Kathleen Jeanne Furlong & Mark Andrew Leishman (a bankrupt) v Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd; Wise & Young Pty Ltd, Defined Properties Investment Pty Ltd & Wyse and Young International Pty Ltd v Kathleen Jeanne Furlong, Gilbert Innes Leishman, Design by Kaka Pty Ltd as trustee for Kathleen Leishman Investment Trust, GIM Investments (ncle) Pty Ltd as trustee for Kathleen Leishman Investment Trust & Kim Magella Leishman; Gilbert Innes Leishman v Defined Properties Investment Pty Ltd, Wise & Young Pty Ltd, Wise & Young International Pty Ltd, George Dimitriou and Bramco Group International Pty Ltd

The plaintiffs are Ms Kathleen Furlong (nee Leishman) and Mr Mark Leishman. The defendants are Wise & Young Pty Ltd (‘Wise and Young’), Defined Properties Investment Pty Ltd (‘DPI’) and Wyse & Young International Pty Ltd (‘WYI’).

The plaintiffs seek declaratory relief in relation to security arrangements between the plaintiffs and defendants. They also seek removal of three caveats over property at 24 Memorial Drive, The Hill, NSW, 2300 (‘property’): the first numbered AJ876905K lodged by DPI, the second numbered AJ876904M lodged by Wise and Young and the third numbered AJ876906H lodged by WYI. The plaintiffs also seek declarations that the defendants engaged in misleading and deceptive conduct under Schedule 2 of the Competition and Consumer Act 2010 (Cth).

In the first cross-claim, the defendants seek declaratory relief relating to the caveats over the property and the security arrangements in contention. The defendants also seek, by way of this cross-claim, the payment of $1,866,253.26 of outstanding fees which are owed to them by the plaintiff parties (CC [37]).

In the second cross-claim, Mr Gilbert Leishman seeks declarations to set aside the various costs agreements and reimburse $1,959,150.70 of allegedly misappropriated Bramco Group International Pty Ltd (‘BGI’) funds, which were allegedly held on trust for Mr Gilbert Leishman by the defendants. Mr Gilbert Leishman also seeks declarations that the defendants engaged in conduct which breached Schedule 2 of the Competition and Consumer Act 2010 (Cth).

It became apparent in the course of the trial, by way of Amended Cross Claim dated 17 August 2016, that the defendants’ attempt to support caveat AJ876905K (CB 171-172, 217-218) was an exercise in futility. This caveat was dated 9 August 2015 and lodged by DPI over the property on 7 October 2015 pursuant to the “deed of loan, guarantee and indemnity” document dated 3 September 2014 (Affidavit of Furlong 4 November 2015 [24]; CB 217; Affidavit of Dimitriou 26 November 2015 [18]). Putting aside the defendants’ effective abandonment of this caveat, the plaintiffs submitted that the caveat must be removed because it was lodged pursuant to a forged document (P submissions [4(b)]) and because the evidence shows the loan was provided to Ms Furlong with Bramco funds and not the funds of DPI (P submissions [4(c)]). Further, the plaintiffs submitted that this caveat is therefore invalid and that they are immediately entitled to orders 4, 7 and 10 of the Amended Statement of Claim (P submissions [1]-[6]). Except for the submission as to any alleged fraud, I agree with the plaintiffs’ submissions and propose to make orders to that effect.

This left for determination the validity of two caveats: one numbered AJ8769904M (CB 169-170, 215-216) lodged pursuant to an unregistered mortgage dated 30 October 2014 and another numbered AJ876906H (CB 173, 219-220) lodged pursuant to the “appointment letter and cost agreement” of 1 January 2014. I will consider both below.

This matter has had some considerable history to which it is necessary to refer. This history is especially important in providing the context to view the defendants’ application to rely on certain materials provided to the plaintiffs prior to and during the trial. While the plaintiffs have provided a comprehensive procedural chronology which I attach as Annexure A to this judgment, I will briefly explain some important parts of this procedural history below.

The history of the matter began with a summons issued on 6 November 2015, supported by the affidavits of Kathleen Furlong and Mark Leishman, both filed on 4 November 2015. This summons sought removal of the caveats over the property and was heard by Darke J, who did not make any of the proposed orders, but set the matter for hearing on 25 November 2015. The hearing of the summons did not take place on this date, but was stood over to be heard before the duty judge, Rein J, on 26 November 2015. His Honour referred the matter to the Expedition List on 4 December 2015 before me. On this date, I set the defendants’ unopposed expedition application for hearing on 12 February 2016 before the Expedition List Judge.

As early as 4 December 2015, the defendants foreshadowed that they proposed to bring a cross-claim. Two iterations of a cross-claim were handed up in Court before Stevenson J. On 6 and 13 May 2016, Stevenson J heard both parties’ submissions on this cross-claim. On 19 May 2016, Stevenson J delivered judgment in Furlong v Wise & Young Pty Ltd [2016] NSWSC 647. His Honour found that the defendants made allegations of dishonesty and serious misconduct in the cross-claim without there being a proper basis and therefore refused leave to the defendants to had to proceed with it, and ordered the defendants pay costs.

On 13 May 2016, Stevenson J fixed the matter for a five day hearing, commencing before me on 1 August 2016.

From 20 May to 17 June 2016, Stevenson J made various orders relating to the filing of evidence by the plaintiffs and defendants, in anticipation of the 1 August 2016 hearing. Both the plaintiffs and defendants failed to comply with many of these ordered dates.

On 1 August 2016, for various reasons I made orders that the hearing be adjourned until 15 August 2016 to provide the defendants with time to obtain legal representation.

Also on 1 August 2016, the plaintiffs filed an amended statement of claim and the second cross-claimant filed an amended statement of second cross-claim.

On 15 August 2016 (T 203), the defendants indicated they were going to withdraw a series of allegations and claims made against the plaintiffs.

On 17 August 2016, the defendants filed an amended statement of cross-claim. Most notably, these new pleadings withdrew allegations that the Binding Financial Agreement between Kathleen Furlong and Mark Leishman and vehicle security documentation were sham documents.

Both parties were directed to give final submissions on 25 November 2016. Only the plaintiffs made final submissions on this date, as the defendants’ legal representation ceased and Mr Dimitriou requested additional time to prepare final submissions. His request was accommodated and the defendants’ final submissions were then heard on 24 November 2016. Further time was granted to the defendants’ legal representative, Mr Hall, to submit further written submissions on 4 December 2016.

Both parties then gave further, final submissions on 7 December 2016. On this date, the plaintiffs sought to also produce an amendment to the evidence of Mr Mark Leishman, along with some new evidence. I denied their request and reserved judgment.

The first and second plaintiffs are married but separated on 9 July 2014 (Affidavit of Furlong 4 November 2015 [2]; Affidavit of Mark Leishman 4 November 2015 [3]). The property is their former matrimonial home (Affidavit of Furlong 4 November 2015 [4]). They are both affiliated with the ‘Bramco’ group of companies, which conduct business in the electronics industry.

The first defendant, Wise & Young provides business finance (Affidavit of Dimitriou 13 November 2015 [5]).

The second defendant, DPI is primarily engaged in short term lending to distressed businesses (Affidavit of Dimitriou 13 November 2015 [5]). Two bank accounts in the name of Defined Properties Investment Pty Ltd were used to receive monies on behalf of the Bramco group of companies and to pay expenses on behalf of the Bramco group of companies.

The third defendant, WYI is a firm offering accounting, general business, tax, business restructuring and litigation support services (Affidavit of Dimitriou 13 November 2015 [5]; Exhibit P2). It purports to offer “Corporate advisory, Enterprise advisory, Financial planning & wealth creation Litigation Support, Management consulting, Sucession [sic] planning, Superannuation, Tax consulting, Tax planning, Accounting compliance and BAS/GST” services (Exhibit P2). The person who dropped this document clearly sat down with a thesaurus and dictionary in hand with the result that the most exhaustive and extravagant claims are made as to the firm’s expertise and services provided.

The accounting division purports to employ two CPA accountants, a senior book keeper, a chartered accountant (tax agent), a middle tier accountant and three junior accountants (Affidavit of Dimitriou 31 July 2016 [51]). It purports to have performed various works for the Bramco group of companies including the creation of “purchasers’ journal and supplier invoices, sales journal and sales invoices, remittance advices, pro-forma invoices, purchase orders, employee pay slips, employee contracts, PAYG payment summaries, employee leave entitlement calculations, inter-company invoices, receipts, employee reimbursements, consultant invoices, bank statements, payroll reports, employment separation certificates, ATO portal print outs, motor vehicle higher [sic] purchase schedules, super guarantees, withholding declaration forms, employee tax file number declarations, employee time sheets, supplier statement reconciliations, asset listing for insurance, budgets, distributor billings, financial records, debtors ledgers, creditors ledgers, companies insurance policies and depreciation schedules” (Affidavit of Dimitriou 31 July 2016 [52]).

The business reconstruction division consists of the director (Mr Dimitriou), a chartered accountant, a law student and various ‘consultants’ (Affidavit of Dimitriou 31 July 2016 [53]). It purports to have performed various works for the Bramco group of companies including the recording of “ASIC company details, minutes and resolutions of meetings, sale agreements, manufacturing agreements, confidentiality agreements, distribution agreements, product catalogues, inventory stock take, Fair Work correspondence, employee contracts, insurance proposals, distributor reconciliations, inventory lists, depreciations schedules, leases, heads of agreement, company structure diagrams, intellectual property agreements, FEG discussions, consultancy agreement drafts, forecasts, creditors’ actions and letters of appointment” (Affidavit of Dimitriou 31 July 2016 [54]).

The defendants’ offices are located at Lexington Drive, Bella Vista (Affidavit of Dimitriou 13 November 2015 [5]; Exhibit P2). It is alleged that the defendants work closely with each other in providing insolvency and restructuring services to businesses and companies in difficult financial circumstances (Affidavit of Dimitriou 13 November 2015 [5]).

Mr George Dimitriou is the director of all three defendant corporations (Affidavit of Dimitriou 26 November 2015 [1]). He is also the company secretary and sole shareholder of each of the three defendant corporations (CB 207-09, 212-214, 1175-1180). Mr Dimitriou is neither a qualified lawyer or an accountant, nor has he any tertiary qualifications.

The history of the ‘Bramco’ group of companies (‘Bramco entities’) began on 29 November 1979, when Gilbert Leishman, the second plaintiff’s father, registered Rynand Pty Ltd (Affidavit of Gilbert Leishman 21 July 2016 [6]). On 22 March 2004, Rynand changed its name to Bramco Electronics Pty Ltd (Affidavit of Gilbert Leishman 21 July 2016 [6]; CB 1166). Between 1979 and 2007, Gilbert Leishman was a director and shareholder of Bramco Electronics Pty Ltd (Affidavit of Gilbert Leishman 21 July 2016 [7]; CB 1166).

On 26 November 2007, Gilbert Leishman resigned as director of Bramco Electronics Pty Ltd and his son Mark Leishman was appointed in his place (Affidavit of Gilbert Leishman 21 July 2016 [12]; CB 1165). At this time, Gilbert Leishman continued to hold 10% of the shares in Bramco Electronics Pty Ltd (Affidavit of Gilbert Leishman 21 July 2016 [13]).

Prior to December 2013, Mark Leishman and Furlong were joint tenants and registered proprietors of the property (CB 187).

In late 2013, Bramco Electronics Pty Ltd began experiencing financial difficulties (Affidavit of Gilbert Leishman 21 July 2016 [15]).

On 17 December 2013, David Mansfield was appointed liquidator of Bramco Electronics Pty Ltd and the related Leishman entity, Tablam Pty Ltd (CB 536).

On 30 December 2013, receivers were appointed over Bramco Electronics Pty Ltd and its assets (Affidavit of Gilbert Leishman 21 July 2016 [16]).

Upon the advice of their solicitor, Anthony Foate, in December 2013 and January 2014, Gilbert and Mark Leishman made contact with Mr Dimitriou and the defendants to help rectify the financial situation of Bramco Electronics Pty Ltd (Affidavit of Gilbert Leishman 21 July 2016 [17]-[19]). On 30 December 2013, the first oral communication between Gilbert Leishman, Mark Leishman and George Dimitriou occurred via telephone (Affidavit of Gilbert Leishman 21 July 2016 [19]; Affidavit of Dimitriou 31 July 2016 [7]). On 1 January 2014, the first written communication occurred, as Mark Leishman sent an email to Mr Dimitriou (CB 1172).

In January 2014, Ms Ashley Sheaves commenced employment with WYI as a receptionist (Sheaves affidavit [4]).

In or about early 2014, the mortgages on the property and another property at 37/215 Darby Street, Cooks Hill (‘Cooks Hill property’) fell into default (Affidavit of Gilbert Leishman 21 July 2016 [39]).

On 13 January 2014, Gilbert Leishman and Mark Leishman met Mr Dimitriou for the first time at the Crowne Plaza in the Hunter Valley to discuss corporate advisory and restructuring services the defendant companies may provide to the Bramco entities (Affidavit of Gilbert Leishman 21 July 2016 [21]; Affidavit of Mark Leishman 4 November 2015 [15]). Dimitriou disputes that this meeting occurred on 9 January and not 13 January 2014, however he does not deny this conversation did not take place at all (Affidavit of Dimitriou 31 July 2016 [8]). No documents were signed at this meeting (Affidavit of Gilbert Leishman 21 July 2016 [22]). Mr Gilbert Leishman deposes that a conversation occurred at this meeting, the terms of which he recalls as follows (Affidavit of Gilbert Leishman 21 July 2016 [21]):

Following this meeting and other communications between the parties, in mid-January 2014, Kathleen Furlong, Mark Leishman, Gilbert Leishman and Kim Leishman attended the defendants’ offices to execute various documents (CB 437-476; Affidavit of Kathleen Furlong 29 July 2016 [17]).

On 3 March 2014, the defendants began to restructure the Bramco entities as BGI was incorporated by Dimitriou (Affidavit of Gilbert Leishman 21 July 2016 [26]). Mr Nicola Urbano was appointed as the sole director and shareholder of BGI (Gil Leishman affidavit of 21 July 2016 [49]). A significant amount of business of the Bramco entities began to be conducted from the defendants’ offices in Bella Vista, with Mr Mark Leishman regularly working from these offices (Affidavit of Gilbert Leishman 21 July 2016 [31]-[32]; T 300, 387, 529, 539).

On or about 4 March 2014, Kathleen Furlong signed a further costs agreement dated 4 March 2014 for the purposes of establishing Design By Kaka Pty Ltd (Affidavit of Furlong 4 November 2015 [52]-[55]; Affidavit of Kathleen Furlong sworn 29 July 2016 [22]; CB 481-498).

On 31 March 2014, Mr Gil Leishman discharged debts owed by Bramco Electronics Pty Ltd to Scottish Pacific Business Finance Pty Ltd, which had provided a finance facility to Bramco (Affidavit of Gilbert Leishman 21 July 2016 [33]). This debt was guaranteed against the property and the Cooks Hill property (Affidavit of Gilbert Leishman 21 July 2016 [35]). Gilbert Leishman allegedly paid $284,456.82 to Scottish Pacific pursuant to a Deed of Subrogation of Debt (Gil Leishman affidavit of 10 November 2015 [4]; CB 224), as Scottish Pacific had lodged a caveat over the property. Mr Dimitriou disputes that this amount was in fact $168,300.00 and not $284,456.82 (Affidavit of Dimitriou 13 November 2015 [11]). In addition to this amount, Mr Gil Leishman alleges that he advanced the sum of $2,000,000.00 between 2008 and 2015, for and on behalf of Ms Furlong and Mr Mark Leishman (Gil Leishman affidavit of 10 November 2015 [6]).

On 3 April 2014, the second defendant alleges it requested its bank managers to draw two separate bank cheques from its National Australia Bank accounts, valued at $142,228.41 and $125,881.06 respectively and a third bank cheque valued at $16,347.35 from its ANZ account (Affidavit of Dimitriou 13 November 2015 [12]). The second defendant alleges these monies were provided to Mr Gil Leishman and Ms Furlong to subrogate the Scottish Pacific Business Finance Pty Ltd debt (Affidavit of Dimitriou 13 November 2015 [13]).

On 9 April 2014, a ‘Domestic Factoring Agreement’ was entered by the DPI and BGI (Affidavit of Dimitriou 26 November 2015 [7]; CB 1048). It is uncontroversial this was never invoked by Mr Dimitriou, DPI and/or BGI.

On 25 June 2014, Mark Leishman and Kathleen Furlong gave written authorities to Dimitriou to organise the discharge of the Commonwealth Bank mortgage (‘CBA mortgage’) over the property (CB 364-368).

In July 2014, Dimitriou refused to provide reconciliations of the Bramco entities’ business to Gilbert Leishman (Affidavit of Gilbert Leishman 21 July 2016 [41]).

In July 2014, Mark Leishman and Kathleen Furlong separated (Affidavit of Mark Leishman 4 November 2015 [3]).

On 9 July 2014, Ms Furlong and Mark Leishman entered into a Binding Financial Agreement (‘BFA’) by which Mark Leishman transferred his rights, title and interest in the property to Ms Furlong (Furlong 4 November 2015 [2]; Affidavit of Mark Leishman 4 November 2015 [4]-[5]).

On 9 July 2014, $2,570,000 was deposited from an account of Union Steel Investments Pty Ltd (‘Union Steel’), via an internet banking transfer, to Wyse Accounting Pty Ltd account number 13-512-4991 (CB Bank Statements NAB-171). Prior to this deposit, there was a credit balance of $45.60 in Wyse Accounting Pty Ltd account number 13-512-4991 (CB Bank Statements NAB-171). There is no evidence of the terms of any arrangement between Union Steel Investments Pty Ltd and Wyse Accounting Pty Ltd for the transfer of the $2,570,000.

On 3 September 2014, Ms Furlong allegedly signed a ‘Deed of Loan, Guarantee and Indemnity’ (CB 1004-1014) and a ‘Mortgage’ over the property to secure repayment of $77,500 loaned by DPI to Design by Kaka Pty Ltd (CB 1019-1026).

On 4 September 2014, McCarroll’s Volvo Cars issued an invoice in the sum of $77,500 for the purchase of a Volvo XC90 vehicle (CB 1243). On 5 September 2014, $77,500 was transferred from the DPI ‘savings’ account 13-515-6176 into the DPI ‘cheque’ account 13-515-6117 (CB 1250, 1257). $77,500 was then withdrawn from the DPI cheque account (CB 1257).

As at 10 September 2014, there was a credit balance of $2,129,911.01 in Wyse Accounting Pty Ltd account 13-512-4991. A number of cheques were written from this account in September and October.

On 30 October 2014, $1,070,334.82 was transferred via an internet transfer from Wyse Accounting Pty Ltd account 13-512-4991 under the description “loan to kl” to Wise and Young Pty Ltd account number 74-280-9712 (CB Bank Statements NAB-172; CB 289-290). Mr Dimitriou alleges this money was withdrawn to discharge the CBA mortgage (CB 281 [5]). In passing, it must be noted that there was a delay from 9 July 2014 until the 30 October 2014 for the Union Steel monies to be used to discharge the CBA mortgage. The evidence implies that Mr Dimitriou was attempting to procure alternative finance to discharge the mortgage (CB 858-860). Whatever the arrangement was between Union Steel and the defendants, it does not appear that it was agreed between them that the money was to be used to discharge the CBA mortgage.

On 30 October 2014, the defendants allege various mortgages and loan deeds were executed to secure a loan of $1,231,752 given by Wise and Young to Mark Leishman and Kathleen Furlong to discharge the CBA mortgage (CB 796-808, 1099-1102, 1120-1134). On the same day, the $1,068,000 CBA mortgage was discharged (CB 292, 372). The plaintiffs assert these documents were fraudulently created. I will consider the facts surrounding the discharge of this mortgage in greater detail below.

On 30 October 2014, Mr Dimitriou, on behalf of Wise and Young, emailed “Natalie”, asking that she collect three bank cheques, one of which was for $1,068,050.72, to be addressed to the CBA and handed to Fiona Reynolds of Turks Legal (CB 856; CB 911).

On 1 November 2014, Kathleen Leishman sent a text message to Mr Dimitriou stating “…Thankyou. I can’t believe the house is safe. Let me know what the details are for refinancing (emphasis added)” (CB 294). This perception of Mr Dimitriou refinancing the CBA mortgage is reinforced by another text message sent by Ms Leishman to Mr Dimitriou on 6 September 2014, stating “…I am overwhelmed by your generosity and goodwill…You have helped us out of such a difficult situation…Thank you. Speak Monday to organise the refinance (emphasis added)”.

On 21 November 2014, Mr Dimitriou was advised by a settlement agent that the property’s CT was ready for collection (CB 910).

On 9 June 2015, Dimitriou replaced Nicola Urbano as the director of BGI and transferred the entire shareholding to DPI (Affidavit of Gilbert Leishman 21 July 2016 [50]).

On 10 June 2015, Mr Mark Leishman sent an email to Mr Dimitriou and stated at paragraph 5, “Memorial. Is there any scope for refinance? Kath/I want to get debt repaid back to you urgently” (Exhibit D3).

In early August 2015, Mark Leishman became aware of the NSW Police Fraud Squad investigations into Mr Dimitriou and was asked to “cooperate with the investigations” (Affidavit of Mark Leishman 24 November 2015 [19]; T 503).

On 12 August 2015, the relationship between Mark Leishman and Mr Dimitriou deteriorated and Mark Leishman ceased working from the defendants’ Bella Vista offices (CB 830; T 453; Affidavit of Dimitriou 26 November 2015 [20]-[22]). The defendants allege that during August, all monies payable to the Bramco entities were redirected to entities not controlled by Mr Dimitriou (Affidavit of Dimitriou 26 November 2015 [8]).

On 8 September 2015 Mr Mark Leishman sent an email to Ms Ashley Sheaves explaining, “We are working to return all funds to George” (Exhibit D3).

On 13 September 2015, Gilbert Leishman and Ms Furlong lodged a caveat (AJ817227) over the property to secure the assignment of the Scottish Pacific debt (Gil Leishman affidavit of 10 November 2015 [4]; CB 4064, 813).

On 14 September 2015, Bramco Property Holdings Pty Ltd was incorporated to purchase the property (CB 144, 146).

On 18 September 2015, Furlong and Mark Leishman made statutory declarations in support of an application for the replacement of the property’s certificate of title (CB 815, 817-818, 823). A sentence in Mr Mark Leishman’s statutory declaration stated that “in or about 26 October 2014 my former wife and I refinanced the property (emphasis added)” (CB 4052 [4]).

On 21 September 2015, the document discharging the CBA mortgage was lodged (CB 376, 813), the Scottish Pacific withdrawal of caveat document was lodged (CB 813) and an application for replacement of the property’s certificate of title was made (CB 813).

On 2 October 2015, Furlong acquired finance for the property and Mark Leishman executed a transfer instrument which transferred his right, title and interest in the property to Furlong (Affidavit of Mark Leishman 4 November 2015 [8]).

On 7 October 2015, Wise & Young lodged a caveat (AJ8769904M) over the property pursuant to an unregistered ‘mortgage’ dated 30 October 2014 (Affidavit of Furlong 4 November 2015 [9]; CB 215, 813; Affidavit of Dimitriou 26 November 2015 [18]), DPI lodged caveat (AJ876905K) over the property pursuant to the ‘deed of loan, guarantee and indemnity’ document dated 3 September 2014 (Affidavit of Furlong 4 November 2015 [24]; CB 217; Affidavit of Dimitriou 26 November 2015 [18]) and WYI lodged a caveat (AJ876906H) over the property pursuant to the ‘appointment letter and cost agreement’ document dated 1 January 2014 (Affidavit of Furlong 4 November 2015 [24]; CB 219; Affidavit of Dimitriou 26 November 2015 [18]).

On 8 October 2015, WYI lodged an Application for Preparation of Lapsing Notice with LPI in relation to the caveat (AJ817227) Gil Leishman and Ms Furlong lodged over the property and WYI sent a letter to Gil Leishman and Ms Furlong informing them of this (CB 284-286).

On 6 November 2015, as explained in the procedural history above, the current proceedings began by way of Summons filed by the plaintiffs.

On 25 November 2015, Mr Urbano ceased his role as sole director and shareholder of BGI, and Dimitriou became its sole shareholder and DPI its sole shareholder (CB 1175). However, the changes were only reflected in the ASIC register when the required 484 form was lodged on 9 June 2016 (CB 1178).

On 2 December 2015, Mark Leishman was made bankrupt (CB 2508-2509).

In or about December 2015, Ms Ashley Sheaves ceased employment with WYI (Sheaves affidavit [4]).

On 28 June 2016, forensic document examiner Mr Stephen Dubedat completed a handwriting report for the purpose of these proceedings (CB 1193-1233).

Where money is transferred, even fraudulently, the legal ownership of this money is conferred on the transferee: Black and Black v S Freedman and Company (1910) 12 CLR 105; Robb Evans of Robb Evans & Associates v European Bank Limited (2004) 61 NSWLR 75 at [109]-[118].

As Wilson and Dawson JJ explained in Illich v R (1987) 162 CLR 110 at [24]:

However, it must be noted that in such cases, a trust will be imposed on the stolen money to ensure the thief (as legal owner) holds the money on trust for the victim: Black and Black v S Freedman and Company (1910) 12 CLR 105; Robb Evans of Robb Evans & Associates v European Bank Limited (2004) 61 NSWLR 75 at [109]-[118].

It is well established that when an individual deposits money with a financial institution, it no longer owns that money, but becomes a creditor who has a chose in action to recover their debt: Croton v R (1967) 117 CLR 326 at 330-331; Parsons v R (1999) 195 CLR 619 at 626-627; Grant v R (1981) 147 CLR 503 at 509; Re Diplock [1948] Ch 465 at 521-522; Foley v Hill (1848) 2 HL Cas 28 [36]-[37]; R v Davenport [1954] 1 WLR 569 at 571.

Barwick CJ, in Croton v R (1967) 117 CLR 326, stated at 330:

Similarly, Viscount Simon LC explained in Perrin v Morgan [1943] AC 399 at 407:

Also, in R v Davenport [1954] 1 WLR 569 at 571, Lord Goddard CJ explained:

There are two means by which an equitable mortgage may be created in the present case. First, an equitable mortgage may exist according to an express or implied agreement between the parties. The deposit of security documentation may be evidence of intention to make such an agreement. Alternatively, an equitable mortgage can exist pursuant to the doctrine of subrogation.

It is well accepted that an equitable mortgage can exist according to an express or implied agreement evincing the parties’ intention to create a mortgage security: National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 at 440; Swiss Bank Corp v Lloyds Bank Ltd [1982] AC 584 at 595; Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 at 200. This is grounded in the equitable maxim expressed in Walsh v Lonsdale (1882) 21 Ch D 9, that “Equity looks on that as done which ought to be done”. As Atkin LJ explained in National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 at 449-450:

As Leeming JA recently explained, with the agreement of McColl and Macfarlan JJA, in National Australia Bank Ltd v Clowes (2013) 8 BFRA 600 at [21]-[25]:

Leeming JA also authorised at [45], the comments of Campbell J (as his Honour then was) in Ellis v Marshall [2006] NSWSC 448 at [47]-[48]:

As the authorities above recognise, the existence of an equitable mortgage may also be indicated by acts of part performance. As Knox CJ said in Cooney v Burns (1922) 30 CLR 216 at 224-225:

Malcolm CJ, with Ipp and Nicholson JJ substantially agreeing, further explained in UTC Ltd (In liq) v NZI Securities Australia Ltd (1991) 4 WAR 349 at 351:

Multiple acts of part performance may be considered together: Steadman v Steadman (1974) 2 All ER 977 at 1001; Millett v Regent (1975) 1 NSWLR 62 at 74. However, the payment of money alone is generally seen to be an insufficient act of part performance to justify an equitable mortgage: Maddison v Alderson (1883) 8 AC 467; Johns v Peters (1948) VLR 331; Pejovic v Malinic (1960) SR (NSW) 184 at 189.

Further, the intention to create an equitable mortgage through the act of depositing documents may be established by writing alone, writing coupled with parol evidence or by parol evidence alone: see A Tyler, P Young and C Croft, Fisher and Lightwood’s Law of Mortgage (3rd Australian ed, 2014, Lexis Nexis Butterworths) at 105 and the authorities cited there. However, an inference that the deposit of documents was made by way of equitable mortgage will not be made where it contradicts the parties’ correspondence or is otherwise inconsistent with contemporaneous statements: Thames Guaranty Ltd v Campbell [1984] 2 All ER 585; Ex parte Coombe (1810) 34 ER 142; Re White Rose Cottage [1965] Ch 940.

As I have said above, an equitable mortgage may also arise in the present case pursuant to the doctrine of subrogation. Subrogation has been described as “a legal fiction, by force of which an obligation extinguished by a payment made by a third person is treated as still subsisting for the benefit of this third person, so that by means of it, one creditor is substituted to the rights, remedies and securities of another”: In the matter of Dalma No 1 Pty Limited (in liquidation) (ACN 111 772 260) (2013) 31 ACLC 13-048 at [26]; Aetna Life Insurance Co v Middleport 124 US 534 (1887) at 548-9.

In the context of the doctrine of subrogation, the absence of a common intention on the part of the borrower and lender that the lender should have security is neither determinative or fatal to a lender’s claim for subrogation: Banque Financiere de la Cite v Purc (Battersea) Ltd [1999] 1 AC 221 at 232-234.

Where a third party discharges a debt owed by another party secured by mortgage, there is a rebuttable presumption that arises that the first party is entitled to the benefit of the mortgage security, on the same terms as the debt discharged: Butler v Rice [1910] 2 CH 277; Ghana Commercial Bank v Chandriam [1960] AC 732; Cochrane v Cochrane (1985) 3 NSWLR 403; Commonwealth Bank of Australia v Christine Maree Delacy [2010] NSWSC 1449.

Approved by the High Court in Bofinger v Kingsway Group Limited (2009) 239 CLR 269 at [83], Kearney J explained the doctrine further in Cochrane v Cochrane (1985) 3 NSWLR 403 at 405:

Pursuant to the common law, interest is not payable on a loan unless there is a contract which stipulates as such, although interest may be awarded as damages: Hungerfords v Walker (1990) 171 CLR 125 at 137.

However, as Collins MR stated in Re Drax; Savile v Drax [1903] 1 Ch 781 at 793:

Further, Mason CJ and Wilson J explained in Hungerfords v Walker (1990) 171 CLR 125 at 148:

However, interest awarded in Equity will not be punitive: Wallersteiner v Moir (No 2) [1975] 1 QB 373; Harrison v Schipp [2001] NSWCA 13 at [129]; Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd (2015) 318 ALR 302 at [320]. Further, it is accepted that a court of Equity will not reform an interest rate in a transaction that is ‘unreasonable’: Knightsbridge Estates Trust Ltd v Byrne [1939] CH 441; Multiservice Bookbinding Ltd v Marden [1979] Ch 84.

As Street J (as his Honour then was) explained in Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 at [218]:

Kyrou J (as his Honour then was) articulated in Talacko v Talacko [2009] VSC 579 at [10]-[14]:

Garde AJA also explained in Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd (2015) 318 ALR 302 at [321]:

Where a debt would have been satisfied but for a mortgagee’s wrongful or inequitable act, the mortgagee will be allowed no interest during such time as the debt has thereby remained unsatisfied: Thornton v Court (1854) 43 ER 115 at 118.

As French CJ explained in Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62 at 69:

In this case, the relevant trust is to be, like French CJ explains, implied or inferred from the intent and oral discussions of the Furlong and Dimitriou parties.

Derived from the words of Lord Langdale in Knight v Knight (1840) 3 Beav 148 at 68, three certainties must be fulfilled for the creation of a valid, express trust: Varma v Varma [2010] NSWSC 786 at [474]; Ying v Song [2010] NSWSC 1500 at [239].

Firstly, there must be certainty of intention. This intention is to be determined objectively by the Court on the basis of what the parties said: Byrnes v Kendle (2011) 243 CLR 253. No formal or technical words are required; there must simply be a sufficient expression of intention: Registrar, Accident Compensation Tribunal v FCT (1993) 178 CLR 145 at 165-166. Intention may be inferred from the circumstances of the case and nature of the parties’ transaction: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1998) 165 CLR 107 at 121, 148-9, 156; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 at 503; Walker v Corboy (1990) 19 NSWLR 382 at 395-396. Reference may also be had to commercial necessity in determining the parties’ intention: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1998) 165 CLR 107 at 121. Intention may be rebutted by evidence of contrary intention: Commissioner of Stamp Duties (Qld) v Jolliffe (1920) 28 CLR 178. In the present case, it is important to note the analogous authority of Kauter v Hilton (1953) 90 CLR 86 at 100 where it was held that all circumstances of the case must be examined to determine whether a depositor of money into an account intended for these monies to be held on trust.

Secondly, certainty of the trust’s subject matter or property must be established: Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246; Herdergen v Federal Commissioner of Taxation (1988) 84 ALR 271.

Finally, there must be a certainty of the objects or beneficiaries of the trust: Kinsela v Caldwell (1975) 132 CLR 458 at 461. A trust will not be declared invalid by a mere difficulty in determining its objects, as long as a “loose class” of objects can be identified: McPhail v Doulton [1972] 1 All ER 41; Herdergen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 277. This is often the case for an express, discretionary trust.

The High Court discussed the nature and purpose of a trust arrangement in Byrnes v Kendle (2011) 243 CLR 253. In particular, Gummow and Hayne JJ explained in that case:

In the same case, Heydon and Crennan JJ stated at [102]-[115]:

A caveat must contain the prescribed particulars of the estate or interest claimed by the caveator: Real Property Act 1900 (NSW) s 74F(5)(b). A caveat must also be supported by a legal or equitable estate or interest in land. A contractual right to be repaid a debt pursuant to a loan agreement or deed does not create an interest in land where its terms are too uncertain: Sanna v Wyse and Young International Pty Limited & Others (No.2) (2015) 18 BPR 35-699.

Section 74F(1) of the Real Property Act 1900 (NSW) makes express reference to “a legal or equitable estate or interest in land.” In Re Pile’s Caveats [1981] Qd R 81 Dunn J stated that “the existence of a prima facie equity to relief involving land is not necessarily the same as the prima facie existence of an interest in land.” In S Lindsay, Caveats Against Dealings in Australia and New Zealand (The Federation Press, 1995), it was said at 153 that “an interest in the land must ultimately trace back to an interest created by or otherwise binding upon the registered proprietor.”

It was said in Municipal District of Concord v Coles (1905) 3 CLR 96 at 108 that “[t]he lodging of a caveat is really in the nature of the initiation of litigation, and only those persons should be entitled to initiate litigation who are entitled to litigate the matter of the dispute which is set up by the caveat.” A caveat may only be lodged by a person who claims an interest in land, such as:

A person who merely has an interest in the proceeds of the sale of land does not have a sufficient interest in the land to caveat, except in circumstances where he has a right to compel sale: Davies v Uratoriu (1995) 6 BPR 13,917.

In Bellissimo v JCL Investments Pty Ltd [2009] NSWSC 1260 at [12] it was explained:

In discussing contractual clauses allowing the lodgement of a caveat over property, in Iaconis v Lazar [2007] NSWSC 1103 Young CJ in Eq stated at [23]-[24]:

In determining whether a caveat should stand, the appropriate principle to apply is whether the defendant would, in all the circumstances, be entitled to an interlocutory injunction to protect the interest that they claim in the caveat. An interlocutory injunction is granted if the court is satisfied that there is a serious question to be tried, and that the balance of convenience favours the granting of an interlocutory injunction: Murphy v Lush (1986) 65 ALR 651 at 652; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1 at 24.

If the defendant is not entitled to an interlocutory injunction, the Court must order that the caveat be withdrawn: Martyn v Glennan [1979] 2 NSWLR 234 at 238-239; Hanson Construction Materials Pty Ltd v Roberts [2016] NSWCA 240 at [37]; Bayblu Holdings Pty Ltd v Capital Finance Australia Limited (2011) 279 ALR 166 at [20].

The fiduciary obligations arising if a trustee mingles or mixes trust funds with non-trust funds were explained in Cook v Addison (1869) LR 7 Eq 466 at 470:

This was applied by Ungoed-Thomas J in Re Tilleys Will Trusts [1967] Ch 1179 at 1183 who said:

Similarly, in Foskett v McKeown [2001] 1 AC 102, Millett LJ approved the comments of Page Wood VC in Frith v Cartland (1865) 2 Hem & M 417 at 420, explaining:

Lord Neuberger of Abbotsbury MR approved the above comments and went on further to state in Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administrative receivership) and others [2012] Ch 453 at [138]:

Australian courts have accepted these principles: Brady v Stapleton (1952) 88 CLR 322 at 336-339; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 109-110.

Further, where it is proven that there has been a mixing of funds, and these mixed funds are used to acquire other property which is not "specifically severable", the trust funds may be traced into the newly acquired property and the beneficiaries may claim an interest in the new property proportionate to their trust funds used to acquire it: Scott v Scott (1963) 109 CLR 649 at [14]; Raulfs v Fishy Bite Pty Ltd; Fishy Bite Pty Ltd v Raulfs [2012] NSWCA 135 at [95]. As Ungoed-Thomas J explained in Re Tilleys Will Trusts [1967] Ch 1179 at 1193:

I am acutely aware that the authorities always permit a defaulting Trustee to exonerate themself from liability by pointing to evidence which distinguishes between their personal funds and the trust funds.

As the High Court (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) explained in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89:

The Full Federal Court (Finn, Stone and Perram JJ) has also explained in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 at [242]-[246]:

More recently, Leeming JA (Gleeson JA agreeing) explained in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 at [73]-[79]:

Brennan, Gaudron and McHugh JJ observed in Peter Johan Devries & Anor v Australian National Railways Commission & Anor (1993) 177 CLR 472 at [10]:

In State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) And Others (1999) 160 ALR 588, Kirby J held at 619 [90]:

O’Loughlin J explained in Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [118]:

In the same judgment at [121], O’Loughlin J stated:

At [362], his Honour then commented:

Herschell LC famously said in Browne v Dunn (1893) 6 R 67 HL:

In the same case, Lord Halsbury made the following remarks at 76-77:

Lord Morris went on to make additional comments at 79:

In this jurisdiction, Hunt J subjected the decision of the House of Lords to his typically lucid analysis in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (Cth) [1983] 1 NSWLR 1 and concluded at 26:

In Markem Corp v Zipher Ltd [2005] RPC 31, the United Kingdom Court of Appeal (comprising Kennedy, Mummery and Jacob LJJ) re-emphasised the principle articulated in Browne v Dunn and approved Hunt J’s analysis in Allied Pastoral by saying at 785-786:

I should also note, however, that a trial judge is in no way restricted in his or her assessment of a witness. He or she is not bound to accept any of that which the witness attests to or indeed may only accept part thereof: Cubillo v Commonwealth (2000) 103 FCR 1 at [188]-[123]. The court is not necessarily obliged to accept evidence, even in the absence of cross-examination. In Ali v Nationwide News Pty Ltd [2008] NSWCA 183 Tobias and McColl JJA observed at [112]:

If a witness is cross-examined on a point, cross-examining counsel may be taken to accept it and may not be permitted to address in a fashion which asks the Court not to accept it: Bale v Mills (2011) 81 NSWLR 498 at [46]; Cooper v R (2012) 293 ALR 17 at [85].

Failure to cross examine at witness on a particular matter may be a very good reason for accepting that witness’ evidence, especially where it remains uncontradicted by other evidence in the case: Precision Plastics Pty Ltd v Demir (1975) 132 CLR 361 at 371; Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419 at 426; MWF v R (2005) 222 ALR 436 at [19]; Cooper v R (2012) 293 ALR 17 at [85].

However, in Fox v Percy (2003) 214 CLR 118, Gleeson CJ, Gummow and Kirby JJ observed at 129:

There are a number of contentious documents in evidence in these proceedings. They include:

In relation to caveat AJ876904M (CB 169), the plaintiffs submitted that it should be removed on two grounds.

First, because there is no evidence that the monies used to discharge the CBA mortgage were provided by Wise & Young Pty Ltd (P [12(b)]).

Secondly, because the underlying mortgage was void for forgery (P [12]-[21]). They argued this was because Ms Furlong denied ever signing the document (P [14]), Ms Sheaves gave corroborative evidence that the document did not contain Ms Furlong’s signature when she handled it after the date which is was purported to be signed (P [15(a)]), a comparison of the document suggests it was transposed from another document (P [15(d)]) and no adequate explanation was given by the defendants about how the signatures came to be on the document (P [18]). Further, the plaintiffs submitted that it was a forgery because:

In contrast, the defendants asserted that the mortgage dated 30 October 2014 was an authentic document which was either signed by both Ms Furlong and Mr Mark Leishman or by Mr Leishman alone, whom they assert acknowledged that he had the consent of his wife to sign documents on her behalf. It was submitted that Ms Furlong’s text message to Mr Dimitriou indicates her acknowledgement of this debt to him.

Further, the defendants submitted that the interest rate applicable to the mortgage of 20% is “not exorbitantly high where the loan was in effect a bridging loan”. I observe that the document provides a default rate of 30%, but no submission was made in relation to this rate.

If the court was to find the mortgage documents were forged, the defendants submitted that Wise and Young would have the same rights as the CBA under the mortgage according to the doctrine of equitable subrogation.

In reply, the plaintiffs submitted that Mark Leishman’s evidence does not establish that he executed the mortgage document on his own behalf or that he did so on his wife’s behalf (P in reply [1(a)]). Further, the plaintiffs argued that Ms Furlong’s text message did not support the assertion that she acknowledged that she owed Mr Dimitriou or the defendants a debt pursuant to the mortgage (P in reply [1(b)]).

The plaintiffs’ primary position was that the Bramco entities’ funds were used to discharge the CBA mortgage. However, the plaintiffs recognised that if the court was to hold that the monies from an alternative source, being Mr Lou Zerini or Union Steel, then this third party could only enforce the advance and that Wise and Young would lack standing to do so as it is simply an agent or intermediary for Mr Zerini or Union Steel (P [21]-[34]).

Further, the plaintiffs submitted that if the court was to find Mr Zerini or Union Steel’s monies were used to discharge the CBA mortgage then the plaintiffs had rebutted the legal presumption that Mr Zerini or Union Steel was entitled to the benefit of the mortgage security, on the same terms as the debt discharged (P additional [1]-[4]). This is because (P additional [5]):

The plaintiffs also submitted that if the court found that the monies used to discharge the CBA mortgage ought be returned to Wise & Young, there should be no interest charged on this mortgage because it was created without the knowledge or acquiescence of the Furlong and Leishman parties (P additional [14]), the relevant debt would have been satisfied but for Wise & Young’s wrongful or inequitable actions in misappropriating funds in the DPI accounts (P additional [19]) and because Wise & Young acted with unclean hands (P additional [20]).

In the alternative, the plaintiffs argued that if the court was to hold that an interest rate was applicable to the monies, it should be the higher of either: the default rate of the monies owed to the Commonwealth Bank secured by mortgage or the rate specified in NSW Supreme Court practice note 16 (P additional [23]).

Further, the plaintiffs proposed that the appropriate commencement date for interest to accumulate would be the earlier of: the date when Ms Furlong was aware the funds were provided by an entity associated with Mr Dimitriou or the date when Wise & Young or one of the Dimitriou parties made a demand for the repayment of those monies (P additional [25]). They concluded that as no demands were received by Wise & Young, the appropriate date was 9 October 2015 when Ms Furlong became aware of the advance of the monies when a caveat was lodged over the property (P additional [26]).

Finally, the plaintiffs submitted that to the extent that any brokerage fee could be claimed for discharging the debt secured by the Commonwealth Bank mortgage (P additional [57]):

The plaintiffs submitted that caveat AJ876906H should be removed because the underlying “appointment letter and cost agreement” dated 1 January 2014 does not create a caveatable interest.

First, the plaintiffs asserted that on a proper construction of the appointment letter and cost agreement, particularly provisions 6(g) and 11(f) (CB 440), these clauses do not create a proprietary interest because they are too uncertain (P [45]-[47]).

Secondly, the plaintiffs submitted that on proper construction of the costs agreement, costs only become payable on the issue of an invoice (P [48]) and there is no evidence to suggest any invoices were rendered and served on the Furlong and Leishman parties (P [50]). The plaintiffs also argued that the court ought to find that Ms Kaur’s evidence would not have assisted Mr Dimitriou in proving invoices were prepared or served on the Furlong and Leishman parties because she remains in Sydney in the employ of Mr Dimitriou and/or the defendants but did not give any evidence (P [51]-[53]).

Thirdly, the plaintiffs submitted that the court should find that no debts were owed to Mr Dimitriou and the defendants to support a caveatable interest under the cost agreement because Mr Mark Leishman, Ms Furlong and Mr Gilbert Leishman gave evidence that:

Further, the plaintiffs submitted that because Ms Kaur was not called, yet in a position to make good Mr Dimitriou’s claims of works being completed and invoices issued, the court ought to find that Ms Kaur’s evidence would not have assisted in proving their claims (P [65]-[67]).

Fourthly, the plaintiffs submitted that the court should set aside the appointment letter and cost agreement of 1 January 2014, along with all other cost agreements (P [54]). This was argued to be on the basis of equitable fraud, constructive fraud, unconscionable conduct and/or misleading and deceptive conduct under section 87 of the Competition and Consumer Act 2010 (Cth) and further, or in the alternative, breach of fiduciary duty (P [54]). This was because there was no evidence, beyond the bare assertion of Mr Dimitriou, that the charging clauses were explained or even brought to the attention of the Furlong/Leishman parties when their signatures were sought (P [56]). In relation to Ms Furlong, the plaintiffs further submitted that (P [55]):

However, the plaintiffs acknowledged that Mr Dimitriou did do some work, and would be entitled to remuneration for (P [61]):

However, the plaintiffs asserted that this work gave rise to an unspecifiable amount of fees owed to the defendants because (P [62]):

The defendants submitted that it was “common ground that much work was done” by the defendants for the Bramco entities and that the defendants were therefore entitled to the payment of fees. Further, they argued that the question of the quantum of unpaid fees claimed by Mr Dimitriou was a matter that should be determined by one of the court’s cost assessors.

In reply, the plaintiffs submitted that there is no evidence before the court that establishes that any claim for fees that is bona fide or may be justified on the basis of any contemporaneous records (P in reply [5]).

The plaintiffs also added in reply that Mr Dimitriou or the defendants should not be entitled to any fees or indemnity for acting as a trustee of any funds because (P in reply [10]-[11]):

The plaintiffs rightly asserted that the defendants have abandoned any quantum meruit claim in the Amended Cross Claim of 17 August 2016. Further, they submitted that if the court is to consider such a claim, then there is no evidence to prove this aspect of the case and nor has any evidence been adduced that would support the defendants’ claims to a sum in quantum meruit (P additional [48]-[54]).

The plaintiffs alleged that Mr Dimitriou has misappropriated funds held on trust for Mr Gilbert Leishman (P [68]-[70]; Second Cross Claim [8]-[9]). The plaintiffs submitted that Mr Dimitriou has failed to satisfy the onus of distinguishing between mingled trust funds held in the DPI bank accounts and therefore the court must grant relief to compensate for this misappropriation (P [36]-[42]; P additional [31]-[47]). The plaintiffs also asserted that the quantum of misappropriated funds should be calculated according to the reconciliation conducted by Mr Mark Leishman (P [39]-[40]).

Without coming to any clear position as to who was the relevant trustee of the funds allegedly held on trust, the plaintiffs asserted that it could have been either Mr Dimitriou or DPI (P additional [28]). In both cases, it was asserted that the trustee (either Dimitriou or DPI) acted in breach of trust and that the other, along with the other Dimitriou entities (including the defendants), were liable for breaching either or both limbs of Barnes v Addy (P [29]-[30]).

Further, the plaintiffs submitted that if the court is to find that any monies are owed from the monies advanced to discharge the CBA debt, the Furlong and Leishman parties are entitled to a setoff of these monies against any misappropriated BGI trust funds (P [35]; P additional [58]).

The defendants submitted that Mr Gilbert Leishman should not be held to be the beneficiary of monies received into the DPI accounts as “the monies received with reference to the toil of the business were simply not his monies”. However, the defendants do not identify the proper beneficiary of these funds in their submissions.

Further, the defendants submitted that the evidence relied upon by the plaintiffs, particularly Mr Mark Leishman’s reconciliation, to support the fraudulent misappropriation claim is “hopelessly inadequate”. In addition, the defendants argued that the evidence does not satisfy the Briginshaw standard to prove the misappropriation of funds.

In reply, the plaintiffs, referring to their submissions in chief, simply submitted that their claim “is that a trustee of funds ought to be able to account for funds in its care” (P in reply [3]).

While I will return to some of the matters I deal with in this section in greater detail later in my judgment, it is important that I record my views of the various witnesses. None called by any party in this case was particularly satisfactory.

In so far as Ms Furlong accepts that she did sign a costs agreement, I accept her evidence. In relation to the authorities engaging Mr Dimitriou in discharging the mortgage, of course Ms Furlong and Mr Mark Leishman accept they signed those.

Ms Furlong adopted a distinctly formulaic approach in giving her evidence about her signature or lack of it on various documents. However, on balance, partly because of the concession she made about her signature on the January cost agreements and partly because of the expert evidence of Mr Dubedat, I am inclined to accept her denials that she did not place her signature on various other documents, importantly the documents purporting to mortgage the property.

Mr Mark Leishman was as adamant as Ms Furlong about not signing numerous documents, again particularly the documents purporting to mortgage the property. Mr Mark Leishman was also adamant that he never signed any of these documents on behalf of Ms Furlong. Again, on balance, I accept his denials.

As will become clear later in the judgment, while I accept Ms Furlong and Mark Leishman did not sign the mortgage documents I am entirely satisfied they knew precisely what was going on. They could not have imagined money simply dropped out of the sky at the last minute to save their home. I am reasonably satisfied that they knew and believed that Mr Dimitriou had produced monies from his own sources or sources related to him for the purposes of discharging the mortgage. In my view, they clearly knew or could not have believed that some third party had come to their aid given the failed attempts made by them and others to achieve just that.

Equally, I do not accept that in so far as they suggest it, either could have legitimately believed that the Bramco entities had at any relevant time sufficient resources to discharge the mortgage. That evidence I regard as fanciful and bordering on the contrived.

While I was not overly impressed with either Ms Furlong or Mr Mark Leishman I accept much of which Mr Gil Leishman said. I particularly accept that he met with Mr Dimitriou and his son Mark Leishman at the Crowne Plaza, Hunter Valley on 13 January 2014 and I accept his recollection of the terms of this conversation, particularly that Bramco trading funds were to be held on trust. It was never put to Mr Gilbert Leishman that this conversation never took place or that he was not present and Mr Dimitriou did not himself deny that it took place or deny that Mr Gilbert Leishman was present. In fact, Mr Mark Leishman affirmed Mr Gilbert Leishman’s evidence that this meeting did in fact occur (T 461). Although nothing really turns on it, I do not accept Mr Dimitriou’s evidence that it took place on 9 January 2014. I am of the view that it is more probable that it occurred on 13 January 2014, as Messrs Gilbert and Mark Leishman assert in their evidence (Affidavit of Gilbert Leishman 21 July 2016 [21]; T 461).

On the other hand, I am unable to accept much if not most of what Mr Dimitriou had to say on many topics, especially in relation to the execution of the 30 October 2014 mortgage documents. Generally, I largely reject his evidence, except as so far as I indicate otherwise in further consideration below.

Ms Sheaves, an employee of WYI, gave evidence in these proceedings which I fully accept. Ms Sheaves worked, after a short period as a receptionist, in a management position for WYI. She also seemed to have a strong involvement with all the other entities controlled by Mr Dimitriou and not simply WYI. Most importantly, she had a distinct knowledge of the defendants’ business practises and the particular events that occurred while she was employed. Further, there was no evidence to suggest that she had any motive to give testimony adverse to Mr Dimitriou or the entities he controlled. The only instance where such a proposition was posed was in cross-examination where she was asked if she was “…not exactly very fond of” Mr Dimitriou, to which she simply replied that she “ceased all contact” after she concluded her employment with WYI (T 294/44-50). I believe Ms Sheaves gave her evidence candidly and spontaneously and I accept it in its entirety.

It beggars belief that business people, even unsuccessful ones, would not imagine that a certain degree of documentation would be necessary in a commercial setting, especially one such as this, where none of the parties knew each other before the January 2014 meeting. The form of the documents is unremarkable and the number of them, given the number of persons and entities involved, is equally unremarkable.

I have already identified various documents in the court book which purport to be signed by the Furlong and Leishman parties. The difficulty surrounding the authenticity of each document, particularly those which the defendants assert give rise to their caveatable interests in the property, is compounded by the defendants’ failure to produce any originals of these documents. These issues are also aggravated by the fact that the defendants have failed to call the legal representatives they purport to have drafted these documents, particularly Ms Thelma Gray (one of the defendants’ solicitors) who allegedly drafted the 30 October mortgage documents (T 862). The defendants’ failure to call such witnesses indicates to me that they could not assist the defendants’ version of events or case generally.

Given the business Mr Dimitriou purports to run and his facilitation of the discharge of the CBA mortgage, Mr Dimitriou had a clear motive to ensure that all arrangements between himself, his corporate entities and the Furlong and Leishman parties were appropriately formalised. My belief is that he is so poorly organised and haphazard in his approach that he omitted from time to time, to have arrangements documented in an orthodox fashion. Likewise, as I have already said, the Furlong and Leishman parties would have expected nothing less. Further, I am in no doubt that perhaps when the relations between the various parties soured, Mr Dimitriou embarked upon an exercise of in effect, fabricating certain documents in order to support his, or his corporate entities’ cases.

As I have said above, I accept the plaintiffs’ evidence that they did not sign a number of documents on which their signatures appear, most significantly the 30 October 2014 mortgage documents. I am of the view that their signatures were electronically or otherwise fixed to these documents without their consent.

First, this conclusion is reinforced by a comparison of the signatures on these documents with other signatures the plaintiffs accept are genuine, presented to the court in a transparency by Senior Counsel for the plaintiffs. After comparing these genuine signatures with those on the contentious documents, pursuant to section 183 of the Evidence Act 1995 (NSW) I am able to draw the inference that the plaintiffs’ signatures have been electronically enlarged or otherwise altered and placed onto the mortgage documents. Secondly, I am fortified in this conclusion by the extremely vague evidence given by Mr Dimitriou as to how it was that Ms Furlong’s or Mark Leishman’s signatures came to be on the documents. Mr Dimitriou in fact agreed that he never witnessed either them signing these documents (T 791). Thirdly, as I have said above, Mr Dimitriou failed to call Ms Thelma Gray, his then solicitor involved in the execution of these documents to give evidence. I infer that she would not have corroborated Mr Dimitriou’s account. Fourthly, Mr Dimitriou failed to call anyone else in his office, particularly Ms Kaur, who was clearly involved in the defendants’ day to day activities concerning the Furlong and Leishman parties and by inference, the execution of documents.

Fifthly, I accept Ms Sheaves’ evidence that she found mortgage and security documents in a “Rent-A-Space” in Bella Vista which were signed by Mr Dimitriou and witnessed by herself, but remained unsigned by the Furlong and Leishman parties (Affidavit of Sheaves 10 February 2016 [13]). Ms Sheaves identified the documents (Affidavit of Sheaves 10 February 2016 [17]) as the mortgage dated 30 October 2014 allegedly signed by Ms Furlong and Mark Leishman (CB 796-808, 1122-1134) and the “deed of loan, guarantee and indemnity” dated 3 September 2014 allegedly signed by Ms Furlong (CB 1004-1014, 1201-1211). Ms Sheaves’ evidence suggests that the documents were unsigned after the date on which they were supposedly executed, yet the documents now appear in evidence to be signed.

Further, I accept Ms Sheaves’ evidence of a conversation where Mr Dimitriou asked her in November 2015 if there was “any way we can cut out their signature on the word document” (Affidavit of Sheaves 10 February 2016 [11]). In cross-examination it was never put to Ms Sheaves that such a conversation did not take place. I accept her evidence. Albeit in the context of the mortgage and security documents relating to the defendants’ motor vehicle loan to Ms Furlong (Affidavit of Sheaves 10 February 2016 [11]), this conversation exposes an interest on the part of Mr Dimitriou in the possibility of document manipulation.

Although a serious matter and acknowledging the standard to which I must be satisfied pursuant to section 140 of the Evidence Act 1995 (NSW) and Briginshaw v Briginshaw (1938) 60 CLR 336, for these reasons I am of the view that Mr Dimitriou or someone at his direction manipulated the signatures on the 30 October 2014 mortgage documents to make it appear that Ms Furlong and Mark Leishman signed them when they had not.

Mr Dimitriou quite dishonestly sought to deny his involvement in any exercise of document manipulation, especially in relation to these mortgage documents. Mr Dimitriou may have generally felt that the pair was obliged to sign such documents, but rather than attending to the execution of those documents in the proper and ordinary course of business, in my view he belatedly created them to support his case. That is entirely unacceptable and of course dishonest.

I am of the view that Mr Dimitriou or someone at his direction manipulated the signatures on the 30 October 2014 mortgage documents at some time shortly prior to the lodgement of caveat AJ876904M on 7 October 2015 by Wise & Young. I am fortified in this conclusion because of the fact that the Furlong and Leishman parties had fallen out with Mr Dimitriou shortly prior to this date. Most significantly, I am of this view because it would be against reason for Mr Dimitriou to have not have lodged this caveat sooner if the supporting document existed at an earlier point.

It is for these reasons that I conclude the mortgages documents of the 30 October 2014 are fraudulent documents.

As I have already said, I reject that Ms Furlong and Mr Mark Leishman could have believed that the mortgage was repaid using the Bramco entities’ funds.

First, this is because as at 30 October 2014, the DPI savings account number 13-515-6176 credit balance was $2,628.91 (CB Bank Statements NAB-53). As at 31 October 2014, this credit balance increased to $9,894.92 (CB Bank Statements NAB-53). The highest credit balance this account had in the October-November period was $63,232.52 (NAB-52 to NAB-53). As at 31 October 2014, the DPI cheque account number 13-515-6117 had a credit balance of $12,266.48 (CB Bank Statements NAB-19). The highest credit balance this account had in the October-November period was $25,353.38 (NAB-18 to NAB-19). Therefore, at no time in the running of either account closely prior to 30 October, but for the injection of the $1,070,000 via the Union Steel transfer, did either DPI account have anything remotely like a credit balance of $1,000,000 to discharge the CBA mortgage. Further, neither Ms Furlong, Mr Mark Leishman or for that matter Mr Gil Leishman ever suggested they had access to DPI’s banking records or otherwise had an ability to know what was in DPI’s bank accounts at any particular time to ascertain if there were sufficient Bramco funds to discharge the CBA mortgage.

Secondly, the evidence shows that Ms Furlong and Mr Mark Leishman expressly authorised Mr Dimitriou to organise the repayment of the mortgage (CB 364-369) and also more importantly, that he was doing so in the face of NSW Supreme Court proceedings initiated by the CBA. They were obviously aware that he was assisting them in the proceedings, which makes their pleading that they were unaware of Mr Dimitriou discharging the debt implausible (P further submissions [5]). For example, on 5 June 2014, Mr Dimitriou acted on Ms Furlong and Mark Leishman’s behalf to send a letter to Ms Hannah Pepper of Turks Legal, referencing two proceedings initiated by the CBA against the plaintiffs for the enforcement of two mortgages the CBA held over the property. This evidences their direct knowledge that funds were going to be advanced in their favour to discharge the CBA mortgage.

Thirdly, there is no evidence at any point during the period of January 2014 to October 2014, of any requests from Ms Furlong or Mr Mark Leishman to Mr Dimitriou to repay any portion of the CBA mortgage debt. If they had truly believed that Bramco had sufficient income throughout this period to total $1,000,000 by October, there is no reason why they would not have sought to repay portions of this debt during the months preceding October 2014. In fact, there is no evidence to suggest any repayment was made at all on the CBA mortgage during this period.

Fourthly, and most damningly, I am satisfied that the communications between the parties detailed above make it clear that Ms Furlong and Mr Mark Leishman were cognisant that the monies advanced to discharge the CBA mortgage came from Mr Dimitriou and his entities. On 1 November 2014, Ms Furlong acknowledged that Mr Dimitriou had ‘refinanced’ the debt they owed to the CBA and expressed a significant degree of gratitude to him for doing so (CB 294). On 8 September 2015, Mark Leishman clearly acknowledged he was “working to return all funds to George” (Exhibit D3). Even in Mark Leishman’s 18 September 2015 statutory declaration he acknowledged that the property had been “refinanced” (CB 4052 [4]). I am fortified in this conclusion because of Mark Leishman’s almost daily attendance at Mr Dimitirou’s offices at this time. He would have been at the very least aware in broad terms of the source of the funds and it is inconceivable that he would not have shared such an awareness with his estranged wife, to which the evidence suggested he maintained contact with in this period.

Fifthly, as I have said above, Ms Furlong and Mr Mark Leishman were in no position to postulate as to whether there were sufficient funds in the DPI accounts to repay the CBA mortgage. There is no evidence of them ever keeping a running tally of the balance of Bramco invoices nor that they ever requested bank statements of the DPI accounts from Mr Dimitriou. They simply had no basis to believe that Bramco had sufficient funds in cash to repay the debt. While Mr Mark Leishman would have had an intimate knowledge of the invoices rendered by Bramco, he would not have known the cash it had available, after expenditure, tax and the like were deducted.

Having carefully considered all the evidence, I am satisfied that Ms Furlong and Mark Leishman, despite their rather vague evidence on the topic, must as I have already said, appreciated that Mr Dimitriou had procured the funds from himself or a related entity to discharge the CBA mortgage.

Rather bizarrely, there is no evidence that Mr Dimitriou ever informed Ms Furlong or Mark Leishman as to where the monies came from to discharge the CBA mortgage. It is however apparent that for whatever reason, funds came into the Wise and Young account from a Union Steel account and $1,070,000 was withdrawn from the Wise and Young account and used to discharge the CBA mortgage.

I am therefore of the view that the monies advanced to discharge the CBA mortgage were funds of Wise and Young, transferred from account number 74-280-9712 (CB Bank Statements NAB-172; CB 289-290). Even though the monies initially came from Union Steel, according to the authorities above, the legal owner of this deposited money was Wise and Young. It follows that the plaintiffs owe Wise and Young $1,070,334.82.

I have previously concluded that the alleged mortgage document was a fraudulent document and therefore cannot be used to evidence the property being security for the loan. Consequently, there is a lack of any other express agreement between the plaintiffs and Wise and Young about the terms of the discharge of the CBA mortgage.

However, the authorities above clearly allow the court to hold that an equitable mortgage exists pursuant to an express or implied agreement between the relevant parties.

I am satisfied that the plaintiffs intended and fully expected that if the CBA mortgage was discharged another arrangement involving a mortgage would take its place. They realised they were not debt or mortgage free. Their above communications about “refinancing” the mortgage fortify my conclusion. It would be almost inconceivable that an amount of $1,070,000 would be lent to them gratuitously by an arm’s length commercial entity.

Most damningly, none of the Furlong or Leishman parties requested Mr Dimitriou to give them possession of the CT for the property after the CBA mortgage was discharged. This seems to me to suggest that they knew Mr Dimitriou was to hold this as security for the money they owed him or one of his entities. This is especially the case for Mark Leishman, who as a somewhat sophisticated businessman, would have fully acknowledged the importance of possessing the title deeds of his own property and made every attempt to ensure that they were in his possession if the property had been truly free of all encumbrances. Put plainly, I am of the opinion that none of the Furlong and Leishman parties expected to obtain the CT to the property because they knew it was to be subject to a mortgage from Mr Dimitriou or one of his entities.

I am therefore satisfied that the loan was not a simple loan and is rather an equitable mortgage secured against the property in favour of Wise and Young. As such, caveat AJ876904M must stand. Wise and Young retains a caveatable interest in the land. The caveat adequately prescribes the interest of Wise and Young in the property, as it remains an unregistered (albeit equitable) mortgage over the property as specified in the document (CB 215-216): Kerabee Park Pty Ltd v Daley (1978) 2 NSWLR 222 at 232; Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459; Windella (NSW) P/L v Ronald James Hughes & 2 Ors (1999) 49 NSWLR 158; Schedules 3 and 4 of the Real Property Regulation 2014 (NSW).

Consistent with the above authorities, Equity cannot intervene by way of subrogation because the declaration of an equitable mortgage is a sufficient remedy to avoid a result which would be unconscionable to Wise and Young.

Having found that an equitable mortgage exists between the plaintiffs and Wise and Young, the issue arises as to the applicable interest rate on this loan.

Monies in any modern commercial setting always carry an interest rate. As I have found that the mortgage documents were fabricated, the interest rate contained in those documents is inappropriate.

However, there is no reason as a matter of principle or fairness why the loan should not carry interest. The plaintiffs clearly could not, on the evidence, obtain finance from any conventional financial institution. They were in fact driven to a lender of last resort in Mr Dimitriou. I am of the view that his conduct disentitles him, or Wise and Young, from charging the rate detailed in the mortgage documents of 20%, or 30% on default. Equally, I keep in mind that the plaintiffs could not borrow at the lending rate offered by banks and other similar financial institutions.

While I therefore do not believe it appropriate in the circumstances to impose a rate of 20% or 30%, I believe that the appropriate rate is that provided by practice note 16 which provides for a rate of interest of 4% on top of the cash rate. As I see at present, that rate should be calculated from the day the CBA mortgage was discharged on 30 October 2014 and until repayment by whatever means.

The plaintiffs put as an obstacle the award of interest, the notion of unclean hands. The ‘unclean hands’ that is relied upon is the fraudulent conduct of forging the mortgage. In my view, the unclean hands doctrine could only disentitle Wise and Young from claiming either 20% or 30% interest on that mortgage, because the documents in which these rates are prescribed have been procured by fraud. However, it cannot disentitle Wise and Young from being awarded any interest at all.

In the present case, I am of the view that the parties not only intended an equitable mortgage to be created upon the discharge of the CBA mortgage but that they also intended that commercial reality would be applied and that some interest would be charged (capitalised or not) upon the facility.

The expressions used by Ms Furlong and Mr Mark Leishman, especially Mr Leishman about “repaying” Mr Dimitriou and “refinancing”, when spoken by a person experienced in commercial matters, is entirely antithetical to a mortgage being interest free. That would be such an unusual event in modern commerce as to be unthinkable in the absence of some express agreement. After all, this was not a facility forged between family members, but two sophisticated commercial parties. Mr Dimitriou, acting for Wise and Young, was for all purposes a commercial party at arm’s length. There could be no expectation by the plaintiff that this arrangement would be on uncommercial terms and hence interest free.

As the court in applying the unclean hands doctrine has a discretion to refuse relief, it can exercise a discretion to granted limited relief: Kettles and Gas Appliances Ltd v Anthony Hordern and Sons Ltd (1934) 35 SR (NSW) 108; Kation Pty Ltd v Lamru Pty Ltd (2009) 257 ALR 336 at [28]; Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22,421 at [181]. The doctrine is intended to operate so as to prevent a party from taking advantage of their own wrong. In the present case, the only advantage that Wise and Young could derive from Mr Dimitriou’s conduct in manufacturing the mortgage would be the applicable interest rate of 20% or 30% on default. I have already denied this advantage by rendering the document void for fraud.

It would be disproportionate to deprive Wise and Young of all interest for the advance of monies to discharge the CBA mortgage because of Mr Dimitriou’s conduct almost a year later, in light of my finding above that he executed this document shortly prior to the lodgement of the caveat on 5 September 2015. There would be no requisite nexus between the loaning of monies to discharge the CBA mortgage by Wise and Young and this latter conduct: Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501 at 508; Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22,421 at [164]. In other words, the entitlement to some interest on the advanced monies was not affected by Mr Dimitriou’s latter conduct: FAI Insurance Ltd v Pioneer Concrete Services (1987) 15 NSWLR 552 at 561. I am therefore of the opinion that the doctrine of unclean hands does not provide a bar to the award of any interest on the equitable mortgage and the rate determined above is appropriate.

I must also address any fees owed pursuant to the discharge of the CBA mortgage. As per my findings above, Wise and Young transferred funds it legally owned to discharge the CBA mortgage. As such, Wise and Young did not secure monies from a third party to discharge the CBA mortgage, but rather provided these funds itself. It follows from this finding that no brokerage fees would be owed by the Furlong and Leishman parties pursuant to clauses in the relevant cost agreements which purport to charge fees for the brokering of the discharge of the CBA mortgage.

On 22 August 2016, I ruled against Mr Dimitriou being able to put in evidence so called time records or documents of the sort which would in theory substantiate any fees he alleges he or the defendants are owed.

These documents were produced at an extremely late stage of proceedings, after the hearing had already been postponed once and then days into the rescheduled hearing. Mr Dimitriou had ample opportunity to present any documents substantiating these fees, being on notice that they would be in contention since he acknowledged on 13 November 2015, as per paragraphs [50]-[53] and [55] of his affidavit of that date, that the work he or the defendants performed for the Bramco entities would be an issue in these proceedings. Further, he lodged a Defence on 31 March 2016 and a Cross Claim on 2 June 2016 in which the defendants claimed unpaid fees. At these times, Mr Dimitriou must have been acutely aware that he bore the onus of proving the precise amount of fees he was owed, yet he failed to timely produce any evidence to support these claims.

Further, Ms Sheaves gave evidence in the proceedings that the defendants never kept time records to substantiate any work they had completed (T 274, 281). As I have already said, the defendants also failed to call Ms Kaur to give evidence about the method of recording work performed, even though it was asserted by the defendants that she was the principal employee of the defendants providing services for the Bramco entities.

In addition, in evidence Mr Dimitriou did not identify the precise methodology, if there was any, by which time or the work performed by the defendants was recorded. Compounding this issue was the lack of any contemporaneous accounts ever rendered to show the nature of the work undertaken by the defendants for the Bramco entities.

This evidence of Ms Sheaves, taken together with Mr Dimitriou’s shambolic or non-existent business practises casts significant doubt over the authenticity of any belatedly produced documentation to support the fee claim and diminishes the possible probative value such records could have.

While the defendants unhelpfully suggested for the first time in final submissions that an expert should be used to quantify the precise amount of unpaid fees or payments owed to the defendants by the Bramco entities or plaintiffs, I reject this proposition, as for the reasons above, the defendants had an exceptionally long period of time to call such expert evidence in the proceedings, but did not at any stage prior to 4 December 2016 propose such a course. It would have been perfectly open to the defendants, and quite frankly perfectly sensible, to seek expert evidence to quantify the amount of work and the appropriate charges for this work during the hearing, however they failed to do so.

The evidence in this case exposed the fundamental flaws in the business practices of Mr Dimitriou and the defendant companies.

The professional services, if any, were allegedly rendered by WYI, the third defendant. This corporation purported to offer “Corporate advisory, Enterprise advisory, Financial planning & wealth creation Litigation Support, Management consulting, Sucession [sic] planning, Superannuation, Tax consulting, Tax planning, Accounting compliance and BAS/GST” services (Exhibit P2).

Mr Dimitriou was the director of all the defendant corporations, yet had no formal qualifications in any field of accountancy, business or law. When questioned about his education and qualifications, Mr Dimitriou confirmed that he had no tertiary qualifications but had “finished year 11” and that his “experience in accounting comes from hands-on [experience] over a number of years” (T 655-656). Further, he explained that the only three formally qualified persons who performed services on behalf of the defendants for the Bramco entities were the accountants Rohan Virmali, Lily Wang and Navneet Kaur (T 653-655). None of these individuals gave any evidence in these proceedings. The failure to call Ms Kaur was inexcusable, as she was mentioned continuously in the evidence, heavily involved in the services performed by the defendants for Bramco and was explained to still be working for the defendant companies (T 650). She would have undoubtedly had an intimate knowledge of the Bramco business, the money flows between the DPI accounts and the defendant companies’ services rendered on behalf of the Bramco entities. It is reasonable to infer from this that Mr Dimitriou did not want any exposure of what he and others were doing.

Furthermore, the defendant companies did not keep intelligible business records, seemingly did not use any formal accounting software in performing services for the Bramco entities and did not render invoices to the plaintiffs for the services they allegedly performed for them. These practises could hardly be classified as ‘professional’ services.

It is against this background that I consider the alleged fees owed by the defendant companies for services and work performed for the Bramco entities.

As the foundation stone for caveat AJ876906H, the defendants assert a lengthy commercial relationship with the Furlong and Leishman parties, which in turn lead to the incurring of substantial fees. The relevant ‘appointment letters and cost agreements’ specify billing for fees to occur “monthly, or when the services have been provided with the account to be paid within 14 days” (CB 441, 468, 508) or for fees to “be invoiced to the client unless otherwise agreed in writing” (CB 483). These are said to give rise to a caveatable interest.

It is important to note that at the very least from November 2015 Mr Dimitriou has been on notice of two things. First, the Ms Furlong and Leishman interests denied owing his companies anything like the fees he alleges are owed. In addition, they say no invoices were rendered nor did they have any knowledge of the actual work that had been completed by him and/or others.

Secondly, it has been blatantly obvious to Mr Dimitriou and Messrs Foley and Hall, his erstwhile lawyers, that the level of fees and indeed the precise work done by Mr Dimitriou’s companies has been put in issue, and for some considerable time.

While it was pleaded that WYI had performed work for the Bramco entities and had forwarded invoices for this work to Ms Furlong and Mark Leishman (Defence 31 March 2016 [AM]-[AP]; First Cross Claim 2 June 2016 [21]-[23]), no evidence was produced to support this assertion. This was even though it was promised in the First Cross Claim (since amended on 17 August 2016) that “the complete list of all the tax invoices evidencing the amount claimed as owed to the Third Cross-Claimant will be provided a reasonable time prior to the hearing” (First Cross Claim 2 June 2016 [23]).

Importantly, there is no evidence of any services rendered by the defendants which is even remotely ‘professional’ in nature, and therefore, no reason by which they could have charged any sort of corresponding professional fees. Over and above menial tasks such as the electronic transfer of funds between the DPI bank accounts and the registration of corporate entities, it is impossible to ascertain what other work was completed by the defendants.

As I have said there has been a total absence of evidence from other employees of the defendants, most notably, Ms Kaur, who was the key accountant allegedly working on behalf of the defendants for the Bramco entities.

Ms Sheaves gave evidence that there was no process or procedure employed by the defendant companies for recording time (T 272, 274). She further explained that she would bill time under the instructions of Mr Dimitriou on the basis of “how long he spent or how much he believes we should charge” (T 272). Ms Sheaves gave evidence that various tax invoices, including those supporting the 30 October 2014 security documents, were prepared retrospectively by her in 2015 under the instructions of Mr Dimitriou and Ms Kaur (T 275-281). Ms Sheaves also explained that various invoices she was cross-examined on dated 2014, 2015 and 2016 were not created by her and that she had never seen them before, even though it was her job to prepare such invoices (T 284).

While Ms Sheaves recognised that the numbers of the various invoices seemed to chronologically follow and that the date which they bore could have been the date they were finalised (T 285-286), Ms Sheaves explained that this did not prove they were contemporaneously prepared because it was also possible to alter the invoice number and hence the invoice date, in a process explained to her by Ms Kaur (T 289).

Further, I have strong reason to doubt the authenticity and contemporaneity of these invoices because it is unlikely that Ms Kaur would have shown Ms Sheaves how to alter the invoice numbers unless it was intended retrospectively, and arguably dishonestly, to produce invoices. Ms Sheaves also explained that despite being described as a “lending manager” on various Wise and Young invoices (CB 379-398), she never held such a role at the company and no such role ever existed (T 282-283). Ms Sheaves also stated that she was not involved in the preparation of any tax returns (T 273).

I accept Ms Furlong and Mark Leishman’s evidence that they never received invoices from the defendants for work the defendants allegedly performed for the Bramco entities (Affidavit of Mark Leishman 4 November 2015 [57]; Affidavit of Mark Leishman 24 November 2015 [38]-[39]; Affidavit of Furlong 4 November 2015 [46]; Affidavit of Furlong 17 June 2016 [46]; T 371-372, 411, 428, 435, 500). There may have been invoices created, as Dimitriou asserted in oral evidence (T 649), however I accept that even if they were created, they were never received by the Furlong or Leishman parties.

Ms Furlong acknowledged that she had requested the defendants provide “tax returns, profit and loss statements and reconciliations” but that she never received any such documents from the defendants and had no knowledge of such documents being lodged (Affidavit of Furlong 29 July 2016 [27]; T 336, 368, 370-371).

Mr Dimitriou himself accepted that even though the defendants were retained to prepare tax returns and BAS statements for the plaintiffs, no such documents were ever prepared (T 762-764).

Mr Dimitriou’s total failure to keep and maintain and/or in a timely fashion produce to the court business records of various sorts is testimony to his incompetence and/or dishonesty. His failure to call Ms Kaur is again testament to his unwillingness or inability to clearly and candidly explain precisely what and he and his staff were doing and when, if anything at all.

There was no specific assertion of the time and services the defendant companies or Mr Dimitriou performed for the Bramco group of companies and to date there is no material before the court which would enable it to make such findings.

In totality, there is simply no evidence to permit me to find that any invoices were rendered to the plaintiffs such that they would be liable for fees to be paid and that a caveatable interest arose under the relevant cost agreements. While the plaintiffs acknowledged that some work had been completed by the defendants for the Bramco entities, Mr Dimitriou has failed to satisfy the onus on him to quantify the precise debt that is owed to him, if any.

Without such quantification, the court cannot be satisfied that there is any debt owed to the defendants by the plaintiffs or the Bramco entities which could be repaid by them or which, in the same sense, could create a caveatable interest.

For these reasons, in my view, caveat AJ876906H should be removed because the defendants have failed to prove there is any outstanding debt owed to them pursuant to the “appointment letter and cost agreement” dated 1 January 2014 sufficient to the support any caveat.

While it is unnecessary to consider because of my findings above, I also note that in my view the clauses in the appointment letters and cost agreements are too uncertain to support a caveatable interest in the property. In considering a similar clause in a WYI appointment letter and cost agreement, I respectfully agree with Darke J who stated in Sanna v Wyse and Young International Pty Limited & Others (No.2) (2015) 18 BPR 35-699 at [27]:

I therefore conclude that even if any debts were owed to WYI pursuant to the appointment letter and cost agreements, the relevant terms of these agreements would not give rise to a caveatable interest.

In so far as it is submitted on behalf of the plaintiffs and first cross defendants that the January appointment letters and cost agreements should be set aside on the basis of unconscionability, that argument has not been seriously developed at the trial.

In light of my findings on the lack of evidence to support any outstanding fees under the appointment letters and cost agreements, this issue becomes largely, if not entirely, irrelevant.

Nevertheless, it is not immediately apparent to me how an unconscionability argument could have succeeded. It does not seem that the plaintiffs or first cross defendants were suffering from any special disadvantage or that the documents were inconsistent with Equity or good conscience: Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 462 (per Mason J), 474-475 (per Deane J); Blomley v Ryan (1956) 99 CLR 362 at 429; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 324. It appears to me that the plaintiffs and first cross defendants were in fact experienced and somewhat sophisticated commercial parties, albeit in a desperate financial situation.

That they were in such a financial position obviously cannot be gainsaid, but alone this cannot, in my view, support a finding of unconscionability. The mere fact that a document was not explained before a person signs it does not itself support an allegation of unconscionability. Nor in my view are the terms of the arrangement or the circumstances in which the present documents were signed necessarily support any allegation of unconscionability. Nor can the fact that they were in a desperate financial situation. Those factors may suggest there was an inequality of bargaining power, however this is not sufficient to prove unconscionability: Australian Corporation and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 64.

The fact is that they fully appreciated their parlous financial situation and they looked to Mr Dimitriou and/or the defendants to resolve their difficulties in every respect. As Deane J explained in Louth v Disprose (1992) 175 CLR 621 at 638, approved by the High Court in Kakavas v Crown Melbourne Limited (2013) 250 CLR 392 at [18]:

It must therefore be noted that without such a vitiating factor, a person who signs a document which is known by them to contain contractual terms and affect legal relations is bound by those terms and it is immaterial that they have not read the document: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [57].

I also note that the plaintiffs resort to a number of phrases which if properly developed in either submissions or evidence, could theoretically amount to vitiating factors. But in the end, they are no more than a litany of labels which remain largely unexamined and unsubstantiated. I therefore do not propose to set aside the relevant cost agreements on the basis of either equitable fraud, constructive fraud, misleading or deceptive conduct, breach of fiduciary duty, any section of the Competition and Consumer Act 2010 (Cth) and of course unconscionability, for the reasons I have stated above.

The quantum meruit claim pleaded by the defendants is unsubstantiated by the evidence and has not been explicitly pressed in final submission. It was initially pleaded, however then removed in the Amended Cross Claim of 17 August 2016.

Despite being abandoned at hearing, I note that there is however no evidential basis supporting a quantum meruit claim. While the plaintiffs acknowledge that the defendants have undertaken work of various sorts, they deny that they have a capacity to quantify it. As per my above reasoning, I agree.

No attempt has been made by the defendants to produce any evidence which would permit me to award damages on a quantum meruit basis. Mr Dimitriou is not an accountant and does not have any legal training or qualifications to warrant the award of professional fees. Further, he has not called any of his employees, importantly the accountant Ms Kaur, to indicate the kind of work she did or the extent of the work she undertook. Consistent with the analysis above, there is no reliable evidence of any accounts that were kept or tax returns contemporaneously prepared, for example. There was no attempt to adduce expert evidence precisely to quantify the amount of time and hence the value to be attributed to any time expended on behalf of the Furlong and Leishman parties. Moreover, as above, when shown an example of some documents that Mr Dimitirou attempted to tender as time records, his office manager at the time, Ms Sheaves, denied that any such records were kept.

For these reasons, there is insufficient evidence to award damages to the defendants for work performed on a quantum meruit basis, even had it been pressed.

It is well accepted that Mr Dimitriou and the defendant companies bore the onus of distinguishing their funds from those held on trust in the ‘mixed’ DPI bank accounts. Mr Dimitriou had ample opportunity during the proceedings, as exemplified in the procedural history outlined above, to present evidence to discharge this onus. Further, in his affidavit of 5 December 2015, Mr Dimitriou explained that he was explicitly aware of the plaintiffs’ claim that he misappropriated trust monies, stating at [5]:

This statement clearly shows that Mr Dimitriou was on notice from 5 December 2015 that he was going to have to defend allegations of misappropriation and precisely identify the nature of each transaction described in the DPI bank accounts. However, he failed to provide any plausible explanation for them, detailed or otherwise. There was a rather bland assertion that all monies could be accounted for.

Eventually, after the hearing had commenced, Mr Dimitriou produced documentation which he alleged explained his use of these trust funds. All of this documentation was in my view unintelligible and its authenticity was questionable. Mr Dimitriou had innumerable opportunities to produce this documentation. Yet, he failed to do so with any urgency or seriousness. It was not until the proceedings commenced that he felt the urge to produce voluminous material which he alleged aided him to discharge the onus of proving the use of the funds held on trust in the DPI bank accounts.

In the interests of fairness, I denied this request: The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. Although for reasons that are later explained I have determined to reverse my position on this aspect of the case.

According to the authorities above and on an objective analysis of the evidence, I am satisfied that it was intended that the Bramco entities’ trading funds were to be held by DPI as trustee for the benefit of BGI and Mr Gilbert Leishman as beneficiaries. I have already said I accept Gilbert Leishman’s recollection of the terms of the conversation at which he was present with Mr Dimitriou and Mark Leishman, as set out in Gilbert Leishman’s affidavit (Affidavit of 21 July 2016 [21]). Viewed literally, this conversation could be construed as suggesting that Mr Gilbert Leishman was to be the sole beneficiary of the alleged trust (CB 1156-1157).

However, it seems to me that on a proper, objective view of the evidence as a whole, both BGI and Mr Gilbert Leishman are the proper beneficiaries of the trust. I am of this view because BGI was the entity which generated all of the revenue and was the entity established for the very purpose of being the face of the Bramco business. Further, I consider Mr Gilbert Leishman to be a joint trustee because this revenue was in part or in whole, I infer, generated by the use of Mr Gilbert Leishman’s intellectual property.

In his Amended Second Cross Claim at [7] and in his affidavit of 21 July 2016 at [9], Mr Gilbert Leishman asserts, without the reference to any underlying evidentiary basis, that he was at all relevant times the “sole proprietor and owner” of the Bramco entities’ intellectual property. In the Second Cross Claim, he asserts that up until 17 December 2013, Bramco Electronics was the licensee of his intellectual property. Further it is asserted that Bramco Electronic was placed in liquidation and as a result ceased to be the licensee of the intellectual property (Affidavit of Gilbert Leishman 21 July 2016 [8]). No detail is thereafter pleaded as to what if any license arrangement exists and with whom.

In his affidavit of 21 July 2016, Mr Gilbert Leishman makes no mention likewise as to what if any license exists and with whom in relation to the intellectual property. No attempt was made at the trial to prove the detail of any license agreement nor the proprietorship of any patents or trademarks if they exist.

However, when he gave his evidence, Mr Gilbert Leishman was not cross examined to suggest that what he asserted in his evidence was inaccurate or untrue. Mr Dimitriou of course was arguably in no position (beyond mere denial) to prove the contrary of the assertion made by Mr Gilbert Leishman. In fact, Mr Gilbert Leishman gave evidence of a conversation on 13 January 2014, which I have accepted, in which Mr Dimitriou expressly acknowledged that “Gil owns the IP” (Affidavit of Gilbert Leishman 21 July 2016 [21]).

On balance, I am prepared to accept Mr Gilbert Leishman’s evidence and I am fortified in my conclusion by the defendants’ failure to test his assertions (in pleadings or affidavits) in cross-examination let alone make any attempt to call any evidence of a tangible nature to the contrary.

In addition, I have resolved that the proper trustee is DPI because it was the entity which all the parties knew would receive the Bramco trading funds and deal with them according to the terms of the trust. I accept Gilbert Leishman’s evidence that he and Mr Dimitriou agreed that Mr Dimitriou would conduct the everyday financial details of the Bramco entities, keep proper accounting records and hold surplus funds on trust for BGI after having paid for various debts of the business. This establishes that all funds received in the DPI bank accounts, minus proper expenses, were to be held on trust.

The evidence suggests that all monies coming into the DPI bank accounts were relevantly from the Bramco entities. The evidence is all one-way in suggesting that the agreement between the relevant parties was that all funds would be received by Mr Dimitriou on behalf of the Bramco entities and be held in the DPI bank accounts. Mr Dimitriou accepted that he had implemented this arrangement by attempting to (although the evidence shows this did not occur in practice) receive income into the DPI savings account numbered 13-515-6176 and pay all expenses out of the DPI cheque account numbered 13-515-6117 (T 680-681). While Mr Dimitriou alleged that some of the monies coming into the DPI accounts were loans provided by the defendants, no supporting documentation for these assertions was ever presented to the court, precluding any finding that there was any income in the DPI accounts that did not originate from the Bramco entities.

Subject however, to what if any monies are found to have been misappropriated or misapplied and hence owed to the beneficiaries, a question might arise in what proportions each beneficiary is entitled to share in those proceeds. I will hear further submissions in due course on this topic, subject to the referee’s report which I propose below.

Where it can be established that a trustee has mingled his own funds with trust funds, the law regards all funds held and or dealt with by the trustee as trust monies. There is an onus therefore on the trustee, if they are able to, to distinguish between those (if any) of the funds that are theirs and the funds which belong to the trust.

In the present case, I am satisfied that there has been a mingling of funds. Mr Dimitriou admitted funds in the DPI bank accounts had been mingled (T 742). It seems to me that consequently, the onus shifts to DPI to distinguish between these funds.

In my view, DPI has thus far failed to discharge this onus and also committed serious breaches of its duty to keep proper accounts and records and arguably to act honestly in relation to the trust.

First, the accounting in the DPI bank accounts was shambolic. Mr Dimitriou, or DPI as the corporate trustee he directed, chose the description to be given to each item in the bank statements. The precise nature of each transaction lied peculiarly within his knowledge, yet he has failed to provide any clarity on each of the transactions in the trust accounts. The descriptions given to the transactions in the DPI bank statements are vague and largely unintelligible. Mr Dimitriou’s lack of apparent readiness to assist the court in tracing the transactions in the DPI bank accounts is telling. He was given more than every reasonable opportunity to do this, yet he failed to do so. This failure is inexcusable, given the extensive services his corporations purported to supply customers, particularly in accounting, with the services of Ms Kaur and other of his staff.

Most importantly in my mind, many of the entries in the bank statements are of a generic kind, for example the variously described ‘loan’ transfers or simply an amount transferred out of the account to an unspecified destination labelled “transfer”. Mr Dimitriou was the person who chose or supervised the choice of every description of every item in the DPI bank statements. But, when asked, he was simply unable coherently to intelligibly explain what it was he described in each transaction. Leaving aside any documentation he may or may not possess which is authentic and contemporaneous, he has not yet presented a plausible and credible explanation of what he was doing with these funds. Further, while Mark Leishman has purported to authorise or explain the use of some of these items in the bank statements, the vast majority of them remain unexplained.

My view on this is fortified by Mr Dimitriou being unable to readily supply orthodox business records and by reason of his failure to call even one of the accountants employed by him or his group of companies to explain their accounting system or the work they performed for the Bramco entities. This makes his failure to keep proper records even more serious, and adds to the weight of the onus upon him.

I am equally fortified by the evidence of Ms Sheaves as to the haphazard or non-existent business practise of Mr Dimitriou in his day to day so called record keeping.

Mr Dimitriou, when on notice and frankly obliged to produce evidence to defend the very serious allegations in these proceedings and to provide sufficient evidence for his cross-claim, failed to produce any conventional books and records to explain any of these transactions and their descriptions. All Mr Dimitriou did was produce documentation which was either inadequate and/or suggested recent invention. While he stated that he was able to give explanations for the various transactions, he simply failed to do so comprehensively, or at all, when he was given ample opportunity. This absence is again inexcusable, given that he must have appreciated that it was in his, and the defendant companies’ interests to do so, and to do so in some detail.

For example, in cross-examination, Mr Dimitriou was asked about the meaning of various transactions described as ‘loans’ in the DPI bank statements, such as “Bramco Loan” or “Loan Bramco Group”. He, being the person who coined the phrase, was the primary person who would have known what this meant. He responded in the following manner at T 884 to 886:

In giving further oral evidence, Mr Dimitriou again failed to give any intelligible explanation for the variously described ‘loan’ transactions in the DPI bank accounts (T 882-885, 698-704).

Mr Mark Leishman asserted that he had no knowledge of these loans and had never signed, executed or sighted a loan agreement between himself, Mr Dimitriou and or the defendant companies (T 408; Affidavit of Mark Leishman 4 November 2015 [23]). Ms Furlong did not give any specific evidence in relation to these ‘loan’ transactions, however she explained that she never borrowed money from Mr Dimitriou or his companies (Affidavit of Furlong 29 July 2016 [12]).

Further, Mr Dimitriou accepted that he did not keep or prepare documents underlying the loans (T 897-900) and was unable to point to any underlying document supporting the transfer, other than insufficiently promising that he would show that particular transfer in another schedule he had prepared (T 694-707). His answers to questions surrounding the ‘loan’ transactions were ambiguous, implausible and insufficient to explain the nature of each transaction. Mr Dimitriou’s choice of this generic term “loan” was either done because he is lazy, incompetent or more plausibly, to be deliberately ambiguous so as to cover a more cynical purpose. If one is to trace these “loan” transactions, they each have different paths through the defendant entities’ bank accounts. It is impossible to ascertain any clear purpose of the “Bramco Loans” from the evidence before the court. This difficulty is compounded by the absence of any loan documentation which could explain the use of that terminology.

Apart from these ‘loan’ transactions, Mr Dimitriou also failed to explain the nature of other transactions in the DPI accounts during the proceedings. For example at T 744:

Again at T 683 to 684:

Despite his failure to explain these transactions, there is little doubt that Mr Dimitriou was paying some expenses from the DPI accounts from time to time for Bramco. This is reinforced by Mark Leishman’s evidence that he would direct payments to be made out of the DPI accounts for business expenses (Affidavit of Mark Leishman 24 November 2015 [11]) and his reconciliation finding that some in effect $700,000 of the transactions in the DPI accounts were authorised transactions, suggesting that they were expenses paid by Mr Dimitriou. Further, both Ms Furlong and Mark Leishman accepted that they were paid wages by Mr Dimitriou, and in fact, had to ask him numerously for such payment (T 244-245, 259, 421-422). Mark Leishman explained that funds in the accounts were “utilised for the day to day running” of Bramco “including the payment of bills, rent, materials, wages and expenses” (Affidavit of Mark Leishman 24 November 2015 [8](e)]. Further, there is no evidence before the court that any persons to which Bramco did business had outstanding debts owing to Bramco when Mr Dimitriou was in control of the corporate structure.

However, as above, I accept the evidence of the Ms Furlong and Mr Mark Leishman that they never received any accounting from DPI, Mr Dimitriou or the defendants. Further, I accept the evidence of Gilbert Leishman that Mr Dimitriou in fact refused to provide such accounts when he asked him, instead meeting these requests with threats and belittlement (Affidavit of Gilbert Leishman 21 July 2016 [41]-[44]). This alone is sufficient to establish a breach of the duty to keep proper accounts, however it is gravely compounded by the unsatisfactory business practises of the defendants and Mr Dimitriou.

For the reasons above, I am of the view that DPI, largely through the conduct of its sole director Mr Dimitriou, acted in clear breach of its duties as trustee to keep proper accounts and to act honestly in relation to the trust.

According to the principles above, it follows that Mr Dimitriou, as director, secretary and sole shareholder of DPI (CB 209-211), is also liable as an accessory under the second limb of Barnes v Addy (knowing assistance) to DPI’s breaches. It is clear on the evidence and according to my findings above, that Mr Dimitriou was the controlling mind of DPI, the key individual in charge of its day to day operations and the person ultimately responsible for keeping and rendering accounts. He was, according to the authorities referred to above, the alter ego or at very least an agent of DPI who knowingly assisted in the breaches of DPI’s fiduciary duties. He had exclusive control over the bank accounts of DPI, being himself responsible for any transfer of funds from these accounts or directed others to do so.

The current evidence does not permit any findings of knowing receipt, as apart from Mr Mark Leishman’s unsatisfactory reconciliation, there is no evidence showing precisely who received any misappropriated trust funds, if there was in fact any. Such a finding may later emerge once an expert is engaged to determine who or what entity received these funds.

Further, I do not believe there is sufficient evidence currently to prove any accessorial involvement in DPI’s breaches of fiduciary duty (be it receipt or assistance) on the part of the other cross-defendants.

I am satisfied however that there has been a breach of trust by DPI as trustee and Mr Dimitriou was an accessory to that breach. However, quantification of any losses, if any, occasioned by that breach is for the reasons which follow a moot question.

Putting aside the onus issue and the inadequacies in the defendants’ evidence, Mr Mark Leishman’s analysis is in many respects wholly unsatisfactory. The flaws within this exercise commenced with the admission of many of the paragraphs in his affidavit of 1 August 2016 as being restricted to his opinion pursuant to section 136 of the Evidence Act 1995 (NSW). In that affidavit he purports to undertake an exercise designed to expose unauthorised payments from DPI at the direction of Mr Dimitriou, with the aim of proving Mr Dimitriou and or one of his entities misappropriated and/or misapplied the funds.

The exercise he performed, which involved him having had some unspecified conversations with his father, purported to single out with some apparent specificity particular payments. The exercise was a hopeless one from the start. He does not explain his methodology and what exactly permits him to label payments as ‘authorised’ or ‘unauthorised’. Further, he does not explain any particular familiarity with each transaction he analyses nor any contemporaneous recollection or documents against which he may be able to form a view about the nature of any transaction. Ultimately, his analysis is flawed because it is entirely driven by the descriptions given to each transaction by Mr Dimitriou, which, as I have already explained are themselves unexplained and ambiguous.

Mr Mark Leishman has at best some “expertise” in the sense that he was familiar with the day to day operations of the Bramco entities and the persons with whom it traded. His methodology as I say was however opaque. Despite unsurprisingly purporting to have an intimate knowledge of the Bramco entities’ business, his opinion alone is insufficient to categorise these payments on their force as authorised or unauthorised, given the seriousness of the allegations in question.

The deficiencies in the Leishman analysis were compounded by Mr Dimitriou and the defendants’ failure to give any assistance to the court in relation to these transactions and the precise amount of transactions which were legitimate or not by the timely production of any relevant documents.

In short, my tentative view (expressed in the hearings of 24 November and 7 December) was that it would be difficult if not impossible to use his evidence as a basis for anything let alone any allegation of misappropriation or misapplication.

Any disquiet on my part at the state of Mr Mark Leishman’s analysis was aggravated when Mr Dimitriou, in his final submissions, was able to point to numerous errors in Mr Leishman’s analysis which caused me to have considerable doubt about the entire exercise undertaken. These difficulties were confronted by the plaintiffs and Mr Leishman purported to readdress his evidence. An amended, more detailed spreadsheet was prepared by Mr Leishman that purported to correct errors, make concessions and do what could only amount to the provision of fresh evidence. At the late stage the exercise could clearly not be received, without causing significant prejudice and unfairness to the defendants.

In light of these considerations, I am in no position on the current state of the evidence to form any conclusion as to what, if any, funds were misappropriated, misapplied, unauthorised or remain otherwise unaccounted for. In the circumstances I intend as a matter of fairness to refer the matter to a referee to assess the nature of each transaction in the DPI bank accounts under challenge and to quantify what, if any, monies are unexplained or unaccounted for by Mr Dimitriou. I will make a final judgment on this aspect of the case after I assess the referee’s report. In my view that is the only way in my view to get to a position on this issue of qualification so as to conclude whether any breach or breaches of trust has led to any quantifiable losses.

I am entirely conscious of the fact that I have prevented Mr Dimitriou and his entities from tendering any records supporting the various payments out of the DPI account (if they exist). Mr Dimitriou will now get that chance.

What I envisage is first appointing a suitably qualified referee pursuant to Part 20, Division 3 of the Uniform Civil Procedure Rules 2005 (NSW). Secondly, pursuant to regulation 20.20 of the Uniform Civil Procedure Rules 2005 (NSW) I propose to give Mr Dimitriou a limited frame to produce invoices, loan agreements and any other contemporaneous supporting documents he alleges support the challenged payments out of the DPI accounts. I mean by the latter the amounts now challenged as a result of Mr Mark Leishman’s most recent amended spreadsheet. The referee will then need to analyse such documents and report on which payments are the subject of supporting documentation and which are not. The exercise is to be entirely documentary. It is not an occasion for the reception of any additional oral testimony. A report should then be prepared for the court: Uniform Civil Procedure Rules 2005 (NSW) r 20.17.

Given the history of the matter and the recent developments, each party should be responsible for 50% of the referee’s fees in the first instance, with an opportunity to be heard on whether one side or the other should have their costs of the reference reimbursed: Uniform Civil Procedure Rules 2005 (NSW) r 20.18.

The plaintiffs submitted that if the court is to find that any monies are owed from the monies advanced to discharge the CBA debt, the Furlong and Leishman parties are entitled to a set off of these monies against any misappropriated BGI trust funds (P [35]; P additional [58]). I note however that such a set off is not pleaded, when in my view it should have been.

Subject to what, if any amount may be found to be owed to Mr Gilbert Leishman under the second cross claim, I will hear further argument as to whether there should be any stay or set off and in whose favour such a stay or set off is ordered.

In passing, while Mr Dimitriou and the defendants’ business practices are fatally flawed for the reasons I have stated, I am not satisfied that a breach of any section of the Competition and Consumer Act 2010 (Cth) has been established by the plaintiffs. No initial or final submissions of any substance were put which would prove these pleaded breaches and therefore I propose not to grant any such relief.

At the very end of the proceedings, the plaintiffs handed some proposed Short Minutes of Order to the Court. As a result of my findings, those short minutes are in part, at least, inappropriate and I would refuse to make those orders. However, I would invite the parties to prepare short minutes to reflect my reasons. I will also hear the parties on the terms of my reference out and potentially on the questions of costs. I say potentially because it may or may not be appropriate to hear any costs argument on any issue until the contemplated reference is completed.