levy's version, which was a conversation he says took place between himself and Mr Bablis during a consultation in the following terms:- "Mr Levy: 'I am leaving for overseas tomorrow'. Mr Bablis: 'Julian, thank you for helping me out with my loan [referring to the $175K advance]. I would like to offer you to enter into a private placement for one million dollars.' Mr Levy: 'I would like be interested but I currently only have $500,000 available with a further $500,000 due any day now'. Mr Bablis: 'That's fine - you can start the initial investment with $500,000 and add on the other $500,000 later if you choose. The placement will start on 1 July and you will have the $500,000 plus the other $500,000 back to you on the 30 th June 2006. I can access the account at any time, because I am the signatory on the account, however if you need your funds back prior to 12 months, it can be done, but you will be penalised heavily interest wise.' Mr Levy: 'Pete, I understand, but I definitely will be able to leave the funds there for 12 months.'"

Mr Levy says that after this conversation Mr Bablis left the room and walked to his office. Mr Levy says he waited outside while Mr Bablis went into his office, and that when Mr Bablis came out, he handed Mr Levy a sheet of paper which had the UPA account details on it. The text of the sheet of paper was a fax sent to Mr Bablis in the following terms:- "United Producers & Associates Pty Ltd Suite 7, Corporate House 155 Varsity Parade Varisty Lakes QLD 4227 Phone: +61 7 5630 6507 Fax: +61 7 5630 6531 Date: 17 th June 2005 Dear Peter, Please find account details for UPA Pty Ltd as follows: Bank: Commonwealth Branch: Brisbane, Adelaide St Account Name: United Producers & Associates Pty Ltd BSB: ####01 Account: ####98 Yours truly, John Bettini"

Mr Levy then says Mr Bablis continued: "Transfer the money to John up at UPA in Queensland. John works for Brendan and myself, and he runs that side of the business." According to Mr Levy this concluded his conversation with Mr Bablis. He says that by the conclusion of his conversation with Mr Bablis he had decided to proceed with the private placement. Mr Bablis had a different version of the conversations leading up to the June 2005 transaction.

Mr Bablis says that Mr Levy raised the subject of private placements not on 17 June 2005 but on 15 June 2005 whilst he was working in the office with his assistant Ms Polly Georgeou. Mr Bablis says that the 15 June conversation was in the following terms:- "Mr Levy: 'Tell me about private placements again, because there are many people who have got this kind of money that I am going to meet overseas?' Mr Bablis: 'As I have said before, I have been told the minimum entry is US$10 million, the money stays in your account, you enter into a private placement and the returns are above market interest and can be a lot, lot more' Mr Levy: 'That sounds interesting. Tell me more' Mr Bablis: 'Why don't you talk to Brendan direct. He can fill you in with all the details rather than getting it third person from me. I can get him on the phone and you talk to him. How about we do that later? I need to do my stuff with Polly [Georgeou] now'"

Mr Bablis said that after Ms Georgeou and he had finished their work at the Double Bay Clinic: that Mr Levy and he continued to talk; that Mr Bablis offered to call Mr O'Dowd; and that he did so from his mobile phone at about 6pm.

Mr Bablis says that he said to Mr O'Dowd words to the effect:- "Brendan I want to introduce you to my friend, Julian. He wants to talk to you about private placements. Can I put him on the phone?"

Mr Bablis says that Mr O'Dowd agreed and he handed his telephone to Mr Levy and left the room. On Mr Bablis' account he returned to his office only about 10 or 15 minutes later, when he found Mr Levy off the phone. On Mr Bablis' account they then had a short conversation about Mr Levy's phone call with Mr O'Dowd:- "Mr Levy: 'Sounds really good. He says its secure and I will double my money in 12 months'. Mr Bablis: 'Great. Just make sure you are satisfied and do your checks'. Mr Levy: 'No problem. I will use my short term finance team'. Mr Bablis: 'Good'."

According to Mr Bablis that concluded the 15 June conversation.

Mr Bablis agrees that there was contact with Mr Levy on the morning of 17 June 2005 at the Double Bay Clinic. Mr Bablis recalls that before commencing a consultation with him that Mr Levy opened a discussion in the following way:- "Mr Levy: 'I have just discussed it with Brendan. I am moving ahead with one of Brendan's deals. I need the details of the account as soon as I can. As you know I am going overseas tomorrow and I want to finalise things before I go. Can I get them to fax it here?' Mr Bablis: 'Ok. I will go and give Brendan a call'."

Mr Bablis says that he assumed that because Mr Levy was asking him to obtain the bank details that Mr Levy had already done any necessary checking on Mr O'Dowd. Mr Bablis then says that he spoke to Mr O'Dowd about 10am and asked Mr O'Dowd for UPA's bank account details to be faxed to the Clinic whilst Mr Levy was there and Mr O'Dowd agreed to do that. UPA did send a facsimile to the Double Bay Clinic at 10.33am.

Mr Bablis says that he then went on to treat Mr Levy and after the treatment gave the facsimile to him. They then spoke again about this subject:- "Mr Bablis: 'Julian you are obviously satisfied with Brendan's investments. Goodluck, I am sure you have done your checks and are happy with everything.' Mr Levy: 'It all sounds good. I will contact you when I am overseas.' Mr Bablis: 'Have a good trip'."

Mr Bablis said he did not know what investment Mr Levy was making with Mr O'Dowd. However he says that he assumed it was not a private placement because he had understood from Mr O'Dowd that with private placements a minimum of US$10 million was required and the money stayed in an account controlled by the depositor.

Mr Levy denied seeing Mr Bablis at all on the afternoon of 15 June 2005. He says that he did not see Mr Bablis when Mr Bablis was doing his paperwork that afternoon because that afternoon he had a dentist appointment in Macquarie Street, in the city, an appointment for which he parked his vehicle at about 4pm. He was able to produce a receipt to verify this visit and this time. After visiting the dentist he says that he returned home and made a telephone call to a number in Brisbane about 5.39pm, an assertion also verified by the Optus telephone account record. The telephone call was only 8 seconds and is consistent with leaving a message on an unanswered telephone.

Mr Levy denied having any conversation with Mr O'Dowd on 15 June 2005 and denied Mr Bablis' version of their conversation on 17 June 2005, generating a strong contest on both sides about the facts. I have ultimately preferred Mr Bablis' version of these conversations for a number of reasons, although I do not entirely accept Mr Bablis' version.

First, Mr Levy's version of what happened on 17 June 2005 is inherently improbable. It is just too fast. It involves Mr Levy giving a spontaneous response to Mr Bablis' unsolicited offer to invest just before he leaves to go overseas. Mr Levy immediately says that he is interested. He obtains the UPA account number by the conclusion of the conversation and had decided to proceed with a private placement. Thus within a space of a single treatment, which is usually no longer than half an hour and often much less, he had received and agreed to an offer committing him to invest half a million dollars. Then the same day he transferred the sum of $500,000 to UPA. Yet he had apparently not thought seriously about such a transaction and discussed it with Mr Bablis since about August 2004. This is simply too quick to be credible. Mr Levy's receptiveness to a slightly less quick transaction is far better explained on Mr Bablis' version in which Mr Levy himself brings the idea into the Clinic on 15 June 2005, an idea Mr Levy presumably had thought about beforehand. My finding is that there were two discussions between them, one on 15 and the other on 17 June 2005.

Secondly, Mr Levy did not successfully exclude the possibility of his being in the Double Bay Clinic on the afternoon of Wednesday, 15 June 2005. Although there were difficulties with Mr Bablis' own version of his meeting with Mr Levy that day, it is in my view the better version.

Mr Levy's legal representatives did very substantial damage to Mr Bablis' credit in relation to the 15 June meeting. The conversation cannot have taken place exactly as Mr Bablis says. The objective evidence supports Mr Levy's contention that he had a dental appointment in the city and that he was briefly on the phone at home at 5.39pm. Mr Bablis' principal evidence on the subject deposes to his having a conversation with Mr Levy of an hour to an hour and a half on that afternoon, in which they discussed a range of investment opportunities and then rang Mr O'Dowd. This cannot be right. A meeting of that length of time cannot easily be accommodated after 2.00pm that afternoon without Mr Levy leaving to go to the dentist and returning or leaving to make a telephone call from his own phone and returning. The other problem with Mr Bablis' version is that the idea that they were talking for a period, then he did administrative work with Ms Polly Georgeou and then resumed the conversations with him saying words to the effect, "let me call Brendan for you now", is difficult to fit into an afternoon with Mr Levy at the dentist and then going home. On top of that Mr Levy's legal representatives established that prior to his telephone call to Mr O'Dowd, that Mr Bablis made another telephone call at 17.51pm with a duration of 15 minutes and 12 seconds. Mr Bablis was on the phone, right up to the time when the phone call to Mr O'Dowd was made, apart from about a 40 second gap. Mr Bablis gave some inadequate explanations to attempt to answer Mr Levy's astute electronic detective work. Mr Bablis amended his version of events to accommodate Mr Levy leaving the premises and returning later. But it was odd that Mr Bablis did not remember Mr Levy's departure and return at the time he swore his first affidavit. If allowance was to be made for Mr Bablis possibly speaking to Mr Levy earlier in the afternoon, it is also strange that he did not take the simple course of giving Mr Levy Mr O'Dowd's phone number so that Mr Levy could ring Mr O'Dowd later at his own leisure. Mr Bablis agreed that it was not necessary for him to be present while Mr Levy made the phone call to Mr O'Dowd.

All of this is very difficult to reconcile. Mr Bablis' account of his evidence about the 15 June 2005 was very unsatisfactory. But I do not accept Mr Levy's denial that he was not at the practice that afternoon. And I do not accept Mr Levy's version of the encounter with Mr Bablis on 17 June 2005. But I do accept that Mr Levy spoke to Mr O'Dowd directly on this afternoon. Although Mr Levy was commercially nave in many ways I do not think he would have invested $500,000 with someone to whom he had never spoken. But nor do I think Mr Bablis was dealing himself with Mr Levy. Mr Bablis' conviction that he did put Mr Levy on the phone to Mr O'Dowd seemed to me in the end to be unshaken and I accept it.

How is all of this to be reconciled? I cannot wholly accept either version of this important conversation. I find that: Mr Levy did have a conversation with Mr Bablis about investments earlier that day, possibly about lunchtime or as late as 2.00pm; the conversation was not very lengthy; Mr Bablis did invite Mr Levy to speak to Mr O'Dowd directly; the conversation at the Clinic was interrupted for Mr Levy's dental appointment; Mr O'Dowd was not telephoned before Mr Levy went to the dentist; Mr Levy returned to the Double Bay Clinic at about 6pm; Mr Bablis was then on the telephone; when Mr Bablis finished on the telephone, he telephoned Mr O'Dowd directly and gave the telephone to Mr Levy; Mr Bablis then left the room.

The complete evidence of neither witness supports this account of what happened that day. But on the balance of probabilities in my view it is what occurred and it is consistent with parts of both versions. The answer to Mr Levy's criticism of why Mr Bablis did not just give Mr Levy Mr O'Dowd's phone number is to be found in a persistent theme in Mr Bablis' conduct that is evident throughout the email communications between the parties. Mr Bablis preferred to be the point of access for Mr Levy's communications to Mr O'Dowd. Mr Bablis simply preferred Mr Levy to call Mr O'Dowd through him, Mr Bablis, rather than to just give Mr Levy Mr O'Dowd's phone number. This changed later in their relationship but by this stage this was Mr Bablis' preference. Mr Levy came back to the Clinic which was not particularly difficult for him.

Mr Levy supports his denial of a 15 June conversation by his challenge to Mr Bablis' account of the 17 June conversation. Mr Bablis has Mr Levy saying on 17 June "I need the details of the account as soon as I can". Mr Levy criticises Mr Bablis' version which really has Mr Bablis' further involvement in the transaction on 17 June as purely circumstantial. But I find that this is what happened: Mr Levy did not have the UPA account details on 17 June, was in Mr Bablis' Clinic; and, wanted the information before he went overseas. Whilst it would certainly have been more logical for Mr Levy to obtain the bank details directly from Mr O'Dowd either before Mr Levy's treatment on 17 June or indeed shortly after and before he went overseas, that is not what Mr Levy did. Mr O'Dowd did not give him the details on the telephone. Mr Levy needed them as he was keen to proceed before he went overseas. Mr Bablis seemed reluctant to hand out Mr O'Dowd's telephone number. It is not surprising that Mr Levy would come back into the Clinic to get this account information through Mr Bablis.

One early indication of the later unreliability of UPA was its failure to issue Mr Levy a receipt until a month after he transmitted funds to it. On 22 July 2005 UPA sent to Mr Bablis a receipt dated 20 June 2005 for the funds he had deposited. The letter provided:- "Date: 20 th June 2005 Reference Funds being held on behalf of Mr Julian Levy UPA Receipt number 10400A Amount Five Hundred Thousand Australian Dollars $500,000.00 Mr Julian Levy We, the above company will hold these funds in a investment account and will undertake that if the funds are to be held for a period of 12 months to provide a return of no less than 100% of the capital placement with further earnings on a best effort basis. Should the funds be required to be withdrawn then we will require a minimum of 30 days notice. Returns will be credited to the account ninety (90) days from the initial investment. A receipt of a bank transfer of funds to a UPA account will be considered a legal transfer of funds bound by the above conditions. Regards Brendan O'Dowd Chairman UPA A signed fax copy of the above will be deemed a original document."

Mr Levy did not get this receipt in June 2005. It appears that Mr O'Dowd only sent it to Mr Bablis and Mr Bablis did not pass it on to Mr Levy because Mr Bablis assumed that (by reason of its date) Mr O'Dowd had already provided a copy of the letter to Mr Levy. Thus, Mr Bablis ended up with a copy of this letter at the time and Mr Levy did not. At first Mr Bablis' evidence about this sounded strange but I accept it as a correct account of what happened.

I do not think that Mr Bablis should be disbelieved when he says that he assumed that Mr O'Dowd had already provided a copy of the letter to Mr Levy. First, Mr Bablis' cross-examination did not displace my view that his evidence on this should be accepted. Secondly, the receipt was by then nearly a month old, so his assumption that it had already been sent is reasonable. Thirdly, the following day Mr Bablis forwarded on to Mr Levy a large amount of investment material about private placements, material that Mr Bablis had received from Mr O'Dowd that day. It is difficult to see why this material would have been forwarded on to Mr Levy and not the 20 June 2005 receipt, other than for the reasons that Mr Bablis gives, that he thought that Mr O'Dowd had already sent it to Mr Levy. Fourthly, in my assessment of Mr Bablis and the relationship he then had with Mr Levy I do not think he would have withheld the receipt from Mr Levy if he then thought that Mr Levy did not have it. I do not accept a hypothesis that Mr Bablis was deliberately holding it back from Mr Levy. What purpose that would serve is difficult to understand. Mr Levy never seems to have asked for it from Mr Bablis and Mr Bablis did not appreciate that Mr O'Dowd had not sent it to Mr Levy.

This episode does illustrate the truth of one of Mr Levy's submissions. His counsel rightly put in my view that he was nave despite his commercial experience. He did seem to accept Mr O'Dowd at face value, to the point of not asking for Mr O'Dowd for a receipt or a record of the terms of his deposit with UPA and not following up with Mr O'Dowd when he did not get one.

One puzzling feature of the email Mr O'Dowd sent Mr Bablis enclosing the letter of offer to Mr Levy is that its subject is headed "No E-mails!!!". Mr Levy's submission was that this was evidence of an arrangement between Mr Bablis and Mr O'Dowd that they would not communicate by email so as to reduce the "paper trail" of their communications. But I do not accept Mr O'Dowd and Mr Bablis were being this conspiratorial. A very ineffective way to eliminate a paper trail is to start it by sending an email entitled "No-Emails!!!" Moreover, Mr Bablis did not strike me as a person at this time as someone who was planning to protect himself from future litigation from Mr Levy by, for example, reducing paper trails. As his later rather distressed telephone messages left with Mr Levy in about October- November 2006 show, he seemed far more anxious about the possibility of litigation than someone who had planned for years to defend himself from it. Mr Levy submits that the Court should infer concerted misconduct against his interests between Mr Bablis and Mr O'Dowd. Rather, the better view is that Mr Bablis had himself been invited into Mr O'Dowd's charmed circle and was himself somewhat naively trusting of Mr O'Dowd, not that he was working with Mr O'Dowd to take control of Mr Levy's funds.

When Mr Levy's and Mr Bablis' versions of their 17 June 2005 contact are compared it is Mr Bablis' version that has greater inherent probability and it is his version that I accept.

First, it is odd that on Mr Levy's version, after he had not responded to this investment opportunity in 2002 and 2004, that he did show rapid interest in it on this third occasion in 2005, as soon as Mr Bablis mentioned it. A difference this time, from their discussions of private placements in 2002 and 2004, was that Mr Levy had loaned $175,000 to Mr Levy in February 2005. Mr Levy characterised the June 2005 transaction as a "thank you" for the $175,000 loan and said that Mr Bablis had treated it this way. But although the offer was now accompanied by Mr Bablis' "thank you", that does not really explain why Mr Levy suddenly decided within the space of a few hours to take up the investment opportunity that he had been offered twice before on his account and had twice ignored. This conversation sounds quite improbable as the spontaneous initiative of Mr Bablis that day and I do not think it was. Rather, I find that Mr Levy initiated it on 15 June 2005 as Mr Bablis said he did. After a few months of mortgage lending I find that Mr Levy thought he was ready for something bigger.

Secondly, Mr Levy's "thank you" explanation for Mr Bablis' offer to him to participate in a private placement does not make ready chronological sense. Mr Levy had made the $175,000 loan to Mr Bablis in February. On Mr Levy's version Mr Bablis would have been grateful for almost four months, since the time the loan was made. But according to Mr Levy, Mr Bablis comes up with the idea and says, "thank you for helping me out with the loan", only the day before Mr Levy is going overseas. If the offering of the loan was an expression of gratitude it was very delayed and not in character. Mr Bablis seemed to the Court to be a fairly careful person who did actually value his friendship with Mr Levy at this time. If the private placement was really an act of gratitude I would have expected it to be either offered, mentioned or hinted at much earlier than the day before Mr Levy's departure, when it would be difficult to organise without concentrated effort. Mr Bablis had known about private placements for many years.

Thirdly, there was persistent vagueness in Mr Levy's evidence about the relationship between UPA, Mr O'Dowd and Mr Bablis. He left the relationships among these parties up in the air. Mr Levy denied Mr O'Dowd had anything to do with the placement that he, Mr Levy was making. He says in evidence as far as he was concerned that his investment "was with Peter". But the only sense one can make of Mr Bablis' words, "John works for Brendan and myself", is that the placement was being made in a business jointly conducted by Mr O'Dowd and Mr Bablis. But there was no evidence that Mr Bablis had an interest in either UPA or in the placement UPA took from Mr Levy. I do not accept that Mr Bablis represented himself to Mr Levy as a joint venturer in private placements with Mr O'Dowd, when he was not. Mr Levy could be expected to be comfortable to invest with Mr Bablis but not with Mr O'Dowd. But on neither side's version does he baulk at transferring funds into UPA. The explanation in my view for him not hesitating to do this is that he had a prior conversation with Mr O'Dowd as Mr Bablis says he did.

Fourthly, if the investment transaction was with Mr Bablis in addition to or instead of UPA, Mr Levy never asked for or received from Mr Bablis any document recording the arrangement for the investment. There was no reason for him not to ask for such a document. Mr Levy was sufficiently experienced in solicitors' reporting to him about the mortgage loans in which he had been involved to ask Mr Bablis for similar documents on this occasion. But he did not. If Mr Levy had actually committed to Mr Bablis during the conversation on 17 June 2005, as he says he did, it might be expected that Mr Levy would have said something to Mr Bablis then and there to ask Mr Bablis to record his, Mr Levy's decision to proceed with the investment. If he was dealing with Mr Bablis and not with Mr O'Dowd this should have been an easy thing to do because of his good relationship with Mr Bablis. Their friendship had not been an obstacle to recording terms between them before. But Mr Levy did not give a satisfactory account of why he did not.

When things started to go wrong from 1 July 2006 it is even stranger that Mr Levy did not ask Mr Bablis for a receipt or some other record of his placement with Mr Bablis. Even then, when he claims he was pressing Mr Bablis for payment, he did not have a receipt from Mr Bablis. The alternative explanation is what Mr Bablis says: that by then Mr Levy had a receipt from UPA for the very transaction he had indeed entered. This explains why he did not ask for receipt from Mr Bablis. Whether or not he had UPA's receipt of 20 June 2005 by late 2006, I infer from Mr Levy's failure to ask Mr Bablis for a receipt for his money that he did not think that Mr Bablis was the other party to his transaction. Private Placement or Currency Transaction

Mr Bablis contended that Mr Levy had invested in a "currency conversion" (some kind of currency trading investment), with UPA and not a "placement". Mr Levy denied any interest in or knowledge of a "currency conversion" or any similar transaction and was unable to satisfactorily explain why he used the expression "currency conversion" to describe what he really thought was in his language a "private placement". Mr Levy did invest $1,000,000. Whether this sum was invested in a private placement or a currency transaction became an important test of Mr Levy's version of his dealings with Mr Bablis and UPA. Currency trading transactions could not be expected to be risk free and would therefore be inconsistent with Mr Levy's account that he was making a risk free investment with a 100% return in 12 months. There are certainly contemporaneous indications that Mr Levy thought that he was engaged in some kind of currency transaction or similar risky investment with UPA. But despite these difficulties, for reasons given in this section I do accept Mr Levy's version of this part of the 17 June 2005 conversation, to the extent that he says he was entering a "private placement". But I do not accept that the private placement was with Mr Bablis. Rather it was with UPA.

Only four days after the June 2005 transaction Mr Levy emails Mr Bablis from Santiago, Chile. He says to Mr Bablis "Thanks for putting my money into the currency conversion. Greatly appreciated". Mr Levy professed to be moderately familiar with the concepts of private placements. They had been mentioned to him a few times since 2002. Yet he makes a mistake and describes the June 2005 advance as a "currency conversion". I assessed Mr Levy as reasonably astute. This is an unlikely mistake in a short email. But I find that a result of Mr Levy's discussions with Mr O'Dowd he thought he was entering into a private placement, not some kind of risky currency trading transaction. This follows in my view from the evidence for several reasons.

First, consistent with a risk free private placement, Mr Levy was expecting a return of $2,000,000 on his advances to be paid to him between July and October 2006. For example, on 25 July 2006, when the moneys are already overdue, Mr Levy emails Mr Bablis with the account details for depositing of the moneys when they are received. His email to Mr Bablis, entitled "Account details", forwards an email from Mr Banovec to Mr Levy that says "Julian, for the transaction of $2,000,000.00 please use the following special purpose bank account-..." I infer from this that in discussions between Mr Levy and Mr Banovec it was clear that Mr Levy was expecting the return of a full $2,000,000. The return of this precise sum accords with a placement transaction, not something riskier, where the return might be less. His demands in July and August 2006 and thereafter for the overdue funds are generally consistent with a belief on his part that he was entitled to a return of $2,000,000, rather than the uncertain proceeds of a currency trading.

Secondly, between mid 2005 and late 2006 Mr Levy does use the description "placement" several times to describe the transaction that he thought that he had entered. For example, on 28 October 2005 just before Mr Levy enters the October 2005 transaction, he emails Mr Bablis asking him, "Can you give me the details of the first placement, $500,000? When does it mature? How much is it at, etc". Yet curiously only a few days later on 2 November 2005 Mr Levy enquires of Mr Bablis as to the "progress of my first trade". Mr Levy could not give an adequate explanation as to why he had used words such as "currency conversion" or "first trade" rather than "placement" n such occasions. But there is little doubt in my view that he regarded the words as interchangeable, possibly because of something which had been said to him by Mr O'Dowd. He did believe he was entering into a private placement for 12 months with a guaranteed 100 per cent return.

Thirdly, it is probable that Mr Levy did discuss a private placement with Mr O'Dowd because Mr O'Dowd's email on behalf of UPA of 20 June 2005 to Mr Bablis, set out above, does not mention currency trading and is at least generally consistent with Mr Levy's understanding of a private placement: funds held for 12 months; a return of no less than a 100 per cent of the capital "placement"; and that, UPA would hold the funds in a "investment account", apparently under its control.

Mr Levy left for overseas immediately after the June 2005 transaction and remained overseas between June 2005 and February 2006. During this period he says that he had a telephone conversation with Mr Bablis in late July but prior to 29 July. Mr Levy claims that that conversation was to the following effect:- "Mr Bablis: 'Brendan is looking for a $10 million private placement. So he asked me if I can ask you if he can call you. Is that okay if I pass on your phone number?' Mr Levy: 'Yes'. Mr Bablis: 'I will send you some details so you can show any investors you may know'."

The conversation appeared to cover a number of topics, according to Mr Levy. Then it turned to the subject of Mr Levy seeing an attorney in New York, Mr David Barrett, to discuss the possibility of obtaining funds for private lending. Mr Levy had arranged to see Mr Barrett in his offices in Madison Avenue, New York. "Mr Levy: 'I am seeing an attorney to discuss the possibility of obtaining funds for private lending deals'. Mr Bablis: 'Can I send you some other business plans to see if the attorney is interested'."

On 29 July 205 Mr Bablis did send Mr Levy a number of emails about investment opportunities he could pursue.

Mr Levy's version of this exchange has Mr Bablis trying to get him (Mr Levy) to promote investments for him. But I do not think that Mr Levy was the passive recipient of Mr Bablis' persuasion to promote investments. Their relationship was more equal and open than that. Rather, I accept Mr Bablis' version that Mr Levy said to him by phone "I'm in the States. I've set up a meeting with the finance guy here. Send me everything you've got". I also find that Mr Levy asked Mr Bablis to send him a list of the One Research Foundation research projects which Mr Bablis established. The emails Mr Bablis sent to Mr Levy with this material are short and come without explanation and are more consistent with his merely responding to Mr Levy's request.

Mr Levy and Mr Bablis exchanged emails about three investment opportunities whilst Mr Levy was overseas. There is a difference between the parties about the origins and significance of these proposals. Mr Bablis contends that it was inconsistent with Mr Levy's case for Mr Levy to look at these risky businesses, when he already had a guaranteed return of 100 per cent through his private placements. By the time Mr Levy had left for overseas he claims he had made the first $500,000 private placement in June 2005 on the basis of a 100 per cent return without risk and there was the prospect of another placement, when the default on the Van Nguyen loan was rectified. These prospects were the "Roses Only" business, a business by the name of the "Green Onion" and another by the name of "NHI".

Mr Levy's work on these investment opportunities was not inconsistent with his case in my view. Although the evidence closely examined Mr Levy's and Mr Bablis' dealings on these opportunities, they were not damaging to Mr Levy's case. Mr Levy needed somewhere to invest the proceeds of his private placement. He was also expecting money from his late mother's estate that could be used for such investments. Moreover, Mr Levy's interest in these opportunities was wide ranging. He could see himself obtaining funds overseas to fund some of these investments. His looking at them was not inconsistent with expecting a 100% guaranteed return from a placement. The main business prospects should be briefly identified.

Roses Only . Mr James Stevens owns the "Roses Only" flower distribution business. Mr Bablis knows him through the University of New South Wales and the Greek Orthodox Church. Between July and September 2005 Mr Levy examined a Roses Only business plan which invited investment in the establishment of a Roses Only business in London. Mr Levy had sufficient sophistication to contemplate taking on and licensing the "Roses Only" business in the UK.

Green Onion. Another one of Mr Bablis' patients, Mr Aaron Hechtman was interested in establishing an organic supermarket business known as the Green Onion and had developed a business plan. Mr Bablis also forwarded this business plan to Mr Levy overseas in August 2005.

NHI . Mr James Frame, a patient of one of the therapists at the Double Bay Clinic had discussed with Mr Bablis setting up a company to market herbs for medicinal purposes worldwide. He was seeking to raise capital. Mr Bablis had mentioned this opportunity to Mr Levy in June 2005 before he left for overseas. Mr Bablis sent Mr Levy a NHI business plan in August 2005.

Mr Levy's involvement in examining and speaking with others about the Roses Only, Green Onion and NHI business plans, was not the result of Mr Bablis asking him to do so. Rather he asked for it from Mr Bablis and was keen to have the information for his own purposes and Mr Bablis obliged by providing it to him. The same thing happened with information about private placements that Mr Levy wanted from Mr O'Dowd.

In late July 2005 Mr Levy and Mr O'Dowd briefly communicated in a way that throws some light on what happened on 17 June 2005. Mr Levy says that Mr O'Dowd was the source of an idea that he and Mr Bablis could jointly arrange large private placements. Mr Levy says that on 30 July 2005 he received a telephone call from Mr O'Dowd, during which a discussion to the following effect took place:- "Mr O'Dowd: 'There's a $10 million placement in which an investor can participate and double their money. I will email you the details' Mr Levy: 'I will present it to the person I know and if they are interested I will let you know' Mr O'Dowd: 'If the person goes ahead, you and Peter Bablis will get a commission as an introductory fee'"

Subsequent to that conversation on 30 July 2005 Mr Levy says he received an email from Mr O'Dowd, with attachments that were similar to the ones received from Mr Bablis.

Mr O'Dowd did send an email directly to Mr Levy on 30 July 2005. It is one of the few objectively provable communications directly between them in these proceedings. Mr O'Dowd copied the email to Mr Bablis with the subject "Documents for Julian". Attached to the email is a letter from Mr O'Dowd to Mr Levy dated 29 July 2005. Like much of Mr O'Dowd's correspondence it is grandiose in tone but very short on detail. Like his prior correspondence it contains material that would be puzzling to a commercial lawyer. But this particular piece of correspondence was not afflicted by the spelling and grammatical errors that so frequently accompanied Mr O'Dowd's communications. Nevertheless a flavour of some of these factors is evident in this letter:- "To Mr Julian Levy Date: 29 th July 2005 The proposal we wish to offer a company (that has at least Ten Million ($10M) in its account in a major public money centre bank in Europe or the US) involves the company requesting or inviting our director to participate in the board of the company for the purpose of assisting the company in the process of completing a private investment placing (sic). We are aware the board placement would only continue for the purpose of the transaction and the appointment and exit from the board of the company would needs (sic) to be executed simultaneously. We, in the attached papers, provide the sort of verbiage the invitation and the resignation to join/resign from the board should contain. It would be required that our director should be in a definite minority position on the board and would have no signature rights to any company accounts. Only as a director on the board of the company can a DIRECTORS AGREEMENT be executed between directors in relation to the entranced (sic) of the company into a secured investment opportunity. We include in the attached papers an example of how such an agreement might be constructed. Once the new inclusive board convenes and executes the DIRECTORS AGREEMENT THEN the company must further prepared (sic) a board resolution to deal with the matter of seeking information and an invitation to enter a private investment opportunity."

Mr Levy says that this email communication was preceded by discussion with Mr Bablis in which Mr Bablis foreshadowed that Mr O'Dowd was looking to make a $10 million private placement. On the other hand, Mr Bablis says he did not have such a conversation but rather Mr Levy was calling him (Mr Bablis) in late July to send investment opportunities over to the U.S. I accept Mr Bablis' evidence about these exchanges not Mr Levy's. But in one respect I do accept Mr Levy's account, that is, as to his telephone call from Mr O'Dowd. It is highly likely that Mr O'Dowd spoke to Mr Levy in such terms. Mr Bablis reports that Mr O'Dowd told him that he had been speaking to Mr Levy. It is probable that the bundle of correspondence that Mr O'Dowd sent to Mr Levy was preceded by an explanation by Mr O'Dowd.

This communication is quite significant for the proceedings. It shows Mr Levy is capable of communicating directly with Mr O'Dowd despite Mr Bablis attempting to maintain a closer relationship with Mr O'Dowd than Mr Levy. It supports the inference that a little over a month before this on 17 June 2005 Mr Levy and Mr Bablis did speak by telephone.

There was otherwise considerable debate in the proceedings about the differences between this $10 million placement that Mr Bablis and Mr Levy were said to be marketing on behalf of Mr O'Dowd and the one in which Mr Levy invested. But the dispute was not one in which the Court ultimately found valuable in resolving the issues in the proceedings and I pass over it.

Mr Levy had further conversations with Mr Bablis whilst he was overseas when the repayment of the Van Nguyen loan was imminent and he would have a further $500,000 to invest. Mr Levy recalls that during October 2005 he spoke to Mr Bablis by telephone to the following effect:- "Mr Levy: 'Peter, in regards to the investments we have been discussing, they are all quite interesting but only the private placement is 100% secure, is that correct.' Mr Bablis: 'That is correct'. Mr Levy: 'So I would be crazy not to invest my money there as it's secure, hassle free and fairly short term'."

Mr Levy says in this conversation he was referring to the second parcel of $500,000.00, he had mentioned in his conversation with Mr Bablis on 17 June 2005, the funds that he had advanced to Dr Van Nguyen Pty Limited and which were about to become available to him again.

Mr Levy says that on or about 28 October 2005 he had another follow up conversation with Mr Bablis after the Van Nguyen loan was repaid:- "Mr Levy: 'It's finally settled with Van Nguyen. I've arranged for my lawyers in Queensland to transfer the funds to the UPA account.' Mr Bablis: 'Do you need the account information?' Mr Levy: 'No, I've still got the details from before. I just want to confirm it is for 12 months, and its returning 100%, and risk free.' Mr Bablis: 'That's right'."

Mr Bablis denies having any contact at all with Mr Levy about the October 2005 transaction. He says: that he was not consulted by Mr Levy about the transaction; that Mr Levy did not tell him that he intended to invest further with UPA; and that he was surprised to find out that Mr Levy had done so. Mr Bablis' recollection is that the first he found out about the October 2005 transaction was upon his receipt of an email on 28 October 2005 from Mr Levy which said:- "Hi Pete, the deal settled...Finally. I had them put the money in John's account... [the email then discusses other investments and then proceeds]...Can you give me the details of the first placement $500,000. When does it mature? How much is it at, etc. Speak soon Jules".

These starkly differing accounts led to a strong contest, the result of which is that I prefer Mr Bablis' version. But before stating the reasons for that preference it is useful to identify this email as one important basis for supporting Mr Levy's story, that I do accept, that he thought that the June 2005 transaction was a private placement not a currency transaction.

First, in relation to the first of these conversations, before the Van Nguyen repayment Mr Levy could give no context to the conversation. He was unable to explain what subject he was discussing and how the issue came into the discussion to enable him to ask for and obtain another assurance from Mr Bablis that "only the private placement is 100% secure". In his attempting to give explanations for features of this conversation Mr Levy's general credibility was destroyed. Ultimately Mr Levy could not recall that he definitely had this conversation. He was very uncertain as to whether it happened at this time or not.

Secondly, the conversation to which Mr Levy deposes was improbable in the circumstances. If Mr Levy went to the trouble to have this conversation that he asserts in October 2005 before the Van Nguyen repayment, because he actually wanted reassurance, then it is very odd that Mr Levy did not confirm in writing the terms that he had just sought to confirm orally. Mr Levy could not explain why he did not express in writing in the 28 October 2008 email to Mr Bablis the fact that he had received before the Van Nguyen settlement a confirmation from Mr Bablis of the safety of the investment.

Thirdly, Mr Levy's email of 28 October 2005 does not site easily with there being a second conversation of the kind to which Mr Levy deposes, after the Van Nguyen settlement. In the email on 28 October he is reporting, apparently for the first time, in terms that provide for no space between the settlement of the Van Nguyen deal and the deposit into the UPA account, "The deal settled...Finally. I had them put the money in John's [Mr Bettini's] account". He is telling Mr Bablis what has happened after he has dealt with Mr O'Dowd. Why would Mr Levy tell Mr Bablis in the conversation on 28 October "It's finally settled with Van Nguyen" when he has said (or is about to say) the same thing in an email? This conversation did not take place. Mr Levy's answers to the Court's questions and those of Mr Simkins' about these conversations were impossible to accept and destroyed his credit.

Fourthly, Mr Levy did not ask for any confirmation in writing back from Mr Bablis that Mr Levy had invested on the terms that Mr Levy was accepting. There was no apparent obstacle to Mr Levy getting such a confirmation from Mr Bablis but he did not ask for it in October 2005, just as he had not in June 2005, despite corresponding several times by email with Mr Bablis within about two weeks of the October 2005 transaction.

Finally, even the objective facts about the October 2005 transaction assist the Court to infer that Mr Levy spoke to Mr O'Dowd in the June 2005 transaction. Mr Levy dealt with Mr O'Dowd directly in October. He did so in a way that did not acknowledge Mr Bablis having an interest in the transaction at all. Mr Levy does not even pretend to be transacting with Mr Bablis in October. It is clearly directly with UPA and Mr O'Dowd. Yet he does not seek to clear with Mr Bablis why this transaction is different from the earlier one in which he thought he was dealing with Mr Bablis. Furthermore, the mere fact that he is dealing with Mr O'Dowd or Mr Bettini directly in October strengthens the inference that he did so in June.

There were important exchanges of emails directly after these conversations against which Mr Levy's evidence may be judged. The email from Mr Levy, dated 2 November 2006, Mr Bablis reports to Mr Levy "Jules, Money has not hit account yet...How are things going with James. Pete". Mr Levy's first affidavit [118] does refer to this email but without mention of the conversation with Mr Bablis that is now alleged to be the trigger for the sending of the email.

Mr Levy replied the same day, 2 November 2005. His reply affirms the idea that he was engaged in some sort of currency trading:- "Hi Pete, I spoke with the solicitor last night & he said he received a bank check & that the money was being put in today! I am still very keen to move forward with James; We have been in contact back & forth over the past few days; He now wants & $1 million. I can't understand why the initial investors want out!!!! Can you send me the progress of the my first trade.... Jules"

This email is inconsistent with Mr Levy having an appreciation that he had a guaranteed return. If he was convinced he had a guaranteed return, why is he seeking progress reports on the investment? Mr Levy's explanation, seeking to understand the words "the trade's doing really well" was not very convincing. Mr Bablis' words of answer to the inquiry do not get mentioned in the email. All this occurs when Mr Levy does not understand what "the trade's going well" meant. Mr Levy seemed unsure of the conversation occurring at all, when his lack of understanding was exposed. This was a very poor part of his testimony.

Mr Levy sends another email on 14 November 2005, "Can you give me an update on the trades so I know financially where I am at...". This is a clear inquiry as to the financial outcome of what the writer understands to be an uncertain investment. It too is not consistent with Mr Levy's story that he had a guaranteed investment outcome of $2 million through a private placement.

Mr Levy says he became aware that there was a shortfall in his payment of the October 2005 transaction through a telephone call from Mr Bablis:- "Mr Bablis: 'Julian, Brendan O'Dowd has just told me that there's 13 odd thousand dollars short of the $500K needed. He wants to know whether you can make up the funds?'"

On 1 December 2005 Mr Levy confirmed to Mr Bablis that he had made up the short fall on the October 2005 transaction.

An important test of Mr Levy's credibility came from an email exchange he had with Mr Banovec in mid January 2006. This exchange came at a time when Mr Levy said he had already made two $500,000 private placements with Mr Bablis and Mr O'Dowd. In this exchange of emails he speaks with Mr Banovec as though he was an investor still contemplating his first private placement. Mr Bablis used these email exchanges to argue that Mr Levy indeed knew that he had not made a private placement but was involved in a currency trade with UPA. I do not agree that these emails establish this. Rather I have found that Mr Levy thought, as he said, that he had made a private placement. Mr Levy dismissed the exchanges merely as a device to obtain advice from Mr Banovec. The exchanges and the way Mr Levy dealt with them were ultimately very damaging to his credit. Even on his own version they demonstrate a disturbingly casual use of falsehood to achieve his immediate ends.

On 10 January 2006 Mr Levy sends the first email in this series, wishing Mr Banovec a happy new year. After dealing with some personal matters Mr Levy says:- "To change subjects, in regards to business, I have been wanting to ask you advice on an offering I have been invited to invest in. It is called PRIVATE PLACEMENT. It has been defined to me by the following... A SECURED INVESTMENT PROGRAM BEING AN INVESTMENT WHERE THE CAPITAL INVESTED IS AT NO TIME BEYOND THE FULL CONTROL OF THE INVESTOR & AT NO TIME AT RISK OF LOSS. I am told that it involves a contractual agreement between the investor & a major public money centre bank in Europe or the US. It is not open to the general public but rather a privilege. The return & the interest depends upon the offering/contract on that particular day, but generally the term is a year, however you can pull out at any time, & even after month a considerable return can be made. Returns are far above 'standard' rates. I have been offered this opportunity by an associate of a very close friend. I have been aware of the investments for three years. I am very interested to see if you have heard of such an offering. So after my last bridging loan I have officially retired from these loans. I received my $500K back, which was the principle & a $60,000 interest for the first three months, however I am now in a court battle with him for the $377K he owes me in penalty interest plus expenses. The deal was done with a Dr Nan Nguyen who lives in Queensland. My solicitor is also in Queensland (Appleyard Lawyers). I was going to ask you if I could get Derek to check that my solicitor in Queensland was doing the right thing by me. I now realise why you were telling me to be more cautious when I first started doing these loans. Its...."

This email is damaging to Mr Levy on several levels. First it shows that Mr Levy was prepared to tell a good friend that he had not entered into a private placement, a representation that he was forced to concede in cross examination was at least a misstatement. Mr Levy's explanation for this communication to Mr Banovec was that he was using the "advice" request in the email as a device to have Mr Banovec think about private placements. Mr Levy admitted that he was not really looking for advice, as he was already in a private placement. But just why he had to engage in such an elaborate artifice when dealing with a good friend, Mr Banovec, whose wedding he had only recently attended, is difficult to comprehend. But his behaviour is still perhaps consistent with Mr Levy's story on the basis that: Mr Levy had made a private placement; was afraid to admit that to his friend Mr Banovec; but, wanted to get the benefit of Mr Banovec's advice about placements so that Mr Levy could use that advice for his benefit in his future dealings. This is in my view what happened.

But then a second and more difficult problem arises for Mr Levy. The email was a fairly thinly disguised profile of the June and October 2005 transactions as he now describes them to the Court. The email was damaging not just to Mr Levy's credit, but to his whole account because of the way he describes what must be his relationships with Mr Bablis and Mr O'Dowd. He says " I have been offered this opportunity [the placement] by an associate of a very close friend". This was the only investment of this kind in which Mr Levy had been involved. The "very close friend" Mr Levy was describing was clearly Mr Bablis and the "associate" was clearly Mr O'Dowd. The correspondence does not sensibly read any other way. Mr O'Dowd is offering the opportunity, not Mr Bablis. Mr Levy tried in cross-examination to resist the conclusion that these were the relationships the email implied. I did not find his evidence about this persuasive. Mr Levy was reluctant to concede that he was "the investor". Mr Levy's own evidence about this email was not credible.

Mr Banovec's email in reply was a model of prudent caution about the investments described in Mr Levy's email. Mr Levy agreed that Mr Banovec was knowledgeable in finance and should have been someone whose warnings he should have noted. Mr Banovec's reply pointed in detail to the hazards of private placements and the generally poor reputation of this class of investment. Mr Banovec's reply was to the following effect:- "The investment is interesting. Without knowing the details I can only say that I have not seen this before except these type of things on the asic website www.asic.gov.au. The minute you have to part any funds to a third party I would be concerned. The questions I would ask myself are the following: Where (what country) is the promoter located? Are they licensed of some sort? What are they doing with the money? What is the security? You say that the funds are invested into a bank type investment? Have a look at the website and check them out. If you can link a bank to it no problem. I have seen many of these things of very similar nature and the fact that you have been referred by a close friend is a worry. Legal schemes operate in legal schemes operate in this basis. Some of the information you have given me sound very much like a illegal scheme promoted by someone. What normally happens that they will operate a scheme like this for many years till they run out of money. I could be wrong but please!!! Do not be greedy and give them money without checking them out. I have seen too many investors loose (sic) money. The golden rule is if you invest in a bank run scheme your returns will be at maximum around the 15% (this is the best I have seen for large investments) you may have some smaller fund manager offering up to 15% + additional profit dividends so you get up to 16-19%. Self managed super you can get up to 22% if you interest in good stuff. We for example our investors 13.25% p.a. with a capital guarantee. ANYTHING ABOVE THESE RATES you must be very careful with. I can only hope you will listen to me like you did before."

This communication from Mr Banovec should have been alarming to anyone who had just entered into a substantial private placement expecting a 100% risk free return within 12 months. Mr Levy had already made such an investment with UPA. It is surprising that Mr Banovec's email did not send Mr Levy straight back to the person in control of his placement for reassurance that his private placement was safe. If that were Mr Bablis the relationship between them both was such that Mr Levy could readily have sought further information from Mr Bablis. Yet that is not quite what happened.

Instead Mr Levy sent an email back to Mr Banovec on 12 January 2006 which was relevantly in the following terms:- "With the placements, (I am told) its directly with a major bank in Switzerland. The money is in an account in your name & never leaves your control. The funds are held by the bank to show the credit on their balance sheet so they can leverage loans from it. The contract is between the investor & the bank. I will keep digging for information & let you know if anything eventuates from it."

Mr Levy's language in this reply is strange. He seems to ignore Mr Banovec's warning and to express confidence that the private placements that he is dealing with do not have the bad character that Mr Banovec was describing. But even in Mr Levy's reply the features of the transaction Mr Levy describes are not consistent with Mr Levy's present account. I find that in this reply Mr Levy was still describing the private placement that he thought that he had entered. Mr Levy says "the contract is between the investor and the bank". But his description is not consistent with his present case that he thought he had a placement contract with Mr Bablis.

Mr Levy did communicate with Mr Bablis just after his e-mail exchange with Mr Banovec. On 16 January 2006 he emails Mr Bablis to wish him a happy new year and to convey information about he and Mr Banovec looking at a site for a proposed chicken shop in London. On the subject of the June and October 2005 advances he says, "In regards to the $500K I transferred to John I assume that has been invested". He does not express to Mr Bablis in this communication any of the concerns that might be expected to have arisen out of the email exchange with Mr Banovec. He is checking on his investment. But he refers to a transfer "to John" without any hint that he thinks the transferee was part of a joint business with Mr Bablis. This is similar to the 28 October 2005 email in which he tells Mr Bablis about the October 2005 transaction with UPA. Mr Levy is not obviously treating Mr Bablis here as someone who has an interest in the transaction or in UPA.

Mr Bablis replied on 18 January, 2006. This first email to Mr Levy for 2006 exhibits the exuberant enthusiasm of his and Mr Levy's investment friendship at this time. He responds as to the "$500K" as follows:- "Hi Julian!! I'm back at work for the new glorious year.... It sounds like things are moving for you and your chickens!!! In regards to the 500K, I had them keep it there awaiting your instructions. Nevertheless I informed them you wish to invest it and if we could back date the interest to the date that it first hit their account. They will get back to me on that. Haven't seen article on macca or James lately??? Let's go for it buddy, a big year for us this year. Pete"

Mr Bablis had difficulty in explaining his words in this email "I had them keep it there". In his oral evidence he sought to change these words to the words "they kept it there". But he had sworn his first affidavit in December 2008 in which he had referred to this email and had not corrected it. He was effectively cross examined about the change. His inadequate explanation of it did him no credit. I find he meant to say to Mr Levy exactly what he wrote, "I had them keep it there awaiting your instructions". Mr Bablis is conveying to Mr Levy that UPA was expected to await Mr Levy's specific investment instructions to UPA.

Mr Levy's case made much of this email contending that it demonstrated Mr Bablis' control over the October 2005 advance. But in my view all it really shows is that Mr Levy continued to be content for communications between UPA and himself to be mostly conducted through Mr Bablis and that Mr Bablis was prepared to be a conduit for Mr Levy's communications with UPA. That is also evident from the lack of frequent direct communications between Mr Levy and UPA.

Mr Levy returned to Australia in late February 2006 wasted little time in seeing Mr Bablis upon his return from overseas. He saw Mr Bablis for a treatment on 28 February 2006, a day after his return. He says that during that treatment that a conversation to the following effect took place:- "Mr Bablis: 'I have great news. The placement is going so well that you are going to be paid out in full in three to six weeks for the entire two million and on top of that, you're going to get a bonus.' Mr Levy: 'That's fantastic, I have spent a lot of money on my treatment in London and I have to go back for more so this will really help reduce my financial burden.'"

There was no conversation between Mr Levy and Mr Bablis about why the change occurred to bring the investment back earlier and with a bonus more than the agreed 100% return. These are apparently spontaneous changes to the existing arrangements, though in Mr Levy's favour that might be expected to have raised a question in Mr Levy's mind. But Mr Bablis agrees that something like this was communicated to Mr Levy, but by email. He says that Mr O'Dowd had given him that information. I accept that this is what happened. His email of 1 March 2006 to Mr Levy confirms it: "Spoke to them today if lucky paid out in 3 to 6 weeks". Mr Bablis was prepared to pass straight on to Mr Levy what Mr O'Dowd had told him about the placement. This demonstrates that at this time Mr Bablis trusted Mr O'Dowd and was content to transmit communications from him to Mr Levy. But also confirms be example that Mr Bablis usually identified to Mr Levy that his source was Mr O'Dowd.

A curious contest in the proceedings arose from a conversation in March 2006 relating to the use of Mr Levy's credit card. This contest has little to do with the matters in issue in the proceedings. But like most of the issues in the proceedings it was strongly contested, resulting in Mr Levy's credit being badly damaged. This episode shows Mr Levy as someone prepared to seize upon documents and make them a foundation of elaborate conversations that he claims to have had with Mr Bablis, when I find that he did not have the conversations at all.

Mr Levy says that in March 2006, within a month of his return from overseas that he was treated by Mr Bablis and that during the treatment a conversation to the following effect took place between them:- "Mr Bablis: 'Can I use your credit card to make a payment for the cost of settling up a corporation to run an investment I am going into for around $3,000.00? I do not want to use my own credit card because I do not want my wife to know about me participating in the investment. I will pay you back over the next few weeks. Can you come in next week to carry out the transaction at my Double Bay practice'. Mr Levy: 'Sure, that's no problem'."

Mr Levy at first said that he authorised a credit card payment by telephone in New Zealand dollars for an Australian dollar equivalent of NZ$2,869.08.

Mr Bablis denies that this is what happened. His account, which I accept in preference to Mr Levy's, is that Paula Dabelic (a girlfriend of one of Mr Bablis' patients) sent him some information about Future Trading Corporation ("FTC"), a company that provides educational materials about finance and investment to subscribers for a fee. Mr Bablis says that in the first half of March 2006 he sent the FTC information to Mr Levy and had the following conversation with him:- "Mr Bablis: 'So Jules, what did you think about the information on FTC'. Mr Levy: 'It looks interesting'. Mr Bablis: 'Why don't we get a Gold Subscription together for educational purposes? If we get it together, I'll get them to send the information here and then if it looks interesting I'll pass it on to you. I'll pay two thirds and you pay one third.' Mr Levy: 'Sounds good. Can we put the subscription fee on my credit card?' Mr Bablis: 'Sure. Then I'll pay you back for my part.'"

Mr Bablis then referred to a faxed credit card authorisation form addressed to FTC in the sum of AUD $3,000. The facsimile document substantially corroborates Mr Bablis' version. In his affidavit in reply Mr Levy corrected his earlier evidence that he had authorised payment by telephone but he denied that Mr Bablis had told him anything about FTC or the subscription material. I regarded it as objectively improbable that Mr Bablis would have confided in Mr Levy a transaction which Mr Bablis allegedly wanted to keep from his wife. There are any number of ways that Mr Bablis could have authorised a confidential transaction of the kind that Mr Levy says was being requested, without Mr Bablis having to use the assistance of Mr Levy. Mr Levy's account seems to be wholly improbable and one that seems to me to have been made up to make Mr Bablis look sneaky.

Within a few weeks of the credit card incident the foundations of another controversial transaction between Mr Levy and Mr Bablis were laid. Mr Levy says that whilst receiving treatment from Mr Bablis on the 4 April 2006 that a conversation to the following effect took place between them:- Bablis: 'I have a contact who does US bank trades. She has a one week trade for $70,000.00 which will return 50% in one week. Many people believe these deals are too good to be true, but in actual fact, they do exist and are completely safe. Paulina Dabelic, who is the name of the lady that I deal with, told me she will make it worth my while. Would you like to fund it?'

Mr Levy says that this conversation I in the middle of an NET treatment, and that he could remember Mr Bablis muscle testing his arm and asking him questions about his financial position. Mr Levy says that they then spoke in words to the following effect: "Bablis: (While muscle testing) 'You're absolutely bone dry, aren't you?' Levy: 'Yes, but I have a friend who can lend me the funds. Is there any risk?' Bablis: 'None. Pauline has given me a personal guarantee. Would you like a copy of the agreement?'"

Mr Levy says that they then moved from one of the treatment rooms to Mr Bablis' adjoining office. Mr Levy says Mr Bablis opened his briefcase and extracted a document. Mr Levy says he can recall seeing both the name of Mr Bablis and Ms Dabelic on the document, and that he also remembers seeing the words "personal guarantee" and the numbers "$70,000.00". He also recollects that the document referred to a return of 50%. He says that he and Mr Bablis then had a further conversation as follows: "Bablis: 'Do you want a copy?' Levy: 'No, I've seen it now'."

Mr Levy then says that they went back to the treatment room and conversed. "Bablis: 'There will be $35,000.00 in interest. If your friend takes $14,000.00, you take $10,500.00 and I'll take $10,500.00. You pay me when you get the money'. Levy: 'Fantastic'."

Mr Bablis has a different version of this conversation. He says that Ms Paulina Dabelic did offer him a short term finance deal, provided he (Mr Bablis) could advance $70,000 for a week he would receive a return of $35,000. Being unable to finance it fully himself Mr Bablis says that he raised it at lunch at the Double Bay Clinic with Mr Levy who had finished his treatment and was conversing with him during Mr Bablis' lunch hour. Mr Bablis says that he then had the following conversation with Mr Levy:- "Mr Levy: 'Pete, I'm bone dry. Is anything on the table?' Mr Bablis: 'I've got a short term deal come through from Paulina, the FTC lady'. Mr Levy: 'Great. Give it to me and I'll teach you how to make money from short-term finance. I don't have the money but I have many friends with money. I'll get a friend to fund it and give him the lion's share and then we'll split the rest'. Mr Bablis: 'Ok. She needs $70,000 and says she'll return $35,000 within a weeks'. Mr Levy: 'With $35,000 interest, I'll give my friend $14,000, I'll take $10,500 and you'll take $10,500. See that's how you make money Pete'."

I prefer Mr Bablis' version of this conversation. His version is more objectively probable. Mr Levy did not give a good account of himself on this issue in the witness box.

First, Mr Levy says that on his own version that he did not understand what a "Bank Trade" was. This was an honest answer. I accept also that Mr Levy was someone who was prepared to a degree to go along with Mr Bablis in conversation without revealing what he did not understand what was being said. Keeping up an appearance of financial sophistication in front of Mr Bablis and others was quite important to him. But it is still odd that Mr Levy just accepted that the bank trade investment was "safe" without getting any clear understanding of why it was safe. He knows why mortgages are safe. He knows that a personal guarantee is only as good as the means of the guarantor. But he did not inquire what was the mechanism of the safety or security of this particular form of "bank trade" investment. He says he just accepted Mr Bablis' assurance that these deals are "completely safe". On his version he just stopped asking questions, once he was told that Ms Dabelic had given Mr Bablis a personal guarantee. This seems strangely improbable for someone who had recently experienced the default by Dr Van Nguyen Pty Ltd.

Mr Levy said he was embarrassed to ask more of Mr Bablis, because it may show up the fact that he did not understand anything about these transactions. But Mr Bablis was a trusted confidante and not someone with whom he should have been embarrassed. When confronted about this he retreated into saying he just accepted Mr Bablis' statement. When pushed further that he should not have been embarrassed in front of Mr Bablis, Mr Levy said he just didn't think to ask. He appeared to be avoiding the issue. This was odd evidence that I do not accept.

Also the text of Mr Bablis' version of the conversation about the Dabelic transaction is inherently more probable. Mr Levy did have some experience in "short term finance". It was an area that had delivered him good returns already with no substantial losses. Mr Bablis' recollection that Mr Levy was "quite confident and boastful" about the arrangement that he had formulated accords with my observations of Mr Levy at times in the witness box.

On 5 April 2006 Mr Levy emailed Mr Bablis seeking the account details for the deposit and stating "the investor is waiting on the bank details". This was a reference to Mr Levy's friend, Mr Damien Alexiou, who lent him $70,000 to fund the transaction. About the same time Mr Bablis says, and I accept, that he showed Mr Levy a one page contract with terms and conditions on it which Mr Levy read. Mr Bablis offered to give a copy of the contract to Mr Levy's investor, Mr Alexiou, but Mr Levy declined but reaffirmed his interest in more short term financing.

Mr Levy arranged for his friend Mr Alexiou to deposit the $70,000 in the nominated account on 6 April 2006. By late 2006 the money had not been repaid.

On 2 May 2006 Mr Levy returned to London to continue treatment at the Breakspear Hospital. He remained in London until early July. From London on 4 May 2006 Mr Levy emailed Mr Bablis saying that the Dabelic "money is not in my account". The email commenced "Hi Pete" and ended with a salutation "speak soon, Jules", a name Mr Levy commonly used in his emails to Mr Bablis.

Dispute arose on the evidence as to whether or not Mr Bablis thought that Mr Levy had in fact received the repayment of the money on the Dabelic transaction and was not paying Mr Bablis his commission. It is not necessary for me to resolve this issue for the purposes of these proceedings. On 11 May 2006 $105,000 was received in Mr Levy's bank account with Homeside Lending from a "P. Dabelic" but the cheque was dishonoured on 15 May 2006. In the meantime Mr Levy had allowed Mr Bablis to withdraw the $10,000 from the bank account as payment of his commission. Further payment of $120,000 was apparently received from the same source on 9 June 2006 but it too was subsequently dishonoured. There were difficulties in gaining repayment of the Dabelic funds. Mr Bablis paid Mr Levy $50,000 on account of this transaction on 2 August 2006. It is convenient to deal with the events leading up to that repayment at this stage in these reasons.

Mr Levy emailed Mr Bablis throughout May, June and July 2006 following up on the repayment of the Dabelic loan funds. I accept that Mr Bablis was receiving assurances from Ms Dabelic that on a number of occasions throughout this period that the money was about to be deposited or had been deposited in Mr Levy's account. For example on 9 June 2006 I accept that Mr Bablis had a conversation with Ms Dabelic in which she told him that she had deposited a cheque in Mr Levy's account that day. Mr Bablis then conveyed this information by email to Mr Levy the same day telling him that the money "has hit your account". But Ms Dabelic's cheque had bounced once again. Mr Levy followed the matter up again on 14 June 2006 with Mr Bablis, he then raised it again with Ms Dabelic. The matter was again followed up about 3-4 July 2006.

Mr Bablis thought that Mr Levy told him in July 2006 that two cheques totalling $55,000 in repayment of the Dabelic transaction had been paid into Mr Levy's account. But Mr Levy says this conversation occurred in May 2006. That in my view is when it did take place. It seems to have occurred at a time when Mr Levy thought that he received $55,000 from Ms Dabelic when in fact he had received that sum on a different account. Mr Levy says, and I accept, that at the time Mr Bablis repaid Mr Levy the sum of $55,000 on 2 August 2005 he, Mr Levy, did believe he had already been paid $55,000 by Ms Dabelic and that the balance due to him was $50,000. Mr Levy has ascertained since 2 August 2005 that the amount owing to him as at that date was still $105,000. His position on the transaction therefore is that he has personally paid $84,000 to Mr Alexiou and Mr Bablis has withdrawn $10,000 from Mr Levy's account giving him a total of $94,000 in outgoings. He has been reimbursed by Mr Bablis $50,000, leaving him out of pocket of $44,000 on the transaction.

Mr Levy has not sued Mr Bablis for that $44,000 in these proceedings. Although I grant no relief in respect of it. But as between the two of them that the sum is owing and has been at least since 2 August 2006.

Mr Levy's payment of $10,000 commission to Mr Bablis was the subject of dispute as to whether Mr Bablis was seeking to make the payments in such a way as to avoid income tax. In an otherwise factually complex case it is not necessary for me to determine what is a credit question. It is enough for me to observe that the allegation is made and denied and it is not necessary for the Court to resolve it.

The date for repayment of $1,000,000 under the June 2005 transaction was fast approaching in June 2006. Towards the end of June 2006 Mr Levy says that he rang Mr Bablis from London. Mr Levy says they held a discussion to the following effect: "Levy: 'Hi Peter. I just wanted to call and confirm payout of the first placement on 30 June. I need my funds on the due date.' Bablis: 'The funds will be paid out in early July. Just waiting for the end of the financial year'."

Mr Levy says that he reviewed his account balance on a daily basis and by 3 July 2006, the funds had not been received. He tried to telephone Mr Bablis but was unable to speak with him. So he then sent Mr Bablis an email on 3 July 2006 asking him to call. Mr Levy says that he then spoke with Mr Bablis on the telephone in words to the following effect: "Levy: 'I need my money back so that I can take up any opportunities that come along which look good'. Bablis: There has been a delay with the Bank in transferring the funds back to Australia. It shouldn't be too much longer'."

Mr Levy returned from London to Sydney in the first week of July 2006. He says he decided to return to Sydney to supervise more closely the return of his funds and because of worries about the Dabelic transaction. Mr Levy here gives an accurate account of his reasons for returning. He says and I accept that had he received a return of the "placement" and the 100 per cent return in the first week of July 2006 he would not have come back to Sydney.

Just how Mr Levy acts when faced with the first default on the June 2005 transaction is an important marker of the truth or otherwise of his account. He is in Sydney for almost the whole of July 2006 before he returns for a course of intravenous antibiotics at the Breakspear Hospital in early August 2006. His conduct during this period is not consistent with that of a man who thought that his very good friend had just defaulted on paying him $1 million. The first meeting between the two after Mr Levy's return was on 10 July 2006. There were two other major contacts before Mr Levy returned to London, on 14 July 2006 and 3 August 2006. The last of these was Mr Levy's final consultation with Mr Bablis as one of his patients.

Mr Levy on 10 July 2006 went to Mr Bablis' Double Bay practice to meet with him. I generally accept Mr Levy's account of this first meeting in preference to that of Mr Bablis. As Mr Levy was a VIP customer he was not required to make an appointment to see Mr Bablis, so he simply arrived at the practice without an appointment. Mr Levy says they began their conversation in the corridor between waiting rooms and then moved into an empty treatment room. Mr Levy said words to the following effect: "Levy: 'Mate where is my money. I want it now'. Bablis: 'Mate, just sit down (pointing to the acupuncture table) and calm down'."

Mr Levy then explained that Mr Bablis further spoke to him in words to the following effect: "Bablis: 'There is absolutely nothing to worry about. The money's there, its just a few days away. I can see that you are upset and anxious. You will have your money very soon. Let me give you some acupuncture to settle you down'.

Mr Levy says Mr Bablis continued muttering to himself things such as 'this is not good' while he reached for acupuncture needles and he then treated Mr Levy with acupuncture. After the acupuncture had finished, Mr Bablis treated Mr Levy using kinesiology (NET muscle testing), and again muttering to himself said words to the effect: "Bablis: 'This is going to be interesting'."

By this time, Mr Levy says he had calmed down and he further spoke to me to the following effect: "Bablis: 'Look the money's there. Don't worry, its only a few days away and I'll call you'.

Mr Bablis' account of this 10 July 2006 meeting does not really differ from Mr Levy's. He remembers Mr Levy being distressed about not getting his money back. Upon review of Mr Levy's patient file for the purposes of the proceedings Mr Bablis concluded that he had treated him that day with acupuncture and kinesiology for the emotions of "fear and dread". Mr Bablis confesses, in my view accurately, "I was also distressed as I felt in some way responsible as I had introduced Julian to Brendan". He says that he cannot recall what he told Mr Levy about the return of the money on this occasion. In my view he did try to reassure Mr Levy in the way that Mr Levy says. But this was not an indication that Mr Bablis regarded himself as legally responsible. But he did see himself as having some personal responsibility to do something for his friend, Mr Levy.

One critical difference between Mr Levy and Mr Bablis, which persists throughout July and August 2006, and which is evident in this first consultation after the June 2005 advance is overdue, is Mr Bablis' claim that he said to Mr Levy words to the effect "Why don't you contact Brendan direct to clarify the situation?", a suggestion to which Mr Bablis says that Mr Levy was reluctant to respond. In contrast Mr Levy says that Mr Bablis did not come up with the idea of Mr Levy contacting Mr O'Dowd directly until later. I accept Mr Bablis' version of this dispute. Although Mr Bablis had been for a long time quite possessive of his relationship with Mr O'Dowd and still saw himself in July-August 2006 as something of a gatekeeper for Mr Levy's communications with Mr O'Dowd, I accept that he suggested Mr Levy contact Mr O'Dowd. But I doubt that the suggestion was as open ended an invitation as now appears in Mr Bablis' evidence. Subsequent emails between Mr Bablis and Mr Levy still show Mr Bablis continuing to assume responsibility for Mr Levy's communications with Mr O'Dowd. For example without dissent on Mr Bablis' part Mr Levy emails him on 31 July 2006 and says, "Please let me know once you have spoken to Brendan [O'Dowd]." Then about a month later on 27 August 2006 when Mr Levy is back in the United Kingdom he asks for Mr Bablis to "send me over Brendan's number and a copy of the UPA statement showing the principle (sic) in trust". Mr Bablis replies with Mr O'Dowd's telephone number the next day and volunteers to try and get the rest of the information "asap". It was only in late August when the June 2005 transaction funds were overdue by about two months that Mr Levy began a concerted effort to make direct contact with Mr O'Dowd. Mr Levy's case construes Mr Bablis' continuing communications with Mr O'Dowd as acknowledging responsibility by his conduct for the security of and for the return of the funds.

Rather the situation was more complicated. In my view what was going on was that Mr Bablis was trying to keep some control of the growing problem of Mr O'Dowd. He felt the need to do this because he too still trusted Mr O'Dowd and wanted to speak with him to ascertain the true status of Mr Levy's investment. Mr Bablis felt, as he explained, that as Mr Levy's friend he should do what he could for Mr Levy using his good relationship with Mr O'Dowd. I find that Mr Bablis' getting information for Mr Levy at this time was more in the nature of giving assistance to his friend, Mr Levy, than acknowledging responsibility for the supply of such information as a party to a loan transaction.

There was a second appointment after Mr Levy returned. On 14 July 2006, Mr Levy says he went to see Mr Bablis at the Double Bay practice for a further treatment. While they were there, Mr Levy says they had a conversation to the following effect: "Bablis: 'The funds should be there towards the end of the month'. Levy: 'Okay'."

I accept that Mr Bablis said this. I infer that his source of information to make the statement was Mr O'Dowd. Mr Bablis cannot recall having a discussion with Mr Levy about the money owed to him on this occasion but he says he merely repeated to Mr Levy what he had been told by Mr O'Dowd. This is indeed what happened. Mr O'Dowd had told Mr Bablis that the funds would be there towards the end of the month and Mr Bablis repeated that to Mr Levy on the 14 July.

Within 10 days there was a third meeting at the practice between Mr Levy and Mr Bablis. On 25 July 2006 Mr Levy says that he went to see Mr Bablis for a further treatment and Mr Bablis said: "Bablis: 'Can you email me your account details. The entire two million is there. I need your account details to transfer the money. Can you send them across.'

Mr Bablis denies this conversation but I do not accept that denial. Rather I accept the correctness of what Mr Levy says and I infer that Mr O'Dowd had told Mr Bablis that the entire $2 million was then ready. This is not the first time that Mr O'Dowd had done such a thing. I accept the correctness of Mr Bablis' earlier evidence that in February 2006 Mr O'Dowd had said to him " there is a chance Julian might get paid out in three to six weeks" and that in early June 2006 Mr O'Dowd also said to him "Julian's investment should be paid out by the end of the week". Mr Bablis passed both of these communications on to Mr Levy. It is likely that he passed a similar communication on to Mr Levy on 25 July 2006. At this time Mr Bablis seemed anxious to convey Mr O'Dowd's promises through to Mr Levy. Mr Bablis still believed Mr O'Dowd himself and wanted to reassure Mr Levy. There was every reason for him to pass them on. That is what he did. At this stage he did not really want Mr Levy to form his own views by direct communication with Mr O'Dowd until he, Mr Bablis, had worked through his own questions about Mr O'Dowd.

Mr Bablis says that when Mr Levy asked for up to date information at this time from Mr Bablis, that Mr Bablis generally referred Mr Levy to Mr O'Dowd. I accept that this is what happened but I also find that Mr Levy continued to ring Mr Bablis in preference to Mr O'Dowd. This pattern of communications requires an answer to the question of why Mr Levy kept communicating with Mr Bablis and did not ring Mr O'Dowd/UPA and start to demand his money directly, especially if Mr Bablis had invited Mr Levy to speak to Mr O'Dowd. Mr Levy did keep coming back to Mr Bablis despite Mr Bablis' suggestion for him to speak to Mr O'Dowd. Mr Levy's case was that his communications with Mr Bablis at this time supported his contention that he had always looked to Mr Bablis rather Mr O'Dowd for recompense, because his initial investment dealings were with Mr Bablis not Mr O'Dowd.

But apart from what has been said above, there are other explanations for what was happening in these communications. First, the tone of Mr O'Dowd's oral telephone evidence to the Court showed that he would have been a very difficult man for Mr Levy to deal with and Mr Levy did not know him well. At one stage in his evidence Mr O'Dowd pointedly implied that these legal proceedings in which he was giving evidence as a party were of profoundly less importance than the high level commercial deals in which he was involved at that time, in July 2009. Mr O'Dowd would have been a far less friendly figure for Mr Levy to speak to about his investments than Mr Bablis. Moreover continuing to work through Mr Bablis with whom Mr Levy understood Mr O'Dowd had a close relationship, was an intelligent way for Mr Levy to use that relationship to get information from Mr O'Dowd. Secondly, Mr Bablis for his own reasons in maintaining a degree of exclusivity in his relationship with Mr O'Dowd was content to continue to act in the role as "go between" between Mr Levy and Mr O'Dowd, despite having encouraged Mr Levy to ring Mr O'Dowd. Thirdly, by the time Mr Bablis was leaving telephone messages for Mr Levy in late October 2006, as these reasons explain below, he was certainly then encouraging Mr Levy to speak directly to Mr O'Dowd. Although his motivation for doing this then was stronger because Mr Levy was then threatening litigation, I do not accept that he suddenly decided only to issue such an invitation to Mr Levy some time in late October 2006.

Nor did Mr Bablis have any basis to conclude that Mr Levy was speaking directly to Mr O'Dowd in July and August 2006. I find that Mr Bablis did not believe that such conversations were taking place. Mr Bablis does not give evidence that Mr Levy reported to him about what Mr O'Dowd had told Mr Levy. Nor does Mr Bablis give any account of conversations that he had with Mr O'Dowd reporting on what Mr O'Dowd had told Mr Levy. Had Mr Levy been speaking to O'Dowd at this time it is likely to have surfaced in evidence indirectly somehow.

Three weeks of failed predictions from Mr Bablis placed the first major strain on his relationship with Mr Levy. This is evident from Mr Levy's correspondence. Up until 24 July 2006 Mr Levy often addresses Mr Bablis signing himself "Jules". On 25 July in relation to the Dabelic transaction he seeks information about "Paulina's position on the $50,000" and signs "thanks Julian". The same day, hopeful of something of $2 million being put into the CSL account he emails Mr Bablis " Hi Pete, here are the account details...Jules ". Then when the money is not deposited by 31 July 2006 formalities creep back in and he writes " Hi Peter, in follow up to our discussion last Friday, can you give me exact dates for the return of both investments. Regards Julian ". Subsequent emails on 27 August 2006, 30 August 2006, 5 and 14 September 2006 show the same increase in formality in the relationship.

Mr Levy makes his first clear demand for the return of the money on 28 July 2006. According to Mr Bablis Mr Levy says to him " When am I going to get the money back from Paulina and Brendan? " Mr Levy denies having this conversation at all but I do not accept that denial. A conversation did happen. In an email from Mr Levy to Mr Bablis on Monday, 31 July 2006 he refers to their discussion "last Friday", 28 July. But I do not accept that Mr Levy said "When am I going to get the money back from Paulina and Brendan ?" [Emphasis added]. Consistent with his 31 July 2006 email in my view Mr Levy was non-specific about where the money was coming from as I believe he was genuinely confused. I accept that Mr Bablis said " I will try and find out " but said nothing about contacting Paulina or Brendan. On 31 July Mr Levy emails Mr Bablis confirming CSL has not received any money and asking Mr Bablis to let him (Mr Levy) know " once you have spoken to Brendan ".

A strange incident occurred at the Double Bay Clinic on or shortly before 2 August 2006. Two large men came into the Clinic and asked the Clinic receptionist for $50,000. I accept that Mr Bablis responded to them "I will deal with this matter once I talk to Julian" and the men left. Mr Bablis was visibly distressed in evidence when he gave evidence about this incident and I have no doubt that it occurred, partly because of that distress and partly because he paid the $50,000 the same day. Who sent these men to the Clinic was not explored in the proceedings. The plaintiff denied any responsibility for their mission. Either Mr Levy or Mr Banovec are the persons who clearly benefited from their work. But there is insufficient evidence to attribute responsibility for this ugly and unacceptable conduct to either Mr Levy or Mr Banovec.

Just before he left Australia to return to Breakspear Hospital in England, Mr Levy had one final contact with Mr Bablis. On 3 August 2006, he again went to Mr Bablis' practice at Double Bay without an appointment. Mr Bablis gave him therapy. Mr Levy says that during his treatment, they spoke as follows:- "Levy: 'I have been diagnosed with Lyme Disease. I need to return to London immediately for treatment. I am extremely concerned about my money. You keep making false promises'. Bablis: 'You will definitely have your money by 12 August. There will be no further delays'".

Then Mr Levy left for the UK. Mr Bablis does not give a clear account of this conversation. But in my view it occurred in the terms that Mr Levy describes and I infer that again Mr Bablis was passing on some information that Mr O'Dowd had given to him.

Once Mr Levy left for London Mr Levy's friend, Mr Oliver Banovec takes an increasing interest in the return of Mr Levy's money. The role he plays is relevant not just to the nature of the legal relationship between Mr Levy and Mr Bablis, but to the extent that that relationship can be inferred from the manner in which Mr Levy asked for his money back. Mr Banovec's role is also relevant to what Mr Levy would have done with the principal and interest from the June and October 2005 transactions had they been paid on time. Mr Bablis' case is that had the money been returned in the second half of 2006 that Mr Levy would have invested it in a company with which Mr Banovec was associated, CSL, and it would have been lost. CSL has since gone into liquidation and has not paid a dividend to creditors.

The evidence strongly supports the inference that in August 2006 Mr Banovec and CSL began rapidly to displace Mr Bablis as Mr Levy's first point of contact about what Mr Levy should generally do about his money. Mr Banovec began taking an increasing role in inquiring directly of Mr Bablis about when Mr Levy's money would be repaid. Mr Banovec's appearance on the scene is one measure of the speed of the decline in Mr Levy's relationship with Mr Bablis. Mr Levy began to transfer his personal loyalties to Mr Banovec in July-August 2006. I infer from what actually happened and the strength of Mr Levy's ties with Mr Banovec that it is highly probable that had Mr Levy received $1,000,000 or even $2,000,000 back from the June and October 2005 transactions, at some time between June and October 2006, that he would not have deposited the money with a major bank but would have invested the funds with CSL. There was therefore a real probability that the funds would have been lost anyway. I generally accept Mr Bablis' account of what happened with Mr Banovec in August 2006.

By the second half of 2005 Mr Levy had a good personal relationship with Mr Banovec. This section represents my findings about their relationship. Mr Levy first met Mr Banovec in about March or April 2005. They both shared the same flight instructor at Bankstown airport. Mr Levy attended Mr Banovec's wedding in Austria in August 2005. Mr Levy saw Mr Banovec and his wife socially in April 2006 upon Mr Levy's return to Australia. Mr Banovec and Mr Levy discussed investments together in April-May 2006. During these discussions Mr Banovec offered to involve Mr Levy in funding mortgage lending transactions. Mr Levy expressed an interest in this when he received his inheritance from his mother's estate. Mr Levy encouraged Mr Banovec and Mr Bablis to meet one another, which they did in May 2006.

In June 2006 Mr Levy entered into transactions with CSL to fund what appeared to be second mortgage transactions. The first was in relation to a client of CSL's called Rintoul in the sum of $75,000 and another for a CSL client, who needed $200,000 to complete a property transaction. In his e-mail correspondence of Friday, 23 June 2006 and Monday, 26 June 2005, Mr Banovec described the interest returns from CSL on both advances in attractive terms. Mr Levy advanced a total of $275,000 to CSL to fund these transactions as Mr Banovec had described them to Mr Levy. Through these transactions Mr Levy was slowly becoming commercially involved with Mr Banovec's company CSL.

These transactions incidentally assist in drawing inferences about the documentation of the June and October 2005 transactions. Just as the February 2005 $175,000 loan between Mr Levy Mr Bablis was documented to record its essential terms, so do Mr Banovec's e-mail exchanges with Mr Levy for the June 2006 transaction between Mr Levy and CSL document the essential terms of the transaction. It was easy for Mr Levy to ask for e-mail confirmation of his alleged loan transactions with Mr Bablis in June and October 2005. The absence of any such e-mail traffic, requested from Mr Levy or offered by Mr Bablis, is a powerful reason to disbelieve Mr Levy's version of the June and October 2005 conversations. He says he never received any security documents for these transactions with CSL. But at least there was some e-mail traffic between Mr Levy and the other party to record their terms.

Mr Levy's relationship with Mr Banovec deepened in July 2006. Mr Levy travelled to Port Douglas on holiday with Mr Banovec and his wife and Mr Derek Ziman and his wife. Mr Levy seemed to be substantially influenced by Mr Banovec and Mr Ziman by this time. Mr Ziman was Mr Banovec's solicitor and a director of CSL. By late October Mr Levy engaged Mr Ziman to write letters of demand to Mr Bablis as a precursor to these proceedings. Whilst Mr Levy was in Port Douglas he gave a power of attorney to Mr Banovec.

On 25 July 2006 Mr Levy forwarded to Mr Bablis an email from Mr Banovec nominating a CSL account for the deposit of the $2,000,000 proceeds of the June and October 2005 transactions. I infer from this conduct that Mr Levy had decided to place the $2,000,000 that he expected to get back from UPA into a "special purpose bank account" at CSL.

Then somewhat strangely Mr Banovec began to see Mr Bablis as a patient commencing on 1 August 2006. I accept Mr Bablis' evidence about his dealings with Mr Banovec at this time. At a treatment on 11 August 2006, much to Mr Bablis' surprise, Mr Banovec enquired of Mr Bablis about the $2 million Mr Levy was expecting. I accept Mr Bablis' evidence that he did not engage much with Mr Banovec on this subject on this occasion but nevertheless Mr Bablis did tell Mr Banovec that he had referred Mr Levy to Mr O'Dowd. I accept that by then Mr Bablis had suggested to Mr Levy to take up with Mr O'Dowd the matter of the non-return of Mr Levy's funds.

But in the second half of August 2006 Mr Banovec began to e-mail and telephone Mr Bablis about the return of Mr Levy's funds. The e-mails became quite demanding. Their tone is sufficiently represented by the opening words of Mr Banovec's e-mail of 24 August 2006 " Peter, I must say that I'm very concerned. You have not responded to my previous e-mail and to both of my phone messages left for you. It is obvious that there is a problem and you do not wish to speak to me. In previous correspondence you have always referred to Brendan O'Dowd who allegedly is in control of Julian's investment. " An interesting feature of this e-mail is that whatever Mr Levy had told Mr Banovec by this time, Mr Banovec seemed to accept that Mr O'Dowd, not Mr Levy, was in control of the funds Mr Levy had invested. This is consistent with my earlier findings that Mr Bablis had not represented that he would personally be a signatory on the account where the funds were to be placed, and therefore would be himself in control of the invested funds.

Between 26 October 2006 and 3 November 2006 Mr Bablis and Mr O'Dowd sent some text messages and left at least nineteen telephone messages on Mr Levy's telephone answering machine.

In the course of the early messages Mr Bablis said, according to Mr Levy, "Brendan O'Dowd is in control of your money. He is flying around the world looking for opportunities to invest in it".

It is strange that Mr Levy does not reply or cannot recall a reply to Mr Bablis' verbal statement to Mr Levy in October 2006 "Brendon O'Dowd is in control of your money". This was totally contrary to what Mr Bablis had told Mr Levy from the beginning. Yet Mr Levy cannot remember what he said when Mr Bablis said this. If Mr Levy's earlier recollection of Mr Bablis' assurances were correct this statement required Mr Bablis to be confronted. But Mr Levy did nothing. I infer from this he knew Mr O'Dowd, not Mr Bablis, was in control of his money.

Mr Levy tendered the telephone messages as admissions. Mr Bablis said that they were not relevantly admissions of anything which would assist Mr Levy's case against Mr Bablis. Some analysis of the content of the messages is required. A curious feature of this short period is that Mr Levy does not call back to answer to any of the messages. Rather he just continues to collect them.

There were in fact twenty-one messages recorded on Mr Levy's telephone answering machine. Two of them could not be dated and have been numbered Messages 20 and 21 in the sequence. Mr Levy was not able to place them in time. It is unclear exactly when Messages 20 and 21 were recorded. But they seem to have occurred just after the last of the other nineteen messages. The messages appear to be organised in a logical developing order, moving from a point of time after Mr Bablis first spoke to Mr Ziman on or about 26 October 2006, through to a final telephone message to Mr Levy on 3 November 2006 at 7.24am with Mr Bablis offering to resolve the matter in person and encouraging Mr Levy to write to Mr O'Dowd to demand his money back.

The telephone messages were far less damaging than Mr Levy thought they were. With one curious exception in Message 5, the messages from Mr Bablis had a number of consistent themes: (a) suggesting face to face talks between Mr Levy and Mr Bablis, (b) encouraging Mr Levy to speak to or send a letter of demand to Mr O'Dowd, (c) apologising for not being more attentive to Mr Levy and in following up telephone calls from him, and (d) encouraging Mr Levy to do whatever he thinks is "right". The very few messages from Mr O'Dowd were of little consequence.

The message from Mr Bablis on 26 October 2006 merely makes contact in this form for the first time. The second message, that appears to have been on the evening of 26 October 2006, contains most of the themes of the other messages. The recording was as follows:- "Message 2 Peter Bablis Date Unknown: 7.46pm Jules, it's Pete. Mate, I spoke to Brendan. He should have rung you by now I think and ah I told him to give you his number and vica versa. Umm, what I am, I was just suggesting is um, [beep] for you guys to talk before it gets messy. I know your solicitor has probably said not to talk to anyone, no need to talk, but mate before it starts getting messy and what not, if it's just going to be a matter of five days, or five, six days, mate, just talk to him now and then maybe, you started the ball rolling, you can always follow that through. It's not going [beep] to change anything but I suggest talk to him, and give it four five days. ??? just talk to him before you take this path because it's going to get messy, it's going to get shitty and, mate just, ah, fuck I know your stressed out and what not, everyone is. Maybe I should've been talking to you more constantly, he told me to give you his number yesterday, I didn't, fuck but you know, I was going to talk to you, I missed you, you missed me. Um, bottom line is, um all I'll say is, but just talk to him, you got this up your sleeve, you can go on this way but if it's a matter of literally three, four days, four five days don't make it all messy and then fuck everyone just it all falls apart for everything and everyone. But, again your call, you decide, do whatever you think's right for you, but just talk to him and do what you can do, um for your sake, and um, for all of us really. It's only going to get sticky, messy and you've got, yeah, you know look, I don't begrudge you mate, you gotta do what you gotta do and you know there's no problem, but you know, it's just confusing and it's, you gotta feel like you got some, get some confidence and strength, ah. Maybe it's my fault - I should have passed off the number quicker I got it the other day. I did try and ring but I couldn't get through. Um, so, your call. If you want to ring me, ring me for whatever its worth and then at the end of the day, um, it's easier - it's all going to wash out anyway I just don't want it to get messy that's all. Um, your money's there mate so don't stress on that and ah, but anyway, just your decision, so if you can, just give him some clarity, give him a call and ah, because I know when a solicitor is going to get involved it's going to get messy and um, Anyway, give me a call let me know ah, if you want of course, talk to you soon."

Mr Bablis was very keen to speak with Mr Levy. After making two calls on 26 October he made three more on the morning of 27 October 2006, one at 9.30am, one at 10.43am and another at 10.48am. These messages are anxious. The two calls later in the morning showing an increasingly desperate Mr Bablis trying to reach Mr Levy. The voice recordings clearly convey Mr Bablis' frustration at not being able to speak to Mr Levy. Indeed Message 5 at 10.48am is a quick supplementary call within five minutes after Message 4 that day. It is not necessary to reproduce the first message of that day. But set out below are Messages 4:- "Message 4 Peter Bablis 27 October 2006: 10.43am Jules, hi it's Pete. Mate, I'm just going through everything that we've gone through and the emails and things. Mate, ah, that second parcel that you wanted to put in, to this ah investment, ah went in around the 6 th of November anyway, or 5 th anyway, had to wait to the 10 th before it went into the system. So, a year hasn't actually been up for that second parcel albeit a year has been up for the first , but the understanding was if we want to tack on the other then it's going to come out with the second lot. Just to let you know, you know, because you're creating a hornet's nest even though I know you are stressing and there's less contact. The, looking at it, ummm mate, ah, I am just trying to look at all the emails we have sent each other. The bottom line is there is still at least, ahhh at least, by looking at it at least till the 10 th of November, ummm before the year is up, before the 10 th of November, before the year's up of the, the actual placement. Anyway, just thought I'd give you some heads up and ah you know, because I don't want it getting messy mate, because your going to get sticky messy. Talk to you soon. I hope you give me a call back or whatever. Take care mate."

The last message on the morning of 27 October 2006 contains potentially damaging material for Mr Bablis about his involvement in the second placement. Mr Levy is right that it certainly shows a greater degree of involvement on Mr Bablis' part in the control of funds than he was prepared to admit to at any stage during the case. The transcript of this recorded message (Message 5) is set out below:- "Message 5 Peter Bablis 27 October 2006: 10.48am Mate, me again just...sifting through this you're just wasting everyone's or my time, but its important I suppose just so you know where you're at for your solicitors mate. Mate the second parcel, the four 500, I will send you these emails, you were transferring 13,000 from your other account to make it a total of 500 and you didn't get it done until the 2 nd of December. Nevertheless, I didn't tell them to instigate it until you instructed me in, uh, in January because I had the money waiting there for your instructions. So I will send you these two emails, just for you to remind you where - because I can't remember to be honest mate, and just to let you know mate, if you take it to the level of the law, you know, the year for that money is up a year from the 18 th of the first 2006. um [grunt/sigh]. But ah, I'm just letting you know mate, just, lets not make it messy. Look, I'll flick you these emails anyway just so you've got them. Um, I'll forward it for what it's worth anyway, just so you know where things are. Ummmm [pause] and ah..give me a call hey, lets sort this out and put it behind us. Ah, from what I know, anyway, he's here he wants to talk to you so if you're available I think it's important for you to talk and I don't know, get your solicitor's advice, whatever you think. Whatever you want mate. Talk to ya. Bye."

It is difficult to know exactly what Mr Bablis' words mean when he says " Nevertheless, I didn't tell them to instigate it until you instructed me in, uh, in January because I had the money waiting there for your instructions ". Mr Bablis is professing a degree of involvement in the second placement to attempt to persuade Mr Levy that the placement was not used for twelve months after 18 January 2006 rather than the anniversary of a date in October 2005. But in my view at best this material is an admission that Mr Bablis carried out some instruction at Mr Levy's request in transferring the funds. It is not an admission that Mr Bablis received the funds. It is not an admission that Mr Levy was in business with Mr O'Dowd. And it is not an admission that Mr Bablis was taking responsibility for the repayment of the funds. Given Mr Bablis' state of agitation, which I could readily infer by listening to the recordings and comparing Mr Bablis' voice to the way he mostly presented in the witness box, the statement demonstrates a degree of looseness in thinking that might be expected. It is not an admission of any important element of the case Mr Levy makes against Mr Bablis.

Other than a reasonably garbled message probably left over the weekend of 28, 29 October 2006, Mr Bablis leaves the next message on Wednesday, 1 November 2006. This message returns to familiar themes: contact with Mr Levy's solicitor, urging that Mr Levy and his solicitor issue demands to Mr O'Dowd and UPA, complaining that it will "get messy for everyone" if litigation is commenced and urging discussion before intractable positions are taken. The full text of the message is as follows:- "Message 7 Peter Bablis 2November 2006: 9.57am Jules, hi it's Pete. I spoke to your solicitor yesterday, told him to ring Brendan again, umm mate like just I told him, I'll let you know as well, just make sure he sends letter to UPA that he's representing you so that Brendan does talk to him, and ah also send a letter ah, requesting your funds back, as per, I think the understanding was it's 30 days, so you should have it within 30 days if not earlier, regardless I think that was the understand in that letter that Brendan gave you initially. I don't have a copy of that so maybe read it and see what actually is in there, but um, it's going to save a lot of aggravation and hassle. So he told me that basically he's um organising for a barrister to put papers out on me and Brendan sure I understand Brendan, but also me, um you obviously understands that once that comes to me then I have to notify my people and my insurances and all that and you know mate, uh, I know you got to do what you got to do this again, it's going to get resolved a lot easier than it should and you know we have emails back and forth, um with a lot of material, and you know, I suppose I just don't want it to get messy for anyone, including you and including myself, so the reality is, I know you got to do what you got to do, but I think it's good if you want to talk to me. I know he's told you I know not to talk to him, that you should talk to me or what not, but I wouldn't think it's a bad idea. But your decision of course, but mate um, you know, let's not back each other into a corner then we all come out the way we don't want to come out, you know it's not right. I'll talk to you soon mate."

Mr Bablis leaves three more messages on 1 November 2006, about 6 to 8 hours apart and a further three long rambling messages between 7.15am and 9am on 2 November 2006. Between 11am and 4pm the same day, Mr Bablis leaves another three messages explaining that he has been in contact with Mr O'Dowd who is going to try to call Mr Levy. In the middle of these calls at about 3.20pm Mr O'Dowd rings and leaves the following message:- "Message 15 Brendan O'Dowd 2 November 2006: 3.25pm Julian, you can get me in Hong Kong at the moment on 852 817 200 31. I'm going to be in Dubai tomorrow. Now these accounts will be settled but Peter's very, Peter's very hurt up about this and they claim somebody's telling me to ignore him. I don't know how that's come about in your head, but that doesn't make me happy, ok. If this is a problem, and you want the profit and you want the money just let me know. 852 817 200 31. I'll be here for the next five hours before I fly out to Dubai. Bye."

By late afternoon of 2 November 2006 Mr Bablis was becoming desperate to have Mr Levy answer the phone or make contact in person that evening when Mr Bablis has finished work. Mr Levy continued not to respond. It was quite clear in my view that Mr Levy was deliberately not returning phone calls during this period in order to collect as much spoken material on tape from Mr Bablis that he could.

Mr Bablis then finishes the evening of 2 November 2006 with one last call urging again on Mr Levy further contact with Mr O'Dowd in the following terms:- "Message 18 Peter Bablis 2 November 2996: 8.00pm Jules, it's Pete. Mate, I had a message from Brendan. He's left his mobile, he's left his number. He wants to talk to you mate, don't you want to talk to him and get your fuckin' money back and get all this sorted out. I mean, can you just please give him a call? Mate just, can we just get this over the line and done so we can get on with our life. I mean, what is it, what you just hanging on to just to create more chaos. Just don't do this mate. Let's just, mate, I'll resend his number, it's international +852 for Hong Kong 817 200 31. 852 for Hong Kong 817 200 31. Can you please give him a call mate? You know, let's just get this done. I waited for you until about, eight oh, what is it, eight o'clock, you didn't show at the clinic. fair enough. Mate, you don't want to come to talk in person that's fine just give him a call. You know mate, I'm doing my best to help facilitate this so as to resolve this for you. Can you please just give him a call. He's going to be flying out soon to Dubai so can you please call him on the phone number cause then I've got to wait a day or so to get a number when he's in Dubai. Mate, please, just ring him or ring me back and I'll get a conference call we're both on the line or something. Whatever you want, just please."

Mr Bablis calls back again the next morning. He leaves a message at 7.24am in a similar vein. Then finally in Message 20 he foreshadows hearing from "Brendan". In the early afternoon Mr O'Dowd calls and leaves the following message:- "Message 21 Brendan O'Dowd Date Unknown: 1.00pm Julian, you can get me on 0435 039 263. That's my current number I'm using because when you, we have a difficulty with the three service, overseas in Dubai while I've been away and I haven't been able to, able to contact me, so you'll get me on 0435 039 263. I'm in Sydney tomorrow. Hope I get a chance to meet up with you. Bye."

An additional reason not to construe the particular material I have identified in Message 5 as an admission against Mr Bablis that he had control of the account is that the content of the other messages are inconsistent with Mr Bablis taking responsibility for paying back Mr Levy's money. Mr Bablis is clearly anxious that Mr Levy has not been paid. He shows evident concern that his friend is suffering such a mammoth loss. But at the same time he is urging Mr Levy to direct his legal fire towards Mr O'Dowd, who he, Mr Bablis, still vainly hopes will take responsibility for and organise the repayment of the two placements.

In a sense Mr Levy achieved the objective of having Mr Bablis make recordings of his thoughts about the two placements but Mr Levy's objective failed in important ways. It showed Mr Levy is capable of a steely determination over ten days to continue to ensnare Mr Bablis who was caught between honouring the residual obligations of his friendship with Mr Levy and protecting himself from Mr Levy's threatened litigation. The result was a series of emotional outbursts rather than admissions. This material did not strengthen Mr Levy's case.

From October 2005 Mr Levy gave instructions to his first solicitor Mr Ziman about the allegations he proposed be made against Mr Bablis in future proceedings. Mr Levy gave detailed instructions to Mr Ziman between October and December 2005. He was cross-examined about these instructions. But they were mostly draft instructions and the result was inconclusive.

The last event founding a major contest of fact between the parties occurred after these proceedings commenced, when Mr Schlederer met Mr Levy in February 2009. Mr Schlederer went to school with Mr Levy but worked with Mr Bablis. He had past loyalties and associations with Mr Levy but his future lay with Mr Bablis. He gave evidence in Mr Bablis' case. In my view he gave thoroughly reliable and independent evidence. He was a witness with an excellent and precise recollection, whose evidence was very valuable in a case where every fact was so fiercely contested. I wholly accept his evidence as to his meeting with Mr Levy in February 2009. I reject Mr Levy's evidence of that event to the extent that it is inconsistent with the evidence of Mr Schlederer.

Mr Schlederer says that Mr Levy telephoned him in December 2008 suggesting that they meet for "a chat". He deferred the meeting until his second child was born. He met with Mr Levy at Westfield Shoppingtown at Bondi Junction on 26 February 2009.

During the meeting Mr Schlederer says, and I accept, that Mr Levy said to him words to the effect:- "I invested $1 million with Brendan O'Dowd and the money is gone. Peter introduced me to Brendan. Peter was full of shit. He is a liar. The investment was all bullshit. The money is gone. That was all the money that I had. I have got nothing left. Please don't tell Peter about this meeting."

Mr Schlederer says that Mr Levy showed him an email from Mr O'Dowd to the solicitor, Mr Ziman, which attached a letter from Mr O'Dowd to Mr Levy. Mr Schlederer identified the letter below as the one that Mr Levy showed him. It is typical of the style of Mr O'Dowd's communnications. "TO MR Julian - Julslevy Derek Ziman of Ziz & Zig I restate the clear and undisputed facts without thelack of clarity and (1) A torturous (sic) distortion and abuse of due process by Z&Z (2) A claim of a feeble minded clown who seeks to project his misfortunes on the shortcomings of others. UPA received 2 payment of approximately $500,000 AFTER LENGTHY DISCUSSIONS ON THE RECEIPT OF 100% return on the funds placed with UPA A TOTAL OF $1,000,000.00 THIS IS ALL SUPPORTED BY DOCUMENTATION. Julian was most interest (sic) in being able to participate in such money market operations Julian is no innocent abroad THIS IS A EASILY DEMONSTATED BY THE VERY LIFE STYLE HE ENJOYES (sic)....He would benefit from learning to work. UPA now for its part accepts the statement of claims (sic) and will pay them as such upon the receipt of a letter of demand for the same. The deal required 30 days notice. You will receive the principal plus bank interest as demanded. AS FOR COSTS STOP THIS BLOODY NONSENSE UPA IS A $1 company WITH GREATER THAN $20M USD in company assets Michael Brendan O'Dowd Chairman UPA"

When Mr Schlederer read this letter and saw that UPA apparently accepted for its part the claim in the statement of claim he asked Mr Levy whether he had ever made the demand suggested by Mr O'Dowd. When Mr Levy had said that he had not, Mr Schlederer asked him "Why didn't you write a demand asking for the money like it says?" Mr Levy replied to this "Because it's a sham and I wouldn't get my money back". Mr Schlederer then advised Mr Levy if he were in Mr Levy's position he would at least make the demand to UPA.

Mr Stanton put Mr Levy's case to Mr Schlederer and suggested to him that Mr Levy had actually said to Mr Schlederer "I invested $1 million dollars with Peter Bablis in a private placement for 12 months". Mr Schlederer replied to this challenge in words that I accept as an accurate description of their conversation in February 2009 "I don't believe he said he invested it with Peter, I believe he said he invested it with Brendan and was introduced through Peter".

Mr Schlederer's evidence was challenged on several grounds. He successfully repelled the suggestion that he had a vested interest in ensuring Mr Bablis won the case. It was suggested to him that he would stand up for Mr Bablis more quickly than Mr Levy. I accept as a correct statement of his complete neutrality his answer "I would stand up for both people". He had the impression that Mr Levy was not suing Mr O'Dowd but that in my view did not impair the accuracy of his evidence.

In my view Mr Levy made admissions to his old school friend which are consistent with the findings in these reasons, that Mr Levy invested with Mr O'Dowd not Mr Bablis.

This part of these reasons analyses Mr Levy's various causes of action and claims against Mr Bablis and UPA based upon the findings made in the chronological account. In the result Mr Levy fails on all his claims against Mr Bablis but succeeds in contract against UPA. First though the course of proceedings was unusual and is set out here.

Both Mr Levy and UPA made procedural applications during the first two days of the hearing. First, during Mr Stanton's opening of the case on Monday, 27 July 2009, the Court enquired of Mr Stanton whether or not the facts in the proceedings as opened supported a claim in either presumed or actual undue influence. Partly in response to that exchange Mr Levy sought to rely upon a form of Third Further Amended Statement of Claim which included two amended paragraphs, paragraphs 45 and 46, seeking relief alleging the exercise by Mr Bablis of presumed or actual undue influence on Mr Levy. Argument took place on the second day of hearing, Tuesday 28 July 2009, as to whether those amendments should be allowed. In the result the Court declined to allow those amendments: Levy v Bablis & Anor [2009] NSWSC 890. As the Court's reasons on that application show, factors that were influential in the Court declining to allow the amendment were: that it would require re-consideration of the calling of evidence not then before the Court, that it may require more matters to be put in issue which had been conceded on the then current pleadings, that it may require broader investigation of the plaintiff's health and, that it may affect the apportionability of claims. The proceedings were fixed for hearing for five days having been commenced in 2006. In the result the Court disallowed such a major change in the groundwork of the plaintiff's case. With minor adjustments the case proceeded on the existing pleadings.

UPA was unrepresented on the first day of the hearing, which was occupied with the opening of the case, the reading of affidavit evidence and some oral evidence. On the second day of the hearing Mr Street SC and Ms Hawkins announced their appearance on behalf of UPA and sought an adjournment to permit their client an opportunity to prepare for the hearing. UPA submitted that it only had actual notice of the hearing date on 23 July 2009 when UPA was informed of it by Mr Bablis. UPA's adjournment application was overtaken after morning tea on the second day when Mr Street SC and Mr Stanton submitted to the Court an agreement which provided for Mr Levy to discontinue the proceedings against UPA without any order for costs. Mr Levy and UPA sought leave for the proposed discontinuance. Mr Bablis opposed the grant of leave. Legal argument about the contested discontinuance took place on the afternoon of 28 July 2009. In the result the Court declined to grant leave to discontinue under Uniform Civil Procedure Rules ("UCPR ") 2005, r 12.1; Levy v Bablis & United Producers & Associates Pty Ltd [2009] NSWSC 740. For the reasons more fully explained in the Court's judgment in relation to the application for discontinuance, Mr Bablis' arguments that he would be disadvantaged by the discontinuance at this time prevailed: Levy v Bablis & United Producers & Associates Pty Ltd [2009] NSWSC 740 at [21] - [28]. The Court made an order for costs in favour of the first defendant on the application against UPA and Mr Levy: Levy v Bablis & Anor [2009] NSWSC 768.

After leave to discontinue was refused Mr Street SC and Ms Hawkins appeared in the proceedings for a number of days until the end of the first week of hearing. Only five days had been set aside for the hearing - a large underestimate. The case eventually took 16 days. To ensure that UPA was not prejudiced by its late appearance the Court indicated that Mr Street SC would be permitted to cross-examine at a later point of time any witness whose evidence was otherwise finished in the first five days of hearing. In the result Mr Street SC and Ms Hawkins did not return when the hearing resumed for the next block of available dates in December 2009.

These reasons have already outlined Mr Levy's principal claims for relief against Mr Bablis and UPA: claims under an alleged loan contract, claims for breach of fiduciary duty, and claims for negligent misstatement and statutory misleading and deceptive conduct. The Court will now deal with the merits of each of these.

Mr Levy pleaded a case in contract both against Mr Bablis and against UPA. The claim against UPA is dealt with separately. Mr Levy's contract claim about the June and October 2995 transactions was pleaded in two parts. The first part was an allegation that Mr Levy agreed to lend to Mr Bablis the sum of $500,000 on or before 1 July 2005 (and $500,000 on or before one year after the October 2005 transaction); and that, Mr Bablis agreed to repay to Mr Levy that principal sum by 30 June 2006 (and about October 2006 for the October 2005 transaction), together with 100 per cent interest. The second part of the pleaded loan agreement relates to what Mr Bablis would do with the loan moneys once it was paid to him. Mr Levy alleges in this second part that Mr Bablis agreed to place the loaned monies in an account with a major bank in Europe or the U.S. and that the monies would not leave the account. It is then said that Mr Bablis warranted the loaned monies so placed would be completely safe and carry no risk.

The cause of action in contract does not succeed. I do not accept that Mr Levy negotiated a loan agreement with Mr Bablis as the other party to the agreement in either June or October 2005. Nor do I accept that Mr Bablis was the recipient of the loan advance. The contemporaneous documentary evidence and the Court's findings as to the oral evidence only support a contract between Mr Levy and UPA. The reasons for this conclusion are the following.

First, the absence of any attempt by either Mr Bablis and Mr Levy to document the alleged loan transaction between them is a basis to infer that there was no such transaction. The parties' informal but careful documentation of the terms of the February 2005 $175,000 loan was a self set standard of behaviour for their mutual transaction which was not repeated on this occasion. If there had been a loan transaction as pleaded, a relatively simple transaction to document, and a transaction which they had documented between themselves before, it is difficult to see why it was not documented on this occasion. Despite Mr Levy's departure for overseas he had ready access to email with Mr Bablis. In the closest email to the June 2005 transaction, on 21 June 2005, Mr Levy does not refer to a loan agreement at all but says, "Thanks again for putting my money in the currency conversion. Greatly appreciated". Mr Levy's email is consistent with Mr Bablis having some control over the placement of the funds. But what Mr Levy thought was being placed in the "currency conversion" was not money loaned to Mr Bablis but " my money" [emphasis added]. Just when it would be expected that Mr Levy and Mr Bablis would repeat the style of their February 2005 communications, instead they mutually adopt language quite different from that of loan.

Second, when Mr Levy began to ask for his money back he did not use the language of a loan transaction with Mr Bablis. In his several conversations with Mr Bablis between late June and early August 2006 Mr Levy uses quite different language, "pay out of the first placement", "need my funds", "need my money back", "where is my money?", "I am extremely concerned about my money". All this language, at a critical time when default first occurs, supports some kind of investment transaction, either with Mr Bablis or UPA, not a loan agreement.

Third, Mr Levy's own version of the June 2005 transaction does not support the making of an oral loan agreement. He has Mr Bablis saying "I would like to offer you to enter into a private placement for $1 million" and "you can start the initial investment with $500,000" and "the placement will start on 1 July". Neither the word "loan" nor loan like concepts are referred to in the principal conversation said to found this transaction. The language is more consistent with some kind of investment other than a loan.

Fourth, the investment documentation between UPA and Mr Levy is inconsistent with a loan of the same funds from Mr Levy to Mr Bablis. On 17 June 2005 Mr Bettini's fax to Mr Bablis invites a deposit directly into UPA's Commonwealth Bank account. That is what Mr Levy does the same day. There is no document recording Mr Bablis even notionally receiving the funds and directing their payment to UPA. Moreover the documents Mr O'Dowd later sends to Mr Bablis for Mr Levy on 20 June 2005 to record the transaction are not compatible with a loan to Mr Levy. I have found that despite his denials Mr Levy received these documents.

The second part of Mr Levy's loan allegation is that Mr Bablis agreed that he would arrange for the sum loaned to be placed in an account with a major European or U.S. bank and that the monies would not leave the account. But an additional warranty is alleged that the monies loaned would be completely safe. There are two difficulties with this allegation. First, Mr Bablis was not handling loan monies at all. The deposit was made directly by Mr Levy to UPA. Mr Bettini's 17 June 2005 facsimile with the account details shows that Mr Levy was being asked to deposit the money himself directly into the UPA account and that is what he did. Mr Bablis did not agree to pay, receive or handle Mr Levy's funds as an agent so as to provide a platform for a warranty on his part for their safe care. Secondly, I have found that Mr Bablis did not personally warrant the safety of the funds. He certainly made generally positive representations about UPA and Mr O'Dowd. But he did not personally warrant the safety and security of the funds. For these reasons Mr Levy's claim in contract against Mr Bablis fails.

Mr Levy brings a contract case against UPA in the alternative to his claim against Mr Bablis. In his claim against Mr Bablis he alleges Mr Bablis contracted as a principal to borrow the loan advance. But their conversations on 15 and 17 June 2005 as I have found them are insufficient on their own to establish a relationship of borrower and lender between Mr Levy and UPA. Nevertheless that relationship is to be inferred from contemporaneous documents and admissions in the proceedings.

The UPA letter of 20 June 2005 records the terms on which Mr Levy had transferred funds to UPA. Although the document does not use the language of "loan" they are stipulated to be "held" in an investment "account" from which "funds" could be "withdrawn". The language implies the structure of banker and customer although the earnings are described not as interest but rather more loosely as "returns".

Moreover, in his telephone evidence Mr O'Dowd admitted UPA owed Mr Levy at least $1 million. This seemed to acknowledge an obligation to return a principal sum of at least that amount and overcome any issue as to whether a demand was made. When he was represented in the proceedings Mr O'Dowd, on behalf of UPA, disputed UPA's liability to return any larger amount. But as the proceedings unfolded, once Mr Street SC withdrew, neither Mr O'Dowd nor any legal representative on UPA's behalf put a case disputing UPA's liability for the balance. UPA was aware of the proceedings and chose not to defend them.

I conclude that Mr Levy has established a loan agreement with UPA for the advance to UPA of a loan of $1 million, together with a 100 per cent return after 12 months, an advance of $1 million to UPA in June and October 2005 and default by UPA in the return of that sum.

The principal contest on Mr Levy's action for breach of fiduciary duty took place on the question of whether a fiduciary relationship existed between Mr Levy and Mr Bablis in relation to the subject matter of the June and October 2005 transactions. Mr Bablis contended that he did not owe any fiduciary duty to Mr Levy in relation to the June and October 2005 transactions. He submits that issues of whether any such duty was breached and whether Mr Levy has suffered any loss or damage warranting an award of equitable compensation or meriting an account of profits do not arise. I agree with Mr Bablis' submission that he did not owe Mr Levy any relevant fiduciary duty.

The principles that apply in determining whether Mr Bablis owes a relevant fiduciary duty to Mr Levy are clear. The point in issue in this case is the application of those principles to the circumstances of these parties in relation to the June and October 2005 transactions.

A classic statement of the features of fiduciary relationships is the judgment of Mason J in Hospital Products Ltd v United States Surgical Corporation ( "Hospital Products" ) [1984] HCA 64; (1984) 156 CLR 41 at 96-7:- "The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense." Mason J also said that the expressions "for", "on behalf of" and "in the interests of" in this passage above signify that the fiduciary acts in a "representative" character in the exercise of his responsibility: Hospital Products, Mason J at 96-97.

These features of the fiduciary relationship have been affirmed by the High Court: Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 at [78] - [79].

In Hospital Products Gibbs CJ described the features of the relationship in slightly different language, that " a fiduciary relationship exists where the facts of the case in hand establish in a particular matter a person has undertaken to act in the interest of another and not in his own ": Hospital Products (1984) 156 CLR 41 per Gibbs CJ at p 68-9.

Mr Levy's submissions identified elements of fiduciary relationships which are important in analysing whether Mr Bablis owed Mr Levy fiduciary duties in relation to the subject matter of the June and October 2005 transactions. Precise analysis is required in order to determine the existence and extent of a fiduciary relationship between two parties. As Handley JA said in Brunninghausen v Glavanics (1999) 46 NSWLR 538 at [100], quoting Professor Finn, in Youdan, Equity, Fiduciaries and Trusts (1989) Carswell, Toronto, at 34-35, whether one party is entitled to expect that the other will act in the former's interests or their joint interests is a useful tool of analysis:- "But whether or not a real trust and confidence is there ... the law simply prescribes that, in general, one party is entitled to expect that the other will act in his or their joint interests in those matters falling within the ambit of the [fiduciary] relationship ... against the background of the relationship, its nature and its purpose [the law] asks for what purpose one party has acquired rights, powers and duties in the relationship: to promote his own interests, the joint interest, or the interest of the other party alone. Insofar as it is either of the latter two, the relationship will be fiduciary to that extent. [Emphasis added] ... the expectation may be a judicially prescribed one because the law itself ordains it to be that other's entitlement. This may be so ... because that party should, given the actual circumstances of the relationship, be accorded that entitlement irrespective of whether he has adverted to the matter ".

A subsidiary way that Mr Levy sought to found the fiduciary relationship he alleges against Mr Bablis is to draw upon duties that may spring from a relationship of financial advisor and client. This relationship can itself be a basis to infer a fiduciary relationship: see The Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64 at [726] - [727]. But here, as my findings above and the analysis below demonstrate, Mr Bablis did not assume any responsibilities as Mr Levy's financial advisor. He was a personal friend of Mr Levy providing him with commercial contacts, opportunities and information, just as Mr Levy was, in a relationship of equality, providing similar commercial contacts, opportunities and information to Mr Bablis.

Mr Levy's claim pleaded a relationship of practitioner and patient between Mr Bablis and Mr Levy in relation to Mr Levy's migraines and chronic fatigue, pleaded their regular consultations, and pleaded Mr Bablis' administration of treatment including acupuncture, cranial or chiropractic adjustments and NET. Then Mr Levy pleaded the fiduciary duty against Mr Bablis in the following terms:- "22. By reason of the matters pleaded at paragraphs 4 to 7 above: (a) Bablis was in a position of ascendancy or influence over Levy; (b) Levy was in a position of vulnerability and dependence on Bablis; and (c) Levy reposed trust in Bablis. 23. In the premises, Bablis owed the following fiduciary duties to Levy: (a) a duty not to permit a conflict or a significant possibility of a conflict to occur between Bablis' interests or duties and the interest of Levy; (b) a duty not to profit or to gain any unauthorised benefit from Bablis' relationship with Levy. 24. In breach of Bablis' fiduciary duties to Levy as set out in paragraph 23 above, Bablis had a interest in the proceeds of the First and Second Bablis Loan Agreements, or in the alternative, the First and Second UPA Loan Agreements (collectively, the 'Loan Agreements'), or some part thereof, which interest inhered to his own benefit or to the benefit of companies with which he is associated and to the detriment of Levy. 24A. The conduct identified in paragraph 24 above was conduct in breach of Rule 6 of the Chiropractors Code of Professional Conduct, established under s 19 of the Chiropractors Act 2001."

Mr Levy also pleaded a case against UPA that it was aware of the breaches of fiduciary duty pleaded against Mr Bablis, so as to support a first and second limb Barnes v Addy (1874) LR 9 Ch App 244 claim against UPA through the knowledge of Mr O'Dowd. That case fails because the breach of fiduciary duty case against Mr Bablis fails and so further analysis of it is not necessary. The breach of fiduciary duty claim against Mr Bablis and UPA was for equitable compensation for Mr Levy's lost $1 million transferred to UPA and for an account of profits.

Here the pleaded circumstances founding the claimed fiduciary duty are principally based on allegations of: (1) Mr Bablis' position of ascendency over Mr Levy, (2) Mr Levy's dependence and vulnerability, and (3) Mr Levy's trust in Mr Bablis. Each of these allegations raises special issues in defining the subject matter of any fiduciary duty in this case.

Ascendancy and Undue Influence. An issue of importance was whether a presumptive relationship of undue influence (such as that between therapist and patient) may be the basis to infer a particular fiduciary relationship between Mr Levy and Mr Bablis. In this respect Mr Levy deployed the observations of Gibbs CJ in Hospital Products (1984) 156 CLR 41 at [69] where his Honour said:- "Fiduciary relations are of different types, carrying different obligations (see Re Coomber; Coomber v Coomber [1911] 1 Ch 723 at 728-9; Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 132-3 and Phipps v Boardman , supra, at 126-7) and a test which might seem appropriate to determine whether a fiduciary relationship existed for one purpose might be quite inappropriate for another purpose. For example, the relation of physician and patient, and priest and penitent, may be described as fiduciary when the question is whether there is a presumption of undue influence, but may be less likely to be relevant when an alleged conflict between duty and interest is in question."

In the present case Mr Levy submitted that he was entitled to rely upon the presumption of undue influence between physician and patient as supporting his claim of the existence of a fiduciary duty. I agree with Mr Levy's submission that the relationship between him as patient and his therapist Mr Bablis is a presumptive relationship of influence. But I am not prepared to find that Mr Bablis had a relationship of actual influence over Mr Levy at the time of and with respect to the subject matter of the June and October 2005 transactions. They conducted their investment friendship largely outside therapy sessions for mutual purposes unrelated to therapy, although, as I have found, the conduct of therapy was not an impermeable barrier to their holding investment discussions.

The therapist/patient relationship is an important contextual factor for assessing Mr Levy's vulnerability and for assessing whether a fiduciary relationship arises from their dealings. But this is not a case where, despite that background, I can infer a specific fiduciary duty relating to the transactions in question from their general patient therapist relationship, especially where I have found that the transactions were between Mr Levy and UPA, not between Mr Levy and Mr Bablis.

It should incidentally be observed that, for the reasons expressed here, even if Mr Levy had been permitted to amend his pleadings and to plead a full undue influence case, on the evidence before me it would have failed.

Vulnerability. The reason the fiduciary principle lies in the special vulnerability of those whose interests are entrusted to another is because of the possibility of the abuse of that power. As Mason J explained in Hospital Products at p 96-7:- "The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other who is accordingly vulnerable to abuse by the fiduciary of his position".

The fiduciary obligation would ordinarily be inferred whether there is a fiduciary position of disadvantage or vulnerability, which causes one of the parties to place reliance upon the other and therefore requires the protection of equity acting upon the conscience of that other: Hospital Products , per Dawson J at [142]. The High Court described the operation of the fiduciary principle in Pilmer v The Duke Group Ltd (in liq) (2001) 207 CLR 165 at [70] in the following terms:- " It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed".

The language used in NET techniques complicated the issue of vulnerability in the proceedings. Entries such as "vulnerable" and "vulnerable/paranoid" often appeared in Mr Levy's therapy records. Mr Bablis did concede that these expressions meant "that the patient was stressed at the time with what he was going through". But the evidence was and I accept that these and the expressions like them are merely a conventional description in NET to measure certain physical responses based on the output of the adrenal glands. No inference about Mr Levy's legal vulnerability for the purposes of inferring a fiduciary relationship or a duty of care can be drawn from the use of such expressions.

When it came to investment activity Mr Levy was surprisingly resilient throughout mid 2004 to mid 2006 despite his general illness. He travelled extensively in 2005 - 2006. He grasped the opportunity to show his investment prowess through the Dabelic transaction. He undertook a steady stream of mortgage lending once he set his mind to involvement in this class of transaction after his mother's death. He initiated his connection with Mr O'Dowd and stayed in touch with Mr O'Dowd. He actively pursued investment opportunities on three continents. Despite his denial of it, I find that he fostered a romantic interest with Ms Donald at the Double Bay clinic.

Mr Levy was not generally vulnerable in this period of his life despite having some special health challenges. But the issue of Mr Levy's vulnerability is relevantly to be assessed by whether or not on analysis Mr Bablis was in a position to misuse any power or discretion in relation to Mr Levy. That is analysed below.

Relationships of Confidence. Mr Levy claims to have had a relationship of confidence with Mr Bablis. I find that he did have such a relationship in his patient/therapist relationship with Mr Bablis. The existence of a relationship of confidence can be one of the indicia of a fiduciary relationship. But it is not a necessary condition of a fiduciary relationship as Gibbs CJ explained " however an actual relationship of confidence - the fact that one person subjectively trusted another - is neither necessary for nor conclusive of the existence of a fiduciary relationship" : Hospital Products (1984) 156 CLR 41, at p 69. Mr Bablis did obtain sensitive and private information that was confidential to Mr Levy through his therapy. This much was not strongly contested.

Mr Levy's submissions tended to infer directly from their therapist/patient relationship and from the information Mr Bablis had thereby acquired about Mr Levy, that Mr Bablis undertook to act in the best interests of Mr Levy not to misuse any of the information acquired during the relationship and that anything that arose from the use of that information was the subject of a fiduciary relationship. That submission was made on the assumption that Mr Levy's version of his conversations with Mr Bablis about the June and October 2005 transactions would be accepted. Now that much of Mr Levy's evidence is rejected the scope of any such duty must be closely analysed. But one preliminary comment must be made.

The plaintiff did not plead a case seeking a remedy for misuse of confidential information. It is true, as I have found, that Mr Bablis did acquire information about Mr Levy's sale of his restaurant through administration of NET treatment to Mr Levy. But this was not a case of allegation of liability due to the misuse of that information to the advantage of UPA or of Mr Bablis himself. Rather, Mr Levy alleged, as was open to him, that Mr Bablis' possession of the confidential information was one indicator of Mr Levy's vulnerability.

It is impermissible to reason merely from Mr Levy and Mr Bablis having a confidential relationship of therapist and patient that Mr Levy was entitled to expect that Mr Bablis would act in Mr Levy's interests in respect of the June and October 2005 transactions. It is always necessary to examine the particular features of the transactions in question.

My findings about the June and October 2005 transactions are that:- (a) there was no loan advance from Mr Levy to Mr Bablis and no commercial transaction between them in respect to the June and October 2005 advances other than that Mr Bablis introduced Mr Levy to Mr O'Dowd and gave Mr Levy some background information about private placements; (b) Mr Bablis did not undertake to be a signatory on any account in which Mr Levy invested his $1 million as a result of the June and October 2005 advances; (c) Mr Bablis did not promise to be guarantor of the security of or of the return of Mr Levy's invested funds with UPA nor did Mr Bablis indicate to Mr Levy that he would have control of how UPA invested the funds; but (d) Mr Bablis did accept a limited gratuitous role as conduit of information between UPA and Mr Levy, including to convey to UPA Mr Levy's instructions and to report to Mr Levy about UPA's management of Mr Levy's funds but he did not assume a role as Mr Levy's financial adviser in relation to these two transactions.

The question then arises, what precise powers or discretions did Mr Bablis have that he could exercise so as to affect the interests of Mr Levy and whether he did undertake to exercise those powers or discretions in Mr Levy's interests.

My findings compel the conclusion that Mr Bablis did not exercise any power or discretion in respect to either the raising or the application of the June and October 2005 advances. Nor did he undertake to Mr Levy that he would act in his interests with respect to either transaction. The only relevant power or discretion that he had was as to his function as the point of contact between Mr Levy and Mr O'Dowd. In my view, at least implicitly, he did undertake to make reasonable endeavours to communicate Mr Levy's instructions to Mr O'Dowd accurately and quickly. But Mr Levy's case is not one that Mr Bablis somehow mis-communicated instructions to or from Mr O'Dowd. He did not obviously fail in conveying any information between the two. Communications were very difficult at times. Mr Bablis had trouble getting information from Mr O'Dowd. What he did get from Mr O'Dowd he conveyed quickly to Mr Levy. The fact the information turned out to be inaccurate is not Mr Bablis' responsibility, as he mostly identified to Mr Levy that Mr O'Dowd was the source of the information.

In June 2005 Mr Levy was interested in pursuing a particular kind of investment. He asked Mr Bablis to put him in touch with Mr O'Dowd. That is what Mr Bablis then did and the transaction proceeded forward between Mr O'Dowd and Mr Levy. Mr Bablis continued to act as the point of contact between Mr Levy and Mr O'Dowd. But that is all he was.

Mr Bablis did not undertake to act in Mr Levy's financial interests in relation to the June and October 2005 transactions. He did not assume the role of financial advisor in respect of Mr Levy's investment.

But it is necessary to consider briefly, in the alternative, whether Mr Levy would have succeeded in establishing breach of fiduciary duty, even if such a duty had been established.

Mr Levy's case also was that his loss resulted from the conflict between Mr Bablis' interests and his fiduciary duty and that he had made a profit or gained an unauthorised benefit from the exercise of his fiduciary duty. This case fails on the facts. I make the following relevant findings.

Mr Bablis did not have an interest in UPA. None was established on the evidence. The indications of separateness between UPA and Mr Bablis were stronger than the indications of any joint enterprise between them. (a) Nothing in the transaction documents that Mr O'Dowd or Mr Bettini issued in June 2005 indicated Mr Bablis had an interest in UPA; (b) Mr Bablis denied having any interest in UPA or deriving any benefit from Mr Levy's placements with UPA and I accept his evidence on this subject; (c) None of Mr Bablis' email correspondence betrays any indication that he had a financial interest in UPA and a financial interest in any profits or commissions from the subject transactions; and (d) Mr Bablis having an interest in UPA was objectively improbable given the regular difficulty that Mr Bablis had in getting reliable information from Mr O'Dowd and the examples of Mr O'Dowd misinforming Mr Bablis.

Mr Levy also sought to establish that Mr Bablis gained indirect benefits from this transaction. This submission rightly pointed to some strange evidence about the extent of communications between Mr Bablis and Mr O'Dowd. But the contention failed to press home any concrete basis to conclude that Mr Bablis gained any indirect benefit from the June and October 2005 transactions. Mr Levy demonstrated that during this period Mr Bablis and Mr O'Dowd made a large number of telephone calls between them. They clearly had a highly communicative relationship extending into 2005 and 2006. But Mr Levy was unable to throw any light upon the content of those calls or any transactions between the two to which the calls could have related. When invited in final submissions to identify any indirect commercial benefit that Mr Bablis gained through referring Mr Levy to Mr O'Dowd, counsel for Mr Levy was unable to do so. The evidence does not demonstrate any such benefit.

A submission was put on behalf of Mr Levy about the subject of Mr Bablis' indirect benefits from this transaction that must also be rejected. Mr Levy's contention was that Mr Bablis had: kept Mr Levy away from Mr O'Dowd; maintained a very close business relationship with Mr O'Dowd; done business with Mr O'Dowd; acted as a "spotter" for Mr O'Dowd to find potential investors for Mr O'Dowd's risky and unreliable investments; failed to warn Mr Levy about Mr O'Dowd; and, then served up an unsuspecting Mr Levy to Mr O'Dowd's depredations. This case theory is just too cynical. Mr Bablis himself made miscalculations about Mr O'Dowd's reliability. For a man as experienced in business as Mr Bablis, his attraction to Mr O'Dowd's ideas is difficult to comprehend but his behaviour was not predatory in the sense being alleged by Mr Levy. He did not intentionally misuse his friendship with Mr Levy. Mr Levy's perception of the Bablis-O'Dowd relationship seems to me to be a product of his own severe financial misadventure. Mr O'Dowd and Mr Bablis were friends. Mr Bablis even cultivated that relationship because he admired Mr O'Dowd. To a degree he excluded Mr Levy from that relationship. But he was not in business with Mr O'Dowd in relation to the placements in which Mr Levy invested.

Mr Levy also claims in negligent misstatement and for statutory misleading and deceptive conduct. The principal issues arising in relation to negligent misstatement were: whether the words spoken by Mr Levy were said; whether, even if they were said, they amounted to a recommendation or advice; whether a duty of care arose in the circumstances; and, finally whether Mr Levy has suffered any loss.

Mr Levy's negligent misstatement and statutory misrepresentation cases were based upon three pleaded groups of representations. Mr Levy's final pleading, the Third Further Amended Statement of Claim described these as respectively the "Future Representations", the "Present Representations" and the "Contract Representations". Mr Levy's negligent misstatement and statutory misrepresentation cases both fail because I find that none of these representations is made out. But I also find in this section that the relationship between Mr Levy and Mr Bablis was inherently unlikely to give rise to a duty of care on Mr Bablis' part in making any statements about commercial matters.

The Future Representations that Mr Levy relied upon extracted material from Mr Levy's version of the November 2002, August 2004 and June 2005 conversations between them. I have generally preferred Mr Bablis' version of these three conversations to Mr Levy's version. That preference means that the elements of the Future Representations that Mr Levy relies upon are not made out. The elements are in summary: that moneys advanced to Mr Levy would be used in a private placement with a major European or US bank; that the money would be placed in a bank account with such a bank and the money would not leave the account; that the moneys advanced by Mr Levy and/the placement would be completely safe, carry absolutely no risk, be 100 per cent secure and risk free; that Mr Levy would obtain a 100 per cent return on the moneys advanced after 12 months; that the moneys advanced to either Mr Bablis or UPA would be repaid on 30 June 2006 (in respect of the June 2005 transaction) and otherwise one full year after they were advanced (in respect of the October 2005 transaction). In the statutory misrepresentation case Mr Levy pleads that Mr Bablis did not have reasonable grounds to make these representations and in any event has not discharged the statutory reversal of the onus of proof in respect of them effected by provisions such as Fair Trading Act , s 41.

The Future Representations are not made out. Mr Bablis did not make an unqualified statement to Mr Levy that private placements were completely safe, carried absolutely no risk, were a 100 per cent secure and risk free. To the extent that he described private placements he may well have mentioned that their proponents, such as Mr O'Dowd, made such claims. But Mr Bablis did not make any such unqualified statements for himself. But nor did he make any unqualified statements that Mr Levy would earn a 100 per cent return on his investment. To the extent that he told Mr Levy about private placements in order to introduce him to Mr O'Dowd, Mr Bablis described characteristics of these investments in terms that clearly identified that what he was saying he had been told by others.

Although Mr Bablis was attracted to Mr O'Dowd's ideas, there was some caution in his approach. There is no evidence that he invested with Mr O'Dowd himself in 2004 and 2005. Despite his involvement with the Sherwood Group which had some association with private placements, Mr Bablis did not appear to the Court to have sufficient expertise in the area to deal with any in depth questioning from Mr Levy about private placements. Mr Bablis did not strike me as the kind of person who would commit his own credibility to an investment, when dealing with his friend Mr Levy, when the true expertise about the qualities of the investment lay with others, such as Mr O'Dowd.

The Present Representations suffer a similar fate. Mr Levy pleaded three Present Representations: that Mr Bablis was a signatory on the bank account in which the moneys would be held; that Mr Bablis had paid $500,000 into a placement and doubled his money within 12 months; and, that Mr Bablis had established a non profit medical research facility based at Oxford University through which to run placements. I accept Mr Bablis' evidence that he did not say any of these things in his conversations with Mr Levy. I have already dealt above with the non-profit medical research facility. Mr Bablis had not established such a facility through which he could conduct placements. Mr Bablis denies that he had himself placed $500,000 into a placement and doubled his money in 12 months. I find that he had not done that and he did not say to Mr Levy that he had.

The alleged representation that Mr Bablis was the signatory on the bank account in which the moneys would be held deserves special mention. I also find that Mr Bablis did not say this. Apart from Mr Bablis' denial that he did not say this to Mr Levy at any stage, the objective probabilities do not support it having been said. It is afterall the ultimate guarantee to Mr Levy, that his money would be safe with Mr Bablis and could not be released to anyone except under Mr Bablis' signature. The great difficulty that Mr Levy's evidence encounters on this statement is what he says happens once the first default occurred in June 2005 through to October 2005. Although Mr Levy does ask Mr Bablis about the whereabouts of his money, it must have become increasingly clear to him by August and September 2005 that the private placement money that he had advanced had been paid away somewhere beyond Mr Bablis' signature and control. The odd thing about this period is that Mr Levy does not confront Mr Bablis by saying something like "why did you sign the money out of the account without telling me?" If this representation had indeed been made, that is the question Mr Levy would have been asking. Indeed at times he was informed in this period that Mr O'Dowd had control of his funds and that he should look to Mr O'Dowd, matters that should have been quite shocking to Mr Levy if this representation had been made. In my view no part of the Present Representations were made to Mr Levy.

Finally, Mr Levy did not make out the Contract Representations. Mr Levy pleads the Contract Representations as being no more than they were binding and enforceable contracts in place between Mr Bablis and Mr Levy in accordance with Mr Levy's contract case. The contentions that these representations that Mr Bablis made these representations fail for the same reasons that Mr Levy's contract claim fails.

The elements of a cause of action for economic loss for negligent misstatement are well established: Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241. It is necessary that there be some form of special relationship between the parties in order to found the duty of care and it is necessary but not sufficient that it be reasonably foreseeable that the plaintiff rely upon the defendant for the provision of advice. A number of factors have been recognised as relevant to the recognition of such a special relationship and the founding of a duty of care: reliance; reasonable foreseeability of reliance; intention to cause reliance; reasonableness of the plaintiff's reliance on the defendant to provide the advice; assumption of responsibility to provide advice; and, financial interest in the defendant in the provision of advice.

In the present case it can be seen that, on my findings, most of these elements are missing. First, there is force in Mr Bablis' submission that in form, the conversations to which Mr Levy deposes are not couched as advice. The case in which Mr Levy presented was one of, in effect, guaranteeing his private placement investment. But Mr Bablis did not take on an advisory role with Mr Levy. Their investment relationship was one of equality in the mutual exchange of information. Mr Bablis did not assume responsibility to provide advice to Mr Levy and it was not reasonable for Mr Levy to have relied upon him. Nor has it been established that Mr Bablis had any identifiable financial interest in providing the advice.

This cause of action fails at this point and it is not necessary to consider Mr Bablis' alternative arguments about reliance and failure to prove loss. Misleading and Deceptive Conduct

Mr Levy's cause of action for statutory misleading and deceptive conduct in its various forms generated substantially similar issues to those that arose in relation to negligent misstatement. The principal issue was whether the various representations pleaded were made at all. On that I conclude on the facts, as I have found them, that none of the representations is made out. But here, instead of an issue about duty of care the other main question was whether the statements relied upon if made were made in "trade or commerce". I find too that such statements as I have found that Mr Bablis made to Mr Levy were not made in trade and commerce. It is convenient to consider the Fair Trading Act claim first.

There are two principal difficulties with Mr Levy's Fair Trading Act claim. The first is that Mr Levy has not made out any of the representations he pleads. In presenting such a case he is strictly entitled to rely on "conduct" but has chosen to define his case by reference to several pleaded representations, which have not been made out. Mr Levy's failure to make out these representations is analysed in relation to his negligent misstatement claim above. The claim can be dismissed on this ground alone.

But there is a second reason why this claim fails. Relief under the Fair Trading Act is only available in relation to conduct or a representation "in trade or commerce". All the discussions Mr Levy and Mr Bablis held were an expression of their firm personal friendship, especially in the period from mid2004 to mid 2006. Mr Bablis let Mr Levy get very close to him. None of the usual indicia or trade or commerce was present in or around the June or October 2005 transactions. The entire context was friendship. Mr Bablis did not issue any marketing material to Mr Levy. Mr Levy was not running a commercial organisation. Mr Bablis was not commercially interested in Mr O'Dowd's or UPA's placement business nor in the particular placements that Mr Levy made in June and October 2005. Nor was he taking a fee for advising Levy about investments. There is no written or oral contract formed between Mr Levy and Mr Bablis about the subject matter of the June and October 2005 placements. In contrast Mr Levy's and Mr Bablis' email exchanges during this period express the joys of pursuing investment opportunities and exchanging investment information on an equal basis for their mutual benefit and pleasure.

Mr Bablis happened to be a chiropractor and Mr Levy his patient. Beyond that relationship they had a friendship bonded by their mutual commercial interests. But the fact that their joint interest was in a commercial subject matter does not mean that their discussions are to be characterised as being held in trade and commerce. Occasionally their discussions spilled over into treatment times. But any investment discussions between them are entirely explained by their friendship not by Mr Bablis' role as Mr Levy's chiropractor.

Mr Levy's reliance on both ASIC Act, s 12BB and Corporations Act , s 769C depended on findings that at least some of the representations Mr Levy pleads were made out. Mr Levy has failed to establish that the representations were made. The requirement in the ASIC Act , that the conduct be in trade or commerce, is not made out. The requirement in the Corporations Act that Mr Bablis be a person providing a financial service or financial product advice is not made out. These causes of action do not assist Mr Levy any more than that under Fair Trading Act , s 41.

In the result, for the reasons stated, Mr Levy fails on all of his causes of action against Mr Bablis but succeeds in his loan contract claim against UPA. He fails in his Barnes v Addy claim against UPA. Accordingly the orders of the Court will be:- 1. Judgment for the plaintiff against the second defendant in the sum of $2 million. 2. Judgment for the first defendant against the plaintiff. 3. Liberty to apply.

In the ordinary course the costs of the proceedings would follow the event unless it appears to the Court that some other costs order should be made. I will therefore also order that the plaintiff pay the first defendant's costs of the proceedings and that the second defendant pay the plaintiff's costs of the proceedings, unless one of the parties seeks a special costs order by Friday 27 May 2011. Such an application is encompassed within the grant of liberty to apply. If such an order is sought the proceedings will be listed before me for mention on the issue of costs at 9.30 am on Thursday 2 June 2011. If no such order is sought final costs orders in accordance with this paragraph will be entered in chambers on Monday 30 May 2011. If the plaintiff provides an interest calculation that can be added to his judgment sum against the second defendant.