Jaken Properties Australia Pty Ltd v Naaman

For all the factual and legal complexities over several years, these proceedings are essentially about a creditor of a former trustee seeking to enforce a judgment debt. In this overview, I will identify the parties and the issues, and give a summary of the Court’s conclusions. It is intended to help the reader orient themselves before descending into those factual and legal complexities. This overview must be read with, and is not a substitute for, the Court’s detailed reasons which follow. For the sake of readability, I will use the various defined terms as they are later set out in these reasons.

Although he is nominally the defendant/cross-claimant, the moving protagonist in these proceedings is Mr Anthony Naaman. Although he is nominally the second cross-defendant, the defending protagonist is Mr Peter Sleiman. The other cross-defendants are Peter Sleiman’s brother, Tony Sleiman, and companies associated (using the term loosely) with them or Peter Sleiman’s wife, Samantha Sleiman. The most important of these companies is Jaken, which is the trustee of the Sly Fox Trust.

Jaken was not always the trustee of the Sly Fox Trust. The initial trustee was JPG, which is now in liquidation. In 2016, by which time Jaken had succeeded JPG as the trustee of the Sly Fox Trust, Mr Naaman obtained a judgment in this court for $3,446,755.55 against JPG. The Court declared that JPG was entitled to be indemnified for that judgment from the assets of the Sly Fox Trust and that Mr Naaman was subrogated to JPG’s right of indemnity.

At all material times, the assets of the Sly Fox Trust have been subject to mortgages to the National Australia Bank (NAB) and the main asset of the Sly Fox Trust has been O’Malley’s Hotel, a public house operated on the Kings Cross Property. However, other assets of the Sly Fox Trust have included the Granville Land and the Victorian Properties.

The underlying dispute between the protaganists is that, according to Peter Sleiman, there is little or nothing of the assets in the Sly Fox Trust available after satisfying NAB as a secured creditor to satisfy Mr Naaman’s judgment debt. Mr Naaman says that to the extent that may be the Sly Fox Trust’s position, it has been brought about by Peter Sleiman over a number of years directly or indirectly causing Jaken to enter into impermissible transactions including the transfer of the Granville Land and the Victorian Properties, and Jaken increasing its secured indebtedness to NAB by the $3.6 Million Drawdown (the Impugned Transactions).

By the end of the hearing, it was clear that Jaken’s summons had no work to do. It sought a declaration about the ownership of the King’s Cross Property that Jaken conceded was based on a wrong premise. It also sought the removal of a caveat lodged by Mr Naaman over the Kings Cross Property which Jaken ultimately accepted Mr Naaman had a caveatable interest to maintain.

The case really became about the relief sought in Mr Naaman’s amended cross-claim. The Court has concluded that, in general, the various cross defendants are liable in equity, as Mr Naaman contended. However, not least because NAB has appointed a receiver to the Kings Cross Property and O’Malley’s Hotel the quantification of that liability will have to be reserved for further consideration.

The Court’s conclusions may broadly be summarised as:

The parties’ agreed a set of questions for the Court’s determination. These appear at the end of these reasons with summary answers.

Mr J Kelly of Senior Counsel appeared with Mr A Maroya of Counsel for the plaintiff and cross-defendants. Mr P Afshar of Counsel appeared with Ms N Wootton of Counsel for the defendant and cross-claimant.

These reasons are divided into the following sections and page numbers:

The persons relevant to these proceedings are:

In these reasons:

What follows are the Court’s findings of fact based upon public records and contemporaneous documents.

On 28 November 2003, Jaken Group Pty Ltd (Jaken Group) was registered.

On 18 December 2003, Jaken Property Group Pty Limited (JPG) was registered. It was originally known as Sleiman Property Group Pty Limited. At various times its sole director and secretary has been Najette Michael, Peter Sleiman and Raymond Saab.

On 2 February 2005, Stallones Group Pty Limited (Stallones) and Powerhouse Corporation Pty Ltd (Powerhouse) were registered.

By a discretionary trust deed made on 21 June 2005, the Sly Fox Family Trust (Sly Fox Trust) was settled with JPG as trustee. Peter Sleiman was noted in the schedule as the specified beneficiary, the default beneficiary and appointor.

By discretionary trust deed made on 23 June 2005 (upon which duty was paid on 28 June 2005), the PeteJake Family Trust (PeteJake Trust) was settled with Powerhouse as trustee. Mr Peter Sleiman was recorded in the schedule to that deed as the specified beneficiary, default beneficiary and appointor.

On 1 July 2005, Sleiman Property Group Pty Ltd changed its name to JPG. Peter Sleiman was the sole director and secretary of JPG between March 2004 and January 2006.

On 15 July 2005, JPG entered into a Deed of Guarantee and Restraint with Mr Naaman, from which the parties’ dispute arose.

By transfer dated 24 August 2005 and registered on 30 August 2005, Unit 261 and Unit 191 at X Cavanagh Street, Southbank in Melbourne were transferred to JPG for $640,000 (Victorian Properties).

By mortgage dated 24 August 2005 and registered on 30 August 2005, JPG granted a mortgage over the Victorian Properties to St George Bank Limited (St George).

By contract dated 7 October 2005, JPG purchased the property at X William Street, Kings Cross (Kings Cross Property) and the plant, goodwill and licences of the O’Malley’s Hotel which was located on the Kings Cross Property. The purchase price for the Kings Cross Property was $8,900,000.

On 29 November 2005, JPG’s purchase of the Kings Cross Property settled.

By mortgage dated 29 November 2005, JPG granted a mortgage over the Kings Cross Property to St George.

Also on 29 November 2005, JPG granted a fixed and floating charge to St George to secure a maximum amount of $17,000,000. The property charged was “all of JPG’s rights, property and undertaking of whatever kind, wherever situated whether present or future including all [JPG’s] right, title and interest in all licences, liquor licences and gaming machine entitlements (as defined in the charge) held by [JPG] in respect to the businesses known as O’Malley’s Hotel and all [JPG’s] rights of indemnity as trustee of the Sly Fox Family Trust”.

By contract dated 14 February 2006, JPG (recorded on the face of the contract as acting in its capacity as trustee for the Sly Fox Trust) agreed to purchase a property at X Cowper Street, Granville for $750,000 (Granville Land).

JPG’s purchase of the Granville Land settled on 5 April 2006. By mortgage of that date, JPG mortgaged the Granville Land to St George.

In August 2006, JPG commenced proceedings in the Equity Division of this Court against Mr Craig Wheeler and Mr Naaman (First 2006 Proceeding).

In the course of the First 2006 Proceeding, on 11 August 2006, orders were made that JPG should pay Mr Naaman’s costs in relation to a notice of motion which the Court infers sought injunctive relief against Mr Wheeler and Mr Naaman.

On 18 August 2006, Bergin J (as her Honour then was) made orders to give effect to JPG discontinuing the First 2006 Proceeding by consent. The orders made on that day included:

Sometime between August and December 2006, Mr Naaman lodged an application for the assessment of his costs of the First 2006 Proceeding.

By statement of claim dated 6 November 2006, Mr Naaman commenced proceedings in the Common Law Division of this Court against JPG for judgment in the sum of $2,000,000 relying upon, among other things, the Deed of Guarantee and Restraint (Mr Naaman’s Common Law Proceedings). JPG did not file a defence to those proceedings.

On 12 January 2007, Jaken Properties Australia Pty Ltd (Jaken) was registered with Mr Tony Sleiman as its sole director, secretary and shareholder.

Also on 12 January 2007, a change to company details form in respect of JPG was filed. According to the form, nearly one year earlier on 16 January 2006 Peter Sleiman had resigned as a director of JPG in favour of his nephew Mr Raymond Saab, and as at the same date Mr Sleiman had purportedly transferred the one share in JPG from himself to Mr Saab.

Peter Sleiman accepted in cross-examination that the reference to 16 January 2006 in the form was a back dating. Furthermore, the form recorded Mr Saab as having signed it on 11 August 2006, which was the date on which the costs order had been made against JPG in favour of Mr Naaman. This was the first of a number of examples of corporate events occurring at or about the time of significant litigation events.

By a deed of appointment made on 13 February 2007 between JPG, Jaken and Peter Sleiman, JPG retired as trustee of the Sly Fox Trust in favour of Jaken. The deed included:

By transfer dated 13 February 2007 (but not registered until 5 February 2008), the Victorian Properties were transferred from JPG to Jaken.

On 14 February 2007, JPG’s solicitor, Mr Joe Nasr then of CPC Lawyers, wrote to Mr Naaman’s lawyers (KB Legals) indicating that they no longer acted for JPG in relation to Mr Naaman’s Common Law Proceedings. On the same day, JPG’s lawyers also wrote to the costs assessor in relation to the costs of the First 2006 Proceedings confirming they no longer acted for JPG in relation to that matter.

On 25 February 2007, a costs assessment was issued against JPG in favour of Mr Naaman for $19,012.98 for his costs of the First 2006 Proceeding and $5,771.99 for the costs of the costs assessment.

On 27 February 2007, Mr Christopher Darin was appointed liquidator of JPG in a voluntary winding up by creditors. In a report as to affairs of the same date prepared by Raymond Saab, the only asset or liability recorded was a $2,500 unsecured debt described as admitted as owing to Kostas Augerinos and Associates. That firm had been the Sleiman family accountants and Mr Augerinos was the settlor of the Sly Fox Trust.

The winding up of JPG had the result that Mr Naaman’s Common Law Proceedings were stayed.

On 6 March 2007, the Court’s manager of costs assessment sent the certificate of determination of Mr Naaman’s costs in the First 2006 Proceeding to the parties.

On 29 March 2007, Mr Naaman lodged a caveat over the Kings Cross Property and the Granville Land. The caveat did not specify the nature of the estate or interest in the land, but specified that it was by virtue of “an agreement between the Caveator and the Registered Proprietor [JPG] under which the Registered Proprietor agreed to charge its rights to and interest in the land”.

By letter dated 10 May 2007, CPC Lawyers (who had previously acted for JPG) informed Mr Naaman’s solicitors that they now acted on behalf of Jaken as the trustee of Sly Fox Trust.

On 1 June 2007, Mr Darin as liquidator of JPG lodged a caveat over the Kings Cross Property and the Granville Land. The interest claimed was as either owner or chargee:

Between 17 April 2007 and 13 June 2007 there was correspondence between Mr Naaman’s solicitors, Mr Darin and Jaken’s solicitors in relation to lapsing notices that had been issued by Jaken in relation to the caveat that had been lodged by Mr Darin.

In its tax return for the year ended 30 June 2007, the Sly Fox Trust represented that it had a total income of $1,800,940 and gross assets of $13,684,438, describing its main business activity as “renting/leasing of non-res prop as owner/leaseholder”.

In its tax return for the year ended 30 June 2007, Stallones recorded its business address as that of O’Malley’s Hotel, described its main business activity as “Hotel operation mainly drinking place”, that it paid rent of $900,000 and had a gross income of $3,813,308.

On 11 February 2008, Peter Sleiman made a statutory declaration in which he stated that the Kings Cross Property and the Granville Land were properties of the Sly Fox Trust.

On 9 April 2008, a hotelier’s licence was issued to Galea Jamie Percival in respect of O’Malley’s Hotel.

On 30 April 2008, Tony Sleiman as the sole director of Jaken in its capacity as trustee of the Sly Fox Trust, gave written undertakings to Mr Darin not to encumber further the Granville Land and O’Malley’s Hotel in return for Mr Darin’s consent as liquidator of JPG to register Jaken as the registered proprietor for the properties of the Sly Fox Trust. Mr Darin’s consent was given on 1 May 2008.

In its annual report for the year ended 30 June 2008, the Sly Fox Trust represented that it had:

In its annual report for the year ended 30 June 2008, Stallones reported that it paid $900,000 in rent. In its tax return for the same period, Stallones also reported that it had paid rent of $900,000 and that it had generated gross income of $3,968,430.

In its annual report for the financial year ended 30 June 2008, the PeteJake Family Trust (of which Powerhouse was trustee) represented the value of the Kings Head Tavern to be $15,586,113. In its tax return for the same period, the PeteJake Family Trust recorded total assets of $17,234,207.

On 15 September 2008, PSJK Holdings Pty Ltd (PSJK) was incorporated with Peter Sleiman as its sole director, secretary and shareholder.

On 9 October 2008 (and subsequently relodged after payment of duty), applications to record Jaken as the new registered proprietor of the Granville Land and the Kings Cross Property were lodged, after which title to those properties was transferred to Jaken as trustee for the Sly Fox Trust.

On 29 October 2008, Jaken applied to lapse JPG’s caveat (filed by its liquidator Mr Darin) from the Kings Cross Property and the Granville Land.

On 5 November 2008, Mr Darin’s solicitors wrote to Mr Naaman’s solicitors, including:

No application to extend Mr Darin’s caveat over the Kings Cross Property and the Granville Land was ever made, so that the caveat lapsed.

On 17 March 2009 at 2.18pm, Stefano Laface of HPL Lawyers purportedly emailed Peter Sleiman saying “When did you want me to come over, this afternoon or tomorrow morning?”. The subject line was Sly Fox Deed. Mr Sleiman purportedly replied by email on the same date at 4.46pm “Morning mate say 10.00am on Friday I’m flat chat next couple of days”. I have used the word “purportedly” because these emails were only located by Peter Sleiman in September 2019 and were tendered in Jaken’s case to corroborate the authenticity of the deed referred to in the next paragraph. The authenticity of these emails was not accepted by Mr Naaman.

On 20 March 2009, a deed of variation of discretionary trust deed was purportedly entered into in relation to the Sly Fox Trust by Jaken as trustee, Peter Sleiman as the resigning appointor and Tony Sleiman as the new appointor, with amendments to the Sly Fox Trust including to change the specified beneficiaries and default beneficiaries from Peter Sleiman to Tony Sleiman. This purported deed of variation had never been produced to Mr Naaman until it was provided by Jaken’s solicitor on 5 September 2019.

On 17 April 2009, Mr Scott Robertson prepared a valuation for St George of the freehold and business of O’Malley’s Hotel as a going concern for first mortgage purposes of $15,250,000.

In its annual report for the year ended 30 June 2009, the Sly Fox Trust represented it had property assets valued at $14,565,827 and received rent in the sum of $992,000.

In its tax return for the year ended 30 June 2009, the Sly Fox Trust declared that it had received gross business income of $992,200 and that its total assets were valued at $15,922,333.

In its annual report for the year ended 30 June 2009, Stallones represented that it had paid rent of $900,000.

In its tax return for the year ended 30 June 2009, Stallones represented that it had received gross total income of $3,778,870 and that it had paid rent of $900,000.

In its annual report for the year ended 30 June 2009, the PeteJake Family Trust represented that the value of the Kings Head Tavern was $18,318,310.

In its tax return for the year ended 30 June 2009, Powerhouse as trustee of the PeteJake Family Trust represented that it had total assets to the value of $19,763,158.

By statement of claim filed in this division of the Court on 6 July 2009, Mr Naaman commenced proceedings against Peter Sleiman and Jaken as trustee of the Sly Fox Trust seeking, among other things, judgment against Jaken as trustee for the Sly Fox Trust in the sum of $2,000,000 (2009 Proceeding).

On 28 October 2009, Joe Nasr (now describing himself as corporate legal counsel of Jaken) served on Mr Naaman’s solicitors a sealed copy of Jaken’s defence in the 2009 Proceeding.

By letter dated 23 December 2009, Mr Naaman’s solicitors notified Peter Sleiman and Jaken of the categories for discovery that were sought in the 2009 Proceeding, including documents in relation to the change of trustee for the Sly Fox Trust.

On 8 February 2010, Peter Sleiman was replaced as sole director, secretary and shareholder of PSJK by his wife Samantha Sleiman.

In its annual report for the year ended 30 June 2010, the Sly Fox Trust represented that it held land and buildings to the value of $14,565,827 and that it had received rent of $992,000.

In the Sly Fox Trust’s financial report for the year ended 30 June 2010 signed by Tony Sleiman, the trust represented that it held property, plant and equipment to the value of $15,231,031 and that it had received revenue in the sum of $998,002.

In the Sly Fox Trust’s tax return for the year ended 30 June 2010 signed by Tony Sleiman, the trust declared that it had received business income of $997,940 and that the value of its total assets was $15,739,541.

In its annual report for the year ended 30 June 2010, Stallones represented that it paid rent of $900,000 and that its gross sales income was $4,564,852.

In its financial report for the year ended 30 June 2010, signed by Peter Sleiman, the PekeJake Family Trust reported that it owned land and buildings to a value of $18,933,512.

It its annual report for the year ended 30 June 2010, the PeteJake Family Trust represented that the value of the Kings Head Tavern was $18,308,810.

Shortly after 14 July 2010, Mr Naaman received a lapsing notice in respect of his caveat over the Kings Cross Property.

By letter dated 17 September 2010, the Commonwealth Bank wrote to Peter Sleiman to inform him that the bank refused his loan application to refinance moneys owed by various trusts including the PeteJake Family Trust and the Sly Fox Trust. The letter included “As discussed, given the outstanding litigation involving AVS [AVS Group of Companies Pty Ltd], and potential reputation and commercial impacts, we are unable to consider the application further.”

By email dated 22 September 2010, Stefano Laface (the solicitor for the defendants in the 2009 Proceeding) served a verified list of documents in response to Mr Naaman’s discovery categories. The list was verified by an affidavit of 22 September 2010 sworn by Peter Sleiman in his own right and by Tony Sleiman as a director of Jaken.

By a deed of variation of discretionary trust purportedly made on 30 September 2010 between Peter Sleiman Investments Pty Limited and Peter Sleiman, the Sleiman Family Trust Deed (originally entered into in 1999) was purportedly amended by deleting Peter Sleiman as the primary beneficiary and replacing him with his brother George Sleiman.

By a deed of variation of discretionary trust purportedly made on 15 October 2010 between AVS Group Australia Pty Ltd and Tony Sleiman, the AVS Group Australia Trust (originally entered into in 2006) was varied in relation to its revocation and amendment provisions.

By a deed of variation of discretionary trust purportedly made on 15 October 2010 between Jaken as trustee and Tony Sleiman, the trust deed for the Sly Fox Trust was purportedly amended by changing the definition of general beneficiaries to include the specified beneficiaries, their spouse and descendants.

By its tax return for the year ended 30 June 2010, apparently completed on 21 September 2011, the PeteJake Family Trust declared that it had total assets of $19,054,988.

On 24 November 2010, Peter Sleiman met with Tony Owen of Owen Property Valuations Pty Limited in relation to the valuation of the Kings Cross Property and the Kings Head Tavern.

On 29 November 2010, Peter Sleiman met again with Mr Owen in relation to the valuation of the Kings Cross Property and the Kings Head Tavern.

On 1 December 2010, Mr Owen emailed Peter Sleiman a tax invoice for an upfront fee of $2,200 “to provide indicative verbal valuations on the two hotels” [O’Malley’s Hotel and the Kings Head Tavern]. The evidence included a tax invoice of $1,100 addressed to Stallones c/- O’Malley’s Hotel for “part valuation fee O’Malley’s Hotel, XXX William Street, Kings Cross”. Although not in evidence, the Court assumes that there was an invoice in the same amount in respect of the upfront fee for the Kings Head Tavern valuation because Mr Owen’s covering email refers to a total of $2,200.

On 3 December 2010, Mr Owen emailed Ms Louise Keenan of the National Australia Bank (NAB) saying that he had not yet received from Peter Sleiman the information which he (Mr Owen) had requested to enable him to undertake the valuations.

On 15 December 2010, Mr Owen emailed Peter Sleiman that “to undertake a valuation that will be relied on for first mortgage security purposes I would require the full Financial Statements for Stallones Group Pty Ltd and Jakes Place Pty Ltd, prepared by your external accountants for tax reporting purposes for the financial years 2007/2008, 2008/2009 and 2009/2010”.

As at 31 December 2010, a St George statement of account for “Jaken Property Group atf the Sly Fox Family Trust” on the maturity of a bank bill shows that JPG owed St George $8,250,000.

By deed dated 17 February 2011 between Powerhouse as trustee and Peter Sleiman as the appointor, the PeteJake Family trust was varied to include a definition of general beneficiaries which included the specified beneficiary or their descendants.

In April 2011, Kings Head Tavern Pty Ltd (Kingsht) replaced Jakes Place Pty Ltd as the operator of the Kings Head Tavern.

On 10 May 2011, O’Malley’s Hotel Pty Ltd (First O’Malleys) was registered with Peter Sleiman as its sole director, secretary and shareholder and then replaced Stallones as the operator of O’Malley’s Hotel.

Acting on the instructions of Peter Sleiman, on 18 May 2011 Scott Robertson valued the freehold and business as a going concern of O’Malleys Hotel at $14,500,000, the purpose of the valuation being recorded as “First Mortgage”.

On 2 June 2011, Peter Sleiman ceased to be a director of First O’Malleys and Tony Sleiman was appointed as a director and received Peter Sleiman’s one share in the First O’Malleys.

On 17 June 2011, Jaken purportedly leased the Kings Cross Property to First O’Malley’s for ten years commencing on 20 June 2011 at a base rent commencing at $300,000 per annum plus GST. For the reasons set out in [318] to [321] below, this lease could not possibly have been entered into on the date it bears.

In its annual report for the two months ended 30 June 2011, First O’Malleys recorded that it paid rent in the amount of $90,000 (equivalent to $540,000 per annum).

In its profit and loss statement for the two months to 30 June 2011 that was provided by First O’Malleys to NAB (being a document dated 22 September 2011), First O’Malleys represented that it had total income of $737,095.94 and that it had paid rent of $150,000 (being $900,000 per annum).

In its balance sheet for the year ended 30 June 2011 that was provided to NAB, Powerhouse as trustee of the PeteJake Family Trust represented the value of its land and equipment to be $18,933,512.

On 6 July 2011, a St George account styled JPG atf the Sly Fox Family Trust received “settlement proceeds” of $970,921.35.

On 13 October 2011, Peter Sleiman lodged an ASIC change to company details form noting the appointment of Tony Ghalbouni as director and secretary of Stallones with effect from 18 February 2011.

Also on 13 October 2011, Tony Ghalbouni purportedly lodged an ASIC change to company details form noting the cessation of Peter Sleiman as a director and secretary of Stallones with effect from 18 February 2011.

By letter dated 17 October 2011, NAB wrote to Jaken as trustee of The Sly Fox Trust and Jaken in its own right enclosing a letter of offer to Jaken as trustee of the Sly Fox Trust for a facility of up to $8,750,000 with an expiry date of 31 December 2014.

By a report dated 18 October 2011, Scott Robertson issued a valuation to NAB of the O’Malley’s Hotel freehold and business as a going concern of $14,500,000.

NAB’s offer was accepted on behalf of Jaken on 26 October 2011 by Tony Sleiman.

On 21 October 2011, NAB also sent an offer of finance to Powerhouse as trustee for the PeteJake Trust for a facility of up to $13,250,00 with an expiry date of 31 December 2014. This was accepted by Peter Sleiman on 26 October 2011.

By a declaration made on 26 October 2011, Tony Sleiman confirmed to NAB on behalf of Jaken as trustee of the Sly Fox Trust that the full unencumbered market value of its property was $18,000,000. Tony Sleiman made a similar declaration insofar as NAB had approved finance for Powerhouse as trustee of the PeteJake Trust.

On 26 October 2011, Jaken as trustee for the Sly Fox Trust instructed NAB to draw down and disperse $8,750,000, nearly all of which was to be applied to pay out the St George loan to Jaken.

By deed of guarantee and indemnity signed by both Tony Sleiman and Peter Sleiman on 27 October 2011, various persons and entities including Peter Sleiman, Tony Sleiman, Powerhouse, First O’Malley’s and Kingsht guaranteed Jaken’s loan from NAB to the limit of $8,750,000. That limit never changed.

By another deed of guarantee and indemnity also dated 27 October 2011, Jaken and other parties including Peter Sleiman, Tony Sleiman, First O’Malley’s and Kingsht, guaranteed the NAB loan to Powerhouse to the limit of $13,250,000.

St George’s mortgage over the Kings Cross Property was discharged on 31 October 2011.

On 22 November 2011, NAB’s mortgage was registered over the Kings Cross Property and the Granville Land.

On 7 March 2012, Superior Family Investments Pty Ltd (Superior) was incorporated with Samantha Panetta (Peter Sleiman’s wife) as the sole director, secretary and shareholder.

On 7 March 2012, a deed of variation for the Superior Family Investments Trust (apparently created by deed of the same date) was purportedly entered into to vary the identity of the general beneficiaries.

On 4 April 2012, Peter Sleiman sent the financial statements for First O’Malley’s and the Kingsht for the two months ended 30 June 2011 to NAB.

On 12 April 2012, Peter Sleiman sent the financial statements for Kingsht for the 9 months ended 31 March 2012 and for First O’Malley’s for the nine months ended 31 March 2012 to NAB.

On 7 May 2012, a valuation obtained on the instructions of NAB valued the Granville Land at $700,000. The valuation noted that the land had been purchased on 26 March 2012 for $1,500,000. The purpose of the valuation was “first mortgage security purposes” and Superior was referred to as the applicant.

On 11 May 2012, Tony Sleiman ceased to be a director of First O’Malley’s.

In its trading profit and loss statement for the year ended 30 June 2012 provided to NAB, First O’Malley’s recorded that it had paid rent in the sum of $720,000.

On 23 August 2012, the Victorian Properties were transferred from Jaken to PSJK for recorded consideration on the face of the transfer of $500,000.

On 6 September 2012, the St George home loan to Jaken in respect of the Victorian Properties was paid out in the sum of $451,261.21.

By motion filed on 28 September 2012, Peter Sleiman and Jaken applied for Mr Naaman’s statement of claim in the 2009 Proceedings to be summarily dismissed. By letter of the same date, Mr Naaman’s solicitors sought an explanation from Peter Sleiman’s solicitors as to the basis of the application.

On 5 October 2012, Jaken’s mortgage to NAB over the Granville Land was discharged and the Granville Land was transferred to Superior for a consideration of $500,000.

On 8 October 2012, a mortgage apparently executed on 24 July 2012 over the Granville Property to NAB from Superior was registered and stamped as securing up to $6,015,000.

On 22 November 2012, Logan Fox Lawyers Pty Ltd (First Logan Fox) was registered with Samantha Panetta and Charles Parisi as its founding directors.

On 5 December 2012, Charles Parisi of Parisi Lawyers, who had been acting for Peter Slieman and Jaken, sought to explain the basis of the notice of motion referred to in [125] above.

On 6 December 2012, Mr Naaman’s lawyers responded to Parisi Lawyers including that they may be instructed to seek leave to proceed against JPG, which would entail the re-registration of that company.

On 14 March 2013, Black J made orders in the 2009 Proceeding reinstating the registration of JPG and appointing Mr Mark Cooper as its liquidator. His Honour also made directions for Mr Naaman to file a motion for leave to commence proceedings against JPG.

On 19 March 2013, Peter Sleiman sent financial reports for First O’Malley’s and other companies for the six months ending 31 December 2012 to NAB.

On 9 May 2013, Stallones was voluntarily wound up and Mr Ozem Kassem was appointed as its liquidator.

On 10 May 2013, Black J made these orders by consent in the 2009 Proceeding:

In its annual report for the year ended 30 June 2013 that was provided to NAB, the Sly Fox Trust represented that it held property to the value of $15,065,827 and received rent in the sum of $1,353,258.

In its annual report for the year ended 30 June 2013 that was provided to NAB, First O’Malley’s represented that it had paid rent in the sum of $720,000 and that its income had increased from $4,028,797 to $4,064,383.

The annual report for the PeteJake Family Trust for the year ended 30 June 2013 represented the value of the Kings Head Tavern to be $18,308,810.

On 25 July 2013, NAB wrote to Jaken (addressed to Tony Sleiman) stating that the facility limit for its loan to NAB was $8,400,000 and gave notice of a revised interest rate.

A record of the Independent Liquor and Gaming Authority for the liquor licence details for O’Malley’s Hotel as at 11 October 2013 records the business owner as First O’Malley’s and the premises owner as Jaken.

By letter dated 26 November 2013 addressed to Peter Sleiman of the “AVS Group of Companies”, Mr Christopher Batten advised that various properties held on trust should each be the subject of a “Deed of Declarations” so that each would become held by a fixed unit trust. The advice records that it “is provided solely for the use of Mr Peter Sleiman”.

In the annual report for the six months ended 31 December 2013 for First O’Malley’s that was provided to NAB, it was represented that the company had paid rent in the amount of $360,000 and that its gross income was $2,303,608.

On 3 March 2014, Pembroke J determined part of the 2009 Proceeding by entering judgment against JPG in the sum of $2,000,000 together with interest for the period from July 2006 to March 2014 in the sum of $1,291,246.58 and ordered JPG to pay Mr Naaman’s costs. His Honour adjourned the balance of the proceedings “with the intention that the claim against Peter Sleiman and [Jaken as trustee for the Sly Fox Trust] proceed on another date”.

By letter dated 10 March 2014, the solicitors for the liquidator of JPG wrote to First Logan Fox (who were acting for Peter Sleiman and Jaken), referred to Pembroke J’s judgment and said:

On 11 March 2014, the liquidator of JPG registered a security interest over all present and after acquired property of Jaken on the Personal Property Securities Register.

On 12 March 2014, the caveat lodged by the liquidator of JPG over the Kings Cross Property was registered.

By notice of motion filed on 17 March 2014 in the 2009 Proceeding, Peter Sleiman and Jaken sought to set aside Pembroke J’s judgment against JPG.

By notice of motion filed on 27 March 2014, Mr Naaman brought an application in the 2009 Proceeding for restraining and freezing orders against Jaken in relation to the Kings Cross Property.

On 7 April 2014, Mr Andrew Soo of NAB emailed Peter Sleiman confirming the loan balances of Jaken as trustee for the Sly Fox Trust as $8,400,000 and Powerhouse as trustee for the PeteJake Family Trust as $10,900,000. The email urgently sought various financial information.

On 14 April 2014, a caveat by Mr Naaman over the Kings Cross Property was registered, claiming a right of subrogation to JPG’s right of indemnity against Jaken.

By summons filed on 8 May 2014, Jaken commenced proceedings against JPG and Mr Naaman for the removal of their respective caveats over the Kings Cross Property.

On 16 May 2014, Joe Nasr (describing himself as managing director and corporate legal counsel of Jaken) emailed Mr Phil Rennie of Phil Rennie Valuations:

By email dated 16 May 2014, Mr Rennie sought further information from Mr Nasr in relation to O’Malley’s Hotel. Mr Nasr provided that information to Mr Rennie by email dated 19 May 2014.

On 21 May 2014, Mr Rennie issued a valuation as at that date of $4,500,000 as the “current market value of the lessor’s interest” in O’Malley’s Hotel: “the interest being valued as the encumbered fee simple subject to the existing tenancy, of the real estate only, excluding the hotelier’s licence and attached poker machine entitlements, the business/good will (for the remaining lease term), lessee’s plan, equipment, furniture and furnishings etc and stock”.

In support of the proceedings to remove JPG’s and Mr Naaman’s caveats (see [150] above), Peter Sleiman swore an affidavit dated 8 May 2014. That affidavit had attached what purported to be a lease for the Kings Cross Property said to have been entered into between Jaken and First O’Malley’s on 17 June 2011. On 27 May 2014, Mr Naaman’s solicitors wrote to the Registrar General concerning that lease. On 21 May 2014, Land and Property Information responded by confirming that the form of lease used had not been released until 5 September 2013.

On 31 May 2014, a new NAB bank account (8943) was opened for the Sly Fox Trust shown fully drawn at $8,400,000.

By motion dated 4 June 2014, Mr Naaman applied to have the various applications in the 2009 Proceeding expedited and heard together with Jaken’s summons in relation to the withdrawal of caveats.

The parties’ various applications were fixed for hearing before Rein J on 18 June 2014. They were resolved by consent orders of that date (the Rein J Orders) which included:

Also on 18 June 2014, Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss a “plan” proposed by Peter Sleiman to increase Jaken’s facility with NAB to $12,000,000 and reduce the Powerhouse facility. The fact of this meeting and the “plan” was confirmed in an email from Mr Hartley to Peter Sleiman and others dated 20 June 2014 in which Mr Hartley said “Just confirming from our meeting on Wednesday the plan you suggested was”..

On 26 June 2014, Peter Sleiman emailed to Andrew Soo of NAB various financial documents which Mr Hartley had sought, including the Sly Fox Trust’s annual report for the year ended 30 June 2013 which valued the trust’s land and buildings at $15,065,827 and recorded rent received of $1,353,258.

On 26 June 2014, Peter Sleiman swore an affidavit in response to the Rein J Orders which included that “Presently, the funding from the NAB is through commercial bank bills. At present the amount due under the bank bills is approximately $8.75 million … At present a figure in the vicinity of $13.25m remains owing by Powerhouse to the NAB”.

In relation to O’Malley’s Hotel, Peter Sleiman’s affidavit annexed a 10 year lease (with a further 10 year option) from Jaken to First O’Malley’s dated 17 June 2011. However, the affidavit said nothing about the sale or transfer of the O’Malley’s hotel business.

In its profit and loss statement for the year ended 30 June 2014, First O’Malley’s represented that it had gross income of $4,453,054 with an operating profit of $691,685, and that it had paid rent of $724,511.

In its financial statements for the year ended 30 June 2014 and provided to NAB, the Sly Fox Trust represented the value of land and buildings held by it was $15,065,827.

On 2 July 2014, Mr Hartley emailed Peter Sleiman referring to a “structure…we were talking about recently” of Jaken having a facility of $12 million and Powerhouse a facility of $3 million.

By letters dated 21 August 2014 to Jaken as trustee for the Sly Fox Trust and to Powerhouse as trustee for the PeteJake Family Trust, NAB offered to vary their respective facilities. Jaken’s facility was increased from $8,400,000 to $12,000,000, with NAB’s offer accepted by Tony Sleiman on 22 August 2014. Powerhouse’s facility was reduced from $10,600,000 to $7,000,000. This was just over two months after the Rein J Orders had been made, including an asset preservation order.

In a declaration made on 22 August 2014, Tony Sleiman, on behalf of Jaken as trustee for the Sly Fox Trust, confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O’Malley’s Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Jaken’s property was $100.

In a declaration made on 22 August 2014, Peter Sleiman, on behalf of Powerhouse as trustee for the PeteJake Trust, also confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O’Malley’s Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Powerhouse’s property was $100

On 8 September 2014, several transactions occurred:

The final result of the transactions referred to in the previous paragraph was that Jaken then had a loan account of $12,000,000 and Powerhouse’s loan account had been reduced to $7,000,000.

On 10 September 2014, Peter Sleiman emailed Peter Hartley and others at NAB:

On the same day Andrew Soo of NAB replied to Peter Sleiman confirming that the limit and balance for Jaken was $12,000,000 and the limit and balance for Powerhouse was $7,000,000. Mr Soo also sent an email confirming that the amounts were fully drawn and included payment of a break cost.

On 24 October 2014, Mannellis Pty Limited was incorporated with Logan Fox Lawyers as its registered office and Ashleigh Panetta (Peter Sleiman’s daughter) as director and secretary. According to an ASIC search, Samantha Sleiman was a director and secretary of Mannellis Pty Limited for one day (28 November 2014). Samantha Sleiman and Ashleigh Panetta were equal shareholders in the company.

On 17 November 2014, Mr Naaman filed a further amended statement of claim in the 2009 Proceeding. This added a prayer for judgment against JPG as trustee of the Sly Fox Trust for $2 million and declarations that JPG was entitled to be indemnified out of the assets held by Jaken, and that the transfer of the Sly Fox Trust assets from JPG to Jaken was voidable as a fraud on creditors.

On 26 November 2014, the defendants in the 2009 Proceedings filed their defence to the further amended statement of claim. In that defence, the defendants admitted that:

On 3 December 2014, there was an attempt by Jaken to transfer the assets of the Sly Fox Trust to two trusts of which Jaken was also to be trustee. At the hearing before me, the cross-defendants accepted this transaction was ineffective such that Jaken continues to hold the Kings Cross Property as trustee of the Sly Fox Trust.

The 2009 Proceeding was heard by Stevenson J on 15, 17 and 18 December 2014.

On 16 December 2014, NAB issued a business letter of offer to Trojan Marketing and Consultants Pty Ltd for a facility of $1,500,000.

On 17 December 2014, NAB issued a letter of offer to South Street Properties Pty Ltd as trustee for the South Street Unit Trust for a facility of $2,315,000.

On 24 December 2014, Stevenson J delivered judgment dismissing Mr Naaman’s claims in the 2009 Proceeding.

On 11 January 2015, Jaken entered into a lease with Mannellis Pty Limited for the Kings Cross Property for 10 years, commencing on 1 January 2015 at a rent of $180,000 per annum including reference to the liquor licence.

On 13 January 2015, Logan Fox Lawyers served a lapsing notice in respect of JPG’s caveat over the Kings Cross Property on JPG’s liquidator, Mr Cooper.

On 16 January 2015, Mr Naaman served his notice of intention to appeal against the decision of Stevenson J.

On 20 January 2015, a deed of change of trustee was purportedly executed appointing AVS Group Australia Pty Limited as the trustee of the Sly Fox Trust.

On 27 January 2015, Mr Cooper, as liquidator of JPG, applied to extend that company’s caveat over the Kings Cross Property.

On 4 February 2015, Peter Sleiman filed an affidavit in opposition to Mr Cooper’s application, stating that he had been authorised to do so on behalf of Jaken by Tony Sleiman. In that affidavit, Peter Sleiman continued to assert that the funding for the original purchase of the Kings Cross Property remained through commercial bank bills, with the “present amount” owing of approximately $8.75 million.

On 6 February 2015, Bergin CJ in Eq heard Mr Cooper’s application for the extension of the caveat over the Kings Cross Property. The application was resolved by her Honour making the following orders:

On 10 March 2015, Stevenson J delivered his costs judgment in the 2009 Proceeding and dissolved the freezing orders that had been made by consent as part of the Rein J Orders on 18 June 2014.

On 9 April 2015, Stevenson J delivered a further judgement in relation to the costs of the 2009 Proceeding.

On 25 June 2015, Logan Fox Lawyers ceased to act for Peter Sleiman and Jaken in the appeal from Stevenson J in the 2009 Proceeding.

In the annual report for the Sly Fox Trust for the year ended 30 June 2015, the land and buildings of the Sly Fox Trust were valued at $15,454,333 and reported having received rent of $1,461,742.

In its annual report for the financial year ended 30 June 2015, which like the report in the previous paragraph, was provided to NAB, First O’Malley’s reported that it had gross income of $4,697,416 and that it had paid rent of $757,114.

On 22 July 2015, NAB valued the Granville Land at $1,000,000, with the land component being valued at $700,000.

On 11 August 2015, the day before the Court of Appeal hearing, O’Connor Legal began acting for Jaken and Peter Sleiman in Mr Naaman’s appeal against Stevenson J’s judgment.

On 1 September 2015, the Court of Appeal delivered its judgment, allowing Mr Naaman’s appeal against JPG and Jaken. The proceedings were remitted to the trial division for an assessment of damages.

On 1 September 2015, First O’Malley’s resolved to change its name to ACN 150 830 087 Pty Ltd.

On 3 September 2015, O’Malley’s Hotel Pty Ltd (Second O’Malley’s) was registered with George Sleiman as the sole director, secretary and shareholder.

On 11 September 2015, copies of the deeds for the Sly Fox 1 Unit Trust and the Sly Fox 2 Unit Trust were certified by a solicitor, Mr Zachary Jones. These were the trusts referred to in [175] above. The deeds were stamped on 13 September 2015. This was les than two weeks after the Court of Appeal judgment.

On 18 September 2015, Angela Michael emailed NAB:

On 3 December 2015, O’Connor Legal filed a notice of ceasing to act for the defendants in the remitted 2009 Proceeding.

On 7 December 2015, the details of the liquor licence for O’Malley’s Hotel were updated to reflect the details of Second O’Malley’s.

On 14 December 2015, Mr Naaman’s solicitor emailed Peter Sleiman and Tony Sleiman informing them that Slattery J had fixed 22 and 23 February 2016 for the hearing of the quantification of damages in the 2009 Proceeding.

On 11 and 13 February 2016, change to company details forms were signed which recorded the purported appointment of a Mr Evan Spiegel as a director of First O’Malley’s with effect from 1 July 2015 including a notation “meeting for Evan to purchase the company from 01-07-2105”. The first of these forms gave the company’s registered office as being Mr Spiegel’s address in South Australia with effect from 1 July 2015. The second form gave that as the company’s registered address but with effect from 11 May 2012, which was also given as the date on which Tony Sleiman ceased to be a director.

On 15 February 2016, Mr Naaman’s solicitor sent various documents to the Associate to Slattery J copied to Tony Sleiman and Peter Sleiman.

On 17 February 2016, Peter Sleiman responded “Please do not include me in your correspondence as I have nothing to do with this matter and you are breaching the director’s privacy”.

Also on 17 February 2016, Mr Naaman applied for orders to restrain Jaken from dealing with the Kings Cross Property.

That same day, a process server attempted to serve a number of documents on Jaken at Parramatta Road, Granville. The process server’s affidavit records:

By an ASIC change to company details form signed by Tony Sleiman on 18 February 2016, the registered office of Jaken was purportedly changed from 3 December 2014 from Cowper Street, Granville to a firm of accountants in Templestowe, Victoria.

Also on 18 February 2016, Andrew Soo of NAB emailed Peter Sleiman with the subject line “change of trustee for O’Malley’s” and asking Peter Sleiman to send him “a copy of the new trust deed and transfer for O’Malley’s”. Shortly afterwards, Peter Sleiman replied to Mr Soo:

Mr Soo replied to Peter Sleiman on the same day “Yes can you send them all through. I’ve ordered a copy of the loan documents for you”.

The quantification of damages hearing proceeded not before Slattery J, but before Young J on 22 February 2016 in the absence of the defendants. On that day his Honour made orders (the Young J Orders) (which were entered on 25 February 2016) which included:

On 23 February 2016, (being the day after the hearing before Young J but before the Young J Orders were entered) Christopher Batten (who had prepared the earlier advice to Peter Sleiman on trust structures to hold property – see [140] above) emailed Mr Soo of NAB (copied to Peter Sleiman) at 7.31am with a number of attachments saying:

These were the documents referred to in [197] above, and included an unsigned and undated transfer form for the transfer of the Kings Cross Property from Jaken to PSJK.

By an ASIC change to company details form signed on 26 February 2016, Raymond Saab certified that he had been appointed a director of Logan Fox Lawyers Pty Limited with effect from 25 May 2015, being the date on which Samantha Panetta ceased to be a director and transferred her shares in the company to Mr Saab.

By letter dated 2 March 2016 addressed to Jaken at its Victorian registered office (being the office of accountants Bilias & Associates), Mr Naaman’s solicitors enclosed by way of service a copy of the Young J Orders as entered. On the same day the orders were emailed to Tony Sleiman and to Bilias & Associates.

On 3 March 2016, Tony Sleiman made this affidavit in response to the Young J Orders:

On 13 March 2016, Mr Naaman lodged the caveat AK XXXXXG which is the subject of these proceedings over the Kings Cross Property (the Naaman Caveat) claiming “equitable right of interest or equitable lien” supported by a lengthy annexure setting out the facts relied upon in support of his claim to be subrogated to JPG’s right of indemnity from the assets of the Sly Fox Trust.

On 22 March 2016, Evan Spiegel as the sole member and director of the First O’Malley’s purportedly resolved to place the company in voluntary liquidation and Andrew Wily was appointed liquidator. There was in evidence before the Court an envelope produced under subpoena by Mr Wily addressed to Evan Spiegel at the address for him in South Australia that had been notified to ASIC. The envelope was marked Return to Sender and “Not at this address – no current address”. To the extent it is a necessary finding, the Court finds that there was no “Evan Speigel”.

In the profit and loss statement for the quarter ended 31 March 2016 that was provided to NAB, Second O’Malley’s represented that it had made gross sales of $1,469,508 for that quarter and had paid rent in the amount of $239,089.

On 7 April 2016, Mr Wily was formally appointed liquidator of First O’Malley’s.

On 26 April 2016, Peter Sleiman emailed Mr Soo of NAB urgently requesting accounts to be opened for Powerhouse as trustee of the PeteJake 1 Trust and PeteJake 2 Trust and for Jaken as trustee for the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust.

On 27 April 2016, Mr Soo responded to Peter Sleiman to say that two of the O’Malley’s accounts would have to remain frozen as they were linked to First O’Malley’s which was in liquidation. On the same day two new accounts were opened with NAB in the name of Second O’Malley’s.

On 16 May 2016, Mr Soo emailed Peter Sleiman and informed him “Old O’Malley’s accounts have been closed and the funds have been credited to” an account of Second O’Malley’s.

On 19 May 2016, Five Clover Hotels Pty Ltd was registered with George Sleiman as the sole director, secretary and shareholder.

On 14 June 2016, Peter Sleiman sent Mr Soo the quarterly profit and loss statements for the period ending 30 March 2016 for the Kings Head Tavern and for Second O’Malley’s.

On 15 June 2016, Peter Sleiman emailed Mr Soo:

Notwithstanding George Sleiman was the director of Five Clover Hotels Pty Ltd, he was not copied on this email. The two accounts were opened on 16 June 2016.

On 12 October 2016, Mr Naaman’s solicitors sent to Mr Soo a letter enclosing a copy of the Naaman Caveat, a copy of Young J’s orders of 25 February 2016 and a copy of the title search for the Kings Cross Property.

On 26 October 2016, Mr Stuart King of NAB emailed Peter Sleiman proposing a meeting for the following Monday, 31 October to discuss what were described as “current items of concern”. In an attached schedule setting out those matters, one of them identified the Naaman Caveat. A response to that query recorded as coming from Peter Sleiman’s solicitors includes:

NAB’s response is recorded as:

On 15 November 2016, Angela Michael emailed Mr Soo (copied to Peter Sleiman) requesting the monthly repayments for both hotels be debited from the new accounts created for Powerhouse and Jaken as the trustees of the PeteJake 1 Unit Trust and the Sly Fox 1 Unit Trust.

On 17 November 2016, Peter Sleiman sent Mr Soo the management accounts for O’Malley’s Hotel and Kings Head Tavern for the period January 2016 to June 2016. In the profit and loss statement for Second O’Malley’s that was provided to NAB, it was represented that it had gross income of $1,897,196.87 and that it had paid rent of $198,818.18 for the period.

On 24 November 2016, Black J delivered his decision in Deputy Commissioner of Taxation v Peter Sleiman Investments Pty Ltd [2016] NSWSC 1657 (“DCT”) in which, among other things, his Honour made orders for the winding up of Peter Sleiman Investments Pty Ltd.

In a profit and loss statement prepared for Second O’Malley’s on 2 December 2016 for the period January 2016 to June 2016, it was represented that Second O’Malley’s had a total income of $1,897,196.87 and had paid rent of $198,818.18.

On 13 December 2016, legal counsel for NAB wrote to Peter and Tony Sleiman’s solicitors referring to “The subsequent request from your clients to refinance some of their facilities with Westpac. We note that Andrew Soo is liaising directly with your clients regarding the proposed refinance.”

Also on 13 December 2016, George Sleiman ceased to be the sole director, secretary and shareholder of Second O’Malley’s and was replaced in those roles on 14 December 2016 by Alissia Michael, Peter Sleiman’s niece.

In balance sheets dated 19 December 2016 for Jaken as trustee for the Sly Fox Trust as of September 2016, and which were provided to NAB, it was recorded that the value of O’Malley’s Hotel “at cost” was $15,500,000, the O’Malley’s Hotel poker machines “at cost” was $2,000,000” and the O’Malley’s Hotel goodwill was $500,000, with total fixed assets being $18,245,446.07.

In the first quarter of 2017, Mr Soo was replaced by Mr Danny Tran as the contact at NAB for the various Sleiman entities.

On 17 March 2017, NAB wrote to Peter Sleiman referring to concerns that had been raised by NAB “regarding a number of matters”, which included the Naaman Caveat, and continued:

On 18 April 2017, the Court of Appeal delivered its judgment in Peter Sleiman Investments Pty Ltd v Deputy Commissioner of Taxation [2017] NSWCA 81 (“the DCT Appeal”), confirming the winding up order but ordering a stay while the debt underlying the winding up order was subject to challenge in the AAT.

On 5 May 2017, NAB wrote to Peter Sleiman and Tony Sleiman and the various companies in their group including Jaken as trustee for the Sly Fox Trust, refusing a request that had been made for a partial release of NAB’s securities.

On 18 May 2017, Stuart King, the Head of Group Strategic Business Services of NAB wrote to Peter Sleiman (and notably not copied to either Tony Sleiman or Angela Michael) with the subject heading “Sleiman – discharge basis”. The email included:

By email dated 26 May 2017 to Peter Sleiman, Mr Danny Tran of NAB sought cashflow forecast for the “pub entities” for the next two years. These were sent to Danny Tran by Daniele Siviero of Peter Sleiman’s office on 31 May 2017. These included projections that the revenue for O’Malley’s Hotel would increase from $4,958,686 in 2017 to $5,524,046 in 2019.

In a profit and loss statement for the year ending 30 June 2016, and produced on 2 June 2017, and provided to NAB in respect of O’Malley’s Hotel, it was represented that the total income was $4,838,135 and that it had paid rent of $790,820.

On 3 August 2017, the Sleiman Group’s lawyers wrote to Henry Davis York (who represented NAB) and asserted that “Mr Naaman is on the verge of bankruptcy”.

On 10 August 2017, the Sleiman Group’s lawyers wrote to Henry Davis York that “Mr Naaman is likely to be bankrupt, in the course of bankruptcy, during the 120 day period covered by those clauses and it makes no commercial sense for our client to commit to a result over which they have no control”. The parties were at that time in the course of renegotiating a Deed of Settlement, Amendment and Restatement.

On 18 August 2017, Peter Sleiman emailed Stuart King of NAB and said: “The Valuation on both pubs is $37M and the debt for both the pubs is $17.4M which shows enough equity there to secure the loan”.

On 6 September 2017, Peter Sleiman and Tony Sleiman and various corporate entities and trusts provided a guarantee to NAB in the sum of $12,000,000 in respect of Jaken as trustee for the Sly Fox Trust, Sly Fox Number 1 Unit Trust and the Sly Fox Number 2 Unit Trust.

Also on 6 September 2017, Jaken gave a mortgage over the Kings Cross Property to NAB.

On 11 September 2017, Danny Tran wrote to Peter Sleiman confirming the details in relation to stages 1 and 2 of the refinancing of the Sleiman Group facilities by NAB.

On 18 September 2017, Jaken, Powerhouse, Tony and Peter Sleiman, and other companies in the Sleiman Group entered into the Deed of Settlement, Amendment and Restatement with NAB.

On 29 September 2017, NAB lodged a caveat over the Kings Cross Property.

On 13 April 2018, Peter Sleiman caused a bankruptcy notice to be issued to Mr Naaman for an alleged debt of $104,544.58.

On 25 May 2018, Mr Naaman’s solicitors served an examination notice on Jaken as trustee for the Sly Fox Trust.

On 14 July 2018, Christopher Batten wrote to Tony Sleiman seeking to explain the various transactions that had occurred on 3 December 2014.

On 10 August 2018, Tony Sleiman ceased to be the director, secretary and shareholder of AVS Group Australia Pty Ltd and was replaced in those roles by Chris Saab.

On 30 October 2018, the Court ordered Tony Sleiman to attend for examination and Jaken to produce documents for the purposes of the examination with respect to Young J’s judgment entered on 25 February 2016. The examination was fixed for 12 February 2019.

On 14 January 2019, Mr Naaman commenced contempt proceedings against Jaken for failure to comply with the Court’s orders in relation to the examination.

On 23 January 2019, Jaken commenced these proceedings by summons. Peter Sleiman’s affidavit in support provided to Mr Naaman for the first time the trust deed with Tony Sleiman as the appointor and the deed of change of trustee dated 20 January 2015.

For the purposes of the examination, Tony Sleiman made an affidavit dated 10 February 2019. In that affidavit he said that Jaken had ceased to be trustee of the Sly Fox Trust in January 2015 when it was removed as trustee of that trust and AVS Group Australia Pty Limited was appointed as trustee of the trust. He said that Jaken did not hold any assets of the Sly Fox Trust, or receive any income of that trust. He stated that “Jaken is not in a position to make any arrangement to pay any debt of the SFFT to Mr Naaman. Any assets it owns are held by it as trustee of the Sly Fox 1 Unit Trust or the Sly Fox 2 Unit Trust”.

On 12 February 2019, Tony Sleiman was examined pursuant to the Court’s orders. An extended extract and summary from that examination is set out at [306]-[310] below.

On 1 March 2019, Mr Naaman’s solicitors sought these particulars of the summons:

On 11 March 2019, Jaken’s solicitors replied:

On 29 March 2019, Mr Naaman filed his cross-claim in these proceedings.

On 2 April 2019, the bankruptcy notice issued to Mr Naaman was set aside in the Federal Circuit Court of Australia.

By an email on 5 September 2019 from Jaken’s solicitors to Mr Naaman’s solicitors, the deed of variation of discretionary trust purportedly made on 20 March 2009 was provided to Mr Naaman for the first time.

On 6 September 2019, Mr Naaman’s solicitors wrote to the solicitors for NAB (NAB having been subpoenaed for documents in these proceedings) and, among other things, asked NAB to see if it had copies of the deed of variation of discretionary trust deed dated 20 March 2009 and the deed of variation of discretionary trust dated 13 or 15 October 2010 because, so the letter said, Mr Naaman had never seen these deeds before and they had not, up to that time, been produced by NAB.

On 13 September 2019, NAB’s solicitors responded that the variation deeds referred to, being dated 20 May 2009 and 13 or 15 October 2010, were from a time that the various Jaken entities were not customers of NAB.

On 4 October 2019, Mr Naaman filed his amended cross-claim and the proceedings were given a provisional hearing date by Darke J.

On 13 November 2019, Mr Naaman issued a notice to produce to Jaken for the original of the purported deed of variation dated 20 March 2009.

On 13 December 2019, Powerhouse sold the Kings Head Tavern for $20,630,550.

On 30 January 2020, the deed of variation of trust deed bearing the date 20 March 2009 was produced to the Court. The authenticity of this document is considered in [333] to [355] below.

On 3 February 2020, on Mr Naaman’s application, the Court vacated the hearing dates originally fixed for these proceedings.

By deeds made on 5 February 2020, Powerhouse was retired as trustee of the various PeteJake trusts.

On 14 September 2020, JPG and its liquidator Mr Cooper, entered into a deed of assignment with Mr Naaman. This document is considered in [395] to [398] below.

On 3 November 2020:

On 10 November 2020, by notice of assignment dated 3 November 2020, Mr Naaman gave notice to Peter Sleiman, Tony Sleiman and various other Sleiman Group companies of the assignment.

The hearing of these proceedings before me commenced on 16 November 2020.

On 17 November 2020, the Court made orders upon the application of Mr Naaman including:

During the course of the hearing, on 25 November 2020, the Court made this order on Mr Naaman giving the usual undertaking as to damages:

On 27 November 2020, on what was ultimately the unopposed application of Mr Naaman, the Court made orders for the appointment of a receiver and the sale of the Kings Cross Property including:

On 16 March 2021, while judgment was reserved, the proceedings were relisted because NAB had appointed receivers to, among other things, the Kings Cross Property. On that occasion the Court made these notations and orders:

On 11 January 2022, the Court made these orders after a further application had been made by Mr Naaman:

On 28 January 2022 the Court made the following orders:

There were five areas of common ground.

First, Jaken holds the Kings Cross Property as trustee of the Sly Fox Trust. The plaintiffs accepted that the purported attempt to change that position in December 2014 (see [175] above) by Jaken becoming the trustee of the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust was ineffective.

Second, there was no dispute that pursuant to the Young J Orders:

Third, it was accepted that (subject to the reserved for consideration issue of accounting) Mr Naaman had a caveatable interest in the Kings Cross Property by virtue of his position as a creditor of JPG who was subrogated to the rights of JPG to be indemnified out of the assets of the Sly Fox Trust in respect of JPG’s judgment debt to Mr Naaman.

Fourth, the cross-defendants accepted that Mr Naaman had standing to claim:

Fifth, the cross-defendants accepted that the Rein J Orders of 18 June 2014 were made by consent and constituted a contract between Mr Naaman, Jaken and Peter Sleiman. It was also accepted that Peter Sleiman and Tony Sleiman were aware of the Rein J Orders at the time they were made or shortly after. Those orders were dissolved on 10 March 2015 by order of Stevenson J.

Peter Sleiman is the central figure in these proceedings. I have reviewed the transcript of his evidence which has only served to confirm the impression I recorded at the time he gave his evidence. At various times I found his evidence incredible, smug, desirous of avoiding the question, displaying willingness to “play dumb” and offering ridiculous explanations inconsistent with the documentary record that suggested he was in fact an astute businessman. Before turning to consider Mr Naaman’s submissions about Mr Sleiman (which I accept), I will set out what struck me as some particularly telling examples.

First, his evidence about basic corporate matters explored early in his cross-examination was unconvincing and bespoke feigned obtuseness. For example, in relation to JPG, his asserted lack of knowledge about it, including who was operating the business after June 2012 when he and his wife and others had ceased to be directors (T112-113) made for an unconvincing start. While he admitted to causing JPG to be incorporated in 2003, he asserted that when he succeeded his sister as a director, he had no interest in what she had done as a director or in what the company did. I cannot accept that as a serious or truthful answer.

Second, Peter Sleiman was shown a signature block on an email which he sent to NAB describing himself as “Jaken Hotels/Peter Sleiman/Managing Director”. Of this he said “Yeh, that’s just a signature, but I’m not [the managing director]” (T165:43). His subsequent denial that he was representing to NAB that he was managing director of “Jaken Hotels” (T165:48) cast him in a very poor light.

Third, Peter Sleiman was shown some emails at the time of the negotiations that led to the $3.6 Million Drawdown. Significantly, none of the emails between Peter Sleiman and NAB were copied to Tony Sleiman. Despite Peter Sleiman’s obfuscations in the witness box, I was left with no doubt from the email correspondence that Peter Sleiman was in sole charge of the negotiations. Peter Sleiman was shown an email to him from Andrew Soo of NAB which had the subject matter “Re: rates lower – need your approval please” and included:

In similar vein, Peter Sleiman was shown an email of 10 September 2014from him to Peter Hartley of NAB which said: "PETER I need you to call me, my accounts are all over the place since we relocked the facility. $12m was supposed to be for Jaken and PWH". It was put to Peter Sleiman (T167:26) that the reason that he used the expression "my accounts" as opposed to "Powerhouse's accounts" or "Jaken's accounts" was because he considered all of those various companies to be his. I am unable to accept Peter Sleiman's denial of that proposition as credible in the face of these and similar email chains.

Fourth, the cross-examination of Peter Sleiman in relation to the refinancing that led to the $3.6 Million Drawdown included examples both of his determination to give evidence contrary to the documentary record in a way that he thought could help his case and to avoid difficult questions (T304:31-305:5):

Fifth, when Peter Sleiman was further examined about the arrangements in relation to the refinancing and $3.6 Million Drawdown, his answers about what NAB referred to in its email as “his plan” also gave rise to what struck me as a ridiculous attempt to suggest that NAB was responsible for suggesting the structure that was being used.

Peter Sleiman first accepted that he knew at the time he met with NAB on 18 June 2014 that the Rein J Orders were to be made, but resisted responsibility for the refinancing plan (T328:17-329:6):

Having been shown the email referred to at [158] above, the following exchange occurred (T330:8-25):

This exchange culminated in Peter Sleiman attempting to lay the entire structure at the feet of NAB in what I regard as a further discreditable attempt to distance himself from what was plainly corporate activity driven by him (T331:32-T332:33):

In addition to the matters to which I have just referred, Mr Naaman’s closing submissions set out a detailed criticism of Peter Sleiman’s evidence which I accept is correct and reproduce as an accurate summary (references omitted):

The end result of this consideration of Peter Sleiman’s evidence is that the Court concludes that he was an unreliable witness whose evidence on critical matters could not be accepted as truthful unless it was against interest, or corroborated by reliable contemporary documentary records. I emphasise the word “reliable” because as will be seen from the discussion from [317] to [360] below, I am satisfied that Jaken (which as I next discuss, was one and the same as Peter Sleiman) was prepared to attempt to deploy in its defence documents that were either forged, or as to which the Court could not conclude on the balance of probabilities were authentic.

The question of Peter Sleiman’s credit is closely connected to the fundamental allegation made by Mr Naaman that, in relation Jaken, Peter Sleiman was a director. At all material times, the only formally appointed director of Jaken was Tony Sleiman. However, s 9 of the Corporations Act includes in the definition of director:

The first of these options is informally referred to as a “de facto director” and the second of these options as a “shadow director”. Whether a company has held out a person as a director will be a relevant but not decisive consideration: Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296: [2012] FCAFC 6 at [75] per curiam.

Mr Naaman submitted that the evidence demonstrated that Peter Sleiman was both a de facto director and a shadow director. Jaken submitted that neither conclusion had been proven, in particular that there was no evidence that Tony Sleiman was accustomed to act in accordance with Peter Sleiman’s instructions or wishes.

The Court has concluded that Peter Sleiman’s role in Jaken as demonstrated in the lengthy recitation of the history of this matter in paragraphs [14] to [283] above and including specific examples such as those set out above concerning Peter Sleiman’s dealings with NAB, amply demonstrate that he was a de facto director of Jaken. The Court accepts Mr Naaman’s submission that the evidence demonstrates that Peter Sleiman:

Assessing Peter Sleiman’s role as both a de facto director and a shadow director of Jaken also requires consideration of the position of Tony Sleiman. While Tony Sleiman did not give evidence in these proceedings, a matter which permits Jones v Dunkel inferences to be drawn in relation to matters about which there was otherwise evidence, the Court received without objection a transcript of Tony Sleiman’s evidence at the creditor’s examination in relation to Mr Naaman’s judgment against JPG. The Court adopts Mr Naaman’s summary of that evidence as accurate which is set out in his closing written submissions (references to the court book omitted);

Mr Naaman also relied on the three further passages of Tony Sleiman’s evidence at the creditor’s examination.

First, there was:

Second, this exchange was relied on:

Finally, attention was drawn to these answers:

By reference to the matters set out in [305] to [310] above, the Court is satisfied on the balance of probabilities that at all times relevant to these proceedings, Peter Sleiman was a de facto director of Jaken and that, to the extent that he was ever involved or permitted to be involved in the affairs of Jaken, Tony Sleiman was accustomed to act in accordance with Peter Sleiman’s instructions or wishes.

Peter Sleiman’s role as a de facto director is established by:

Alternatively, Peter Sleiman’s role as a shadow director is established by the same matters referred to in the preceding paragraph, together with the inference that if, according to Tony Sleiman, Peter Sleiman did “everything”, and Tony Sleiman was so obviously ignorant of Jaken’s affairs, whatever he may have formally done (such as execute documents) must have been because Tony Sleiman was accustomed to act in accordance with Peter Sleiman’s instructions.

Jaken called two other witnesses in the proceedings, both solicitors. The first was Mr Stefano Laface, who was cross examined, and Mr Joe Nasr, who was not required for cross-examination. Their evidence will be considered in the context of the impugned documents dealt with below.

No other witnesses were called for the cross-defendants. Most notably, neither Tony Sleiman nor Samantha Sleiman gave evidence, notwithstanding their role as directors of corporate cross-defendants. In what follows, where it is properly able to do so, the Court has no hesitation in concluding that their evidence would not have assisted any of the cross-defendants. Therefore, where other evidence exists for a particular finding against the cross-defendants, the Court has made that finding more easily in accordance with the principle discussed in Jones v Dunkel (1959) 101 CLR 538; [1959] HCA 9.

Neither Mr Naaman nor his expert witnesses was required for cross-examination. Where necessary, and the Court being otherwise satisfied of its inherent cogency, that evidence is accepted. This conclusion in particular relates to the expert valuation evidence filed in Mr Naaman’s case.

There were five documents which Mr Naaman submitted were inauthentic. I will consider each of these in turn.

In May 2014, Peter Sleiman swore an affidavit in support of an application to remove the caveats that had been lodged over the Kings Cross Property by Mr Mark Cooper in his capacity as liquidator of JPG and by Mr Naaman relying upon his right of subrogation to JPG’s right of indemnity. Exhibited to Peter Sleiman’s affidavit was a lease purportedly entered into on 17 June 2011 from Jaken to First O’Malleys in relation to the Kings Cross Property. The lease is purportedly executed on behalf of both the lessor and the lessee by Tony Sleiman as the sole director and secretary of each company.

The lease is unregistered and is on a standard Lands Title Office form described as “Form 07L” and “Release: 4.4”. At the bottom right hand corner of the front page of the document was the number “1309”.

By letter dated 21 May 2014, Land and Property Information informed Mr Naaman’s solicitor:

The Court is satisfied that the lease could not possibly have been entered into on its purported date of 17 June 2011. The Court also accepts Mr Naaman’s submission that the lease is likely to have been prepared around the time Peter Sleiman swore the affidavit for the purposes of attempting to persuade the Court that the Kings Cross Property was worth less than it in fact was.

This is another document attached to Peter Sleiman’s affidavit to remove the caveats lodged by the liquidator of JPG and Mr Naaman over the Kings Cross Property. This 11 April 2014 email appears under an email from Peter Sleiman to Joe Nasr of 11 April 2014 at 4.40pm in which Peter Sleiman says “See email from Andrew from NAB below. We need to get the caveat off asap”. Peter Sleiman’s email address for that email is peter@jakenhotels.com.au.

The “email from Andrew” referred to is an email purportedly from Andrew Soo dated 11 April 2014 at 3.46pm and sent to Peter Sleiman at the address peter@avsgroup.com.au. The subject is described as “Loan Details” and the text is:

It was submitted for Mr Naaman that the Court would find that the 11 April 2014 email was created by Peter Sleiman to convey a false sense of urgency to the Court about the need to remove the caveats. In support of this proposition, Mr Naaman relied on:

In cross-examination Peter Sleiman denied that the 11 April 2014 email from Mr Soo to him was a fabrication. An affidavit of Joe Nasr was produced attaching the forwarded version of what was said to Mr Nasr.

The Court accepts the arguments advanced on behalf of Mr Naaman and finds that the 11 April 2014 email was a fabrication. The fact that it may have been forwarded to Joe Nasr casts no light on the question of the authenticity of the email. The Court’s finding is made on the Briginshaw standard.

Pursuant to the Rein J Orders, Peter Sleiman produced an affidavit setting out details concerning the financial position of the Sly Fox Trust. He exhibited to that affidavit what purported to be an NAB bank statement for Jaken for the period 25 December 2013 to 25 June 2014 (“the 2013/2014 bank statement”).

Mr Naaman submitted that the 2013/2014 bank statement was also inauthentic and had been created belatedly to provide support for evidence sought to be given in the same affidavit that the lease purportedly entered into in June 2011 had been formalised in writing in or about October 2013 to record what until then had been an informal lease between Jaken and First O’Malley’s.

The difficulty for Jaken is that NAB produced on subpoena bank statements for the same account (described as Jaken Properties Australia Pty Limited atf/Sly Fox Family trust) which was in a different form and contained different entries to the 2013/2014 bank statement (which was described as account name Jaken Properties Australia Pty Ltd). The 2013/2014 bank statement was curious in other respects. For example, it had two NAB logos in its top left hand corner in slightly different forms. Furthermore, it used headings such as “Narrative”, “Reference”, “Debit amount”, “Credit amount” and “EOD balance” which do not appear on the form of statement produced by NAB.

The 2013/2014 bank statement referred to credits into the account on 28 January 2014 and 27 March 2014 with the narrative “transfer credits TRF O’Malley’s”, whereas the statements produced by NAB describe those transactions as “Loan Spa/JPA Spa JRK Inves”. Furthermore, the statement produced by NAB uses this same description to refer to a credit and debit on 7 February 2014 for $300,000 that is not to be found on the 2013/2014 bank statement.

When these discrepancies were pointed out to Peter Sleiman in cross-examination, he accepted that the two versions were in respect of the same bank account but was unable to explain the discrepancies. His answer was “… these bank statements are clearly different to the other one so it’s the Bank’s bank statements” (T345:3-4).

Taking into account the discrepancies to which I have referred, the Court is satisfied on the Briginshaw standard that the 2013/2014 bank statement cannot possibly be an authentic statement produced by NAB. The only available conclusion is that it was used by Peter Sleiman in his affidavit made pursuant to the Rein J Orders to present a different picture about the financial condition and income of the Sly Fox Trust to what it actually was. Furthermore, given the view which the Court has formed about Mr Sleiman’s credit generally, his denials that the document is a fabrication are not accepted. On the contrary, given what was plainly his close connection to and control over the business of Jaken (see for example Tony Sleiman’s evidence set out in [306] to [310] above), the Court concludes that Peter Sleiman must have known at the time he deployed the 2013/2014 bank statement that it was not an authentic document.

The next document is a variation of discretionary trust deed purportedly made on 20 March 2009 and purporting to vary the Sly Fox Trust, including by substituting Tony Sleiman for Peter Sleiman as the appointor. This document came to be known as the Tea Deed, and I shall refer to it as such. As the evidence unfolded, the Tea Deed has a most curious history. For the reasons which follow, the Court has concluded that Jaken has failed to prove that any such document was actually ever entered into on or before 20 March 2009 or at all, and that, through Peter Sleiman, the cross-defendants were again prepared to deploy what must have been known to Peter Sleiman to be a concocted document.

The original appointor of the Sly Fox Trust was Peter Sleiman. By a defence filed on 9 October 2019, the cross-defendants pleaded that Jaken was not entitled to defend the cross-claim on behalf of the Sly Fox Trust because it had been removed as trustee on 20 January 2015 pursuant to an instrument executed by Tony Sleiman as appointor. However, on the evidence as it then stood, there was no evidence to support the proposition that the appointor had been changed from Peter Sleiman to Tony Sleiman.

In an affidavit sworn on 30 October 2019, in a section headed “Change of Appointor”. Peter Sleiman said (at paragraph 41):

However, while referred to in his affidavit, the purported deed of variation dated 20 March 2009 was not exhibited to his affidavit. A Notice to Produce was issued for that document. It was not produced. Darke J made orders requiring production. It was not produced.

On 30 January 2020, Mr Kelly of Senior Counsel emailed Mr Afshar saying “My people have dropped the original copy of the Deed of Variation of Trust dated 20 March 2009 into my chambers …. Would you prefer to pick it up from my chambers, or for us to produce it formally to the Court?” This was the document which came to be known as the Tea Deed. On 30 January 2020 the Tea Deed was formally produced to the Court under cover of a letter from Jaken’s solicitors saying “We now produce in answer to paragraph 1 of the said Notice to Produce, the Original Deed of Variation dated 20 March 2009”. As I will next set out, whatever else the document produced to the Court may have been, it was not the “original” of anything.

The Tea Deed was tendered into evidence before me. No forensic skill is required to discern that however it came to be stained with what appears to be tea, the tea was applied with a brush of some kind. Nevertheless, in an affidavit sworn on 18 March 2020, Peter Sleiman said (at paragraph 12):

This version of events changed during Peter Sleiman’s cross-examination (T449:17-46):

There was uncontested forensic evidence tendered on behalf of Mr Naaman that the Tea Deed “is not an original document as purported in the letter dated 30 January 2020 from David Legal … rather, it is a reproduction possibly printed on or about 3 September 2019 . There has also been a liquid such as tea (or other tan/brown substance) applied to it with some kind of brush”. The Court finds in accordance with that evidence.

In his affidavit of March 2020 (which was after Mr Naaman’s forensic evidence had been received), Peter Sleiman deposed (at paragraph 13) that “I no longer believe that the [Tea Deed] is the one I found at Sliverwater. I now believe I made a mistake in producing that copy of the Deed dated 20 March 2009 to the Court” and at paragraph 14 “To be clear, I do not believe the document I found was the original deed. I believe it was a photocopy”.

If the matter were not so serious, Peter Sleiman’s attempts to rely on the Tea Deed and his explanations in the face of the forensic evidence, might be described as ludicrous. The Tea Deed is not an original document. No original of the purported deed of variation alleged to have been entered on 20 March 2009 has been produced. The Court finds that no such document was ever entered into.

In making that finding, I have not overlooked the evidence of Jaken’s solicitor, Mr Stefano Laface. He swore an affidavit on 2 October 2019 which attached the Tea Deed and continued:

As I shall shortly develop, a point of some concern to the Court is that Mr Laface’s signature as it appears on his affidavit of 2 October 2019 bears little resemblance to his signature as it purportedly appears on the Tea Deed.

For the following reasons advanced on behalf of Mr Naaman, the Court is not satisfied on the balance of probabilities that an original version of the Tea Deed was executed in the presence of Mr Laface in March 2009. The Court finds, as submitted for Mr Naaman, that the likelihood is that Mr Laface has persuaded himself that he executed the original of the Tea Deed by reason of having been shown a copy of it and bearing in mind, as the Court accepts, that Mr Laface executed many documents for and in relation to Jaken, Peter Sleiman, Tony Sleiman and their affairs.

There are five reasons for this conclusion. First, while Mr Laface initially claimed to have an actual recollection of witnessing an original of the Tea Deed, he was unable to provide any file note or other contemporaneous record of having done so. Furthermore, when pressed in cross-examination, Mr Laface said (T471:9-50):

Second, in certifying a list of documents in the 2009 proceedings on 22 September 2010, Mr Laface had certified a list of documents in which he said that he “was not aware of any documents” which fell within the description of “amendments for variation(s) of the trust deed” for the Sly Fox Trust, whereas 10 years later he purported to recall executing the original of the Tea Deed.

Third, Mr Laface could not claim to be completely independent of Peter Sleiman and Tony Sleiman. He had had business dealings with the Sleimans as part of a joint venture, including being a director of Logan Fox Lawyers Pty Ltd, a law firm which operated from the office of Peter Sleiman and of which Samantha Sleiman was also a director. That relationship fortifies the Court both in its conclusion that there would have been many documents which Mr Laface would have witnessed or executed for or in relation to Peter Sleiman, Tony Sleiman and Jaken, and that he could not be regarded as completely independent.

Fourth, in contrast to his apparent ability to recall executing the original of the Tea Deed in March 2009, Mr Laface showed a poor recollection in cross-examination of what matters relating to Peter Sleiman and Anthony Sleiman he had taken from his former employer to his own practice which he had set up in 2010.

Fifth, Mr Laface was taken to a number of documents which he accepted he had signed in 2009, 2010 and 2011. As a matter of ordinary, visual comparison, Mr Laface’s signatures purporting to witness the execution by Tony Sleiman and Peter Sleiman of the original of the Tea Deed are quite different to Mr Laface’s signature in the other documents to which he was taken which he accepted bore his signature.

I raised with Mr Afshar my concern as to what the Court was entitled to do with such a comparison in the absence of expert evidence, even when it is recalled that expert evidence is evidence which enables the Court to make findings of fact.

Mr Afshar submitted that where all that could be done was to compare a copy document (the Tea Deed) with other copy documents, the Court was in just as good a position as an expert to reach a conclusion as to the authenticity of the impugned signatures. He drew to attention the decision of the Court of Appeal in Carnemolla v Adelaide Bank [2013] NSWCA 122, in which the Court said:

Mr Afshar then invited an analogy to the decision of the High Court in Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50, in which the plurality rejected as irrelevant the evidence of two police officers who had given evidence at the trial that one of the robbers depicted in security camera photographs was the accused. Their Honours said (at [11]) “Because the witness’s assertion of identity was founded on material no different from the material available to the jury from its own observation, the witness’s assertion that he recognised the appellant is not evidence that could rationally affect the assessment by the jury of the question we have identified”.

I accept Mr Afshar’s submission that, at least insofar as the question of authenticity is concerned, I am entitled to take into account my own observation of how different Mr Laface’s signatures on the Tea Deed appear to be from those on the other documents which he accepted were his signature for the period 2009 to 2011 (and, although much later, his signature on his affidavit in these proceedings). Contrary to how it was originally presented by Peter Sleiman, the Court has no doubt, and has concluded, that the Tea Deed is not an original document.

The fact that, in the first instance, the Tea Deed was sought to be presented as an original document is a matter which the Court also takes into account on the next question, which is that given the Tea Deed is a copy, was there ever an original document which in fact was executed on 20 March 2009 as Jaken’s witnesses sought to suggest? Taking into account the various matters to which I have referred to in [334] to [354], the Court is not satisfied that there was ever any such original document, not least because the end result of Peter Sleiman’s evidence, if accepted at face value, is that he found but still has not produced what he first said was an original document when he was rummaging around in archive boxes in 2019. Taking all of the matters to which I have referred together, the Court concludes that on the balance of probabilities (and applying the Briginshaw standard) the Tea Deed and its liquid vicissitudes were no more than an inept attempt by Peter Sleiman to concoct evidence in support of Jaken’s case.

The final impugned document is a deed of variation of discretionary trust purportedly made on 30 September 2010 in relation to the Sleiman Family Trust (the purported SFT variation deed). On its face this has the effect of deleting Peter Sleiman as the primary beneficiary of the Sleiman Family Trust and appointing George Sleiman as the primary beneficiary of that trust, in addition to deleting a class of general beneficiaries. The deed is between Peter Sleiman Investments Pty Ltd as trustee of the Sleiman Family Trust and Peter Sleiman, described as its appointor. It is executed by George Sleiman as the sole director and secretary of Peter Sleiman Investments Pty Limited (witnessed by a solicitor, Joe Nasr, who was not required for cross-examination but whose affidavit evidence was not directed to this document), and Peter Sleiman’s signature is witnessed by Angela Michael.

Mr Naaman’s criticism of the authenticity of the purported SFT variation was based upon the fact that the Sleiman Family Trust had been the subject of proceedings heard by Black J in 2016 in DCT (referred to at [232] above). As appears from paragraph [26] of Black J’s judgment, that case was fought for the defendant (represented by Mr Kelly of Senior Counsel and Jaken’s current solicitors, David Legal), on the basis that the primary beneficiary of the Sleiman Family Trust was Peter Sleiman. Furthermore, when the proceedings were dealt with in the Court of Appeal, Peter Sleiman did not object to being joined as a party to perfect the record by reason of his status as primary beneficiary.

Mr Naaman’s submission was that history meant that either Peter Sleiman had permitted the case before Black J and in the Court of Appeal to proceed on a false basis, or the purported SFT variation deed was in itself inauthentic. These alternatives were put to Peter Sleiman in cross-examination, who was unable to offer any explanation.

The Court accepts Mr Naaman’s submissions. In light of how the proceedings appear to have been run before Black J in the Court of Appeal in relation to the Sleiman Family Trust, I am unable to reach a state of actual satisfaction on the balance of probabilities that the purported SFT variation deed was executed on or about the date which it bears or at all as a document executed with the intention of having legal effect.

As Mr Naaman’s submissions accepted, the significance of the various impugned documents was not necessarily their legal consequences in relation to the transactions impugned by Mr Naaman in these proceedings. Their significance, which the Court readily accepts, was to demonstrate as part of the general attack on the credibility of Peter Sleiman, that the Court could not necessarily rely on the veracity of documents propounded on his behalf or on his evidence. By reference to what I have said above in relation to the impugned documents and more generally in relation to Peter Sleiman’s credit, Mr Naaman’s submission to that effect is accepted as well made.

The only seriously contested question of legal principle between the parties related to Mr Naaman’s standing, in particular in relation to causes of action against the third parties who are said to have received property of the Sly Fox Trust other than as bona fide purchasers for value without notice. This issue is able to be dealt with at the level of principle before being referred to later in these reasons in relation to particular causes of action.

It is uncontroversial that a current trustee is entitled to indemnity from the trust assets for all liabilities properly incurred in the execution of the trust. That right arises as an incident of the law of trusts, under statute (see for example, s 59(4) of the Trustee Act 1925 (NSW)) and is also often given expression in the express terms of a trust deed.

So it is that the trust deed for the Sly Fox Trust included:

The parties each began with this basal principle set out in the judgment of the High Court in Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 at 367 (citations omitted):

Once JPG had retired as trustee of the Sly Fox Trust to be replaced by Jaken, JPG's means of enforcing its right of indemnity against the trust assets was different. So much appears in the judgment of Leeming JA (Beazley P and Emmett AJA agreeing) in the DCT Appeal referred to at [239] above:

It is convenient at this point to note that, in this case, under the deed of appointment and retirement of trustee of discretionary trust made on 13 February 2007 whereby Jaken replaced JPG as the trustee of the Sly Fox Trust, it was provided:

The final point of agreement between the parties was that in insofar as a creditor such as Mr Naaman was subrogated to the trustee's right of indemnity from the assets of a trust, the creditor could not be in a better position than the trustee would have been.

The point of divergence between the parties came with Jaken's emphasis on the statement of principle by Brereton J (as his Honour then was) in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 ("Lemery"):

Jaken then goes on, critically for its argument, to draw attention to what was said by Bell, Gageler and Nettle JJ in Carter Holt Harvey Woodproducts Australia Pty Limited v The Commonwealth of Australia (2019) 268 CLR 524; [2019] HCA 20 ("Carter Holt") (Jaken's emphasis):

Jaken submits that this is "a critical distinction which leaves no room for a trustee, let alone a creditor to whom the trustee's right of indemnity is subrogated, to presume that the trustee's right of indemnity in trust assets are one and the same". The submission continues that "there is no room for Mr Naaman or any other creditor to treat any cause of action which belongs to the Trust as though it were his own and he is somehow entitled to bring an action on that cause of action in his own name".

Taken together, Jaken's submission is that,

As I will next develop in my respectful opinion, both of those propositions are incorrect. As to the first, the Court accepts Mr Naaman's submission that the authorities amply demonstrate that a court will do more to assist the former trustee than appoint a receiver to effect a judicial sale. To understand the basis for that further assistance, a starting point is this paragraph in the judgment of Bell, Gageler and Nettle JJ in Carter Holt (emphasis added):

As will be shortly demonstrated by reference to the authorities, equity's assistance to the trustee does not stop with facilitating the realisation of trust assets. In referring to Brereton J's statement of principle in Lemery Holdings, Jaken overlooks his Honour's conclusion, albeit in obiter dicta, (at 561) that "To my mind, then, it follows in principle that a former trustee does not have a right to retain as against a new trustee, the trust assets as security for an accrued right of indemnity, though the former trustee is entitled to ensure the new trustee does not take steps which will destroy, diminish or jeopardise the old trustee's right of security, which subsists in the trust assets after their transfer to the new trustee" (emphasis added). I respectfully agree with his Honour and, as will be developed below, add that where there has been such destruction, diminishment or jeopardy, equity will assist.

The foregoing explains why the second sub-proposition in Jaken's argument is in error. Mr Naaman, by subrogation to JPG, is not seeking to exercise "any cause of action which belongs to the Trust". What he is seeking to exercise is JPG's own entitlement as the former trustee to enlist the assistance of equity where the assets of the Sly Fox Trust have been diminished by being paid away or otherwise disposed of other than to a bona fide purchaser for value without notice. That is not a cause of action of the Sly Fox Trust. It is an entitlement of JPG to which Mr Naaman in subrogated. The nature of that entitlement is further considered below.

Turning to Mr Naaman's reliance on the authorities, which the Court accepts as correct, the starting point is this statement by the High Court in Bruton Holdings Pty Ltd (In Liquidation) v Commissioner of Taxation of the Commonwealth of Australia (2009) 239 CLR 346; [2009] HCA 32, where speaking of the position of the appellant as a former trustee, the Court said (citations omitted):

Translated to the facts of this case, when JPG ceased to be trustee of the Sly Fox Trust, its right of indemnity continued to be supported by a lien over the whole of that trust's assets and which gave JPG a proprietary interest in those assets. That lien and interest, to the enforcement of which Mr Naaman is subrogated, continued after JPG had ceased to be trustee in relation to the assets of the Sly Fox Trust now legally held by Jaken. The same conclusion appears in the decision of the Court of Appeal in Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26, in which Barrett JA (with whom Campbell JA and Sackville AJA agreed) said:

The next step is to identify what further assistance equity will give a former trustee such as JPG and, by subrogation to JPG's rights, Mr Naaman in relation to trust assets in which JPG had a preferred beneficial interest where those assets had been paid away. The short answer is that JPG (and, by subrogation, Mr Naaman) was entitled to follow those assets into the hands of third parties (other than bona fide purchasers for value without notice) who will hold them on a constructive trust imposed by the court in aid of JPG’s proprietary interest in the Sly Fox Trust assets. Mr Naaman relied on a number of authorities in the argument made on his behalf to reach that conclusion, but the point is sufficiently demonstrated by reference to four cases.

The first decision relied upon by Mr Naaman is that of Mansfield J in Rothmore Farms Pty Ltd (in provisional liquidation) v Belgravia Pty Ltd & Ors [1999] FCA 745. In that case, the plaintiff (“Rothmore Farms”) was the trustee of a family trust. It was succeeded in that role by the defendant (Belgravia), which subsequently vested the whole of the assets in the trust in another defendant, Mr Andrew Cooper. Justice Mansfield described the appointment of Belgravia as the "first transaction" and the vesting of the assets of the trust in Mr Cooper by Belgravia as the "second transaction".

In relation to the first transaction, his Honour held:

It is his Honour's finding in relation to the second transaction that is on all fours with this case:

I respectfully agree with the conclusion set out by Mansfield J and find that his reasoning is equally applicable to the circumstances of these proceedings.

The second case is Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439. It is less directly in point because it concerned a trustee's right to be indemnified by the beneficiaries rather than out of the trust assets. In that case, confronted with a judgment against the trustee company, the beneficiaries caused the trust assets to be transferred to them while the judgment remained unsatisfied.

McPherson JA (with whom Davies JA and Fryberg J agreed) held that the judgment creditor, who was subrogated to the trustee's right of indemnity against the beneficiaries, was entitled to sue the beneficiaries directly.

What is important for present purposes is that his Honour did not see any difference between the enforcement by the subrogated creditor of the trustee's right of indemnity from the trust assets as opposed to against the beneficiaries themselves. His Honour said (emphasis added) at 443-444:

The Court draws two points from this decision. First, it is directly contrary to Jaken's submission (which the Court rejects) that the only relief open to JPG in relation to assets that may have been paid away from the Sly Fox Trust would be to appoint a receiver to the Sly Fox Trust who could then pursue the funds. Second, if the subrogated creditor is entitled to sue the recipient of the funds on the basis of the trustee's right of indemnity against those recipients (whether or not beneficiaries), there is no reason why the same principle would not apply to assets that have been paid away by or from a successor trustee. The point is that whether or not the trust assets are legally held by the first trustee or the successor trustee, they remain impressed with the lien in favour of the first trustee to whose rights the creditor is subrogated.

Mr Naaman then relies on the next iteration of the Rothmore Farms litigation: Rothmore Farms Pty Ltd (In liq) v Belgravia Pty Ltd [2005] SASC 117 (“Rothmore No 2”). As a result of the first set of proceedings heard by Mansfield J, an inquiry and account had been conducted which resulted in orders against two of the six defendants in that case. I add, in passing, that it seems to me a similar course will have to be followed in this case. Rothmore No 2 concerned the continuation of the proceedings before Perry J (for reasons which need not be rehearsed) for "damages and/or equitable compensation" against the other defendants for the deficit.

Perry J discussed the principles and their application in this way:

I accept Mr Naaman's submission that Perry J's analysis is on all fours with the present case, with JPG being in the same position of Rothmore Farms and Mr Naaman being entitled to sue on the causes of action available to JPG as a subrogated creditor of JPG.

It was further put for Mr Naaman that Jaken held the assets of the Sly Fox Trust in trust for JPG insofar as they were required to satisfy JPG's right of indemnity. I do not consider the relationship between Jaken and JPG may be so neatly characterised. Perry J's analysis of the relationship between the successor trustee and the former trustee as fiduciary, or the successor being a constructive trustee of the trust assets to protect the former trustee's right of indemnity is correct (see Rothmore No 2 at [73] cited in [387] above). In my respectful opinion, the relationship is an example of one that may be analysed as bearing both fiduciary and trust characteristics. It is the incidents of that relationship in a particular case that are important, recognising, as Bell, Gageler and Nettle JJ in Carter Holt at [83] (see [369] above) that the former trustee's lien is not "comparable to a synallagmatic security interest over property of another", but arises “endogenously as an incident of a trustee in respect of the trust assets".

Finally, on the question of standing more generally, Mr Naaman relied on these dicta of Young J (as his Honour then was) in McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 637:

While not in and of themselves dispositive, these dicta fortify me in the conclusion to which I have come that a creditor subrogated to a trustee's right and power of indemnity from the trust assets is entitled to sue directly those who have received, with notice, money paid away or assets disposed of improperly from the trust property or who are responsible for that impromptu conduct.

The conclusion to which the Court has come means it is not necessary to determine two other issues that were raised in relation to Mr Naaman's standing. However, I will briefly set out my opinion in relation to both matters.

First, there was debate as to whether or not Young J's orders enlarged or provided an independent source of Mr Naaman's rights. It will be recalled that the relevant declarations are:

Were it necessary to do so, I would accept Jaken's submission that those declarations declared, but did not of themselves create or enlarge, the rights referred to in them. In particular, the use of the expression "and generally" in order 5 made clear that the entitlement to indemnity out of the assets existed as against the second defendant and anyone else (for example a further trustee) who may be in possession of those assets.

The second issue is the effect, if any, of the deed of assignment between JPG and its liquidator, of the one part, and Mr Naaman of the other part, made on 14 September 2020. This deed was entered into in response to Jaken's claim that Mr Naaman lacked standing to bring a number of claims which Jaken characterised as being "derivative". Such claims included claims in relation to the transfer of the Granville Land which occurred in October 2012 and the transfer of the Victorian Properties which took place in March 2013.

Reduced to their essentials, the relevant terms of the deed are:

Jaken’s principal argument was that none of the causes of action relied upon by Mr Naaman accrued, if they did at all, before 13 February 2007 when JPG ceased to be trustee of the Sly Fox Trust. Therefore, it was submitted, JPG had nothing to assign.

Mr Naaman's response to this argument was that insofar as any such causes of action accrued after 13 February 2007, they were not causes of action of JPG as trustee for the Sly Fox Trust. Instead, they were causes of action which JPG had against the assets of the trust and as against the new trustee. That submission is correct because it reflects the conclusion which the Court has reached about the nature of JPG's rights both against Jaken and third parties set out above. Mr Naaman is, as the Court has already concluded, subrogated to JPG's rights in those respects. To the extent it is not so subrogated, the Court is satisfied that the deed effectively assigns to Mr Naaman all of JPG's rights in relation to the various causes of action pleaded by Mr Naaman in these proceedings. In relation to any particular one of those causes of action, no point arises insofar as whether Mr Naaman sues by subrogation to JPG's rights or as assignee of those rights.

The question of Mr Naaman’s standing was strenuously contested between the parties. Insofar as the other claims advanced by Mr Naaman, the debate was whether they had been made out on the facts rather than as to the applicable legal principles. Because they were not in issue, it is convenient to set them out as they appeared in Mr Naaman’s closing submissions:

Before turning to the application of these principles to the impugned transactions, one aspect of Mr Naaman’s claim may be conveniently dealt with at this point. Assuming in Mr Naaman’s favour but without deciding that he could rely on the sham doctrine, the Court does not agree that any of the Impugned Transactions were legally shams, i.e. something other than what they appeared to be. Mr Naaman’s case otherwise succeeds precisely because those transactions had the effect they purported to achieve, being the unlawful alienation of assets of the Sly Fox Trust to third parties.

In this section I will set out the Court's findings in relation to the Granville Land. These findings are made by reference to contemporaneous documents.

By contract made on 14 February 2006 JPG, as trustee of the Sly Fox Trust, purchased the Granville Land for $750,000.

On 20 February 2006, $75,000 was drawn from a personal account of Peter Sleiman's to pay the deposit for the purchase, the relevant bank statement noting "XX Cowper deposit" as the description of the withdrawal.

The purchase settled on 5 April 2006.

By letter dated 5 April 2006 from St George to Peter Sleiman, described as "The Director Jaken Property Group Pty Ltd" $518,000 was drawn down against the loan from St George to JPG, and an additional $198,808.81 was drawn from Peter Sleiman's personal account to complete the purchase of the Granville Land.

At the time of the settlement, St George took a mortgage over the Granville Land which was noted as securing indebtedness of $8.7 million.

On 13 February 2007, JPG retired as trustee of the Sly Fox Trust in favour of Jaken. There was no evidence as to when Jaken succeeded JPG as the registered proprietor of the Granville Land.

In October and November 2011:

On 7 October 2011, JPG was deregistered.

On 7 March 2012, Superior was incorporated with Samantha Panetta (Peter Sleiman's wife) as the sole director, secretary and shareholder and the Superior Family Investments Trust was settled with Superior as the trustee.

On 7 May 2012, a valuer retained by NAB valued the Granville Land at $700,000.

On or about 5 October 2012 Jaken transferred the Granville Land to Superior. The Real Property Act transfer in evidence records that "the transferor acknowledges receipt of the consideration of $500,000". At about the same time, NAB's mortgage over the Granville Land was discharged.

On or about 8 October 2012, Superior gave NAB a mortgage over the Granville Land securing an amount of up to $6,000,015.

By reference to the unchallenged valuation tendered in evidence on behalf of Mr Naaman the Court finds that the market value of the Granville Land as at 2 October 2012 was $837,000.

Mr Naaman's fundamental contention was that, notwithstanding what was recorded on the transfer, no consideration had in fact been paid to Jaken by Superior. This was the starting point for Mr Naaman's contentions that:

Jaken's submissions were:

The fundamental issue for Mr Naaman's claim in relation to the Granville Land is whether or not Jaken received any consideration for the transfer of that land to Superior. For the reasons which follow, the Court finds that no consideration was paid by Superior, or received by Jaken for that transfer. There are seven reasons for this conclusion. Because of the evidence available to Mr Naaman in relation to the transfer of the Granville Land, a detailed exposition of the law in relation to proving a negative is unnecessary. However, it is pertinent to the Victorian Properties and is set out in [489] to [490] below.

First, in an ordinary arms-length transaction the acknowledgement of receipt of consideration in a Real Property Act transfer would be prima facie, and often sufficient, evidence that consideration was paid. However, the transfer of the Granville Land from Jaken to Superior was not an arms-length transaction. It was a related party transaction within the Sleiman family. For this reason I give it very little weight.

Second, and recognising that Mr Naaman bore the burden of proving a negative, Mr Naaman tendered three sets of bank statements for the period in or around October 2012. The first was the Sly Fox Trust's NAB loan account which remained fully drawn for $8.4m with no reduction in or about October 2012. The second was the Sly Fox Trust's cheque account with NAB. This recorded no receipt of funds of $500,000 (or any sum or any figure anywhere near that amount) in or about October 2012. Third, the Sly Fox Trust still held a St George account which similarly showed no receipt of funds in or about October 2012.

Third, neither Jaken nor Superior tendered any financial records to show the receipt or payment of $500,000 passing between them or made to or from any third party, being a bank or otherwise. The absence of such evidence from Jaken and Superior, when taken with the evidence referred to in the preceding paragraph, satisfies the Court on the balance of probabilities that Jaken transferred the Granville Land to Superior for no consideration. The following matters fortify the Court in that conclusion.

Fourth, beyond asserting that the $500,000 was paid, Peter Sleiman did not provide any other evidence to show that money was received by Jaken for the transfer. Furthermore, Peter Sleiman conspicuously failed to fulfil an assertion he made in his affidavit of 3 October 2019 in relation to the Granville Land that he would "refer to the records of St George Bank in relation to loan account XXXXXXXXX when produced at the hearing of the present proceedings and to the relevant loan account and bank statements of the NAB to trace and prove payment". As I have already noted, neither Jaken nor Superior produced any bank statements that could be said to "trace and prove" that any consideration had been received by Jaken from anyone for the transfer to Superior.

Fifth, no commercial, or any other, reason for the transfer from Jaken to Superior was advanced in evidence or submissions on behalf of Jaken.

Sixth, neither Samantha Sleiman nor Tony Sleiman gave evidence. If there was a legitimate explanation for the transaction, it was to be expected that they would give evidence about it. The Court therefore makes a Jones v Dunkel inference that their evidence would not have assisted their or Jaken's case on this point. This enables the Court more easily to draw the inference which it has in [417] above by reference to the other evidence referred to in the preceding paragraphs.

Contrary to the submission put on behalf of Jaken, the discharge by NAB of its mortgage over the Granville Land from Jaken says nothing, without more, about whether or not Jaken received consideration for the transfer. On its face, this charge speaks only to the position as between Jaken and NAB, not the position between Jaken and Superior.

Finally, the Court accepts Mr Naaman's submission (see [416(5)] above) why any presumption of a resulting trust in favour of Peter Sleiman for his contribution to the purchase price of the Granville Land has been rebutted. For example, Peter Sleiman was taken to the balance sheet of the Sly Fox Trust as at 30 June 2008 which showed beneficiary loans of $1,850,617 for the year ended 30 June 2007 and $1,785,606 for the year ended 30 June 2008. It was put to Peter Sleiman that the money which he had paid towards the purchase of the Granville Land was a loan to the Sly Fox Trust included in those beneficiary loans. Given the view I have taken of Peter Sleiman's reliability generally, I do not accept his denial of that proposition. The Court accordingly finds that the money paid by Peter Sleiman to the purchase of the Granville Land was a loan to the Sly Fox Trust and not intended to be the basis of any direct beneficial interest by Peter Sleiman in the Granville Land.

Having regard to the foregoing, I will next set out the Court's conclusions in relation to the Granville Land.

The Court's findings mean that Superior is a volunteer and equity will not assist a volunteer.

In circumstances where there was no consideration for the transfer and no commercial explanation for the transaction has been advanced, the Court is satisfied that Superior, through its director Samantha Sleiman knowingly received the Granville Land in breach of Jaken’s fiduciary obligations to JPG and knowingly received and assisted in the transfer of the Granville Land. The Granville Land is held on constructive trust by Superior for JPG, but subject to the interest of NAB as registered mortgagee. It was one in a long series of manoeuvres which the Court is satisfied were undertaken by or at the behest of Peter Sleiman to defraud or hinder creditors including at least Mr Naaman.

The same circumstances of no consideration and no commercial purpose satisfy the Court that the transfer was also in breach of s 37A and is voidable. Even if this conclusion is wrong, because the Granville Land is held on constructive trust for Jaken, Mr Naaman is entitled to an order that the Granville Land be reconveyed to Jaken as the current trustee to be held for the benefit of JPG (subject again to the interests of NAB as registered mortgagee).

Next, by allowing the Granville Land to be transferred for no consideration and thereby depriving JPG of an asset of the Sly Fox Trust which should have been available to satisfy JPG's right of indemnity, Jaken breached its fiduciary duty or obligation to JPG. Jaken is therefore liable in equitable compensation to the extent of any shortfall attributable to the Granville Land not being available to JPG.

The absence of consideration or commercial purpose, and the undoubted knowledge of Peter Sleiman and Tony Sleiman of Mr Naaman's claims, satisfies the Court that Jaken engaged in a dishonest and fraudulent design to strip itself of assets that might otherwise be available to satisfy JPG's power of indemnity to which Mr Naaman was subrogated. For the reasons set out in [305] to [313] above the Court finds that Tony Sleiman as director of Jaken and Peter Sleiman as shadow or de facto director of Jaken, knowingly assisted in that dishonest and fraudulent design. They are therefore liable to JPG, and by subrogation, to Mr Naaman in equitable compensation to the extent of the shortfall already referred to.

However, as was the case in Rothmore No 2 (see [387] above), in my respectful view the Barnes v Addy accessorial liability analysis in relation to Peter Sleiman and Tony Sleiman is unnecessary. They were, for all intents and purposes, the controlling minds and personalities of Jaken and are directly liable in compensation to JPG and, by subrogation, to Mr Naaman accordingly.

Finally, I record the Court's conclusions in relation to Jaken's submissions (see [416] above and following the numbering of those sub-paragraphs) to be:

Although these appear set out above in the factual narrative commencing at [157], it is convenient to repeat them here:

The parties' various applications were fixed for hearing before Rein J on 18 June 2014. They were resolved by consent orders of that date which included:

Also on 18 June 2014, Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss a "plan" proposed by Peter Sleiman to increase Jaken's facility to $12,000,000 and reduce the Powerhouse facility. The fact of this meeting and the "plan" was confirmed in an email from Mr Hartley to Peter Sleiman and others dated 20 June 2014.

On 26 June 2014, Peter Sleiman emailed to Andrew Soo of the NAB various financial documents which Mr Hartley had sought, including the Sly Fox Trust's annual report for the year ended 30 June 2013 which valued the trust's land and buildings at $15,065,827 and recorded rent received of $1,353,258.

On 26 June 2014, Peter Sleiman swore an affidavit in response to the orders of Rein J which included that "Presently, the funding from the NAB is through commercial bank bills. At present the amount due under the bank bills is approximately $8.75 million … At present figure in the vicinity of $13.25m remains owing by Powerhouse to the NAB".

In relation to O'Malley's Hotel, Peter Sleiman's affidavit annexed a 10 year lease (with a further 10 year option) from Jaken to First O'Malley's dated 17 June 2011. However, the affidavit said nothing about the sale or transfer of the O'Malley's hotel business.

In its profit and loss statement for the year ended 30 June 2014, First O'Malley's represented that it had gross income of $4,453,054 with an operating profit of $691,685, and that it had paid rent of $724,511.

In its financial statements for the year ended 30 June 2014 and provided to NAB, the Sly Fox Trust represented the value of land and buildings held by it was $15,065,827.

On 2 July 2014, Mr Hartley emailed Peter Sleiman referring to a "structure…we were talking about recently" of Jaken having a facility of $12 million and Powerhouse a facility of $3 million.

By letters dated 21 August 2014 to Jaken as trustee for the Sly Fox Trust and to Powerhouse as trustee for the PeteJake Family Trust, the NAB varied their respective facilities. Jaken's facility was increased from $8,400,000 to $12,000,000, with the NAB's offer accepted by Tony Sleiman on 22 August 2014. Powerhouse Corporation's facility was reduced from $10,600,000 to $7,000,000. This was just over two months after Rein J had made freezing orders against Jaken.

In a declaration made on 22 August 2014, Tony Sleiman, on behalf of Jaken as trustee for the Sly Fox Trust, confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O'Malley's Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Jaken's property was $100.

In a declaration made on 22 August 2014, Peter Sleiman, on behalf of Powerhouse as trustee for the PeteJake Trust, also confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O'Malley's Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Powerhouse's property was $100.

On 8 September 2014, several transactions occurred:

The final result of the transactions referred to in the previous paragraph was that Jaken then had a loan account of $12,000,000 and Powerhouse's loan account had been reduced to $7,000,000.

On 10 September 2014, Peter Sleiman emailed Peter Hartley and others at the NAB:

It was submitted for Mr Naaman that there was no commercial explanation for the $3.6 Million Drawdown in any of Jaken's evidence. Powerhouse had given no consideration for the $3.6 million it received. Because the guarantee ceilings were left unchanged, with the effect that Powerhouse's guarantee was limited to $8,750,000, no one else guaranteed the balance of Jaken's increased indebtedness. This was said to have the following consequences:

For its part, Jaken accepted that the Rein J Orders were made by consent and were therefore the product of a contract of compromise between the parties, being Mr Naaman, Peter Sleiman and JPA. However, it drew to attention that the Rein J Orders were made until further order, which was relevantly when Stevenson J dissolved those orders on 10 March 2015. This was said to be relevant to the question of whether any tortious interference with the contract caused any loss.

Jaken also accepted that Peter Sleiman and Tony Sleiman were aware of the Rein J Orders at the time they were made or shortly afterwards.

Jaken premised most of its argument in relation to the $3.6 Million Drawdown on this passage from the judgment of Hodgson J (as his Honour then was) in Standard Chartered Bank v Antico (Nos 1 and 2) (1995) 38 NSWLR 290 (“Standard Chartered”) at 314:

Having regard to the Rein J Orders, Jaken submitted that it did not "deal with the Kings Cross Property" other than in the usual course of business in August 2014, nor did it "further" encumber or diminish the value of that property within the meaning of the Rein J order, nor did it "pay" $3.6 million to Powerhouse.

Jaken submitted that when it accepted the offer contained in the letter from NAB dated 21 August 2014 and implemented the arrangements set out in that letter, the arrangements were "in the usual course of business". This was because Jaken's and Powerhouse's facilities fell due on 31 December 2014 and it was to be expected that in the months leading up to that date there would be negotiations between those companies and their banker. It was suggested that those negotiations were already underway by the time the Rein J Orders were made. However, while that matter may be true as a general proposition, the Rein J Orders were made on exactly the same day when Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss the "plan" proposed by Peter Sleiman to increase Jaken's facility to $12m and reduce the Powerhouse facility. Because Peter Sleiman was a party to the proceedings in which the Rein J Orders were made and those orders were made by consent, the Court has no doubt, and finds, that Peter Sleiman knew the Rein J Orders were going to be made at the time he met with representatives of NAB to propose his "plan".

Jaken further submitted that rolling over and renewing existing facilities before their expiration date was a paradigm example of the usual course of business. Adopting the language of Hodgson J in Standard Chartered, it was submitted as a matter of "substance and commercial reality", the facilities entered into upon acceptance of the August 2014 offers did not "further" encumber or diminish the value of the Kings Cross Property. This was because other than varying the facility limits, the terms of the facilities remained in full force and effect and Jaken acknowledged as part of the new facility documents that all security provided to NAB remained in place and could be relied on by NAB. However, no additional security was provided by either Jaken or Powerhouse and neither company received any "new" money. It was submitted, therefore, that the $3.6 Million Drawdown was "liability and security neutral", with the effect that there was no further encumbrance or reduction in the value of equity in either trustee company.

Jaken also relied on the fact that the securities which were either given or continued in support of the $3.6 Million Drawdown included "all moneys" mortgages and registered charges over all of the assets and undertaking of each of Jaken and Powerhouse. This meant, it was submitted, that each of those entities became liable for the whole of the other’s debts to NAB. The Court's attention was drawn to a registered charge and a reference to a memorandum of mortgage in the evidence, both of which secured "all amounts" owing. In other words, under the various securities, Jaken and Powerhouse were each liable for the others debts and there was no net increase in that liability by reason of the $3.6 Million Drawdown.

Jaken also contended that there was no payment made to Powerhouse of $3.6 million or any other sum in August 2014, nor did Powerhouse receive any payment from Jaken. It was submitted that each facility had been fully drawn and spent in October 2011.

Jaken answered a number of Mr Naaman's claims in relation to the $3.6 Million Drawdown by submitting that no liability could exist because the drawdown as defined, including the making of a $3.6 million payment to Powerhouse, did not occur. The reference to the drawdown “as defined” can be understood by having regard to two paragraphs of Mr Naaman's amended cross-claim:

Jaken further submitted:

While “$3.6 Million Drawdown” is a convenient label, it is apt to mislead. As I understood it, Mr Naaman’s complaint, properly understood, had two aspects relating to two different consequences of the transaction. The first was that, in effect, Jaken drew down and paid $3.6 million to Powerhouse for no good reason. Second, Jaken had reduced the amount of equity available to Jaken’s unsecured creditors through Jaken’s access to the assets of the Sly Fox Trust by $3.6 million.

The facts set out in [435] to [447] above demonstrate and the Court finds that:

Jaken's reliance on Standard Chartered did not give sufficient attention to what was a nuanced analysis by Hodgson J in answering the question of whether a debt had been incurred as a "matter of substance and commercial reality". His Honour was conscious of the need to examine the particular circumstances in a given case. So much appears from this passage in his Honour's judgment (at 316):

Adopting his Honour's language, in my respectful view the $3.6 Million Drawdown is an example of where a "further agreement imposes an additional debt on the company". Jaken's former facility was coming to an end. A new facility agreement was entered into for a larger sum. While it may be accepted that Jaken may have had liability to NAB for the entire borrowings of Jaken and Powerhouse under "all moneys" provisions of various security instruments, it would be contrary to both substance and commercial reality to overlook the fact that by its new facility agreement, Jaken's express liability as principal or primary debtor to NAB increased by $3.6 million. Of the $12 million which Jaken drew from the new facility and paid away to Powerhouse, this necessarily included the $3.6 million, notwithstanding that Powerhouse appears to have repaid $1.422 million of that $12 million and, through a separate facility, also paid $7 million to Jaken (producing the amount of $8.4 million that was used by Jaken to clear its former loan account).

Turning to the various causes of action maintained by Mr Naaman in relation to the $3.6 million drawdown the Court concludes that insofar as the result of the drawdown and the related movement of funds set out in [446] above was to increase Jaken's principal liability to NAB by $3.6 million, this was a "further encumbering or diminishing the value of the property" other than in the usual course of business. It could not be in the usual course of business if, as the Court has found, there was no commercial purpose or benefit to Jaken demonstrated by assuming the additional liability and paying away the funds to Powerhouse. To that extent, the drawdown of the $12 million and payment away of that sum to Powerhouse (but crediting back the $1.422 million repaid by Powerhouse to Jaken) is void as a breach of the Rein J Orders.

The Court does not accept Jaken's submission that there was no alienation of property for the purposes of s 37A. Jaken paid away $12 million to Powerhouse as part of a series of transactions which must have included the $3.6 million, being the amount by which Jaken's liability as principal to NAB increased over its former $8.4 million facility. That paying away, in the context of the series of transactions identified in [446] above, was an alienation. The Court finds that there was an intent to defraud or hinder creditors on the part of Jaken through both Peter Sleiman and Tony Sleiman given the absence of any commercial purpose or benefit to Jaken of assuming that additional debt as principal, Peter Sleiman's obvious authorship of the arrangements, the knowledge on the part of both of them of the proceedings being brought by Mr Naaman and the imminence and subsequent making of the Rein J Orders. The inescapable conclusion is that the increase in Jaken's liability to NAB which was effected by drawing down and paying away the $12 million to Powerhouse was intended to defraud creditors (most obviously, Mr Naaman) by increasing Jaken's liability as principal to NAB as a secured creditor. The payment to Powerhouse, to the extent of $3.6 million, should be voided under s 37A.

Turning to Jaken's submission that the $3.6 million is held on trust as property of the Sly Fox Trust, this is correct as a theoretical proposition. However, if only part of that fund is still held by Powerhouse it can only be a matter for account and inquiry.

On the other hand, the Court is well satisfied that JPG has made out a cause of action against Jaken for breach of its fiduciary duty sounding in equitable compensation insofar as Jaken paid away $3.6 million which would otherwise have been available to it under its new facility to meet any obligation to indemnify JPG (to which right Mr Naaman is subrogated). Importantly, the same conclusion follows in relation not to the paying away, but quite separately in relation to assuming the increased primary liability to NAB for no commercial benefit. This is completely inconsistent with JPG’s obligation not to diminish the assets of the Sly Fox Trust available to meet JPG’s right of indemnity.

Nor can there be any doubt that insofar as Powerhouse received the $3.6 million as part of the $12 million payment, Powerhouse did so knowing that it was being paid those monies in breach of Jaken's trust or fiduciary duties to JPG. Powerhouse's knowledge was through Peter Sleiman and Tony Sleiman. If a remedy in the nature of tracing is not available, then at the very least Powerhouse is liable to JPG in equitable compensation for any shortfall attributable to either the payment away or the increase in liability.

Peter Sleiman and Tony Sleiman are similarly liable to JPG (and by subrogation to Mr Naaman). While the Court is satisfied that they knowingly assisted in Jaken's dishonest and fraudulent design to divest itself of property (in this case both by paying away $3.6 million of the $12 million and bringing about a commensurate increase to its liability to NAB as secured creditor) as was the case with the Granville Land the Court is satisfied that Peter Sleiman as shadow or de facto director and Tony Sleiman as named director were in fact the alter egos of Jaken such that ancillary liability for knowing assistance need not be made out. Each of them is liable in equitable compensation to JPG (and to Mr Naaman by subrogation) to the extent that the $3.6 million cannot be restored to Jaken.

However, the Court does not accept the alternative basis of liability advanced against Peter Sleiman and Tony Sleiman for tortious interference with the contract which underpinned the Rein J Orders. This is because, even assuming there had been such interference, Mr Naaman has not proven any damage caused by that breach. As a tort, proven damage is an essential element of the cause of action and it has not been made out. This may be contrasted with the Court’s ability, as it has done, to find parties liable for breach of fiduciary duty to pay equitable compensation, but to reserve the quantum of that compensation for further consideration.

The objectively demonstrable facts in relation to the Victorian properties are in short compass. These are the Court’s findings.

In August 2005, JPG purchased the Victorian Properties for $645,000.

Consequent upon the appointment of Jaken as trustee of the Sly Fox Trust, by transfer dated 13 February 2007 the Victorian Properties were transferred to Jaken. The transfer recorded the consideration as “an entitlement in equity”.

On 15 September 2008, PSJK was incorporated with Peter Sleiman as its sole director, secretary and sole shareholder.

On 8 February 2010, Samantha Sleiman succeeded Peter Sleiman as the sole director, secretary and shareholder of PSJK.

On 23 August 2012, the Victorian Properties were transferred from Jaken to PSJK for a consideration stated on the transfer of $500,000. The transfer was signed for Jaken by Tony Sleiman as sole director and secretary and for PSJK by Samantha Sleiman as sole director and secretary.

Westpac’s mortgage over the Victorian properties was discharged at the time of the transfer and replaced by a mortgage to NAB. ‘

By reference to unchallenged valuation evidence tendered by Mr Naaman, the Court finds that the market value of the Victorian properties as at 23 August 2012 was $1,035,000.

Mr Naaman’s fundamental contention was that Jaken in fact received no consideration for the transfer of the Victorian Properties. It was submitted that in those circumstances, the transfer was an alienation of the Victorian Properties with the intention to defraud creditors for the purposes of s 172 of the PLAV and voidable accordingly.

Furthermore, it was submitted that the transfer of the Victorian Properties was in breach of the trust or fiduciary duties owed by Jaken to JPG. Furthermore, given that PSJK was a related party controlled by Peter Sleiman’s wife, PSJK knowingly received the Victorian Properties in breach of trust or fiduciary duty and knowingly assisted in the transfer. It was submitted for Mr Naaman that the Court would find that PSJK holds the Victorian Properties on trust for JPG.

Finally, it was submitted that the Court would find that Peter Sleiman as shadow or de facto director, and Tony Sleiman as named director, knowingly assisted in the dishonest and fraudulent design on the part of Jaken to divest itself of property which was held on trust for JPG such that each of Peter Sleiman and Tony Sleiman were liable in equitable compensation or damages for any shortfall.

Jaken made two submissions in answer to Mr Naaman’s claim.

First, Jaken submitted that $500,000 had in fact been paid.

Second, it was submitted that when JPG purchased the Victorian Properties for the Sly Fox Trust in August 2005, Peter Sleiman paid the 10% deposit, the stamp duty and the balance of the purchase price in excess of the mortgage that was taken out. Attention was also drawn to evidence that St George withdrew the sum of $108,297.72 from Peter Sleiman’s personal bank account to complete the August 2005 settlement of the purchase of the Victorian Properties. This meant that Peter Sleiman had an interest by reason of a resulting trust in his favour as to 16.92% of the Victorian Properties. Were the Court minded to void the transfer to PSJK, allowance would have to be made for what was said to be Peter Sleiman’s interest.

It is convenient first to deal with the argument that Peter Sleiman has a 16.92% interest in the Victorian Properties. The only admissible evidence on this point was an email of 24 August 2005 from a senior account executive at St George Corporate Banking to Peter Sleiman with the subject matter “Settlement – Kavanagh Street, Southbank” which stated:

Although the email does not indicate precisely how the amount withdrawn from Peter Sleiman’s account was to be applied to complete the settlement, I will assume in his favour that he did in fact contribute that amount towards the purchase price of the Victorian Properties.

It is uncontroversial that any presumption concerning the parties’ intention where a party contributes to the purchase price of real property without being recorded on the title is rebuttable. In the present case, the Court accepts Mr Naaman’s submission that any such presumption is rebutted by the fact that the Victorian Properties were purchased by JPG to hold on trust as part of the Sly Fox Trust (of which at the time Peter Sleiman was the primary beneficiary). The Court infers that it was the intention of both Peter Sleiman and JPG that the Victorian properties would be held by JPG upon the terms of the Sly Fox Trust so as to rebut any suggestion that Peter Sleiman was to have any interest outside the terms of that trust by reason of his having contributed to the purchase price.

Turning to the question of whether consideration was ever paid by PSJK, the starting point must be that Mr Naaman assumed the burden of proving a negative. Jaken relied on the consideration recorded in the transfer to PSJK. As I have already noted in [418] above in relation to the Granville Land, in the ordinary course the statement of consideration in a transfer which is the product of an arm’s length transaction between unrelated parties will be accepted as at least prima facie evidence that the consideration was paid. In this case, however, the transfer is not between unrelated parties and, on any view, was at an undervalue, being even less than the price for which the properties had been purchased seven years earlier. Taking those matters into account, I am unable to be satisfied on the balance of probabilities to the level of actual satisfaction by the transfer alone that any consideration actually moved from PSJK to Jaken.

That conclusion does not end the inquiry. I respectfully adopt these observations on proving a negative made by J C Campbell JA (with whom McColl JA and Handley AJA agreed) in Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39:

I also sought to summarise the relevant principles in Claudia Leung in her capacity as Executrix of the Estate of the Late Robert Ho v Paul Mervyn Fordyce t/as PMF Legal Trading [2019] NSWSC 18:

Applying those principles to the present case, whether or not consideration was actually paid by PSJK to Jaken is a matter peculiarly within the knowledge of those two entities. In those circumstances, relatively slight evidence is required to have been adduced by Mr Naaman from which the Court can draw the inference that no consideration was in fact paid. What Mr Naaman has established, and the Court finds, at least meets the description of “slight evidence” and, in my assessment is more than that:

Those three matters are sufficient, without more, for the Court to find, as it does, on the balance of probabilities, that no consideration was paid. They are also sufficient to move the evidential burden on to Jaken and PSJK, in whose camp material must have existed to demonstrate the payment and receipt of consideration if in fact that had occurred. No admissible material going to the question was forthcoming from either Jaken or PSJK. Moreover, neither of the directors who executed the transfer – Tony Sleiman for Jaken and Samantha Sleiman for PSJK – was called to give evidence.

The Court therefore draws a Jones v Dunkel inference that neither the evidence of Tony Sleiman or Samantha Sleiman would have assisted the relevant defendants in demonstrating that any consideration was paid or received in relation to the transfer of the Victorian Properties out of the Sly Fox Trust. This fortifies the Court in drawing the inference, based on the evidence to which I have referred above, more easily that no consideration was received by Jaken for transferring the Victorian Properties to PSJK. If, contrary to that conclusion, $500,000 was in fact paid, then the liability of the various defendants which I find in the following paragraphs is reduced from being a liability in respect of the entire Victorian Properties to the difference between their market value of $1,035,000 and $500,000.

Having regard to the Court’s conclusions by reason of the matters set out in [491] to [493] above, the Court accepts these contentions made on behalf of Mr Naaman in relation to the Victorian Properties:

At various points in the hearing and Mr Naaman’s final submissions, references were made to the possible or apparent impermissible severing of the ownership of the assets and undertaking of O’Malley’s Hotel from the assets of the Sly Fox Trust. However, the question was not pursued with any precision on behalf of Mr Naaman. Mr Kelly SC’s response for Jaken was that the assets and undertaking of O’Malley’s Hotel (including, for example, its liquor licence) had been leased by Jaken (either formally or informally) to operating companies at various times, as might be expected.

Notwithstanding, for example, Peter Sleiman seeking a valuation of the Kings Cross Property excluding the assets and undertaking of O’Malley’s Hotel (see [151] above), the result of the Court’s review of the evidence is that it accords with Mr Kelly SC’s submission. Putting the matter another way, Mr Naaman refrained from pointing to any specific evidence that demonstrated there had been such an impermissible severing.

Perhaps the most powerful point in support of the proposition that Mr Naaman though JPG has no actionable complaint of the kind suggested is that the receivers appointed by NAB have clearly been appointed to both the King’s Cross Property and the assets and undertaking of the O’Malley’s Hotel business operating on the King’s Cross Property. That is to be expected given that the commercial intention is to attempt to realise NAB’s security by selling the land and business as a going concern. There has been no suggestion by any party (including NAB who have participated in the proceedings insofar as the appointment of receivers is concerned) that funds realised by the sale would not be applied in reduction of Jaken’s debt to NAB incurred in Jaken’s capacity as trustee of the Sly Fox Trust.

Given the view to which the Court has come, this aspect of Mr Naaman’s claim can be dealt with in relatively short compass.

It was submitted for Mr Naaman that each of Peter Sleiman and Tony Sleiman was jointly and individually liable for Mr Naaman’s judgment debt pursuant to s 197 of the Corporations Act. That section relevantly provides:

It was submitted for Mr Naaman that his judgment debt was a liability which had been incurred by JPG for the purposes of s 197(1) when the Young J Orders were made on 22 February 2016 or entered on 25 February 2016. The Court accepts Mr Kelly SC’s submission that this was not the occasion when JPG “incurs a liability while acting, or purporting to act as trustee”. In my respectful view, both as a matter of ordinary construction and applying Hodgson J’s “matter of substance and reality” test from Standard Chartered, the relevant liability which ultimately became an ascertainable sum by the judgment was incurred when JPG breached its contract with Mr Naaman on or about 20 June 2006 and Mr Naaman’s entitlement to damages arose.

“Incurs” for the purpose of s 197 must be understood in the context of the following words “while acting, or purporting to act as trustee”. This means that the liability is relevantly incurred as a result of some action on the part of the corporation. So understood, having a judgment entered against it is not to “incur” a liability because the judgment is not the product for some action or purported action by the corporate trustee. The relevant action in this case was JPG acting in breach of its contractual obligations to Mr Naaman and incurring a liability to him in damages accordingly. There was no dispute that as at 20 June 2006, neither Peter Sleiman nor Tony Sleiman was a director of JPG.

Second, the Court accepts Mr Kelly SC’s submission that s 197(1)(b) is not satisfied because in this case JPG has the benefit of a declaration that it is entitled to be fully indemnified against the liability out of the assets of the Sly Fox Trust.

Third, assuming in favour of Mr Naaman that JPG was “not entitled to be fully indemnified against the liability out of trust assets”, Mr Naaman has not identified any evidence which enables the Court to find that the lack of entitlement is “solely” because of one of the matters listed in paragraphs (i) and (iii) of s 197.

For these reason, Mr Naaman’s claim pursuant to s 197 of the Corporations Act fails.

The parties will be given an opportunity to consider these reasons and to make submissions about the next steps. In the absence of some resolution, it is clear this will not be the last first instance hearing.

As occurred in the Rothmore Farms litigation, it seems inevitable that there will have to be a second hearing. This is because the Court will reserve consideration of the quantum of the equitable compensation for which the various cross-defendants have been found liable.

Insofar as there may be a shortfall in Mr Naaman’s recovery by subrogation to JPG between what would have been the outcome if the Impugned Transactions had not occurred and the final position after NAB’s receivership and other steps, the Court is satisfied that shortfall is the result of the breaches of fiduciary duty identified in this judgment. The reservation of consideration extends to the parties putting submissions as to how any compensation is to be calculated, a matter not addressed so far in any detail by anyone. What is clear is that quantum cannot be sensibly addressed until such matters have been addressed as the NAB receivership of the King’s Cross Property and O’Malley Hotel, whether it will be necessary to appoint receivers to the Victorian Properties and the Granville Land, the rights of NAB as a registered mortgagee over those assets, and no doubt other issues which will be identified by the parties.

Agreed statement of questions for determination and Court’s answers: