Chetwynd v Rose

These proceedings concern what has become a bitter dispute between three people who had been close friends and business colleagues for more than 35 years: the first and second plaintiffs, Brian and Jill Chetwynd, and the defendant, Glynis Rose. Without any disrespect, I shall refer to the parties by their given names and to the first and second plaintiffs jointly as the “Chetwynds”.

The lack of documentation of their relationship was a sign of their deep trust in each other. Regrettably, that same lack of documentation has led to this complex and lengthy litigation. A particularly unfortunate aspect of this case is that it has marred several years of what should otherwise have been well-earned retirement years for each of the parties.

The nub of the dispute is about the ownership of a property in Armidale which has been the Chetwynds’ family home (the “Armidale Property”). The Armidale Property was purchased in 1993 and, pursuant to an arrangement between the parties, Glynis was recorded as the registered proprietor. The Chetwynds contend that Glynis holds the Armidale Property on trust for them and that it cannot be sold without their consent. Glynis’ case is that, in accordance with a longstanding “three way split” agreement, she holds the Armidale Property for the three of them, and that she is entitled to orders for its statutory sale over the objection of the Chetwynds, and to one-third of the proceeds. This issue was primarily ventilated during 2017 across a nine day hearing with additional hearings to resolve interlocutory disputes (the “2017 hearing”).

While judgment on the 2017 hearing was reserved, the Chetwynds caused fresh proceedings to be commenced in January 2018 by Wincot Pty Ltd (“Wincot”) against Glynis based on the same facts. Those proceedings alleged that the Armidale Property was held on trust for Wincot, which had been the corporate vehicle for the relationship between the parties. With Glynis’ consent, these proceedings were re-opened on terms in 2018 for a further three day hearing with Wincot added as the third plaintiff (the “2018 hearing”) and the Court’s consideration of the 2017 hearing was suspended pending the conclusion of the 2018 hearing.

In addition to the question of the beneficial ownership of the Armidale Property, the case also expanded into a vociferous attack on Glynis’ integrity and the accuracy of the accounts for Wincot which Glynis had maintained as bookkeeper. That attack extended to Wincot’s longstanding external accountant, Mr William (“Bill”) Herd, who provided accounting services to Wincot from the 1990s until December 2013. Brian presented a substantially reworked set of accounts that he had prepared, which he invited the Court to accept as being an accurate statement of what he said was the “true position”.

In both the 2017 hearing and the 2018 hearing, Brian represented himself, his wife Jill and the third plaintiff Wincot. Mr H Stowe of Counsel appeared for Glynis.

These proceedings bear a considerable similarity to the type of case described by the former Chief Judge in Equity, Young J (as his Honour then was), in Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 694-695:

Primarily based on Brian’s own documents produced before there was any dispute between the parties, the Court is well satisfied that the arrangement between the parties was that Glynis was to hold the Armidale Property for herself, Brian and Jill and that there was no agreement that sale required unanimous consent. My note during the 2017 hearing when Brian sought to explain away those documents was that his explanations were unconvincing. A close review of those documents and of the transcript of the hearing has fortified me in that conclusion. During some of Brian’s attempted explanations during the 2017 hearing I was left with the strong impression that I was not sure whether even Brian really believed them himself.

Similarly, during the 2018 hearing and after many days of seeing him present his case in Court over two years, I noted him to be a strong character, articulate and intelligent. Those very qualities made his efforts to explain accounting and other evidence that was unhelpful to his case as something he did not know about or did not understand as completely unpersuasive.

Brian’s allegations against Glynis became increasingly strident. He sought to paint her as a scheming and deceptive individual who, in concert with Mr Herd and completely unbeknownst to the Chetwynds, constructed the accounts of Wincot to her own advantage and thereby breached the complete and unquestioning trust which they had placed in her. For the reasons developed in this judgment, the Court rejects that characterisation as completely unfair and inaccurate in relation to both Glynis and Mr Herd.

At the 2018 hearing, the Chetwynds relied on the evidence of an expert accountant, Mr Andrew Kirk. Mr Kirk had been retained “to look over some of the [Wincot] transactions and provide my expert opinion as to the accounting process and/or the effect of a particular book entry”. Mr Kirk’s evidence was of no real probative value or assistance to the Court. It made no reference to any applicable accounting standards and essayed no views on whether the accounts appeared to comply with those standards. He had not been provided with a copy of Mr Herd’s evidence as to the basis of the preparation of Wincot’s accounts and why Mr Herd had treated particular matters in the way he had in those accounts. Mr Herd’s evidence therefore stood unchallenged by any contrary expert evidence.

With no disrespect intended, Mr Kirk’s evidence was little more than informed speculation based on his interpretation of certain accounting entries. In fairness to him, his conclusions, such as they were, were understandably (and properly) qualified to the effect that something “could” be the case, or that “it did not seem unreasonable to suggest” something. Mr Kirk was not cross-examined, on the basis of an agreement between the parties that Glynis’ election not to cross-examine Mr Kirk would not preclude her from submitting that Mr Kirk’s evidence should not be accepted by the Court.

The Court’s conclusions may be summarised as follows:

It is necessary to set out the long and complex procedural history of this litigation.

These proceedings were first commenced by summons on 30 July 2015. The proceedings were largely focussed on the beneficial ownership of the Armidale Property which was purchased through an arrangement between the parties. The Armidale Property was legally owned by Glynis, however occupied by Brian and Jill as their home. Under this summons, the Chetwynds claimed the following relief:

Based on this original summons, it was clear the main issue to be determined was the beneficial ownership of the Armidale Property. Despite all the subsequent vicissitudes of these proceedings, that did not change.

On 21 August 2015, the proceedings were first listed for directions before Darke J. Orders were made for evidence to be filed by the Chetwynds by 21 September 2015. At this stage, both parties had legal representation.

On 15 September 2015, the Court was informed that due to the ill health of Brian and his hospitalisation, evidence for the Chetwynds would not be filed on time.

The Court subsequently made orders on 16 September 2015 extending the time for the Chetwynds to serve any evidence, including expert evidence and also granted leave to Glynis to file a cross-claim by 18 September 2015.

On 24 September 2015, Glynis filled a cross-summons. The relief sought in the cross-summons related directly to the Armidale Property. Glynis sought an order pursuant to s 66G of the Conveyancing Act 1919 (NSW) (the “CA”) that the Armidale Property be sold, trustees be appointed as trustees of the land on statutory trust for sale, and the proceeds of that sale be divided between the three beneficiaries of the Armidale Property, being the Chetwynds and Glynis.

On 28 October 2015, a further directions hearing was held before Darke J in which the timetable to prepare and file evidence was extended.

On 4 December 2015, orders were again made by Darke J setting out a timetable for the Chetwynds to serve evidence in reply.

On 5 February 2016, Darke J made orders which extended the time for the Chetwynds to serve evidence.

On 4 March 2016, Darke J made orders which extended the time for the Chetwynds to serve evidence.

On 4 May 2016, the proceedings were listed for mediation by the Equity Registrar which was to be held on 22 June 2016.

On 14 June 2016, Stevenson J made orders extending the time by which the mediation was to take place to 5 August 2016. Further orders were also made extending the time for the Chetwynds to serve their evidence, and for the matter to proceed by way of statement of claim.

On 2 August 2016, a court-annexed mediation was held before the Equity Registrar. The mediation was unsuccessful.

On 10 August 2016, the matter was stood over to allow the parties to continue settlement discussions which continued from the court-annexed mediation.

On 31 August 2016, the proceedings were again stood over at the request of the parties.

On 21 September 2016, orders were made which listed the matter before me for hearing in March 2017.

On 2 February 2017, Mills Oakley filed a notice of ceasing to act for the Chetwynds.

While the initial dispute was limited to the Armidale Property, it soon became evident that the Chetwynds sought to ventilate additional grievances.

On 16 March 2017, the legal representatives for Glynis wrote to the Chetwynds:

Despite it becoming clear that there were additional issues which the Chetwynds wished to press, and the offer presented by Glynis’ legal representatives to draft an amended summons, the Chetwynds did not amend their summons or provide further pleadings in relation to these additional grievances.

On 16 March 2017, four days before the hearing was set to begin, the Chetwynds served an affidavit of Brian which annexed what purported to be adjusted accounts of Wincot for the period from 1989 to 2012. These accounts did not appear to be linked to the relief sought in the summons which had initially been filed to commence the proceedings.

Following the Chetwynds serving Brian’s latest affidavit which annexed the adjusted accounts for Wincot, Glynis withdrew her offer to draft the amended summons.

On 20 March 2017, what was meant to be the first day of the 2017 hearing, I invited the Chetwynds to articulate the claims which they wished the Court to decide. I was shown the disjuncture between the original summons filed by the Chetwynds and the evidence they were intending to present to the Court.

Additionally, at the time the matter was heard on 20 March 2017, I asked the Chetwynds whether Wincot should be joined as a party to the case:

The Chetwynds declined to add Wincot as a party.

At the conclusion of the hearing on 20 March 2017, I made the following order:

On 21 March 2017, the Chetwynds sent the following email to Glynis’ legal representatives clarifying the claims they were bringing against Glynis (emphasis added):

On 21 March 2017, Glynis replied to the Chetwynds’ email:

On 22 March 2017, leave was granted to Glynis to file an amended cross-summons. In addition to the s 66G order, she sought the following payments:

On 22 March 2017, I vacated the hearing set down between 22 and 25 March 2017, and relisted it before me for hearing in April 2017. The Chetwynds were to serve any draft amended summons by 29 March 2017.

On 4 April 2017, the Chetwynds sought leave to file and serve an amended summons which added eight additional claims. These claims were:

As can be seen, the case had evolved into much more than seeking a declaration that the Armidale Property was held on trust for the Chetwynds. However, notwithstanding that increase in the number of issues, the Chetwynds did not seek an order relating to the general accounting of Wincot or an order for the accounting of the relationship between them generally.

Glynis consented to leave being granted to the Chetwynds to file the amended summons.

I subsequently heard the matter on 4, 5, 6, 7, 26 and 27 April 2017. At the conclusion of hearing all of the evidence, I set out a timetable for the filing of written submissions and a final day to hear oral submissions.

On 5 June 2017, the Court was notified that Brian had been unwell and that he sought to extend the time for the filing of written submissions. I made an order to that effect. The written submissions provided by both parties were very extensive and detailed. The total submissions received amounted to over 320 pages and included detailed argument in relation to individual entries in Wincot’s accounts.

On 24 August 2017, I heard the final oral submissions for the 2017 hearing. At the conclusion of the hearing, I reserved the Court’s judgment.

On 19 January 2018, my chambers received an email stating that Wincot had commenced separate proceedings against Glynis on 18 January 2018. Those proceedings arose out of the same facts as has been the subject of the 2017 hearing. Each of the individual claims pressed in the new proceedings related to transactions which were the subject of the adjusted accounts that had been served with Brian’s affidavit on 16 March 2017.

On 15 February 2018 Glynis filed a motion to stay permanently the new proceedings as an abuse of process. She argued that a new set of proceedings should not be allowed to be commenced because the issues should have been pressed during the 2017 hearing, and the Chetwynds should have added Wincot as the third plaintiff as they had been invited to do.

On 19 February 2018, the matter was bought before me for directions, where the hearing of Glynis’ motion was adjourned to 5 March 2018.

On 5 March 2018, orders were made by consent reflecting a regime proposed by Glynis. The orders granted the Chetwynds leave to amend the summons to join Wincot to these proceedings and pursue the additional relief sought on behalf of Wincot. This was done on the following conditions:

The mutual releases were to be signed by 19 March 2018. The parties were agreed that I should hear the amended claim and that in order to do so without suggestion of prejudgment, I would defer further consideration of the matters raised in the 2017 hearing until after the hearing of the claim that was to be amended to include Wincot.

A timetable was also set for the Chetwynds to put on any further evidence in relation to the new claims by Wincot:

It was ultimately agreed that the Chetwynds would have until 20 April 2018 to serve any lay evidence, and until 29 June 2018 to serve any expert evidence.

On 19 March 2018, the Chetwynds emailed Glynis:

On 4 April 2018 the matter was before me again for directions. Consent orders were made vacating the orders made on 5 March 2018 and provided leave to amend the summons and include Wincot as a plaintiff. Again, this was conditional upon the parties signing the mutual releases. The date for the Chetwynds to sign the release was 29 June 2018. The purpose of extending the date to 29 June 2018 was to allow the Chetwynds ample time to consider whether they wished to agree to the mutual releases and to allow Glynis liberty to oppose leave to amend if the release was not signed.

The Chetwynds also sought an extension to put on further lay evidence until 29 June 2018. This was despite the exchange which had taken place as reproduced in paragraph [56] above. Glynis consented to that extension being granted.

The Chetwynds subsequently filed a further amended summons on 4 June 2018, which added Wincot as the third plaintiff to the proceedings and incorporated the claims pressed on behalf of Wincot.

Under the further amended summons, the plaintiffs (being the Chetwynds and Wincot) also made the following additional claims:

The plaintiffs did not elect to sign the mutual release by 29 June 2018.

On 6 July 2018, further consent orders were made, again providing for leave, subject to the plaintiffs’ consent to the mutual release by 18 July 2018.

On 18 July 2018, the plaintiffs signed the mutual release.

As part of the mutual release agreement, Glynis has assigned her shares in Wincot to the Chetwynds.

On 10 September 2018, I ordered:

The purpose of these orders was to allow the new claims to be heard, without reagitating any claims from the 2017 hearing.

On 17 September 2018, the Court made various case management directions for the final preparation of the matter, and noted the following matter by consent:

I then heard the continuation of the case on 15, 16 and 17 October 2018. As the order just referred to foreshadowed, those three days were taken up with submissions only. At the conclusion of the hearing, I reserved my judgment subject to a timetable for final written submissions.

Final written submissions were received from the Chetwynds and Wincot on 6 December 2018. On 21 January 2019, Glynis’ solicitors informed the Court that she did not intend to take up the opportunity for which directions had been made that she could file submissions in reply to the plaintiffs’ submissions. The parties’ written submissions for the 2018 hearing totalled 160 pages, again including detailed arguments about a number of specific entries in the accounts of Wincot.

The background facts were not in dispute. The Chetwynds owned photographic stores. Glynis has known the Chetwynds for many years, having been first employed by them during the 1970s.

During the course of her employment, Glynis formed a close personal and business relationship with the Chetwynds of more than 35 years’ duration. Brian described the relationship between the Chetwynds and Glynis as being “practically family”.

In addition to being employed by the Chetwynds, Glynis also became good friends with them. Between 1970 and 2005, Glynis regularly saw Jill and Brian in social situations, averaging approximately twice a month. Her relationship with the Chetwynds extended to being close with their children, and they referred to her as “aunty”.

The early business relationship with the parties was developed through a company called Rogote Pty Ltd (“Rogote”). Their business relationship was not documented in formal contracts, instead consisting of and relying upon a great deal of trust between the parties.

In April 1979, Glynis purchased a unit in Neutral Bay (the “Neutral Bay Property”). This property was purchased in her name and she was the sole contributor of funds to purchasing the property.

Rogote began experiencing financial difficulties in 1989 and consequently the Chetwynds sold their home in Forestville to discharge the outstanding debts for Rogote and stave off creditors. The Chetwynds had personally guaranteed the company’s debts.

Following the Chetwynds sale of the Forestville property, there was an agreement between Chetwynds on one hand, and Glynis on the other. This agreement was known as the “three way split” agreement. Under this agreement, the Chetwynds sold the Forestville property, discharged the debts of Rogote and subsequently each gained a one third interest in Glynis’ Neutral Bay Property. In terms of what was to happen in relation to the Armidale Property, it is important at this point to recall that Glynis gave up two-thirds of her interest in the Neutral Bay Property which up until that time had undoubtedly been her property absolutely.

It was agreed, as Brian put it in his affidavit sworn 2 November 2015, that “everything we do will be equally shared one third between the three of us and that includes assets and liabilities.” While this agreement initially related to discharging the debt of Rogote and the Chetwynds gaining an interest in the Neutral Bay Property, there was no dispute that this agreement extended into other aspects of the parties’ relationship.

As with other important arrangements between the parties, the three way split agreement was not reduced to writing. Despite this, all parties accept that the agreement existed.

At this time, the Neutral Bay Property was being rented out. The rent was paid into Glynis’ personal Commonwealth Bank account, and not into any business account. Glynis paid tax on the rental income she received from the Neutral Bay Property. This arrangement was in place until the Neutral Bay Property was sold.

The Neutral Bay Property was tenanted from 1991 until 2010 when it was sold.

In 1990 the parties acquired a shelf company: Wincot. At the time of purchasing Wincot, it was agreed that Glynis would hold a 90% shareholding in the company, whilst Brian would hold the remaining 10% share. Glynis’ evidence was that there was a conversation between her and Brian, namely that she would actually own 100% of Wincot, and the 10% shareholding which Brian held was actually to be held on trust for her.

Despite this arrangement where Glynis was effectively the sole owner of Wincot, it was agreed between the parties that Wincot too was subject to the three way split agreement. As with previous agreements between the parties, the arrangement was not recorded in writing.

The purpose of Wincot was to purchase photography stores. The company purchased a store in Armidale and also in Coffs Harbour.

The Chetwynds moved to Armidale to run the store which Wincot had bought. Similarly, following Wincot purchasing a store in Coffs Harbour, Glynis moved to Coffs Harbour to oversee the running of that store.

The Coffs Harbour store closed in approximately 1993, which consequently saw Glynis also move to Armidale to work in the shop there.

In the early 1990s, Wincot secured an interest only line of credit from Citibank. This loan was secured against the Neutral Bay Property. There was an original limit of $225,000, with each of the parties being guarantors for the loan.

In 1992 after moving to Armidale, Brian and Jill moved into the Armidale Property. The Armidale Property was formerly owned by John and Barbara Phillips, who were friends of the Chetwynds. At this time, Brian and Jill were housesitting for the Phillips.

After housesitting for approximately twelve months, the Phillips told the Chetwynds that they were going to sell the Armidale Property and offered to sell it to them.

The Chetwynds were interested in purchasing the Armidale Property and Brian and Jill carried out the negotiations with the Phillips. These negotiations concerned price and terms of the sale of the Armidale Property. Glynis was not involved in the negotiations.

The terms of the purchase were that $110,000 would be paid up front to the Phillips and $110,000 would be borrowed off the Phillips by way of vendor finance. This loan of $110,000 would be repayable over seven years at a rate of 9.5% interest.

At this time, Brian was particularly concerned that he could still be liable to creditors from his previous business ventures. In order to protect his assets and the purchase of the Armidale Property, it was suggested by the Chetwynds that Glynis would be the legal owner of the Armidale Property, however she would hold the property on trust for the Chetwynds. Additionally, the Chetwynds would reside in the Armidale Property. Glynis agreed to purchase the Armidale Property for the Chetwynds as the legal owner.

In accordance with the agreement, the Armidale Property was purchased in Glynis’ name, but it was understood that the Chetwynds would reside in the Armidale Property. The crux of this dispute is whether Glynis holds the Armidale Property on trust exclusively for the Chetwynds, or whether she is also a beneficiary under the trust. I shall return to the resolution of that question later in these reasons (see paragraphs [267] to [344] below), but for present purposes will continue the narrative.

Brian gave evidence that while the Armidale Property was legally held in the name of Glynis, it was held exclusively on trust for Jill and himself. His affidavit evidence was that the following conversation happened with Glynis:

Glynis acknowledged a conversation with Brian had occurred and that she was asked to hold the Armidale Property in her name, however disputed that the word “trust” was ever used. Glynis further disputed that the Armidale Property was held exclusively on trust for Brian and Jill, and not also for her.

Brian said there was a conversation between Glynis and himself which was an express oral agreement. This oral agreement allegedly set out the terms of the arrangement concerning the Armidale Property. Brian submitted that the following conversation occurred:

I note in passing that this version contains no express reference to the Armidale Property only being sold if all three parties agreed.

Glynis did not recall a specific conversation where the terms outlining the arrangement were expressed, however noted such a conversation outlining the terms could have occurred. While Glynis does not recall the conversation generally, she specifically does not recall the suggestion that she would be indemnified, that the Chetwynds would make the mortgage repayments, and that there would be no fee payable for occupying the Armidale Property.

Glynis stated that she remembered a term of the arrangement would be that “this transaction will be treated the same as all our other dealings. We will split the asset in one third shares, just like the Neutral Bay Property.”

The Chetwynds submitted that the agreement with Glynis was that they would make all the repayments for the vendor finance, pay the interest and pay the outgoings related to the Armidale Property. As such, Glynis would not be a beneficiary of the trust. Whether or not this was agreed to, this is not what happened.

Of the $110,000 which was to be paid up front, at least $102,000 was paid by Wincot through the Citibank line of credit, which was secured by mortgage over the Neutral Bay Property. This fact is not disputed.

Glynis executed a mortgage in respect of the vendor finance, which was guaranteed by the Chetwynds.

On 13 August 1993, Wincot paid a 10% deposit on the land of $22,000. This money was paid from the Citibank line of credit.

On 17 August 1993, contracts for the sale of the Armidale Property were exchanged.

On 17 September 1993, the sale was completed.

From 1993, the Chetwynds resided at the Armidale Property.

Between 1993 and 2000, all three parties worked in the Armidale store.

When working in the store, Glynis became responsible for bookkeeping and managing the accounts; Jill was responsible for stock ordering and Brian was involved in sales and oversaw the general operations of the business.

Despite having no formal qualifications as an accountant, Glynis performed the financial tasks associated with Wincot. This made her responsible for all accounts, including banking, payments, invoicing, journal entries, bank reconciliations, and preparation of draft accounts. Journal entries were made by Glynis just before the end of the financial year.

Draft accounts, while prepared by Glynis, were later reviewed by Mr Herd, the accountant for Wincot. When Mr Herd reviewed the accounts for Wincot each year, Glynis would be present, and Brian would occasionally attend these meetings. After reviewing the draft accounts, Mr Herd would settle the accounts and send them to the Armidale shop. After the accounts were sent to the Armidale shop, they were reviewed by both Brian and Glynis. The financial practices of Wincot were complex and are outlined below in further detail in paragraphs [194] to [218].

As the parties were all working equivalent hours, it was agreed by all parties that they would each receive an equal salary from Wincot. As the bookkeeper for Wincot, Glynis was responsible for distributing wages. Glynis’ evidence was she made weekly remuneration distributions to Brian, Jill and herself.

In 2000, Brian became mayor of Armidale. He acted as mayor until 2005. During this time, he did not draw a salary from Wincot, however Jill continued to receive remuneration for her work with the business during Brian’s term as mayor. Brian suggested he voluntarily did not receive remuneration during this period as he did not require the salary, given he was receiving his mayoral salary. He alleged there was an agreement between the parties that he would still work for Wincot at this time, not receive payment for his work with the company, and instead defer receiving his salary to a later date. The Court does not accept this and finds that Brian’s hours were reduced during his time as mayor.

Throughout the time the Armidale store was running, Wincot acquired various assets and debts, including a storage shed, a Xerox machine and various other pieces of equipment.

In 2000 the Neutral Bay Property was renovated. The Chetwynds contributed substantially to the costs of those renovations.

On 24 January 2001 the mortgage over the Armidale Property was discharged and the Land Titles Office removed the mortgage and issued a new certificate of title in the name of Glynis.

The Court finds that the repayments made in respect of the vendor finance were made by Wincot from the Citibank line of credit. They were paid in 84 instalments of $1,797.84, which included interest owing. The Chetwynds asserted that while repayments were made by Wincot, they subsequently paid Wincot back. This was supposedly done through funds advanced when Brian was mayor of Armidale, through rental payments made by the Chetwynds and through a series of debits to the Chetwynds’ loan account. For the reasons provided in paragraphs [228] to [261] below, the Court does not accept this.

During 2001 to 2005, Brian transferred $55,000 to Wincot in order to reduce the Citibank line of credit interest costs.

In 2005, the Armidale store was closed. Following the closure of the store, Glynis ceased to have any direct involvement in the running of Wincot.

In November 2006, Brian created the Financial Position Report, which detailed the financial assets of Brian, Jill and Glynis (set out in paragraph [285] below).

In about 2010, the parties agreed to sell the Neutral Bay Property. It was common ground that throughout the time Glynis had owned the Neutral Bay Property, the Chetwynds had spent money on the upkeep of the Neutral Bay Property, however how much money was spent was unclear.

The Neutral Bay Property was sold in October 2010 for $430,000.

The proceeds of the sale were to be distributed in accordance with the three way split agreement. Throughout the duration of owning the Neutral Bay Property, both the Chetwynds and Glynis contributed funds to pay for various aspects of the Neutral Bay Property. As such, following the sale of the property it was necessary to make adjustments to reflect the individual contributions.

As with the previous agreements between the Chetwynds and Glynis, there was no formal documentation to reflect or document the adjustments agreed to between the parties.

As the Neutral Bay Property was legally owned solely by Glynis, she alone received the $430,000 into her account upon the sale of the property. It was agreed between the parties that Glynis would hold onto the entirety of the money from the sale, however noting it was being held on trust for both Brian and Jill.

Subsequently, Glynis opened two Commonwealth Bank Netbank Saver accounts, one for Brian and one for Jill. $82,450 was deposited into one account, being the money from the sale of the Neutral Bay Property as adjusted for Jill, and $105,450 was deposited into the other account, being the money as adjusted for Brian. This was agreed to between the parties.

On 10 February 2011, in accordance with instructions from Brian, Glynis transferred the money set aside for Jill into the account for Brian, and subsequently closed Jill’s account.

On 4 April 2011, in accordance with instructions from Brian, Glynis deposited an amount of $150,000 into a term deposit account with the Commonwealth Bank. This left approximately $27,000 in the Netbank Saver Account.

Glynis continued to hold the money for both Jill and Brian and only dealt with the funds in accordance with instructions from the Chetwynds. Glynis acknowledged that, at various times, Brian would request that she make a withdrawal on his behalf and send him the money in cash. Upon these requests, Glynis would transfer the money from the Netbank Saver account into her cheque account, withdraw the money, wrap the cash in foil and express post it to the Chetwynds.

As Glynis held the money legally in her name, she was taxed on it accordingly. As such, she made deductions to account for the amount of tax she paid on the money. The Chetwynds were aware Glynis made deductions to account for the tax that she paid, and consented to her doing this.

At the commencement of the hearing, Glynis still held approximately $70,000 for both Brian and Jill. This has since been paid to them and they make a claim for interest on that sum at Supreme Court rates.

In 2012, Glynis resigned as a director of Wincot.

In 2012, Mr Herd resigned as the accountant to Wincot.

On 3 January 2015, Glynis sent an email to the Chetwynds and said:

It is this correspondence from Glynis which set off the chain of events that led to these proceedings.

On 9 January 2015, Brian replied to Glynis’ correspondence by saying:

Glynis responded on 14 January 2015 with the following email:

The Chetwynds responded to Glynis on 16 January 2015. They said the following:

On 11 February 2015, the Chetwynds registered a caveat over the Armidale Property, noting the caveatable interest being that Brian and Jill had an “Equitable Interest as beneficiary under a Trust.”

This was by virtue of the fact that:

On 17 February 2015, MVS New England & North West Pty Ltd, a valuation and property consulting business, attended the Armidale Property and undertook a market assessment. Glynis had arranged for this property valuation without the consent of the Chetwynds. The Armidale Property was subsequently valued at $675,000.

In around mid-May 2015, Brian attempted to resolve the dispute with Glynis. He called her and spoke to her for approximately 45 minutes. Various options were canvassed, however no agreement was reached between the parties.

A further phone conversation occurred between Brian and Glynis on 26 May 2015, again trying to resolve the dispute. Brian offered to buy Glynis’ one third share of the Armidale Property for $130,000. As the Armidale Property had been valued at $675,000, Glynis believed she was entitled to $225,000. Consequently, Glynis did not agree to the offer, however said she would consider it.

On 3 June 2015, Brian called Glynis and a conversation was had to the effect that Brian and Jill would pay Glynis $130,000 for her share of the Armidale Property. Additionally, it was discussed that if the Armidale Property was later sold for more than $500,000, Glynis would receive an additional payment from the Chetwynds, between 10-20% of the amount over $500,000.

Brian’s evidence was that the following were agreed terms between the Chetwynds and Glynis at this time:

Glynis refuted that there was an express agreement with the terms outlined above. Ultimately the Chetwynds did not press that there had been agreement to settle the case in those or any other terms.

On 4 June 2015, Glynis suffered a heart attack and was placed in intensive care at Coffs Harbour Hospital.

Following Glynis’ heart attack, a letter dated 24 June 2015 was sent to Brian and Jill. The letter was sent from Fishburn Watson O’Brien, a law firm in Coffs Harbour. The letter was sent on behalf of Ms Lani Metzmacher and Ms Rachel Twigg, who were the enduring powers of attorney for Glynis. The letter is reproduced below:

On 3 July 2015, Brian contacted his legal representative and instructed them to reject the offer from Glynis.

These proceedings were commenced on 30 July 2015.

This case has involved two conflicting narratives as to who were the intended beneficiaries of the trust relating to the Armidale Property and as to its terms. Given the lack of any formal documentation surrounding the three way split agreement or the scope of it, the Court has had to consider the credit of both Brian and Glynis. While Jill is the second plaintiff, she has not played a significant role in the case. Mr Stowe did not cross-examine Jill. This was in accordance with an agreement with the Chetwynds that they would not submit that any inference should be drawn against Glynis solely by reason of that election.

The Court was also invited to consider the credit of Mr Herd, Wincot’s accountant. While Mr Herd was not a party to the proceedings, his evidence primarily supported Glynis’ version of events. Therefore, the Chetwynds made submissions which questioned his credit. Consequently, I have made various findings in relation to the evidence Mr Herd put before the Court.

I considered the principles applicable to findings of credit in Maria Saravinovksa v Krste (Chris) Saravinovski; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964. Those principles are as follows.

First, at the forefront of the Court’s approach has been the oft cited statement of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 at 318-319:

Second, the concept of actual persuasion was elucidated by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers appointed) (In liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56:

Third, there is the statutory successor of the rule in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 in s 140 of the Evidence Act 1995 (NSW):

Fourth, evidence is to be preferred which is inherently probable in the circumstances or is given by a witness against their interest.

Fifth, evidence of independent witnesses, i.e. persons who have no reason to be partisan, may be decisive in resolving the conflicting evidence of interested parties.

Sixth, where a witness has been found to be lying about one thing, that does not automatically mean that they are to be disbelieved about everything else. The Court is not bound to accept or reject a witness’ evidence in its entirety. This approach was expressed by O’Loughlin J in Cubillo v Commonwealth of Australia (No 2) [2000] FCA 1084; (2000) 103 FCR 1:

Seventh, and closely related to the preceding point, in Sangha v Baxter [2009] NSWCA 78 Basten JA (with whom Handley AJA agreed) cautioned against global credibility findings:

Eighth, disbelieving a witness that “X” was the case does not mean that “not X” has been proven. The Court respectfully adopts what fell from Gibbs J (as his Honour then was) in Steinberg v Federal Commissioner of Taxation [1975] HCA 63; (1975) 134 CLR 640 at 694 (citations omitted):

Ninth, the way evidence should be treated where that evidence is not the subject of cross-examination when cross-examination was required, was considered by Hallen J in Fulton v Fulton [2014] NSWSC 619:

Tenth, the Court can only do the best it can on the evidence which it has. Some issues may need not be resolved or should not be resolved. It may be that they cannot be resolved given the nature of the evidence which the parties have adduced. This case has many similarities to the family dispute considered by Robb J in Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044. Of the evidence in that case, his Honour said:

Glynis submitted that the credit of Brian was a factor that the Court must consider. Glynis submitted that there were inconsistencies in Brian’s evidence, that he failed to make concessions where appropriate, that he was evasive in oral evidence, and that his memory (such as it was) was incorrect when measured against the objective, contemporaneous documentary record.

For the reasons which follow, the Court accepts Glynis’ submissions that Brian’s evidence was inconsistent and should be given no weight unless independently corroborated.

Brian’s evidence was at times inconsistent with previous evidence he had given. This was particularly evident in the evidence he gave when being cross-examined and in comparing his oral evidence to that in his affidavit. By way of example, Brian’s evidence in relation to the caveat (see paragraphs [139]-[140] above) was entirely inconsistent with other submissions he had previously made. During cross-examination, Brian initially stated that he had not reviewed the caveat before the trial and did not know the details of the interests it listed when it was lodged. Despite this, Brian later conceded he had attached a copy of the caveat to his affidavit, suggesting he had not only seen the caveat, but also had read and understood its contents.

Similarly, Brian remained resolute that he had never read the description of the interest in the Armidale Property which was lodged with the caveat. This was despite the fact that he had extracted that description in his affidavit. When confronted with this inconsistency, Brian continued to assert that “I never saw or reviewed … the caveat until yesterday when I read it” (T230:48).

Additionally, Brian’s affidavit evidence went on to describe how the description in the caveat was meant to mean Glynis had a one third interest in the purchase price of the Armidale Property. However, during cross-examination Brian asserted that it was “definitely not” the case that Glynis had a one third interest in the purchase price of the Armidale Property. Brian was unable to satisfactorily explain the inconsistency in his oral and affidavit evidence.

Similar discrepancies were apparent in Brian’s evidence concerning the nature of Glynis’ interest in the Armidale Property generally. Brian gave evidence that there was an express agreement between Glynis and the Chetwynds that she would hold the Armidale Property on trust for them. Brian gave evidence that Glynis “has no interest in the purchase price of the Armidale property” (T124:38-40) and that he has always been “rock solid sure that she has no interest in the purchase price of the Armidale Property” (T125:4-6). However, as noted in paragraphs [271] and following below, when referring to documents which referred to Glynis’ interest in the Armidale Property, Brian sought to explain that Glynis had a one third interest in the purchase price of the Armidale Property.

This changing evidence from Brian, which was clearly inconsistent with his belief that Glynis held no interest in the Armidale Property, did not give the Court any confidence in the reliability of his recollection of events. This changing account between the kind of interest, if any, Glynis had in the Armidale Property was not a one off, and was constant throughout the hearing. I accept the submission made for Glynis that Brian was strategic in his answers to questions, crafting a narrative which was most convenient to him, despite the glaring inconsistencies within his own evidence and against the objective documentary record.

Similarly, it appeared Brian was being tactical in the way he presented other aspects of his evidence. For example, the $55,000 payment which Brian made to Wincot between 2001 and 2005 has been characterised in two different forms by the Chetwynds. Brian submitted on one hand that the payment was to reduce the Citibank line of credit interest costs, and as such used to repay the vendor finance. This submission ultimately went to the fact that the Chetwynds repaid to Wincot the funds which Wincot had paid for the Armidale Property, and that therefore Brian and Jill were the owners of the property. Alternatively, one type of relief the Chetwynds seek in the amended summons relates to $55,000 which “should have been repaid by Glynis”. If the funds were to be repaid as is suggested, they therefore cannot be characterised as being a payment to repay the vendor finance.

In addition to presenting inconsistent evidence to the Court, Brian failed to make concessions where it was clearly appropriate. For example, Brian did not acknowledge that according to the caveat, Glynis had a one third interest in the Armidale Property. Similarly, when I put to Brian that it would be fair to assume that the description provided on the caveat was likely to be in accordance with instructions the solicitors received, he would not accept that proposition.

Another example was Brian’s attempts to characterise the correspondence between Mr Herd and himself detailed in paragraphs [271] to [284] below as being just negotiations. Despite Brian’s clear acceptance in his letter that Glynis had a one third interest in the Armidale Property, he would not accept this. The written submissions of the Chetwynds reiterate that “GR did not ever have a 1/3 equity interest” in the Armidale Property, despite his clear concession to that effect in the documents which are considered below. Instead of making these appropriate concessions, Brian remained argumentative on some points, while on others would be evasive and vague in some of his answers.

Similarly, precisely what Brian remembered about various events struck me as inherently improbable. Brian would sometimes be unable to recall various facts, whilst at other times he would have very specific recollections of events. For example, Brian was very confident about a conversation during the early 1990s which created an express trust with Glynis, and all the terms of such an agreement. The terms he recalled of that oral agreement were detailed, precise and extensive, despite that conversation happening over 20 years ago. No few than 11 terms were agreed and are set out in paragraph [267] below. Alternatively, as already outlined above, Brian was unable to recall ever seeing the caveat before it was shown to him in Court, despite it appearing in his affidavit evidence. This caveat was lodged on his instructions in 2015, only a few years before the evidence for these proceedings was prepared and the case was heard.

The cumulative effect of matters such as those in the preceding paragraphs have led me to the conclusion that I will not accept Brian’s evidence unless it accords with the probabilities, is against interest or is supported by contemporaneous documents.

Numerous submissions were made by the Chetwynds regarding Glynis’ credit. It was submitted that she was unreliable, should not be believed, and that her past behaviour involved making false and misleading entries in the Wincot accounts. In his submissions Brian sought to portray Glynis as someone who had acted out of self-interest and was manipulative in her behaviour. It was suggested that the various journal entries she made for the Wincot accounts were made by a highly competent and calculating individual who had intended to deceive the Chetwynds, rather than a woman who was inexperienced and may have made mistakes. Consequently, it was asserted by the Chetwynds that any evidence she gave should not be given any substantial weight, and if her evidence contradicted that of the Chetwynds, she was not to be believed. I do not accept this characterisation of Glynis’ conduct.

The impression I formed of Glynis was that she was generally a reliable witness who was doing her best to tell the truth to the best of her recollection. Glynis swore numerous affidavits in these proceedings and throughout those affidavits she acknowledged the limitations of her memory. On multiple occasions, Glynis informed the Court that she did not remember a conversation having occurred, however she noted that did not necessarily mean that such a conversation did not happen.

The oral evidence Glynis gave was consistent with her affidavit evidence and she answered all questions carefully. She did not seek to embellish evidence during cross-examination, nor did she seek to adjust her evidence to suit her own objective. She made concessions where appropriate and acknowledged her lack of formal training in relation to her role as bookkeeper for the Wincot accounts.

At numerous times throughout these proceedings, the accounts of Wincot were in issue, including specific entries made by Glynis. As bookkeeper for the company, Glynis was responsible for the day-to-day management of the accounts and record keeping. Glynis has no formal qualifications in accounting, nor does she have any formal training in record keeping. When Glynis was cross-examined about a particular payment and whether a mistake had been made in recording the payment, Glynis freely admitted (T497:2) “I don’t know. I’m not an accountant. I don’t know.”

The Chetwynds submitted that any issues arising from the Wincot accounts were a result of Glynis intentionally making false and misleading entries for her own benefit. The Court does not accept this submission. The serious nature of those allegations would require the Court to be satisfied to the Briginshaw standard, and the Court is not satisfied to that standard or at all. At the time these various journal entries were made for the accounts of Wincot, it was a common and uncontested fact that Glynis, Brian and Jill were all good friends. They had a trusting relationship and were more than business partners. They were, in Brian’s words, “practically family”. Consequently, the Court does not accept that Glynis was acting out of malice and self-interest when these journal entries were made.

Additionally, given Glynis’ lack of formal training and qualifications in bookkeeping, any entries in the Wincot accounts which have been criticised are most likely explained by Glynis’ inexperience rather than her intentionally making false entries so she could benefit. There is no suggestion of actual benefit to Glynis in any event, in the sense of her gaining access to actual funds to which she was not entitled.

Glynis consistently acknowledged that where she did not know how to record a transaction, she would ask either Mr Herd or Brian how to record the transaction accurately. It was Brian who had set up Wincot’s computerised bookkeeping system. She did not question their advice and always deferred to their experience. During her cross-examination, Glynis was shown numerous journal entries which she was unable to explain. Rather than attempting to justify them with the benefit of hindsight, she acknowledged that she could not explain them and that she would have made those entries in accordance with instructions from either Brian or Mr Herd. Glynis conceded that at times, she did not understand why Brian or Mr Herd had instructed her to make specific entries, however she did so anyway in accordance with what she regarded as being their expertise.

The Court finds that when Glynis was fulfilling her role as bookkeeper, she was doing so to the best of her ability. The Chetwynds have failed to provide any basis sufficient to persuade the Court that Glynis was acting with any malice or being guided by self-interest.

Most of the entries in question were unremarkable and made over 20 years ago. Given the nature of the entries, the context in which they would have been made, her lack of training in the area and the subsequent time which has lapsed since the entries were made, it is unsurprising that Glynis was unable to recall the exact details of the journal entries, and why she made them. As such, the Court makes no adverse credit findings against Glynis for her failure to explain the journal entries. While Glynis was not able to provide justifications for these entries, the Court is not satisfied that provides sufficient grounds to made an adverse credit finding against Glynis. The Court is satisfied that Glynis was a reliable witness whose evidence was to be preferred over that of Brian where that evidence was in conflict.

Mr Herd was an important witness during this case and his evidence has proved to be highly probative. Mr Herd was the accountant for Wincot, and also did accounting work for the Chetwynds. Mr Herd is a Fellow of the Institute of Chartered Accountants, and has been a Partner at HQB Chartered Accountants since 1986.

Mr Herd’s credit was put in issue by the Chetwynds. The Chetwynds asserted in their submissions that at times, he “submitted an outright lie” and he was motivated to “mislead and cover up” certain facts. Despite these submissions, it was not clear to me how, or more importantly why, Mr Herd, as an independent witness in this litigation, was motivated to mislead the Court.

The crux of the Chetwynds’ submission on making an adverse finding about Mr Herd’s credit was grounded in small factual misgivings, or the interpretation of specific words used by Mr Herd. For example, much was made of Mr Herd’s characterisation of rental payments made by the Chetwynds to Glynis. Mr Herd characterised those rental payments as being “notional” rent, as Glynis did not actually receive the money as she paid it back to Wincot. Brian submitted that Mr Herd’s characterisation was “an outright lie” and the rental payments should have been referred to as “real” not “imaginary”, as he conceived the word “notional” supposedly to connote.

Similarly, it was submitted that Mr Herd’s evidence was contradictory to evidence given by Glynis, and even at times contradictory to his own earlier evidence. During cross-examination, the following exchange occurred between Brian and Mr Herd,

The Chetwynds submitted that the above evidence appeared to suggest that Mr Herd did not accept there was a trust, and that Glynis was not the trustee, which is uncontested. Brian argued that “this extraordinary evidence by BH (Bill Herd) seems to even contradict his own evidence, but in any event is a complete contradiction to the evidence of GR (Glynis Rose). BJC (Brian and Jill Chetwynd) submits that this evidence by BH even seems to indicate that GR was the sole beneficial [sic] and … if BH is telling the truth, is GR untruthful or is it vice versa?”

Like the example in the preceding paragraphs, much seems to be made of what appears to be a fairly innocuous remark made my Mr Herd. The attack on Mr Herd’s credit was not based on any substantial piece of evidence or contradiction, but a series of largely irrelevant and minor facts.

The Court accepts the submission made for Glynis that these kinds of relatively trivial examples are not sufficient to found an adverse credit finding against Mr Herd. When the evidence of Mr Herd is examined holistically, it is consistent and supported by objective pieces of evidence, and is congruent with the evidence provided by Glynis.

Furthermore, when considering Mr Herd’s evidence, the Court accepts his evidence in accordance with the approach outlined in paragraph [158] above. Mr Herd acted as the accountant for Wincot. He has no beneficial interest in determining who has an interest in the Armidale Property and has no reason to be partisan towards either party. Additionally, given his professional role as accountant of Wincot, Mr Herd is intimately familiar with the accounting practices of the parties. Mr Herd oversaw the complex financial arrangements of Wincot, dealing with the not always straightforward task of trying to make what might be termed “accounting sense” in accordance with applicable standards of arrangements that Brian had initiated primarily to protect the Chetwynds’ assets from creditors. As such, in resolving the conflicting evidence of the interested parties, I have given Mr Herd’s evidence substantial weight given his familiarity with the practices of the parties and his lack of beneficial interest in the result of this litigation.

Moreover, Mr Herd’s evidence is not exclusively favourable to Glynis. For example, in paragraph [447] below, his evidence is accepted in determining that Glynis owes the Chetwynds $15,953 in relation to dividend payments. I am fortified in my finding that Mr Herd is a reliable witness given he clearly is not partisan and his evidence does not exclusively favour one party. This is particularly important in circumstances where the Chetwynds submitted that Mr Herd would have been inclined to favour Glynis because she subsequently worked for him, a submission I reject. Mr Herd’s presentation in the witness box was considered and professional. As such, I have found Mr Herd to be a reliable and trustworthy witness.

The accounts of Wincot were a key piece of evidence in these proceedings, particularly in relation to who made repayments for the mortgage over the Armidale Property, and who paid for various business expenses. The Court’s reasons for the findings in relation to who made repayments for the mortgage are detailed in paragraphs [219] and following below.

Additionally, following the case being reopened in 2018, new claims were made by the Chetwynds in relation to Glynis breaching the corporations law by reason of entries she had made in the Wincot accounts. As such, it is necessary to set out the accounting practices of the business.

As I have already recorded, Glynis did the bookkeeping for Wincot. She had no qualifications in accountancy and no formal training in the photographic industry. The accounting software used by Wincot was created by Brian, who subsequently taught Glynis how to use it. It was uncontested that Glynis was essentially self-taught, and that she had recourse to guidance from either or both of Brian and Mr Herd when she was unsure how to record a transaction.

While Glynis was responsible for the bookkeeping, at the end of each financial year Mr Herd finalised the accounts for the year and showed them to Brian, which Brian would then review.

In his evidence, Mr Herd described the complexities of the accounting procedures required for the Wincot accounts. While Wincot was a business, it acted as more than a business for the Chetwynds. The Wincot accounts were closely intertwined with the personal affairs of the Chetwynds.

Mr Herd described how Wincot acted essentially as a “cash cow” for the directors, a description which Brian accepted. Mr Herd detailed how if the Wincot accounts were “normal”, then the directors would have been paid a salary out of the accounts. This salary would have been paid into their personal account, and subsequently been used for personal expenses. This was not the case.

There was no dispute that Wincot’s funds were used to pay for substantial personal expenses for the directors. These payments were not part of the salary of the directors.

Glynis detailed how the payment of personal expenses was facilitated by Wincot and subsequently recorded as debits in each of their respective loan accounts. There were no limits on the amount or nature of the expenses which Wincot would pay. The only condition was Wincot had to have sufficient funds available to make the payment.

During the hearing, I noted that it was not unusual in small and family businesses for a company to pay personal expenses and for them to be recorded as a director loan. It appears this was the case with Wincot.

The accounting of Wincot was complicated further due to the various legal structures in which payments were made. The commercial relationship of the parties involved the following:

The agreement in relation to both the partnership and the trust were never documented or formalised in any other way. Nor was the extent to which, and how, Wincot could make personal payments on behalf of the directors ever formalised.

The interaction of these various legal structures complicated the accounts. For example, Glynis was the legal owner of the Armidale Property, which was held on trust for the Chetwynds and, the Court finds, for herself in equal shares. Wincot paid for the Armidale Property using the Citibank line of credit secured against the Neutral Bay Property, which was owned by Glynis and held on trust by her for the Chetwynds and herself in equal shares. Rent was received by Glynis for the Neutral Bay Property in her personal account and she subsequently used that rent to pay the interest on the Citibank line of credit for the Armidale Property. This practice is described in further detail in paragraphs [233] and following below.

Originally, the Citibank line of credit was in the name of Wincot, however was later transferred to Glynis by Mr Herd. The Citibank line of credit, while making payments for the Armidale Property, was also used to make payments for Wincot’s corporate purposes. This complex arrangement therefore made accounting for various payments quite difficult, and especially so for someone like Glynis, who had no formal accounting training.

Additionally, the purpose behind these structures was to obfuscate the beneficial interests in the assets and ventures. The Chetwynds were concerned that they could be pursued by creditors from a previous failed business venture. Consequently, the Chetwynds proposed an arrangement whereby Glynis would hold the exclusive legal title to various assets, and the Chetwynds would have a beneficial interest in those assets.

As I have already noted, there was no documentation which evidenced the nature of this beneficial interest, or who the beneficiaries were. For example, the ownership of the Armidale Property, the ownership of shares in Wincot and the handling of the proceeds following the sale of the Neutral Bay Property, were all subject to a trust arrangement in some respect.

During cross-examination, Mr Herd was questioned as to why the beneficial interest of the Chetwynds in the Armidale Property was not recorded. This interest was not recorded for numerous reasons, however most prominently for the reason outlined above, namely that the Chetwynds wanted to shield their assets from any possible claim from creditors from their previous business ventures. The three way split agreement was the idea of the Chetwynds, and Brian personally oversaw the trust arrangements for the ownership of various assets. Consequently, the accounting relating to the purchase of the Armidale Property reflected that Glynis was the trustee and legal owner of the Armidale Property.

Another complexity in the accounts of Wincot was Mr Herd’s practice to characterise certain transactions to minimise the tax exposure for the parties and Wincot. In and of itself, there is nothing to criticise in that. At times, this resulted in transactions being retrospectively re-characterised for accounting purposes. For example, Mr Herd accounted for the Wincot Citibank line of credit as being in substance a facility of Glynis, rather than Wincot. This was done because of possible tax implications if the drawdowns to acquire the Armidale Property were characterised as an advance to Glynis.

Another example of the re-characterisation practice was the re-characterising of loans made by Wincot to the directors as being “salary” or “dividend” payments. Again, this was done to avoid tax liability for payment of the directors’ personal expenses. As I observed during the hearing, “The parties arranged their affairs, no doubt, with the advice of an accountant in a way that they accepted … was the most advantageous to them. … A consequence in law of that is that if the parties have made their bed in a particular way for the purpose of tax or other consequences, then they must lie in that bed.”

In terms of the daily accounting procedures, Glynis, as bookkeeper of Wincot, made general accounting entries from day to day, and prepared the trial balances at the end of each financial year. These end of financial year reports were then shown to Mr Herd and Brian for approval. As I have already found, due to the complexities of the accounts for Wincot, Glynis at times deferred to Mr Herd or Brian in order to be advised how to record specific transactions.

Glynis’ affidavit evidence sworn 31 March 2017, and which the Court accepts, was:

Similarly, Mr Herd’s evidence from his affidavit sworn 31 March 2017 supports the evidence of Glynis. He said:

While the evidence suggested that Glynis was not experienced at bookkeeping, the Chetwynds submitted otherwise:

The underlying assertion from that submission was that Glynis was highly competent and therefore her actions were manipulative and self-serving. For the reasons outlined in paragraph [84] above the Court does not accept this submission.

Additionally, the Chetwynds continuously submitted that the accounting for Wincot should have been simple and should have been recorded in the “very simple way” of just splitting the ownership of the Armidale Property in one third shares. For the reasons outlined in paragraphs [198] and following above, I do not accept that the accounting was simple, and this is reflected in the accounting evidence which was tendered.

The Court also accepts Mr Herd’s opinion that given the complex nature of the accounts, and the fact that business and personal finances had become intertwined, there was going to be a need for a “reckoning”, whereby the finances were formally resolved between the parties by taking into consideration various personal and business expenditures. This “reckoning” never occurred.

It was common ground that the deposit for the Armidale Property was paid by Wincot. It was not, however, agreed as to who made the repayments in relation to the vendor finance.

Glynis submitted that a direct debit authorisation was established in 1995, which she authorised, which paid for the monthly instalments from the Wincot accounts when they fell due. She does not recall the Chetwynds ever personally paying for any of the monthly repayments.

While it was initially submitted that the Chetwynds were “wholly responsible for the mortgage repayments”, this was not the case. Instead, the Court finds that it was Wincot who made the repayments.

The Chetwynds then submitted that they would repay Wincot for the funds which Wincot used to pay the vendor finance. Again, the Court finds that this was not the case in accordance with the reasons set out in paragraphs [233] and following below.

In determining how the repayments were made, the Court has taken into account the significant discrepancies between the affidavit and oral evidence given by Brian in terms of Wincot being responsible for the payments.

In relation to the arrangement that the Chetwynds would repay Wincot, Brian acknowledged that there was no time limit on the repayment obligation, and he had not considered what a reasonable time would be to repay the money. When questioned as to the details of making repayments to Wincot, Brian noted “we would progressively, over a period of time, pay for the house. There was no time limit set to pay for the house and that would certainly be out of our own resources, whatever resources came away we would be paying towards the house” (T105:17-20).

In support of the Chetwynds’ contention that they repaid Wincot, the Chetwynds relied upon the Wincot ledger reconstructed by Brian. This ledger was described by Brian as being “an account recording the purchase of the Armidale Property as an asset.” The ledger lists numerous payments, with the closing balance being nil, suggesting the Chetwynds have repaid all the monies paid by Wincot for the Armidale Property. According to the ledger, the total amount paid by the Chetwynds to Wincot was $212,000.

Glynis submitted that the ledger was fictitious and devoid of any probative value. In making this assertion, Glynis relied upon the expert evidence of Mr Herd. In his evidence, he stated:

The Court will consider each of the categories stated by Mr Herd.

In 2000 Brian became mayor of Armidale. It was uncontested that Brian transferred $55,000 from his personal account to the Wincot account. These payments took place between 2001 and 2005. The purpose of the payment was to reduce the Citibank line of credit interest costs. Brian said that he made these payments using funds from his mayoral income.

Whilst it was accepted that these funds were paid to Wincot, Brian’s affidavit evidence was that these funds were to be repaid back to him. It was ultimately agreed between the parties that instead of making an adjustment against the Neutral Bay Property, an adjustment would be made against the Armidale Property when it sold. As Mr Herd concluded in his evidence:

The evidence given by Mr Herd in relation to the nature of the $55,000 payments was not criticised or tested in cross-examination, nor was there any contrary evidence put to the Court.

The Court also has taken into account the characterisation of the $55,000 by the Chetwynds themselves in their Amended Summons. One of the grounds for relief initially pressed by the Chetwynds was that “the Defendant pays to the First and Second Plaintiffs the amount of $55,000 … being the monies paid by the First and Second Plaintiffs, that should have been repaid by the Defendant, or applied to the payment of the Armidale Property.” Seeking that relief is entirely inconsistent with the notion that the payments made by Brian were repayments to Wincot for the purchase of the Armidale Property.

This payment is considered further at paragraph [422] below.

The Chetwynds further submitted that they made rental payments as a means of repaying Wincot for the vendor finance. The reconstructed ledger suggests that of the funds used to repay Wincot, $45,140 was attributed to being paid by the Chetwynds as rent for living in the Armidale Property. This rent was supposedly paid between 1994 and 2000.

Mr Herd gave evidence that he proposed a system of round robin cheques to the parties whereby the Chetwynds would pay $780 per month as rent for the Armidale Property. The system proposed by Mr Herd would have seen these payments being made by the Chetwynds through drawing a cheque from Wincot for $9,360, that being the cumulative annual amount of rent. This cheque would then be paid to Glynis as the legal owner of the Armidale Property, who would then repay the money back into the Wincot account.

Under this arrangement, the Chetwynds would not pay any of their private funds for the rent, and Glynis would not receive any money for the rent. In her evidence, Glynis acknowledged that she did not recall this arrangement in detail, however noted that Mr Herd had made suggestions as to how to pay rent and minimise tax liability.

This arrangement saw $780 per month being debited against the Chetwynd loan account and subsequently being credited to Glynis’ loan account. At this time, Glynis was the legal owner of the Neutral Bay Property which was being rented out. The Neutral Bay Property was positively geared. As such, she was paying tax on the income she received from that property.

Alternatively, under the arrangement set up by Mr Herd where the Chetwynds paid $780 per month, the Armidale Property was to be negatively geared. This would subsequently decrease the amount of Glynis’ taxable income. This arrangement was terminated after 2000 upon the advice of Mr Herd when the Armidale Property became positively geared, and there was no tax advantage in continuing the rental arrangement.

While paragraph [234] above outlines the proposed system, it did not always eventuate this way. On some occasions, cheques were drawn from Wincot on a monthly basis, rather than an annual basis; at some times the cheque was drawn by Glynis, rather than the Chetwynds; and at other times the cheque was drawn by Wincot itself, and subsequently paid back into the Wincot account.

Brian submitted that the debit entries in the loan accounts of Jill and himself were the personal resources of the Chetwynds, and as such they personally made the rental repayments to Wincot. Additionally, it was also submitted that cheques drawn from Wincot, to the Chetwynds, to Glynis, and back to Wincot were properly recorded as personal funds in the hands of the Chetwynds.

The Court does not accept these submissions.

The Court accepts Glynis’ submission that it was incorrect for the Chetwynds to characterise the rental payments as personal finances. Brian argued that the debit entries generated “personal financial resources” by being part of his salary on which he paid tax. While Mr Herd acknowledged the debits could have been part of his salary, and that the Chetwynds likely paid tax on that amount so far is it appeared in their personal tax returns as part of a salary, that does not necessarily mean the salary amounted to “personal financial resources” which the Chetwynds could utilise.

As noted in paragraph [201] above, Wincot had a practice of paying the individual directors’ personal expenses and subsequently debiting the directors’ respective loan accounts for those expenses. This was done to minimise tax liabilities which could otherwise arise.

As such, the salaries of each of the directors would be adjusted to reflect these payments. Mr Herd explained the way this was done was that at the end of the year, all the debit entries were collected and subsequently charged against the debit loan account. This would result in adjusting the salary of each of the directors.

As Wincot was making direct payments for the directors’ various personal expenses, any characterisation of the funds as a salary is a retrospective recognition that the director had previously had the benefit of the entitlement to that payment. It does not mean that the director received the money as cash, which would enable them to dispose of it as they wished. As such, it is not open to characterise the money as “personal financial resources” belonging to the Chetwynds, as it was Wincot making the payment. This is consistent with Wincot having acted as a cash cow for the directors, which meant that the Chetwynds had already received the benefit of the salary by the company making the payment. To allow the Chetwynds to have the benefit of the salary payments twice, once in the hands of Wincot, and once in the hands of them personally, would be wrong.

Additionally, any suggestion that the money which paid for the rent was from their “personal financial resources” is also incorrect. While Brian attempted to adduce evidence that the cheques were “physically handed to the Chetwynds” (T417:45), little evidence other than submissions were provided to the Court to reach that conclusion. The only real evidence Brian relied upon was the fact that the payee on a cheque butt was listed as being “Mr Chetwynd/JC”. While there is a possibility that the cheque itself, and not just the butt, may have been made out to Brian, the Court is not satisfied this means that the cheque was drawn in favour of the Chetwynds.

Mr Herd gave evidence, which the Court accepts, that it was not unusual for the recipient of a cheque to be different to who was listed on the butt. Moreover, Glynis also said that she may have written the cheques to individuals other than who was listed on the cheque butt. The Chetwynds could have been listed on the cheque butt if the cheque was directed to Glynis for payment of the Chetwynds’ rent for the Armidale Property. This would reflect that the payment by Wincot was for the benefit of the Chetwynds, and result in a debit entry in the Chetwynds loan account. There was also no evidence of cheques being personally banked by the Chetwynds, which again reinforces the likelihood that the cheques were not always drawn to the Chetwynds.

Brian cross-examined Glynis extensively about the nature of the cheques drawn from the Wincot account. She did not recall the monthly cheques of $780 being drawn from the Wincot account, being provided to the Chetwynds, the Chetwynds personally banking that cheque, and then subsequently issuing another cheque to her. Despite numerous questions, Glynis remained confident that she had no recollection of the cheques ever being drawn in the name of the Chetwynds. The Court accepts her evidence.

Furthermore, Brian’s own affidavit, dated 16 March 2017, noted that “in account number 539 styled Drawings Manager, there are a number of debit entries for $780.00. These are noted as being BC/JC Management Fees. Neither my wife nor I actually received these funds. These were re-banked by Glynis Rose to Wincot and then paid to Citibank.” This evidence contradicts any suggestion that the money was held by the Chetwynds in their personal capacity, and then used to repay Wincot rental payments for the Armidale Property.

As such, the Court accepts Mr Herd’s evidence in relation to the cheques not being personal funds of the Chetwynds. Mr Herd devised and implemented the system of round robin cheques concerning the payment of rent for the Armidale Property, and did so for tax purposes. Consequently, his evidence as to the nature of those payments is highly probative and the Court gives it determinative weight in determining the nature of the cheques. These payments were not repayments from the Chetwynds to Wincot and should not be characterised as such.

Therefore, there is no proper basis for recording any such payments in the reconstructed ledger as payments of rent by the Chetwynds to Wincot.

The Chetwynds also submitted they repaid Wincot for the vendor finance through a series of debits to their loan account. There were numerous credit entries in the Wincot House Account which were recorded as “payment from BJC” (being both Brian and Jill Chetwynd). The total of these credit entries amounted to $111,860.

Brian submitted that these credit payments amounted to money being paid by the Chetwynds to Wincot as repayments for the money Wincot paid for the Armidale Property.

There was no evidence to support this assertion. There was no evidence to suggest they related to any transaction for which Brian made an actual payment of cash to Wincot.

Instead of being connected to any repayment to Wincot, Mr Herd characterised these payments as:

Mr Herd’s evidence also included the following:

No evidence has been produced as to what the credit entries in the House Account relate. As such, the Court does not accept the argument made by the Chetwynds.

Furthermore, there has been no evidence in response to Mr Herd’s highly critical analysis of the ledgers, and Mr Herd was not cross-examined in relation to his evidence on this subject.

As such, Glynis submitted the entries in the reconstructed ledger were a “sham.” Without necessarily accepting that description, it is clear that the reconstructed ledger is exactly that: a reconstruction by Brian to reflect what he would like the Court to find happened, without providing any persuasive evidence by reference to which the Court could be satisfied that the reconstructed ledger gives a true and fair view of what actually occurred at the time. The Court gives no weight to the reconstructed ledger in determining whether repayments were made by the Chetwynds to Wincot.

The Court finds that, on the balance of probabilities, Wincot paid for the Armidale Property in its entirety, including both the initial down payment and the subsequent vendor finance repayments. The funds advanced by Wincot were not subsequently repaid by the Chetwynds.

In making this finding, the Court has rejected the submission that Brian’s mayoral income, rent paid by the Chetwynds and debits to the Chetwynd loan accounts were forms of repayment to Wincot for the purchase of the Armidale Property. This is in accordance with the reasons provided in paragraphs [228] to [258] above.

Additionally, upon the case being reopened in 2018, the main argument pressed by the Chetwynds was that they made repayments to Wincot through the rental payments. Following the case being reopened, it appears no argument was made in relation to payments being made from Brian’s mayoral salary, or debits in the Chetwynd loan accounts, and that argument was abandoned.

Many issues have been raised by the Chetwynds and upon the reopening of the case in 2018, further issues were raised in the alternative for Wincot. The relief the plaintiffs seek can be summarised as follows:

While the main issue before the Court has been in relation to the ownership of the Armidale Property and who the beneficiaries are, no less than 22 individual monetary claims of relief were also pressed by the Chetwynds and Wincot against Glynis. Additionally, 11 breaches of the Act have been pleaded in relation to Glynis’ behaviour as bookkeeper of Wincot.

The 2017 hearing primarily focussed on whether Glynis held the Armidale Property on trust exclusively for Brian and Jill, or whether the Armidale Property was subject to the three way split agreement. Closely connected to this was the question of whether, if the Armidale Property was held for all three, there was an agreement that it could not be sold unless all three parties consented.

The 2018 hearing concerned the claim that, in the alternative, Glynis held the Armidale Property on trust for Wincot, with Wincot being the sole beneficiary.

The Court’s findings are that Glynis does not hold the Armidale Property on trust for Wincot exclusively, and that she is a one third beneficiary in the property, along with Brian and Jill. This one third interest is not limited to the purchase price of the Armidale Property, but to the current value of the property. The Court also finds that there is no agreement requiring unanimous consent of the beneficial owners for any sale of the Armidale Property.

The Chetwynds submitted that an oral agreement was entered into with Glynis which would mean the Armidale Property was not subject to the three way split agreement. Brian argued he had an express oral agreement with Glynis and the following were the terms of that agreement:

These terms were not recorded anywhere in writing. There was no other evidence to substantiate the claims of the Chetwynds in relation to the agreement for the Armidale Property. In the face of conflicting evidence, the Chetwynds submitted that the Court should believe them in accordance with their submissions that the Court should make adverse credit findings against both Glynis and Mr Herd.

Glynis rejected that there was any such agreement in relation to the Armidale Property and submitted that Brian’s evidence should be rejected as uncorroborated oral evidence. Rather than holding the Armidale Property on trust for the Chetwynds, Glynis submitted that the Armidale Property, like the other business dealings between the parties, was subject to the three way split agreement. In support of this submission, Glynis relied upon various contemporaneous documents and other evidence including, importantly, some produced before the parties were in dispute. The evidence Glynis relied upon included:

I will consider this evidence in turn. As might be expected, I place especial weight on correspondence which predates the dispute which has led to these proceedings.

On 26 August 2005, Mr Herd sent a letter addressed to “The Directors” of Wincot. That letter included (emphasis added):

Brian provided a detailed reply to the letter from Mr Herd on 10 November 2005. His reply is set out below (emphases added):

The Court notes the failure of Brian in his letter of reply to correct the observations made by Mr Herd in his original letter of 26 August 2005. Had the observation made by Mr Herd, being that Glynis had a one third interest in the Armidale Property, been incorrect it would be expected that Brian would respond and correct Mr Herd’s statement. He did not. Instead, Brian in fact went further to confirm the observation made by Mr Herd.

In his evidence and submissions Brian attempted to characterise the letter from Mr Herd as being merely “negotiations”. Brian sought to minimise Mr Herd’s letter, stating “I really didn’t approach that with the great importance at the time” (T132:7). It was submitted that the Chetwynds did not want to enter into an argument with Mr Herd or Glynis at this point, and therefore decided not to correct Mr Herd’s letter for strategic purposes. The Court does not accept Brian’s attempts to dismiss the letter from Mr Herd.

Both the personal and financial history of the Chetwynds and Glynis was complex and their finances were intimately intertwined. A third party having an interest in the family home would naturally be an important factor to consider and cannot be dismissed in the way Brian was inviting the Court to do. Additionally, Brian gave evidence that had an assertion been made to him that Glynis had a one third interest in the Armidale Property, he would have certainly corrected that (T138:10).

Mr Herd’s letter to Brian was exactly that, an assertion that Glynis had a one third interest in the Armidale Property and Brian failed to correct this. Had this letter been the opening of “negotiations”, as submitted by the Chetwynds, then the first step of any negotiation would be to ascertain what interests each party had in each of the properties. Therefore, even if the Court accepted that Mr Herd’s letter was the starting point of a negotiation (which on its face it plainly was not), Brian’s letter of reply accepts that Glynis had an interest in the Armidale Property and more. The starting premise from which everything else proceeded in Brian’s reply was “I believe that all parties acknowledge that the whole of the assets and liabilities are apportioned one third to each person.”

This conclusion is fortified when considering Brian conceded that he was interested in exploring the notion of separating the parties’ financial interests at that time (T125:28). If separating the financials between the parties was important to Brian, as he concedes it was, he would have been particularly aware of what interests Glynis had in the Armidale property, and what interests the Chetwynds had in Neutral Bay Property, and would have ensured this was documented correctly by the accountant. He did not.

Furthermore, the letter of 10 November 2005 from Brian is detailed and is three pages in length. Rather than refuting the suggestion that Glynis has an interest in the Armidale Property, Brian confirms this fact, particularly at point (5) of his letter. Brian explicitly states “In order to separate the properties it would be necessary for GR [Ms Rose] to sell her one third share in Armidale.” Brian’s letter was sent more than two months after receiving the initial letter from Mr Herd. This would have allowed for sufficient time for the Chetwynds to consider Mr Herd’s letter thoroughly, digest the observations he made in the letter and then make an informed and detailed reply, which is what occurred. This accords with the opening of the letter where Brian records “I have now obtained some more accurate figures of the assets and liabilities”.

After initially denying his letter conceded a one third interest in the Armidale Property to Glynis, Brian explained his reply as being what he was prepared to offer Glynis in a form of settlement, rather than being what she was legally entitled to. The Court does not accept that submission. As was put to Brian at the time, it was illogical to be “prepared to settle the matter on a basis that bore no reference to your understanding of the reality of the position” (T144:11).

Given the letter was sent before the dispute began with Glynis, the Court places very substantial weight on it when considering what was the arrangement between the parties. When read in an ordinary context, the letter does not suggest it is being written for the purposes of resolving a negotiation, rather the letter is being written to outline the complex financial relationship between Glynis and the Chetwynds, and raises possible steps to unwind that relationship. The interests of the parties are a given in the letter. What was not “fixed in concrete” and “could be a basis for discussion” was the various proposals as to how those interests could be separated.

I also regard it as significant that Brian’s letter makes no reference to there being an agreement in place that the Armidale Property (or anything else) could not be sold unless all three parties agreed. That may have been the practical reality (absent proceedings such as the present), but if there had been such an arrangement I would have expected Brian to refer to it as one of the fundamental matters informing any future discussions.

When I asked Brian specifically about point (5) in his letter, and how I interpreted that “looking at that today, that looks to me like an acknowledgment that [Glynis] in fact had a one third share to sell”, Brian replied “I draw exactly the same conclusion” (T155:35-37). Brian stated again that the concession did not reflect his “understanding … at the time”, however when I inquired as to why, Brian responded “to be honest I don’t really know” (T155.43). That position did not change after he had an opportunity to read the whole letter in the witness box. This was one occasion of several where I had doubt whether even Brian believed the explanation he was now proffering.

Brian also attempted to justify his letter by suggesting it was Wincot which had paid for the Armidale Property and as such, the observations in his letter were to reflect this. Again, the Court does not accept this submission. The language used by Brian in his letter is particularly relevant in answering Brian’s assertion. The letter refers to the assets being “apportioned one third to each person.” The specific reference to “person” as opposed to Wincot or company is important, and highlights the intent was that Wincot was not the beneficiary of the trust arrangement. This is consistent with point (11) of the letter, where Brian seeks to show how Jill and himself (and not Wincot) would demonstrate their 2/3 interest in the Armidale Property because the vendor finance loan “repayments were made from Wincot [I interpolate, not by Wincot], which could be constituted as being made in lieu of certain wages”. Additionally, Brian acknowledged in cross-examination that the letter does not talk about Glynis’ “one third interest in the money paid by Wincot rather than the Armidale Property itself” (T157.49).

In the end, Brian was not able to offer any satisfactory explanation for why the Court should not read his letter of 10 November 2005 as a clear acknowledgement - before there was any dispute - that Glynis had a one third interest in the Armidale Property itself. His attempts to persuade the Court otherwise also reflect decisively against Brian in its assessment of his credit.

In November 2006, Brian personally prepared a document entitled “Financial Position Report” (the “Report”). That document included (emphases added):

On its face, this document again appears to record a clear interest for Glynis in the Armidale Property. Paragraphs 2, 4, 5 and 9, when read together, provide an unequivocal assertion that the Armidale Property was subject to the three way split agreement.

When asked in cross-examination, Brian agreed that “this is another careful, detailed description of the status of the parties’ financial interests” (T158:43). Similarly, Brian accepted that “this document again contains a clear and unequivocal representation that Ms Rose has a one third interest in the Armidale property” (T159:6).

After making these concessions that it appeared Glynis had a one third interest in the Armidale Property, Brian later stated “it’s not the case and I’m happy to explain” (T159:49).

Brian’s explanation can be summarised as follows:

The Court does not accept the explanation provided by Brian for the following reasons.

First, Brian’s attempt to characterise the situation as one where there was “pressure” and the parties were in a situation of negotiation that was leading to a “settlement” is falsified by the terms of the document itself. The background statement in the Report could not be clearer: “No dispute exists, or has ever existed between the parties”. The issue was not one of negotiation or requiring any settlement. It was a consensual one of “How to arrange our affairs and generate income, whilst maximising and pensions income [sic]”, which I take to have been intended to say “whilst maximising pensions income”.

Second, listing Glynis’ interest in the Armidale Property is inconsistent with Brian’s explanation that the Report was produced to assist Glynis to purchase a property in her own name. This is particularly telling, given Brian stated numerous times in his evidence that it was his belief that Glynis did not have an interest in the Armidale Property. It does not make sense that such a report would be produced setting out a position contrary to the belief of Brian, for the purposes of purchasing an additional property. This is particularly relevant given Brian was the author of the Report.

Third, the language used by Brian in the Report cannot be characterised as being an offer of settlement to Glynis. The Report presents as a clear representation of the status quo. When I suggested that the Report was “not an offer” (T160:33), Brian initially agreed and further accepted that it said nothing about making a concession or a negotiation to settle anything. In its terms the Report is clearly an accurate statement of the state of affairs between the parties at the time it was created, as Brian understood them to be.

Fourth, it is not possible to construe the language used by Brian in the Report to mean Glynis’ interest was confined to one third in the purchase price of the Armidale Property. The reference in paragraph 9 to the purchase price of the Armidale Property is obviously in the context of Capital Gains Tax which would only be “(split three ways)” because each had a one third interest in the underlying asset itself. Furthermore, even if the Report did acknowledge Glynis’ interest as being one third in the purchase price of the Armidale Property, this would still be at odds with the assertions Brian has subsequently made, namely that Glynis has no interest in the Armidale Property of any kind at all.

Similarly to the 2005 correspondence referred to in paragraphs [271] to [284] above, the Financial Position Report was created prior to the commencement of the litigation or any hint of a dispute between the parties. It positively asserts the absence of any dispute. Therefore, it is far more likely to present an unbiased and reliable record of Brian’s understanding at the time. Furthermore, it was not a document that appears to have been created in response to any letter or demand by Glynis or anyone else. The Court finds that the Report relevantly says what it means and means what it says: that Brian’s understanding was that Glynis had a one third interest in the Armidale Property.

Two other observations should be made. First, there is no reference to an agreement of any kind that unanimous agreement for sale of the Armidale Property was required. Second, Brian’s convoluted attempts to explain away the Report again count decisively against him in terms of the Court’s assessment of his overall credit

The present dispute had its genesis in an email sent from Glynis to Jill and Brian on 3 January 2015. This sparked a series of correspondence between the parties.

For convenience, I set out that email chain again, beginning with Glynis’ email of 3 January 2015.

On 9 January 2015, Brian replied to Glynis’ email (emphasis added):

Glynis responded on 14 January 2015 (emphasis added):

The Chetwynds responded to Glynis on 16 January 2015 (emphases added):

As will be apparent from the passages which I have emphasised, on at least two occasions in this correspondence the Chetwynds explicitly state that Glynis has a one third beneficial interest in the Armidale Property:

The Chetwynds’ initial reply to Glynis came six days after her email, allowing ample time to provide a thoughtful and considered response, and states in terms “we have considered your email”. Similarly, their reply on 16 January was two days after Glynis’ reply, suggesting the reply was not caught up on the “heat of the moment.” Therefore, the acknowledgments contained in their emails of Glynis’ interest in the Armidale Property would not have been innocent mistakes, but are clearly deliberate remarks which reflected the Chetwynds’ understanding of the interest Glynis held in the Armidale Property.

Brian tried to explain why he represented Glynis to be a one third beneficial owner in the Armidale Property, despite his oft stated position in his evidence that she had no interest in the Armidale Property at all. The Chetwynds’ submissions can be summarised as follows:

The Court does not accept either of these explanations put forward by Brian.

At the time of the 2017 hearing, Brian had sworn four affidavits. In those affidavits, he expressly addressed the email chain above and attempted to explain what he meant. At no point did Brian express any sense of urgency or a need to appease Glynis. When cross-examined on this point, Brian conceded that in his affidavits, there was “absolutely no reference there to any strategy of appeasing Ms Rose” (T185:3).

Moreover, given the lengthy personal history between the parties, it is highly unlikely that Glynis would sell the Armidale Property without giving the Chetwynds ample time to organise their affairs, and would ensure that they were not left “out in the cold” (T166:19). The initial email was sent in January 2015, and Glynis clearly states she was hoping “to resolve these issues before the end of 2015”, giving the parties twelve months to resolve their financial affairs.

The initial email sent by Glynis is not demanding or unreasonable; rather it is friendly and cooperative. Glynis states how she “want[s] to work together with you both to resolve these issues” and suggests “a telephone link to discuss the situation once I have established the initial contact.” This email, against the backdrop of over thirty years of friendship, in which they were “practically family”, does not suggest Glynis would immediately sell the Armidale Property as the legal owner.

The Chetwynds sought to suggest an aggressive tone was present in Glynis’ initial email due to her requesting “the property must be sold and finances sorted” and this must be done “sooner [rather] than later”. They submitted it were these quotes which suggested Glynis needed to be appeased. The Court does not accept this.

Glynis justified her need to resolve the matter over a time frame of a year, namely she was hoping to retire. This implies an intention to receive the pension which would be adversely impacted if the Armidale Property (which was not her home) was in her name. Consequently, it does not appear that Glynis needed to be appeased because she wanted to work with the Chetwynds to resolve any issues. The likelihood of this is increased when considering again that this correspondence is occurring against the background of over thirty years of friendship. In making these observations, I have not overlooked that in her second email Glynis brought forward the timetable for resolution, but that does not seem to me unreasonable in the light of Brian’s response. Further, even in her second letter there is no hint that she might seek to sell the Armidale Property peremptorily.

Brian’s second explanation was that his words “one third beneficial owners of the Property” should be construed to mean a one third interest in the purchase price of the Armidale Property. This was the evidence he gave in his affidavits.

The above is inconsistent with other evidence given by Brian that it was his firm belief that Glynis had no interest of any kind in the Armidale Property. Given Brian’s adamant belief that Glynis did not have any interest at all in the Armidale Property, it is highly improbable, if not inconceivable, that he would have sent an email expressing a belief he did not have.

The much more plausible explanation, and what the Court finds, is that the words he used in the two emails that I have set out in paragraph [302] above demonstrate that the Chetwynds knew and understood that the Armidale Property was subject to the three way split agreement.

I shall return below to the fact that Brian is at pains in his emails to repeat several times that there was an “agreement” that the Armidale Property could only be sold by unanimous consent.

Following the email correspondence outlined above, the Chetwynds instructed their solicitors, Mills Oakley, to lodge a caveat over the Armidale Property. Pursuant to Schedule 1 particularising the ‘Estate or Interest Claimed’, the caveat recorded the Chetwynds interest in the property as “equitable interest as beneficiary under a trust” by virtue of these facts:

The interest claimed in the caveat was verified by a statutory declaration signed by the Chetwynd’s solicitor, Ms Ng, which included a statement that to the best of her “knowledge, information and belief the caveator [the Chetwynds] has a good and valid claim to the estate or interest as set out in Schedule 1”.

Brian’s evidence was that that he had instructed his solicitors that the Armidale Property was held exclusively on trust for both himself and Jill, and that Glynis had no equitable interest in the Armidale Property. However, as will be apparent, this was not reflected in the description of the interest asserted in the caveat.

When pressed as to why there was a discrepancy and what instructions he said he provided to his solicitors, again Brian could not provide a satisfactory explanation. Brian attempted to rationalise this inconsistency by suggesting that his solicitors misunderstood his instructions. Brian described his meetings with his solicitors having “a tremendous amount of discussion about one third interests in Neutral Bay, one third interests in companies … I think it was a very convoluted conversation” (T199.15-21).

Furthermore, the Chetwynds sought to explain the discrepancy by reference to the fact that Brian had just come out of hospital for a heart related illness, and they were under a great deal of stress. Consequently, there may have been a misunderstanding with how they expressed their interest in Armidale Property.

While I accept that this would have been a stressful time for the Chetwynds, least of all because of Brian’s health issues, the position which the Chetwynds have strenuously and consistently put to this Court is that they are the sole beneficial owners of the Armidale Property. Given this has been the central issue in this case, I readily infer based on my own knowledge and experience of the practice of lawyers advising in relation to caveatable interests that this issue would have been thoroughly explored by the Chetwynds’ lawyers. The Court is also entitled to assume that a solicitor would understand the consequences of an inadequately described interest and the possibility of compensation being sought for an improperly lodged caveat. The fact that Ms Ng had to give the statutory declaration as to the validity of the interest claimed fortifies me in the conclusion that she would have taken care to ensure that the caveat reflected her instructions. For these reasons the Court rejects Brian’s explanations and finds that the interest described in the caveat is in accordance with the instructions Brian provided to Mills Oakley and reflected Brian’s understanding of how the Armidale Property was held.

Alternatively, Brian’s affidavit evidence sought to explain the inconsistency by asserting Glynis’ “one third interest” was a one third interest in the purchase price of the Armidale Property. During cross-examination, however, Brian did not engage with this explanation at all and in fact contradicted his own affidavit evidence.

Brian suggested that it was not the case that “at the time the caveat was lodged, [he] intended the caveat to record Ms Rose had a one third interest in the original purchase price of the Property” (T234:11-14). Brian was unable to explain the inconsistency between his affidavit evidence and the evidence he gave in cross-examination.

This alternate explanation is at odds with other evidence the Chetwynds submitted, namely that Glynis did not have any interest in the Armidale Property of any kind at all. Furthermore, just as Brian was able to draw the distinction in his evidence between an interest in the property and in the purchase price, I am well satisfied that if it was the case that Brian’s belief was Glynis’ interest was confined to the purchase price, he would have given those instructions to Ms Ng. For the same reasons as are set out in paragraph [320] above, the Court rejects Brian’s alternative explanation.

A letter was tendered relating to Brian applying to Centrelink for the age pension. The letter was sent on 22 March 2010 and explicitly acknowledges that the Chetwynds made no payments for the purchase of the Armidale Property. This letter included:

While Brian did not recall preparing the letter, the pension number listed on the letter was his pension number. Brian also could not recall any other individual who would have drafted the letter on his behalf.

The evidence of Mr Herd, the accountant to the parties, has also been a matter on which the Court has relied in determining for whom the Armidale Property is held in trust. Mr Herd consistently gave evidence that he “had always understood that [the parties] each had a third equal interest” in the Armidale Property.

Being the accountant to the parties, the Court accepts that Mr Herd was highly familiar with their financial situation and that of Wincot. Mr Herd devised and oversaw the implementation of the round robin cheque system for the Chetwynds to pay rent on the Armidale Property. This system was in accordance with his belief that all three had a beneficial interest in the Armidale Property.

Furthermore, Mr Herd provided evidence which directly contradicted the evidence of Brian. He did not recall any conversation in which Brian informed him that Glynis held the Armidale Property on trust exclusively for the Chetwynds. Given Mr Herd’s understanding that the Armidale Property was subject to the three way split agreement, it is likely he would recall a conversation which was entirely inconsistent with that understanding. As such, the Court accepts his evidence that there was no conversation where Brian informed Mr Herd that he (Brian) and Jill were the sole beneficial owners of the Armidale Property.

Additionally, Mr Herd has no interest in the Armidale Property, or in the outcome of the dispute between Glynis and the Chetwynds. As such, in accordance with the credit findings relating to Mr Herd in paragraphs [185] to [193] above and Brian in paragraphs [164] to [175] above, the Court places considerable weight on the evidence he provided. The evidence of Mr Herd is consistent with all of the documentary evidence to which I have referred in the preceding sections of these reasons, and has fortified me in the conclusion that Glynis was a beneficiary under the trust for the Armidale Property in accordance with the three way split agreement.

For the following reasons the Court rejects the case brought on this point by the Chetwynds. The Court is well satisfied on the balance of probabilities, and finds that Glynis holds the Armidale Property on trust for Brian, Jill and herself in equal shares.

The relationship between the Chetwynds and Glynis was one of great trust in relation to both their business and personal affairs. Those affairs had become completely intertwined over the course of many years. The high level of trust is the most plausible explanation for their failure to record any of their arrangements in writing, at least at the beginning. Insofar as those arrangements later were directed to offering the Chetwynds protection against creditors, it may be (but it is not necessary for the Court to make any finding) that Brian saw an advantage in having no formal record.

While all parties acknowledge the existence of the three way split agreement, it is the scope of the agreement which is contested and whether it extended to include the Armidale Property. As a result, the Court has been left with two very different stories in relation to the nature of the ownership of the Armidale Property and the respective interests that the parties hold.

Consequently, in determining the scope of the three way agreement, the Court has heavily relied upon the documents considered in paragraphs [271] to [325] above, especially those that pre-date any dispute between the parties. The accumulation of evidence, and particularly the express acknowledgments made by the Chetwynds of Glynis’ interest in the Armidale Property in those documents, clearly point to Glynis having an equal beneficial interest in the Armidale Property with the Chetwynds. As such, the Court finds that Glynis did not hold the Armidale Property on trust exclusively for the Chetwynds.

While each document individually is compelling in the acknowledgments they make of Glynis’ interest in the Armidale Property, when viewed collectively this fact becomes very difficult, if not impossible, to deny.

This conclusion is fortified when considering that Mr Herd, the architect for the financial arrangements between the parties, also agreed the framework he set up was established in the belief that all three parties had a beneficial interest in the Armidale Property. While Mr Herd’s evidence in isolation could potentially be challenged by another expert (which it was not), when seen together with the evidence outlined in paragraphs [271] to [325] above it is clear that everyone understood Glynis to be a beneficiary of the Armidale Property.

Additionally, Glynis’ interest in the Armidale Property is more than just that of the purchase price. Instead, Glynis’ interest extends to a one third interest in the Armidale Property and, subject to the usual deductions and any applicable set-offs, any proceeds of sale of that property. While Brian conceded to numerous express references to Glynis’ interest in the Armidale Property, he sought to characterise this interest as being merely in the purchase price. For reasons already given, the Court does not accept this argument.

Brian consistently asserted that he did not believe Glynis had any interest in the Armidale Property and that the Armidale Property was held exclusively on trust for the Chetwynds. His affidavit evidence relied upon an express oral trust whereby Brian and Jill were the sole beneficiaries to the Armidale Property. As such, any attempt to suggest there was any interest in the Armidale Property, whether that is in the purchase price or otherwise, would be inconsistent with Brian’s earlier evidence.

Consequently, the Court does not accept the Chetwynds’ argument that should the Court find Glynis does have an interest in the Armidale Property, that interest was only in the purchase price of the Armidale Property.

Four additional matters support the Court’s finding in this regard.

First, the position contended for by the Chetwynds seems implausible when compared to the rest of their undisputed dealings with Glynis. The three way split agreement, which all parties acknowledge existed and was agreed to by all parties, was a simple agreement: irrespective of legal ownership, the parties shared equally in the assets and were equally responsible for the liabilities. The simplicity of such a longstanding arrangement makes it highly unlikely that in relation to one asset, the Armidale Property, the parties departed from that to enter into such a detailed and complex agreement, as was contended for by Brian in paragraph [267] above. Brian’s uncorroborated recollection is the only evidence for the existence of such an agreement. Given the view I have taken of Brian’s credit (see paragraphs [164] to [175] above), that evidence of his is rejected.

Second, and allied to the first point, given the informal nature of the three way split agreement, it is implausible that if the parties had decided to enter into a separate agreement with numerous and intricate terms in relation to the Armidale Property, they would not have sought to record it in writing.

Third, while not in and of itself dispositive, the Court accepts Glynis’ submission that it is unlikely she would have agreed to what Brian said she had agreed to because it would have been seriously unfair to her:

Given how unfair this agreement would have been for Glynis, the close personal relationship between the parties at the time the Armidale Property was purchased, and Glynis’ presentation in the witness box as an intelligent and rational person, I am satisfied that it is highly unlikely Glynis would have agreed to such an arrangement whereby she had no interest and received no benefit from the Armidale Property, but potentially had all the liability.

Fourth, the Chetwynds candidly acknowledged that an important purpose of their arrangements with Glynis in relation to the Armidale Property was to protect them from potential claims by old creditors. That purpose would not have been achieved if Glynis simply held the property on trust for the Chetwynds alone. To the extent it is any protection at all, the point of such arrangements is to have a third party holding a significant beneficial interest in a property which would otherwise be available to creditors or a trustee in bankruptcy.

The Chetwynd’s primary contention in the 2018 hearing was that Glynis held the Armidale Property on trust for Wincot exclusively. The crux of this assertion was that Wincot provided both the initial funds for the purchase price of the Armidale Property and also all of the repayments of the vendor finance. These facts were not disputed by Glynis. As such, it was asserted that Wincot was the sole beneficiary of the Armidale Property due to a resulting trust.

However, merely paying for the funds in relation to the purchase price does not automatically mean that Glynis held the Armidale Property on trust for Wincot. While a resulting trust may lead to Wincot having a beneficial interest in the Armidale Property, this interest can be rebutted. The Court accepts Glynis’ submission that, for the following reasons, any such presumption has been clearly rebutted in this case.

In Napier v Public Trustee (1980) 32 ALR 153 at 158 it was noted that,

Additionally, in Vendervell v Inland Revenue Commissioners [1967] 2 AC 291 at 313, the Court described the presumption of a resulting trust as,

Therefore the onus was on Glynis to satisfy the Court as to why a resulting trust did not arise.

Glynis submitted that there were three distinct reasons that a resulting trust did not arise:

Additionally, any argument in relation to the Armidale Property being held exclusively for Wincot is entirely contradictory to the main argument advanced by the Chetwynds in the 2017 hearing. In the 2017 hearing, it was acknowledged by Brian, Jill and Glynis that the Armidale Property had been subject to an agreement, however the nature of that agreement was in contention. At no point was there any suggestion that Wincot was a beneficiary pursuant to the agreement.

For these reasons, the Court finds that any presumption of a resulting trust that may arise in favour of Wincot is clearly rebutted. Therefore, the Court does not accept that Glynis holds the Armidale Property exclusively on trust for Wincot.

It is convenient at this point to consider Glynis’ amended cross-claim.

Should the Court find that Glynis does have a beneficial interest in the Armidale Property, Glynis seeks the appointment of trustees for sale of the Armidale Property pursuant to section 66G of the CA, pursuant to her cross-claim. The parties did not dispute that while an order under s 66G of the CA is discretionary, as noted by White J (as his Honour then was) in Tory v Tory [2007] NSWSC 1078 at [42], it is granted “almost as of right” unless on settled principles it would be inequitable to allow the application.

One of the settled principles is if the parties have made some contrary agreement. It is therefore necessary at this point to deal with the Chetwynds’ contention that part of their arrangement with Glynis was that the Armidale Property could only be sold if all agreed. As I observed in paragraph [268] above, the only evidence for such a term was in the uncorroborated evidence of Brian, which I have rejected for the reasons set out in paragraphs [164] to [175] above.

However, in support of that conclusion, the Court has also taken into account Glynis’ response to Brian’s assertion of such an agreement in his email of 9 January 2015 (see paragraph [299] above). Her reply on 14 January 2015 (see paragraph [300] above) included “if this was our agreement (and I must admit I don’t recall it), this would disadvantage my position”. I accept that as an honest reflection of her state of recollection at the time. That remained her consistent position during the hearing. Her lack of recollection of something which she rightly identified as being disadvantageous to her is, in the circumstances of this case and given the view I have formed of her reliability as a witness, a matter which I have taken into account in inferring there was in fact no such agreement.

In my view, it is clear that the Chetwynds have sought to elevate what had been the historical practice between the parties into an express agreement. Their longstanding arrangement had obviously operated on deep trust which enabled them to agree, or acquiesce in, how things were to be done from time to time. However, that is not the same thing as an express agreement of the kind Brian sought to persuade the Court existed. His repeated assertions of such an agreement in the January 2015 email exchanges is, in my view, a case of protesting too much. The Chetwynds have failed to satisfy the Court that there was any agreement in relation to the Armidale Property to the effect that unanimous consent was required, with the result that it could not be sold without their consent.

In reaching this conclusion I have not overlooked Brian’s argument that this was the Chetwynds’ family home and they would not have agreed to a situation where it could be “sold out from under them”. If the holding of the Armidale Property was the only point of relationship between the parties, that argument might have some force. However, it is not persuasive when the arrangements in relation to the Armidale Property are understood, as the Court has found them to be, as part of the longstanding three way split agreement that governed the entirety of the parties’ personal and professional relationship.

In the absence of any contrary agreement, there are no factors which would suggest the usual remedy of ordering the sale of the Armidale Property should not be applied. Unless the parties are able to agree otherwise within a short period after delivery of these reasons, the Court will make orders for the sale of the Armidale Property. The issue in this case is then to determine the appropriate scope of adjustments that might be made to the parties’ interests upon the distribution of the proceeds of sale.

Glynis originally made a claim for two separate adjustments in any distribution of the proceeds of sale of the Armidale Property.

The first was an adjustment for $80,232 in respect of disproportionate contributions said to have been made by Glynis to facilitate the purchase of the Armidale Property.

The second was a claim in relation to disproportionate contributions said to have been made by Glynis for the vendor finance repayments for the Armidale Property. This was noted in Glynis’ cross-claim as being for $96,482 but the calculation ultimately pressed in the submissions, and which the Court accepts, was for $100,679.04.

In her final written submissions of 11 August 2017 for the 2017 hearing, Glynis expressly acknowledged that she no longer pressed her claim for the disproportionate funds used to purchase the Armidale Property.

The claim for the adjustment in respect of the vendor finance payments is still pressed. The vendor finance, of $110,000, was repayable over 7 years at 9.5%, with 84 repayments of $1,797.84.

The practice for repaying the vendor finance was set out in Mr Herd’s affidavit of 4 December 2015. He set out the arrangement as follows:

This effectively meant the payment was made by Wincot and was subsequently debited against Glynis’ loan account.

This practice was not contested by the Chetwynds. While Wincot made the repayment, the payment was entirely debited against Glynis’ loan account. This meant Glynis incurred the liability to Wincot for the payment.

Glynis submitted she was entitled to recover two thirds of the amount paid from the Chetwynds on two alternative bases:

The claim for $100,679.04 is calculated as follows:

The key authority on which Glynis relied for the making of adjustments is Re Fettell (1952) 52 SR (NSW) 221 (“Re Fettell”). McLelland J (as his Honour then was) at 225-228 held (emphases added),

There have subsequently been two interpretations of the requirement that adjustable claims must be “directly concerned with the position of the parties as co-owners”.

The first approach is broader and is to the effect that the Court can make adjustments to statutory trusts in respect of personal or proprietary claims pressed in a party’s capacity as co-owner of the land (see Chamberlain (t/as capacity as liquidator of Gerard Cassegrain and Co Pty Ltd (in liq)) v Cassegrain [2015] NSWSC 1838 [62-64]; Whitehead v Whitehead [2002] NSWSC 486 [221] (“Whitehead”) and Forgeard v Shanahan (1994) 35 NSWLR 206).

The second interpretation is narrower and is restricted to claims which are purely proprietary in nature (see Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839; (2008) 14 BPR 149 (“Arrow Custodians”)).

Glynis contends for the broader interpretation to be adopted for four reasons:

The Chetwynds made no submissions on this point and, in those circumstances, I am reluctant to come to any definitive view in the absence of contrary legal argument. While I strongly incline to the view that the broader construction is to be preferred, it is in any event not necessary for me to decide the question. This is because I have no doubt that, without purporting to alter the statutory trust for sale, the Court can direct the trustees for sale to make adjustments as part of the general working out of the Court’s orders and pursuant to the Court’s power under s 63 of the Supreme Court Act, 1970 (NSW) to “grant all such remedies” so that “all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided”.

The Court is satisfied that on either of the bases she has identified, Glynis is entitled to an adjustment in her favour in the amount of $100,679.04.

Brian and Jill have made numerous monetary claims against Glynis. These claims were made in the 2017 hearing. They are:

Furthermore, should the Court find that the Armidale Property is held for three beneficiaries, then the following monetary claims were also pressed by the Chetwynds against Glynis:

Similarly, following the reopening of the case in 2018, Wincot has made numerous monetary claims against Glynis. In most instances, these claims were identical to the claims outlined in the preceding paragraphs, and are made in the alternative that the Chetwynds are unsuccessful in making the claim personally. They are as follows:

The Chetwynds claim $43,872.67 against Glynis in relation to rent that she received from the Neutral Bay Property. This is calculated as being two thirds of the rent Glynis received for the Neutral Bay Property during the time it was tenanted. It was submitted that as the Neutral Bay Property was subject to the three way split agreement, both Brian and Jill were entitled to the rent which Glynis received from the Neutral Bay Property.

The Chetwynds submitted that Glynis had a Metway bank account which all rental proceeds were paid into. Moreover, it was submitted that Glynis had “concealed” this account from the Chetwynds to ensure none of this rental money was paid to Wincot or to the Chetwynds, and she would be the sole beneficiary of the rental money. This submission was made in accordance with their other submissions (which the Court has rejected) which suggested Glynis was manipulative and deceptive.

The Court does not accept that all rental payments were paid in the Metway account or that Wincot did not receive any payments for the reasons outlined at paragraph [391] below.

In making the assertion that Glynis had a secret Metway bank account, Brian relied upon a bank statement which recorded a deposit of $805 on 23 October 1997 from “Linway.” Linway was the agent of the Neutral Bay Property.

The bank statement which Brian relied upon also listed other deposits into the Metway account which did not relate to rental payments from the Neutral Bay Property. It was submitted that the Neutral Bay Property rental payments were all paid into the Metway account, and none of those funds were paid to Wincot.

The Court does not accept Brian’s characterisation of the Metway account as being a secret account set up by Glynis purely for the purposes of concealing funds from Wincot and the Chetwynds.

While Glynis accepted that she had a Metway bank account, and noted the $17,193 closing balance in the account, she does not have any recollection of what happened to the closing balance of the account.

Given these payments were made over 20 years ago, Glynis’ failure to recall the precise details of the money within the Metway bank account is unsurprising. Her inability to recall those details does not reflect poorly on her, and the Court makes no adverse finding against for the reasons outlined in paragraphs [176] to [184] above.

Glynis rejected the argument that she did not pay any money to Wincot in relation to rent for the Neutral Bay Property. While she acknowledged that she did receive rent and was liable to split any income she received three ways with the Chetwynds, she submitted that once the Court took into consideration the payment of expenses for the Armidale Property and the interest charges which had accrued as a result of the Citibank line of credit, there is no liability to account to the Chetwynds.

Glynis presented evidence to the Court that the “surplus” of rent from 1991 until October 2019 was approximately $164,623. Surplus was used to mean any money left over after the payment of expenses for the Neutral Bay Property. The bank statements which were in evidence clearly showed Glynis receiving the rental payments on a monthly basis, and then making a payment of roughly the same amount as the rental payment for the Citibank mortgage. In some instances, the payment made to Citibank exceeded the amount received for the rent of the Neutral Bay Property.

In the same period, evidence was presented to assert that $183,412.82 was paid to Citibank as the total monthly repayments for interest. This exceeds the surplus of $164,623. As such, it was put that there was no surplus once the Citibank interest was taken into account. The Court accepts this submission.

This finding is supported by the little evidence that was before the Court. That evidence is:

Moreover, Glynis had no recollection of an agreement between the parties in relation to the rental payments received from the Neutral Bay Property and the evidence she did provide only covered the period of 2005 to 2010. The evidence Glynis gave for this period was that she would arrange to have all the council, water and strata rates and levies to be paid from her Commonwealth Bank account, and then the amount of the Citibank balance per month was transferred into Wincot’s account.

While the evidence provided by Glynis only covered between 2005 and 2010, the Court accepts the practices that she described could be dated back to 1991 when the Neutral Bay Property was first rented out. The Court has reached this conclusion for four reasons:

Therefore, the Court finds that Glynis is not liable to the Chetwynds for any rent she received for the Neutral Bay Property, as the rent was used to pay the Citibank line of credit, which paid for the Armidale Property of which the Chetwynds were also beneficiaries.

The Chetwynds seek a declaration that Glynis holds $74,082.75 on trust for them. This has been overtaken by events. Glynis never contested that this money belonged to the Chetwynds. It has been paid to them by Glynis.

The Chetwynds made a claim for interest in their final written submissions. If that claim is still pressed after they have had a chance to consider these reasons, the Court will give the parties an opportunity to make submissions on interest in relation to this claim and others.

A claim for $3,738.66 against Glynis is pressed by the Chetwynds (or, in the alternative, Wincot) in relation to the costs paid for the renovation of the Neutral Bay Property. Glynis accepted that the renovations for the property did occur, and the Chetwynds did pay for them, however does not accept the amount being claimed by the Chetwynds. It was acknowledged by both parties that the Chetwynds had been reimbursed for expenses relating to the renovation, however to what extent was unclear.

Brian’s affidavit evidence was:

The Court was presented with very little evidence of the quantum of funds spent on the renovations of the Neutral Bay Property. The only evidence the Court had was a document prepared by Brian, which was created approximately one year before the trial.

The renovations occurred in 2000, meaning the document prepared by Brian was created well over ten years after the renovations had occurred. Consequently, the Court is not in a position to give this evidence dispositive weight.

Given this lack of evidence, the Court is not in a position to determine the quantum of costs in relation to the renovations. As such, the Court is not satisfied that Glynis owes the Chetwynds (or Wincot) $3,738.66 for those costs.

I am fortified in reaching this conclusion for three other reasons:

The Chetwynds have made a claim for $5,473 against Glynis for monies being owed by Glynis for the Chetwynds assisting her with her living expenses.

No evidence was presented to the Court to substantiate this claim. The claim is therefore not made out either as advanced by the Chetwynds or by Wincot.

A claim is made by the Chetwynds (or, in the alternative, Wincot) of $8,039, being one third of the rental costs paid by the Chetwynds (or Wincot) for a storage shed in Armidale.

In 2005 the Armidale shop ceased trading. When the shop stopped trading, the parties again agreed to share any liabilities in one third proportions. One of these liabilities included the storage shed.

In making this claim, Brian relied upon a conversation with Glynis in which he asserted that she agreed to pay one third of the rent for the storage shed personally. Glynis did not recall this conversation.

There was no independent evidence to corroborate this conversation. In accordance with the credit findings relating to Brian made above in paragraphs [164] to [175], the Court does not accept his evidence and recollection of events, as it is not supported by any other evidence.

Glynis submitted that the agreement between the parties as to the liabilities of the Armidale store should be construed to mean that each of the directors would only pay for the liabilities of the store should Wincot not be able to pay for those fees. Alternatively, the directors would also be personally liable if one party personally paid for the liabilities of the store and Wincot could not reimburse them.

The Court notes that in the Chetwynds’ own written submissions, it is conceded that “the disbursement of the rent for the storage shed was made each month by Wincot and this is not disputed.” This concession is contradictory to oral evidence given by Brian where he suggested he personally paid for the storage shed. As such, the Court finds that it was Wincot who paid for the storage shed, not the Chetwynds personally. That is also the position recorded in section 7 of the Report (see paragraph [285] above) that “the company rents a storage shed for $381 p.c.m.”.

As it was Wincot who paid for the rent of the storage shed, the Court accepts Glynis’ submissions above as to how the liability should be treated. As there is no suggestion that Wincot was not in a position to pay for the storage shed, there is no liability to be split three ways, meaning Glynis is not liable to the Chetwynds for the storage shed. Nor have the Chetwynds demonstrated any basis on which she would be liable to Wincot for that amount.

A claim for $12,942.34 has been made against Glynis and is pleaded as being one third of the rental and hire purchase costs paid by the Chetwynds for the Xerox machine.

This claim falls within the agreement outlined in paragraph [409] above, regarding splitting any liabilities three ways between the directors.

Brian contended that a conversation was had with Glynis, whereby he would pay off the Xerox machine, however he would need to be paid for such work. Glynis did not recall this conversation. The Court rejects Brian’s evidence as uncorroborated from any other source.

Evidence was put to the Court which showed that it was Wincot who directly paid for the Xerox machine. That is also consistent with the position recorded in section 7 of the Report (see paragraph [285] above) to the effect that the company retained the Xerox machine. There was no evidence put to the contrary to suggest that Brian personally paid for the Xerox machine.

As it was Wincot who paid for the Xerox machine, the Court finds that Glynis is not liable for any charges associated with the machine.

The Chetwynds have asserted that Glynis owes them $47,093, being two thirds of the alleged rent which Glynis received in relation to the Armidale Property.

It is uncontested that the Chetwynds paid rent on the Armidale Property through a series of cheques usually drawn from Wincot. This practice of the parties in relation to making rental payments for the Armidale Property and the round robin of cheques is detailed above in paragraph [234] above. This arrangement ultimately resulted in the cheques being paid back into the accounts of Wincot. The quantum of $47,093.33 is also accepted to be two thirds of the rent which Glynis received between 1991 and 2001.

While this rental claim is poorly particularised, it appears to suggest that Glynis received rent from the Chetwynds in her capacity as trustee, rather than as landlord and as such, Glynis is accountable to the beneficiaries of the trust for the rent she received.

The Court does not accept this submission. The Court accepts Glynis’ submission that the rent the Chetwynds paid to Glynis was paid to her in her capacity as landlord of the Armidale Property, rather than as trustee. The rent enabled the Chetwynds to reside at the Armidale Property to the exclusion of all others. As such, they have no claim to the rent they paid Glynis.

The Chetwynds have presented no evidence to the Court to enable a finding to the contrary, and in the absence of that evidence, the Court cannot make a finding that Glynis held the rent she received on trust for the Chetwynds.

Between 2001 until 2005, Brian transferred $55,000 from the personal accounts of the Chetwynds to Wincot. This was done for the purposes of reducing the Citibank line of credit interest costs. This fact is agreed and is also discussed above in paragraphs [228] and following above.

The Chetwynds submitted that the “$55,000 should have been recorded as a credit in the BCJ [joint Chetwynd account] loan account with Wincot, thus making it a resource that BCJ had available.” This would result in the $55,000 being a payment from the Chetwynds to Wincot. The Court finds this was not the case.

There are no records of this payment being made in the Wincot accounts, and similarly, there was no credit made in the Chetwynds’ loan account for the payment. It is unclear why the payment is not recorded in the Wincot accounts, and without being critical of anyone, Glynis was unable to articulate why it was not recorded there.

Despite this payment not being recorded, it is accepted that Brian paid $55,000 to Wincot.

Brian has submitted that he is yet to be reimbursed for the money he paid to Wincot. Glynis refutes this submission and has instead asserted that at least $50,000 had been repaid to Brian.

Glynis kept a file relating to the Neutral Bay Property. In this file, she had a handwritten working note which was used for the purposes of making adjustments following the sale of the Neutral Bay Property. This note read:

Glynis submitted that this note suggested that a credit was made in Brian’s favour of $44,000, being $24,000 for superannuation and $20,000 for his mayoral income. The additional notation in parenthesis suggests a $50,000 payment was made from Brian, and in 2004/2005 a $30,000 repayment was made. The outstanding amount owing was paid when the Neutral Bay Property was sold.

While Glynis does not expressly recall any withdrawal in 2004/2005, the Court accepts that such a withdrawal occurred in accordance with the note she prepared. According to the note, the withdrawal occurred over ten years ago, and as such it is unsurprising that Glynis does not recall the details of the transaction.

Glynis also relied upon an email she sent to the Chetwynds on 22 October 2010. It reads as follows:

The “off BC there is $3000” refers to Glynis making a payment of $3,000 to Wincot. This was done to off-set her own personal contributions to Wincot. Consequently, rather than Brian receiving $44,000, he received $41,000, to reflect Glynis’ payment to Wincot. This resulted in $41,000 being adjusted in Brian’s favour.

The final distributions made following the sale of the Neutral Bay Property were:

Glynis’ distribution is exactly $41,000 less than Brian’s.

In contrast, Brian also tendered a handwritten working document of adjustments following the sale of the Neutral Bay Property into evidence. Brian’s working sheet that notes the adjustments made in his favour following the sale of the Neutral Bay Property recorded $44,000 being adjusted in his favour, however he recorded the $44,000 as being only for “BC Super”, and not constituting any repayment for sums advanced to Wincot.

The Court does not accept Brian’s evidence that the $44,000 that was paid to him consisted only of superannuation. There is no evidence to suggest that Brian made a $44,000 payment in superannuation to Wincot.

Additionally, as set out in the next paragraph, the Report prepared by Brian listed the amount of superannuation being owed to him as $25,000. This supports Glynis’ submission, that the amount of superannuation owing to Brian was $24,000. Consequently, the Court does not accept Brian’s evidence that the $44,000 adjustment from the Neutral Bay proceeds was in relation to superannuation.

The Report (see paragraph [285] above) lists the liabilities as at the date it was created. One of the liabilities listed in the Report is,

This Report is important for two reasons. First, it provides evidence as to how much superannuation was owing to Brian. Second, it supports the notion that the money owing to Brian has been reimbursed.

The Report does not mention the $55,000 owing to Brian for contributions made via his mayoral salary. Consequently, the inference which the Court draws is that the outstanding money as listed in the Report is the payment made by Brian out of his mayoral income.

Brian attempted to rectify the apparent omission in the Report of the $55,000 as an error, namely that he forgot to include this in the Report, however the Court does not accept this. As Brian accepted, this report was a “careful, detailed description of the status of the parties’ financial interests” (T158:49).

The Report detailed a series of complex financial arrangements between the parties, and it is unlikely that a $55,000 payment was merely “forgotten” from being included. Consequently, the Court is satisfied on the balance of probabilities that the $50,000 listed in the Report is referring to Brian’s mayoral income and the payment he made in favour of Wincot.

There is not enough evidence before the Court to determine how much Brian paid into Wincot to reduce the Citibank line of credit. However it appears both parties accept $55,000 was paid. As such, the Court finds that $50,000 of the $55,000 has been reimbursed to Brian, in accordance with the financial documents which Glynis had prepared following the settling of the proceeds of sale of the Neutral Bay Property.

The Court has made this conclusion for six reasons:

While only $50,000 of the $55,000 has been repaid to Brian, it is incorrect to suggest that Glynis is personally responsible for any outstanding amounts. Brian consistently made the submission that the $55,000 “should have been recorded as a credit in the BCJ loan account with Wincot”. As such, any outstanding amount owing to Brian is payable by Wincot, and not Glynis. Consequently, the Court finds that Glynis is not liable for the outstanding amount. This conclusion applies insofar as the claim was also pressed in the alternative by Wincot.

A claim has been brought against Glynis for $16,906.67 being “dividend monies owed to the First and Second Plaintiffs, that should have been repaid by Glynis, or applied to the payment of the Armidale Property.” Wincot pressed this claim in the alternative.

It is worth noting that while the amount claimed pursuant to paragraph [20] in the Amended Summons filed 4 April 2017 is $16.906.67, the calculations conducted by the Chetwynds in their written submissions claim relief amounting to $22,895.

Glynis owing a dividend payment to the Chetwynds is uncontested. As Mr Herd noted in his affidavit sworn 28 April 2016:

The Chetwynds calculated the amount owed to them, being $22,895, as follows:

Glynis accepts that she owed funds to the Chetwynds in relation to dividends, however quantifies the amount owing as being $15,953.

Glynis has quantified the amount owing in the following manner:

The Chetwynds rejected the proposed calculation by Glynis. They submitted that making any deduction to take into account any tax Glynis would have paid is “a farce.” This is because the dividends were franked, and as such tax has already been paid.

The Court accepts the evidence of Mr Herd when calculating the dividend owing to the Chetwynds. It is important to take into consideration the tax liabilities Glynis paid on the dividend and as such, the amount should be reduced to reflect this. I note the Chetwynds’ objection to a deduction being made in accordance with the dividend being franked, however I do not accept this submission.

No evidence was put to the Court to prefer the figure in the Wincot accounts over the amount declared in Glynis’ tax records, or vice versa. The Chetwynds presented no argument to the Court to accept the higher figure, except that Mr Herd and Glynis were responsible for the bookkeeping and therefore Glynis should have the burden of justifying which figure should be accepted as being the dividend payment. Therefore when determining which figure to adopt as being the value of the dividend, the Court sees no basis to “split the difference” between the two.

The Court accepts the figure outlined in the Wincot accounts to be the correct amount declared in the dividend. The dividend was made by Wincot, and therefore the Court accepts that the figure provided in the Wincot accounts is most likely more accurate.

As such, the Court adopts the calculation conducted by Mr Herd, and finds that Glynis owes the Chetwynds $15,953 for dividend payments which were never made to them.

A claim is made that Glynis owes Wincot $65,908 in accordance with rent paid to the Neutral Bay Property. This claim is almost identical to the claim in paragraph [380] above, however with money being owed to Wincot, as opposed to the Chetwynds.

Additionally, the claim made by the Chetwynds was for $43,872.67, being two thirds of the rent Glynis received for the Armidale Property. The claim made by Wincot is for $65,908, which is all of the rent received by Glynis for the Neutral Bay Property.

At the 2017 hearing, it was an uncontested fact that the Neutral Bay Property was subject to the three way split agreement, where any proceeds or liabilities would be split in equal shares between Glynis, Brian and Jill. This practice was observed by all the parties, with Glynis using the rent to pay for the Citibank line of credit as outlined in paragraph [389] above, and the Chetwynds using their funds to help pay for renovations and other expenses associated with the Neutral Bay Property.

There was no assertion that Wincot was ever party to the agreement, or a separate agreement was entered into with Wincot which would have seen the company provided with an interest in the Neutral Bay Property.

The three way split agreement was recognised with the sale of the Neutral Bay Property, and any outstanding amounts owing to any party were made via adjustments (see paragraphs [123]-[126] above).

No evidence was presented to the Court to suggest money was owed to Wincot separately, as opposed to being owed to the Chetwynds. The three way split agreement, and therefore the trust over the Neutral Bay Property, was entered into before Wincot as a company was purchased by the Chetwynds.

There was no evidence of a contract or a trust entered into between Glynis and Wincot following the three way split agreement in relation to the Neutral Bay Property which would suggest she owed the company money for any rent she received.

What the documentation that does exist suggests is that Wincot never had an interest in the Neutral Bay Property. So much is evident through what occurred on the payment and adjustment of the proceeds of sale for the Neutral Bay Property. Both the Chetwynds and Glynis agreed that the beneficiaries of the proceeds of sale were the three individuals. Wincot did not have an interest in the Neutral Bay Property, or the rent which was received for it.

Therefore, the Court does not accept that Glynis is liable to Wincot for any rent she received relating to the Neutral Bay Property.

A claim is made by Wincot for $47,093, being two thirds of the rent received by Glynis in relation to the Armidale Property. This is in accordance with the round robin of cheques as outlined above in paragraph [234]. The additional evidence relied upon by the Chetwynds was the affidavit of Mr Kirk. I set out my overall view of the utility of Mr Kirk’s evidence in paragraphs [11] to [12] above.

Mr Kirk’s evidence was:

Mr Kirk made these observations and inferred that the Chetwynds were making rental payments for the Armidale Property back to Wincot. The Chetwynds therefore submitted that Wincot was owed the money which was paid to Glynis.

Mr Kirk reviewed numerous documents in relation to the purchase of the Armidale Property. These included the settlement information, the mortgage and guarantee documents, the contract for the sale of land, the mortgage calculation, Citibank cheque butts and statements, and Wincot statements. He concluded:

Mr Kirk’s opinion in relation to whether the Chetwynds repaid Wincot was:

Glynis submitted that Mr Kirk’s evidence as to whether the Chetwynds had repaid Wincot for the vendor finance payments was irrelevant for six reasons:

The Court accepts Glynis’ critique of Mr Kirk’s evidence. While Mr Kirk’s evidence was not objected to, it is clear that Mr Kirk’s opinion in relation to these payments is no more than speculation. Mr Kirk was not in any position to determine how the Chetwynds believed their money was being recorded. It was this remark which especially detracted from the utility of Mr Kirk’s evidence in relation to the repayments from the Chetwynds. Nor is the Court assisted in circumstances where Mr Kirk did not comment on Mr Herd’s evidence or his accounting practices in relation to Wincot. As no further evidence was put on by Glynis following the reopening of the case, Mr Herd did not respond to Mr Kirk.

Furthermore, an order was made prior to the 2018 hearing confining any new evidence to the new claims which arose out of the further amended summons filed on 4 June 2018. As such, Mr Kirk’s evidence was only to relate to Wincot having an interest in the Armidale Property, and not the Chetwynds making repayments to Wincot. Therefore, despite what was submitted by the Chetwynds as to the value of Mr Kirk’s evidence in determining whether the Chetwynds repaid Wincot, it is not relevant.

The Court accepts Mr Herd’s evidence on this matter. Mr Herd’s involvement in creating the rental payment system with the round robin of cheques and overseeing it is a highly relevant factor in the Court adopting his evidence. Additionally, his evidence was also within the scope of his expertise, was consistent with Glynis’ evidence and was supported by the objective documentary record. As such, the Court does not accept that the Chetwynds made repayments to Wincot in relation to the purchase of the Armidale Property.

Additionally, upon the reopening of the case in 2018, further affidavits were filed by Brian. Brian’s affidavit of 19 July 2018 stated:

Brian’s assertion that “with the agreement of Wincot, BJC elected to pay $780.00 per month to Wincot as a repayment for the property” is uncorroborated evidence by Brian which the Court rejects in accordance with its overall view of the reliability of his evidence (see paragraph [175] above). The Court does not accept that the Chetwynds made such repayments to Wincot. The Court finds that the accounting of the payments by Glynis was correct, and that the payments made were for rent, not repayments to Wincot for the purchase price of the Armidale Property. I have set out in paragraph [219] and following above why I do not accept that the Chetwynds repaid Wincot.

In reaching this conclusion the Court also relies on this additional reason. The argument put by the Chetwynds and Wincot is implausible. If the Court accepted their argument, it would have meant the Chetwynds repaid Wincot approximately $67,000. This is a significant amount of money and is very probative for the Chetwynds. However, no evidence of the Chetwynds making any repayments was put in an affidavit until March 2017. This meant five affidavits had already been sworn before this fact was put into evidence. When considering the procedural history of this case and the number of extensions the Chetwynds had to prepare their evidence, and given the importance of this evidence, had the Chetwynds repaid $67,000 to Wincot, it is inexplicable that this evidence was not adduced until the eve of the first trial.

Therefore, the Court does not accept that Wincot is owed $47,093 from Glynis.

For completeness, even if the Court did accept the argument put by the Chetwynds that repayments were made by them to Wincot, that would not mean Glynis was required to pay the rent back to Wincot. If the payments were repayments to Wincot, that would mean the credit entries made by Glynis were incorrect and without foundation. As such, this would not give rise to a monetary claim by Wincot against Glynis.

An additional claim is also made by Wincot for $67,760 for “amounts paid by the Third Plaintiff by the First Plaintiff and the Second Plaintiff, but diverted by the Defendant and applied to the credit of Glynis’ account, for the benefit of the Defendant.” This claim is separate to Wincot’s claim for rent to the Armidale Property.

Despite the separate pleading, this claim is essentially a restatement of the claim for rent from the Armidale Property and it is unclear how this claim differs from the claim for $47,093. No further evidence was advanced to substantiate or particularise how the $67,760 was calculated, or how it should be considered a separate claim than just rent received for the Armidale Property.

The only written submissions made by the Chetwynds in relation to this matter were as follows:

This submission was never expanded upon.

As no further evidence has been put before the Court, the Chetwynds have failed to discharge their burden of proof, and the Court does not find that Glynis owes Wincot $67,760.

A claim is made by Wincot against Glynis for $90,343.26. This claim relates to plant equipment and assets owned by Wincot. This claim was not pressed in the 2017 hearing. While not particularised, this sum appears to rest on a journal entry for $60,343 for “unappropriated profit” and a journal entry for $30,000 for “safari” equipment.

The journal entry relating to the “unappropriated profit” reads as follows,

It is the “Loans – GR” which is the subject of the claim.

Glynis addressed this payment in her affidavit sworn 31 March 2017. She stated that she did not recall making the entry, and she would only have made that entry on the instructions of either Brian or Mr Herd.

Glynis was cross-examined on this payment during the 2017 hearing, and she explicitly stated on numerous occasions she could not explain the payment, however it appeared the funds related to unappropriated profits from the Coffs Harbour business.

The Chetwynds submitted that the payment concerned Wincot buying the assets of Photax (the company previously owned by the Chetwynds prior to Wincot), which owned the store at Coffs Harbour. The assets of Photax supposedly included plant, equipment and stock, however there was no evidence before the Court to suggest this was the case.

The Chetwynds relied upon this evidence of Mr Kirk:

Additionally, the Chetwynds relied upon the reconstructed ledgers created by Brian. The reconstructed ledger included corresponding credits in the Chetwynds’ loan account.

The only reference to the ledger is Brian’s affidavit of 16 March 2017. In this affidavit, he states “I have now prepared a correcting set of ledgers for the Wincot accounts. These have been prepared from a series of journal entries which I have prepared, to reflect the true nature of the Wincot entries as they should have been at the time of the transactions.” Given the reconstructed ledgers are exactly that – reconstructions – they are of no evidentiary value in and of themselves. As there is no foundation to explain the process behind the creation of the ledger or primary evidence of the underlying transactions said to be recorded in the reconstructed ledger, the Court gives the ledger no weight.

Furthermore, in the absence of Mr Kirk’s affidavit, no other evidence was put before the Court to suggest the entry was incorrect, or that Glynis knowingly made a false entry in the journal.

Given this lack of evidence, the Court is not in a position to determine the nature of the $60,343 payment, nor determine whether that money is owed to Wincot.

The second part of this claim made by Wincot is for $30,000 in respect of “safari” equipment. This relates to a journal entry dated 30 June 1993. The entry reads as follows,

Glynis’ affidavit sworn 31 March 2017 described the payment:

When Glynis was cross-examined about this journal entry, she confirmed that she did not understand it and would only have made the entry upon the instructions of either Mr Herd or Brian. She denied that the entry was made by her knowing it to be false. I accept Glynis’ evidence in relation to her bookkeeping for this transaction. It occurred more than 20 years ago and it is unsurprising that Glynis cannot recall it.

Furthermore, Glynis’ evidence that she would have sought instruction from either Brian or Mr Herd is consistent with her evidence as to her general accounting practice, namely that she would defer to their expertise when she was unsure how to record a transaction.

Mr Kirk gave almost identical evidence in relation to this journal entry, as he did above in paragraph [490]. His evidence was

As with the previous journal entry, no evidence has been put before the Court to ascertain the nature of the transaction, or the proper accounting of it. Furthermore, there is no evidence to suggest the entries made by Glynis were made knowing they were false and misleading. Consequently, the Court cannot find that Wincot is owed $30,000 from Glynis and, in the absence of any other evidence, will not speculate as to the nature of the payments.

Therefore, the Court finds that the Chetwynds have failed to prove that Glynis owes Wincot $90,343.26 for plant and equipment funds.

A claim is made by Wincot for $253,018. This claim is based on the fact that Wincot was the source of the repayments for the vendor finance. The only submission made by the Chetwynds was in their written submissions where they stated:

No other evidence was referred to or submission put to the Court.

The Chetwynds have failed to demonstrate any legal basis for which Glynis should be liable to Wincot for the repayments the company made. No argument was put by the Chetwynds to suggest a finding could be made that Glynis was liable for these payments to Wincot. No evidence was submitted which would suggest Glynis owed funds to Wincot. Consequently, the Court finds that the Chetwynds have not made out this claim.

A claim is made by Wincot that Glynis owes the company $82,037. The claim relates to a journal entry about a Citibank account which Wincot owned, and was subsequently transferred to Glynis. The entry reads,

When cross-examined about the entry, Glynis did not recall whether she took on the liability of the account, why she made the entry and gave evidence that she did not understand it to be assigning liability to her personally, rather than with the company.

Mr Herd gave the following evidence in relation to the transfer in his affidavit sworn 31 March 2017:

Glynis submitted that Wincot suffered no prejudice from this transaction because the transaction was balance sheet neutral for Wincot, the transaction was authorised by Wincot’s accountant, and there was no additional liability or exposure generated for Wincot. Consequently, Wincot had no additional claim against Glynis.

The Chetwynds submitted that Mr Herd’s evidence was a “blatant untruth”, that “BH sounds very much like he is involved in tax fraud” and that his evidence amounted to “nothing more than a series of convoluted excuses coupled with conjecture and guesswork.”

Despite these assertions being put forward by the Chetwynds, Mr Herd was not cross-examined at any point about his accounting of this transaction, any relevant accounting standards against which his approach should be measured or any other applicable ethical guidelines.

The Court does not accept the Chetwynds’ characterisation of Mr Herd’s evidence. The evidence quoted in paragraph [507] above was from Mr Herd’s affidavit sworn 31 March 2017. This means the evidence was given well before any claim was made in relation to this payment to Glynis, and well before Wincot was a party to the proceedings.

Therefore, the Court does not accept the Chetwynds’ submission that “BH is just setting this up for a property claim by GR” or that there was an “ulterior motive” because when the evidence was given, Wincot was not a party to the proceedings.

Furthermore, given Mr Herd’s evidence was adduced in the 2017 hearing, the Chetwynds had ample opportunity to consider it and to challenge it if they wanted to. They made no such attempt to challenge it.

The Chetwynds relied upon the evidence of Mr Kirk, which was:

Mr Kirk’s evidence did not engage with the evidence of Mr Herd, and it appears Mr Kirk was not aware of the arrangement outlined in paragraph [206] above.

The Chetwynds put on no further evidence to substantiate their assertion that Glynis had knowingly acted improperly, as was consistently submitted.

Additionally, no further evidence was put before the Court to suggest the accounting by Glynis was incorrect.

In the absence of any evidence which contradicts or challenges the approach taken by Mr Herd, the Court is not satisfied that there is a basis on which Glynis owes Wincot $82,036.82.

A claim is made by Wincot for $25,360 in relation to dividend payments. This claim arises from the same circumstances as outlined in paragraphs [445] to [455] above.

This claim has not been particularised and it is unclear how this amount has been calculated. As noted above, the claim made personally by the Chetwynds against Glynis is $16.906.67 as expressed in the amended summons, while their submissions calculate the amount to be $22,895. Therefore it is unclear how the sum of $25,360 has been quantified.

No further evidence was put to the Court, and submissions in relation to this claim were very limited. As such, the Chetwynds have failed to discharge their burden of proof. The Court does not find Glynis is liable to Wincot for the dividend payments in addition to the liability she has to the Chetwynds, which I have dealt with in paragraphs [445] to [455] above.

A claim is made by Wincot for $53,740. This claim arises from the sale of the Neutral Bay Property.

It was common ground that following the sale of the Neutral Bay Property, Glynis held funds on trust for the Chetwynds.

Upon the instructions of the Chetwynds, Glynis would occasionally draw down funds from that account, and deposit the money where requested.

The funds that were drawn down in accordance with the Chetwynds’ instructions were for the sole benefit of Brian and Jill. As a result of these funds being drawn down for the Chetwynds, a credit entry should have been made in their loan account with Wincot. Glynis, however, incorrectly credited her own loan account with the funds. Glynis has accepted that she made a mistake with recording these payments. Funds were drawn down in 2011 and 2012. The total sum of these funds was $53,740.

In written submissions from the 2017 hearing, Glynis conceded “by way of summary, Glynis does not contest that this adjustment [$53,740] be made to the Chetwynds’ loan account.”

Glynis submitted further that rather than she personally being liable to Wincot for $53,740, a declaration be made that there be adjustments to the Wincot loan accounts to reflect that a credit should have been made in respect of both Brian and Jill, rather than Glynis. The Court finds that this is the appropriate course of action to remedy the situation because Glynis did not personally receive cash in that amount and the Chetwynds have not demonstrated that she has received any other actual benefit to the value of that amount that would give rise to an obligation to repay that amount.

The final set of Wincot accounts which were presented to the Court listed Glynis having a balance of $157,007. This would suggest there are sufficient funds to make the declaration. Therefore an adjustment should be made deducting $53,740, and a credit being made in favour of the Chetwynds.

A claim is made by Wincot against Glynis for $124,054 “being amounts paid to the Third Plaintiff, or owing to the Third Plaintiff, but not entered into the accounts of the Third Plaintiff by Glynis, but applied by Glynis for the sole benefit of the Defendant.” This claim has not been particularised and no evidence was led as to what the claim was made in relation to.

The written submissions of the Chetwynds merely rearticulated the claim, without providing any further details as to what it related to, or how the amount had been calculated.

Consequently, given this claim has not been particularised and no evidence has been put to explain it, yet alone substantiate it, the claim fails.

Although I have already dealt with these claims incidentally insofar as they were also made by the Chetwynds, for ease of reference I will deal with them expressly in this section of my reasons.

Claims amounting to $30,193.10 are made by Wincot against Glynis and are particularised as above in paragraph [377(3)]. These claims are virtually identical to those claims already pressed by the Chetwynds and are phrased as “in the alternative” to the Court making any finding that the $30,193.10 is owed to Brian or Jill personally.

The written submissions of the Chetwynds do not provide any further argument to suggest any substance to the claims insofar as they are made “in the alternative” by Wincot.

Additionally, following the reopening of the case, no evidence was put before the Court to differentiate these new claims as opposed to those made by the Chetwynds in the 2017 hearing. In relation to the renovations, living expenses, storage shed and Xerox machine, their written submissions state “this claim is primarily claimed by BJC (Brian and Jill Chetwynd), claimed by Wincot in the alternative.” No further submission is made.

As no evidence was presented to the Court to suggest Wincot was owed any money as particularised in paragraph [377(3)] above, the Court declines to make any such finding.

In the absence of this evidence, the Court cannot be satisfied Glynis owes any funds to Wincot as alleged.

Furthermore, a claim was made by Wincot for $55,000, being money the Chetwynds advanced to Wincot. This is detailed above in paragraphs [422] to [444], namely being the $55,000 Brian transferred to reduce the interest on the Citibank line of credit.

It is not in dispute that this payment was made. Despite the Court’s findings in paragraphs [442] to [444] above that most of these funds had already been repaid to Brian, no evidence was presented to the Court to suggest Glynis was liable to Wincot for this money. No further submission was made to justify or articulate how Glynis was liable to Wincot. As no evidence was put before the Court, there are no grounds to suggest Glynis owes $55,000 to Wincot.

Wincot seeks “a declaration that the Defendant account to the Third Plaintiff (or the Chetwynds generally) for any financial benefits she may have received in her capacity as trustee of the Armidale Property.” While this claim goes beyond the scope of the leave granted to the Chetwynds to amend the summons, Glynis has consented to this claim being pressed.

This claim is separate to Wincot’s claim in relation to any rent received by Glynis for the Armidale Property. In seeking Glynis be held to account, the Court must consider the benefit and the costs which Glynis incurred in relation to the Armidale Property.

The financial benefit Glynis received through the Armidale Property amounted to $67,760. This is calculated by considering the monthly payments of $780 from 1994 until 2000. However, as has already been observed more than once in this judgment, Glynis never personally enjoyed those funds as a result of the round robin of cheques, which saw the money deposited back into Wincot.

If Glynis were to be liable to Wincot, she would be liable for $45,173, being two thirds of the amount she received.

As stated above in paragraph [420], there is nothing to suggest Glynis received rental payments in her capacity as trustee, as opposed to being the landlord of the Armidale Property. Glynis received $780 in rent to ensure the Armidale Property was negatively geared, and that arrangement ceased in 2000 upon the advice of Mr Herd, when the property became positively geared. Consequently there is nothing to suggest Glynis is liable to anyone for the rent she received for the property.

Even if Glynis were found to be liable to the Chetwynds for the income she received for the Armidale Property, which is not the case, offsetting expenses would need to be considered.

Glynis is not seeking any offsetting exercise to take place, however asks the Court to note that there were three categories of expenses related to the rent received for the Armidale Property:

However, as the Court has determined Glynis is not liable to Wincot for the rental payments she received, no offsetting exercise is required.

Wincot seeks a declaration that Glynis contravened sections 180, 181, 182, 183, 184, 191, 295, 296, 297, 319, and 344 of the Act. These provisions relate to directors and officers of companies discharging their duties with care and diligence, acting with good faith, not taking personal advantage from a company, having a material personal interest in a company, the financial report of a company, complying with accounting standards and lodging a financial report with ASIC.

Glynis’ accounting practices and the bookkeeping of Wincot is detailed above in paragraphs [194] and following.

The written submissions of the Chetwynds appear to particularise those breaches of the Act to be as a result of accounting entries about Wincot made by Glynis for which it is alleged she knew they were improper and untrue. Those entries have been discussed at various points throughout this judgment. How those entries relate to the various sections of the Act is not entirely clear and was not clarified in the submissions of the Chetwynds.

The Chetwynds rely upon the evidence of Mr Kirk in establishing those contraventions of the Act. However, Mr Kirk’s evidence does not relate to certain sections of the Act which the Chetwynds allege Glynis has violated. For example, Mr Kirk’s evidence does not address s 319 of the Act which relates to the contents of the annual financial report. Similarly, his evidence does not relate to s 191 of the Act concerning a director’s material personal interest and a possible conflict. This limits the usefulness of Mr Kirk’s evidence in so far as it is relied upon for the making of various declarations sought by Wincot.

In response to the claims that she contravened the Act, Glynis submitted the following:

The Court accepts each of these submissions by Glynis for the reasons below. It is also convenient to record at this point that to succeed in any of these claims, given their seriousness, the Chetwynds would have had to have satisfied the Court to the Briginshaw standard of the elements necessary to make them out. In no respect have the Chetwynds succeeded in doing so.

The complexities of the Wincot accounts are outlined above in paragraphs [194] and following. These included Wincot paying personal expenses of the directors, various legal structures in place, and tax minimisation strategies.

Brian’s involvement in the accounting should also not be overlooked. At the end of each financial year Mr Herd finalised the accounts for the year and showed them to Brian, which he would then review. At no time did Brian ever suggest the accounting as shown to him was incorrect.

While there were some errors in the accounts which Glynis kept (and Glynis accepts these errors), for example crediting her own loan account instead of the Chetwynds’ account following the distribution of funds from the Neutral Bay Property, to suggest her accounting practices in general were incorrect is wrong.

While a claim has been made by the Chetwynds, there is no expert evidence before the Court to suggest the accounting was either inaccurate or contrary to normal accounting standards.

The evidence of Mr Kirk fails to provide any definitive opinion in relation to the expected accuracy of any accounting entries, and therefore the Court has no basis on which to determine Glynis’ entries were incorrect.

Mr Herd was not challenged in cross-examination as to the correctness of his overall approach to the accounting for Wincot and as such, the claims put forward by the Chetwynds are unsubstantiated.

Given the lack of evidence, the Court is not in a position to make a declaration that the accounting practices of Glynis were incorrect.

Even if the Court found that Glynis’ entries were incorrect, there is nothing to suggest she made those accounting errors knowingly. I have outlined Glynis’ accounting experience and lack of formal qualification above in paragraph [179].

In support of the assertion that Glynis knowingly made incorrect accounting entries, the Chetwynds relied on numerous journal entries which have previously been discussed, and Glynis’ inability to explain those entries.

Merely pointing to those entries and Glynis’ inability to explain them is not sufficient to suggest Glynis knowingly made incorrect accounting entries. Those entries do not prove that Glynis understood the matters, let alone conceived or instigated them.

Instead, I accept Glynis’ submission that her failure to explain the entries supports her submission that she followed the advice of Brian and Mr Herd on complex accounting matters and did not question their advice.

In cross-examination, Glynis consistently denied the fact that she knowingly made incorrect journal entries. There has been no objective evidence to suggest those denials were false. The credit findings which I made above in paragraphs [183] to [184] above fortify the decision I have reached in relation to the weight I give Glynis’ consistent denials.

The Court has also considered the broader context of the allegations made against Glynis. This broader context includes:

When these broader circumstances are taken into account, it is unsurprising that Glynis was unable to explain the accounting entries in question. As such, the Chetwynds have to adduce any evidence that could satisfy the Court to the requisite standard that Glynis knowingly made any incorrect accounting entries.

The Chetwynds have submitted that Glynis’ behaviour in recording certain entries was not only incorrect, but that it was also deceptive and dishonest. There has been no evidence put before the Court to suggest this is true.

All of the relevant documentation for this case has been in the possession of the Chetwynds and they have had ample time to examine it, or have an expert examine it. The Chetwynds submitted to the Court that certain documents were deliberately kept from them which related to the case. That is incorrect.

Additionally, it is clear that despite his denials and obfuscations when it suited his case, Brian has reasonable accounting proficiency and provided advice to Glynis for complicated accounting transactions. Brian also accepted that at the end of each financial year, he would have reviewed the final accounts as produced by Mr Herd.

I also adhere to the observation I made on the final day of the hearing that “if [Brian] has, as it were, suffered the accounts to be prepared in the way they were and did nothing about them, but took whatever benefits and burdens came with those characterisations”, then whether or not he knew about the accounting treatment is irrelevant (T129:43-46). Brian was prepared to follow the accounting procedures he sought to have put in place and as such, he is bound by that decision.

Given Brian’s accounting experience, and his role in reviewing the accounts of Wincot on a frequent basis, including advising Glynis on how to record certain transactions, the Court does not accept the submission that Glynis was a deceitful mastermind of deceptive accounting transactions.

The submissions made by the Chetwynds suggested that in addition to Glynis knowingly making dishonest and incorrect entries into the accounts to Wincot, the entries were purely for her benefit.

No evidence was put before the Court to support that assertion. The evidence suggests much to the contrary.

Glynis held the legal title to assets at the instigation of the Chetwynds. This was done by Brian to protect the Chetwynds from being pursued by any creditors following a previous failed business venture, therefore expressly benefiting Jill and himself.

Furthermore, the accounting practices were overseen and approved by both Mr Herd and Brian. The strategies implemented by Mr Herd to minimise tax exposure was for the collective benefit of all the parties, and not just Glynis.

Therefore, any suggestion that Glynis’ accounting practices were purely to her benefit has not been made out and is falsified by the evidence.

It follows that for the reasons set out in paragraphs [553] to [577] above, I accept the submissions made for Glynis that, other than where she acknowledges she made errors, the accounting entries put in issue by the Chetwynds were not incorrect. In relation to all of those entries the Court finds that they were not made knowing that they were incorrect, were not deceptive and were not for the sole benefit of Glynis for the reasons provided above.

The Court therefore does not find any of the following:

Therefore, the Court will not make any of the declarations under the Act sought by Wincot.

For the sake of completeness, I will also set out below why it is that even if the challenged entries were incorrect as alleged, the Court still would not have made the declarations sought by Wincot.

In the alternative, Glynis also pleads a defence to Wincot’s application for declarations in relation to the breach of the various statutory duties under the Act.

If it were found that Glynis had made incorrect accounting entries, Glynis seeks an order under s 1318 of the Act that she be relieved wholly from any liability.

Section 1318 of the Act states:

Section 1318 involves the Court undertaking a three stage inquiry (Australian Securities and Investments Commission v Healey (No 2) [2011] FCA 1003 at [84]):

Australian Securities and Investments Commission v Vines [2005] NSWSC 1349 at [52] (“Vines”) is authority for the proposition a person has acted honestly if the person acts “without moral turpitude.”

Austin J’s conclusion on this point was not disturbed in the subsequent appeal: Vines v Australian Securities and Investments Commission [2007] NSWCA 75; (2007) 73 NSWLR 451.

The second and third elements for the Court to consider are much more subjective. The Court has a wide discretion and as noted in Vines at [46], “it is extremely difficult to attempt to lay down general principles because, of necessity, each case will very much depend on its own circumstances.”

Glynis submitted that she acted honestly in relation to her bookkeeping. Glynis took pride in her work and as was recorded above in paragraph [213], Glynis had a “commitment to achieving accuracy.” Glynis acknowledged the limitations of her knowledge and where she felt entries were beyond her skillset, she defaulted to the opinion of those who she deemed more qualified, namely Brian and Mr Herd. This was in order to not compromise the quality of her work.

Furthermore, it was acknowledged by all parties that Glynis sought advice from either Brian or Mr Herd in relation to transactions which were beyond typical everyday transactions. This practice of Glynis seeking advice was not only in relation to difficult transactions, but also extended to making the end of financial year journal entries.

Although repeatedly pressed during cross-examination, Glynis never conceded any entry was knowingly false. I give this considerable weight when also considering the credit findings I have made regarding Glynis, as noted in paragraphs [183] to [184] above.

In considering Glynis’ liability it is also necessary to take into account the size of Wincot. Wincot was a small company, which consisted of just Brian, Jill and Glynis. The company lacked the resources to employ an accountant on a fulltime basis, so Glynis dutifully took on those responsibilities. When considering the nature of Wincot as a company, Glynis’ behaviour was entirely reasonable.

It was completely sensible for Glynis to act as she did, and to follow the advice of Mr Herd when she was uncertain how to record specific transactions. The reasonableness of Glynis’ actions in deferring to Brian or Mr Herd is underscored by Glynis’ lack of formal training or qualifications.

Glynis did make some mistakes in her bookkeeping. However, the nature and effect of those mistakes must be considered. The consequences of Glynis’ actions were not great, in that neither Wincot nor the Chetwynds suffered any actual damage by reason of Glynis’ accounting. Similarly, Glynis did not derive any significant personal gain from the accounting entries. While a credit entry was made in Glynis’ loan account, she never sought to call upon the outstanding balance with Wincot.

As such, even if I had been satisfied that Glynis has acted improperly and contravened the Act (which I am not), I would not have made the declarations sought by Wincot. In accordance with s 1318 of the Act, the Court would have excused Glynis for her actions and relieved her of any liability.

Unfortunately, the nature of these proceedings means that it is not as simple as now giving the parties time to bring in short minutes to give effect to these reasons. Rather, I will give the parties time to consider these reasons and determine what they say the next steps should be.

There is an outstanding claim by the Chetwynds for interest at Supreme Court rates on the amount of approximately $70,000 that was held for them by Glynis which she paid during the course of these proceedings (see paragraph [395] above). If that claim is still pressed, the Court will give directions for short written submissions to be exchanged as the point has not been the subject of argument.

Leave to file those submissions will also extend to any claim made for interest in relation to any of the other amounts for which any party has been held liable to the other or in respect of which an adjustment should be made (see the summary in paragraph [13] above).

It will also be necessary for the Court to determine the question of costs. Subject of course to hearing any applications (including for special costs orders), it is my preliminary view that costs should follow the event so that the Chetwynds and Wincot will be liable to pay Glynis’ costs of the proceedings. Wincot’s liability should only relate to the 2018 hearing being the only hearing to which it was a party. In real terms the Chetwynds have enjoyed very small success and Wincot none. So there appears to me no basis to vary what would otherwise be the usual costs order. I emphasise that these are merely preliminary observations for the assistance of the parties, and I will hear the Chetwynds if they wish to contend otherwise.

The practical reality is that these reasons, and the orders that will be made to give them effect, will not bring matters to a close between the parties. That is a particularly unfortunate outcome given the age and circumstances in life of each of Brian, Jill and Glynis. For that reason I conclude this judgment by urging the parties in the strongest possible terms to give serious consideration to whether it is possible for them, by a formal mediation or otherwise, to attempt to reach a solution that involves a complete settlement between them in the light of these reasons. If that is an opportunity of which the parties wish to avail themselves, then the Court is prepared to allow a reasonable hiatus for that to occur before resolving any outstanding matters and making final orders.