In the matter of Portman Securities Pty Ltd (in liq)

By Amended Statement of Claim (“ASC”) filed on 26 August 2025, the Plaintiffs, Mr Darin, as liquidator of Portman Securities Limited (in liq) (“Company”), and the Company, seek relief against several Defendants. Broadly, their claims arise from the liquidator's and the Company's challenge to a contract dated 26 March 2020 (“Contract”) by the Company to purchase a property situated at Punchbowl (“Property”), which, it is alleged, was purchased at a substantial overvalue. The liquidator and the Company contend that there was no realistic prospect that the Contract could have gone to completion. The liquidator and the Company bring claims against the First Defendant, Mr Pamboris, for that transaction so far as it has resulted in the Company’s loss of a $5 million deposit and a potential further liability to the Second Defendant (“Westwood”) and bring claims against Westwood for an uncommercial transaction. Claims are also brought against Mr Pamboris in respect of transactions with another entity, Waldron Projects Pty Ltd (“Waldron Projects”) of which Mr Pamboris was a director, which appear to have some connection with the transaction in respect of the Property.

Claims are also brought against the Third Defendant, Athenee Mortgages Pty Ltd ("Athenee"), relating to a purported advance of $5 million to Mr Pamboris. Athenee was incorporated on 25 March 2025, and its director and sole shareholder is Ms Susan Polias, who is the wife (or, on Westwood’s case (Westwood Amended Defence (“WAD”) [6B]), estranged wife) of Mr Gertos, the director of Westwood, and a person who has been a director of several companies with Mr Gertos.

I now turn to the lay affidavit evidence and cross-examination. In addressing that evidence, I recognise that this hearing took place not long after the events in issue but I also have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318–319; Varma v Varma [2010] NSWSC 786 at [424]–[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10] (“Colorado”). I also bear in mind the observations of Bell P (as the Chief Justice then was, with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]–[28]:

I have here drawn on my summary of the applicable principles in, inter alia, Re 1derful Pty Ltd [2024] NSWSC 1414 at [7]ff (“1derful”). I have also borne in mind the cautionary observations of Basten JA (Handley JA agreeing) in Sangha v Baxter [2009] NSWCA 78 at [155] (“Sangha v Baxter”), applied by Nixon J in Firmtech Aluminium Pty Ltd v Xie; Zhang v Xu; Xie v Auschn Conveyancing & Associates Pty Ltd [2024] NSWSC 1293 at [42], that:

The Plaintiffs read several affidavits of Christopher Darin, the Company’s liquidator. By his first affidavit dated 5 June 2024, Mr Darin outlined the circumstances in which the Company was wound up and he was appointed as its liquidator; the position in respect of Mr Pamboris and Westwood; and the nature of the Company’s business and its dealings with Westwood. He referred to the circumstances in which the Company initially received a substantial payment by way of compensation from Transport for New South Wales (“TfNSW”) for the acquisition of certain properties. Mr Darin also there referred to public examinations of persons associated with the Company and with Westwood, to the Company’s financial records and to amounts paid to Waldron Projects. Mr Darin also addresses past business dealings between Mr Gertos and Mr Pamboris and the matters relied on in the uncommercial transaction claim.

By his second affidavit dated 20 February 2025, Mr Darin referred to the Company’s financial statements, documents relating to the acquisition of the Property and matters relating to payments by the Company to Waldron Projects. By a third affidavit dated 17 April 2025, Mr Darin referred to the circumstances in which he became aware of the personal guarantee purportedly given under the Contract, which is deleted in the copies of the Contract held by the Company but apparently retained in another version of the Contract on which Westwood relies. I return to that matter below.

By a fourth affidavit dated 29 May 2025, Mr Darin referred to Mr Pamboris’ assets, including a property in Brown Street, Paddington (“Paddington Property”) and a property in Livingstone Road, Marrickville (“Marrickville Property”); the circumstances in which Mr Darin became aware of Mr Pamboris’ dealings with Athenee in respect of those properties; and the relationships between Athenee, Mr Gertos and Ms Polias. He also identified his then concern that Mr Pamboris’ grant of mortgages over the Paddington and Marrickville Properties in Athenee’s favour in May 2025 was intended to prevent the Plaintiffs’ recovery of any judgment ordered against Mr Pamboris in these proceedings. By his fifth affidavit dated 8 August 2025, Mr Darin further addressed the position in respect of Mr Pamboris’ assets, the dealings in respect of the Paddington and Marrickville properties, publicly available information as to Athenee and the relationship between Athenee and Mr Gertos.

Mr Darin was cross-examined at some length, particularly by Mr Jordan, a solicitor, who appears for Westwood in the proceedings. That cross-examination did not significantly advance the matters in issue, because Mr Darin did not have, and did not purport to have, personal knowledge of the matters in issue in the proceedings, since he was appointed as the Company’s liquidator after those events.

The Plaintiffs also read the affidavit dated 11 April 2025 of Ms Pettit, a solicitor acting for them in the proceedings, who referred to Mr Gertos’ evidence that Mr Pamboris had undertaken work for Westwood through another entity, Waldron Hill Projects Pty Ltd, and annexed a copy of a search of the records maintained by the Australian Securities and Investments Commission relating to that entity. I address Ms Pettitt’s further affidavit dated 5 November 2025 in dealing with the guarantee on which Westwood relies below.

By her affidavit dated 17 April 2025, Ms Funston, a solicitor acting for the Plaintiffs in the proceedings, also addressed the position in respect of the Contract and dealt with the production of documents in response to orders for production issued in connection with liquidators’ examinations. By a second affidavit dated 28 October 2025, Ms Funston addressed the production of documents by Mr Pamboris in response to a Notice to Produce dated 29 May 2025 issued to Mr Pamboris. By an affidavit dated 4 November 2025, Ms Graham, a solicitor acting for the Plaintiffs, gave evidence of service of the proceedings upon the solicitors for Athenee, although Athenee did not appear at the hearing.

Mr Pamboris, although represented by a solicitor in respect of the proceedings, read no evidence.

Westwood primarily relied on Mr Gertos’ affidavit dated 14 April 2025. Mr Gertos gives evidence of a long commercial relationship with Mr Pamboris, including that Mr Pamboris was previously employed by Mr Gertos at the accounting practice William J Gertos & Co until approximately 2001 and continued to work as a consultant for that practice after Mr Savell (who gives evidence for Westwood in the proceedings) purchased that practice in or about 2001. Mr Gertos’ evidence is that Mr Pamboris was also contracted to undertake work for Westwood on the development application for the Property and conducted that work through one of his companies and Westwood paid Waldron Projects for the work that was being undertaken by Mr Pamboris (Gertos 14.4.25 [7]–[8]). That evidence does not undermine the Company’s claim for the payments made by the Company to Waldron Projects.

Mr Gertos’ evidence is also that the Company entered into an agreement to purchase a property at Annandale on 28 June 2016 for $68 million (which may be the property referred to in Mr Savell’s evidence) and that completion of that contract was frustrated by compulsory acquisition of that property by TfNSW. Mr Gertos also refers to a conversation with a person in Cyprus, whose name he does not recall, who said he worked for a large financial institution, the name of which is not identified, which would provide “most of the funds” for the Company’s acquisition of the Annandale property. Plainly, the gaps in that evidence undermine its weight; but, even apart from that matter, the willingness of an individual associated with a financial institution in Cyprus to fund an acquisition of the Annandale property says nothing as to his willingness to fund an acquisition of a Property at well above its market value by a company that then had no substantial assets or income. Mr Gertos also refers to a conversation with Mr Smith of Westpac to “verify the conversation” but gives no evidence of anything said by Mr Smith that had that effect.

Mr Gertos’ evidence (Gertos 14.4.25 [15]) is that he was satisfied, after that conversation, the Company would be able to complete the purchase of the Annandale property and that overseas interests would be able to provide most of the capital, with the balance being provided by Westpac or some other Australian lender. I do not accept the conversations set out by Mr Gertos provided any basis for that satisfaction but, even if they did, that would not advance the position as to the Company’s ability to fund the purchase of the Property at substantial overvalue. In cross-examination, Mr Gertos claimed that they were further conversations, at least with Mr Smith, in relation to the Property, but that claim does not advance Westwood’s position where those conversations were not in evidence and would have been inadmissible hearsay where Mr Smith did not give evidence.

Mr Gertos’ evidence is that Westwood initially indicated to Mr Pamboris that it wanted $145 million for the Property, which would have been an even more remarkable overvaluation of that property. Mr Gertos’ evidence is that Mr Pamboris then indicated that an overseas contact would be providing the relevant sourcing the funds (Gertos 14.4.25 [19]). Mr Gertos refers to a lesser offer then made by Mr Pamboris and to subsequent negotiations which resulted in a price of $100 million. Mr Gertos’ evidence is (Gertos 14.4.25 [21]):

I do not accept that evidence, and do not accept that the previous conversations provided any rational basis for being satisfied that Mr Pamboris’ “equity partner”, still less the Company, would be able to afford the purchase price of $100 million in order to purchase a property at substantially more than its market value. Mr Gertos also refers to an extension of time for the Company pay the balance of the deposit allowed by Westwood on 8 June 2020, until 30 June 2020; the termination of the Contract by Westwood on 8 October 2020; Westwood’s subsequent purchase of the Property, which did not take place until 30 August 2021; and subsequent developments in respect of the rezoning of the Property.

Mr Golledge, with whom Ms Bailey appears for the Plaintiffs, submits that:

Mr Gertos was cross-examined and was generally not prepared to respond to questions in direct way and preferred to give speeches that he thought would advance Westwood’s interests. Mr Gertos’ evidence in cross-examination was replete with consistent claims that he did not recall matters, including relatively recent matters, other than several matters which would assist Westwood’s position which he recalled with precision. I have no doubt that Mr Gertos’ claimed recollection or lack of recollection reflected his perception as to matters which would or would not advance Westwood’s case.

Mr Gertos has also given several radically inconsistent accounts of events. I have referred above to his evidence, in these proceedings, as to a telephone call with one of Mr Pambouris’ “equity partners” in 2016 relating to the purchase of the Annandale property. However, in an affidavit dated 16 June 2020 sworn in proceedings in the Land and Environment Court of New South Wales (Ex P3), Mr Gertos had given evidence of discussions with Mr Pamboris, also relating to the purchase of the Annandale property, in which Mr Pamboris had told him that he had established contacts with “substantial money in Cyprus” in 2015, but refused to advise the identity of the funder, and that Mr Pamboris then said that:

On Mr Gertos’ account of that conversation, he was also then told that Mr Pamboris’ nephew operated a chain of hotels in Crete, that the nephew had introduced Mr Pamboris to the Cypriot family who had funded the nephew’s hotel business and asset purchases, and had agreed to support Mr Pamboris’ acquiring commercial property in Sydney.

Mr Gertos gave a further account of his knowledge of the funding obtained by Mr Pamboris and the Company for the purchase of the Property in the course of the liquidator’s examination on 26 August 2022. Mr Gertos’ evidence, again entirely inconsistent with the evidence he led at this hearing, was there that he knew “nothing” as to the identity of Mr Pamboris’ investors; he had never asked about the identity of those investors and that “[w]hen you sell something, you shut up. Never talk beyond the sale”. That evidence was inconsistent both with the evidence that he had given in the Land and Environment Court, that he had asked as to the identity of those investors and Mr Pamboris had refused to tell him; and with the evidence he gave in these proceedings, that he had in fact had a conversation with the lead investor.

These three accounts are irreconcilable. In Mr Gertos’ 2020 version, he did not know the identity of the funder from Cyprus, although he knew it was a Cypriot family, because Mr Pamboris would not tell him, and he did not refer to any conversation with that funder, which would necessarily have disclosed the funder’s identity. In Mr Gertos version at this hearing, he had a conversation with that funder, set out in relatively precise terms, although it had occurred several years ago; he knew the identity of the funder and, in cross-examination, he went further to suggest that he recalled the name of the funder and, for the first time, offered that name; and the funder was not a Cypriot family but an employee of a Cypriot bank with access to funding from that bank. Having regard to the inconsistencies between these accounts, and my observations of Mr Gertos in the witness box, I am comfortably satisfied (to the standard required by s 140 of the Evidence Act 1995 (NSW) (“Evidence Act”)) that his evidence as to these matters was not only false, but was deliberately false and I am comfortably satisfied that, notwithstanding the observations in Sangha v Baxter, I should not give any weight to Mr Gertos’ evidence of this matter or generally, unless corroborated by third party documentary evidence.

Westwood read the affidavit dated 28 March 2025 of Mr Savell, an accountant who provides services to Westwood. Mr Savell there referred (in paragraphs 17 and 18) to a conversation with Mr Smith, who he said was a senior banker at Westpac, concerning possible funding for Mr Pamboris’ purchase of properties at Camperdown from Westwood, which appear to be a reference to the Annandale property that is addressed in Mr Gertos’ evidence. Those paragraphs were plainly hearsay in nature; they were admitted with a limiting order under s 136 of the Evidence Act as evidence of the conversations and not as proof of the relevant facts; and they do not advance matters, in any event, because (even if it admitted to prove the fact) the suggestion that Westpac would “consider” the purchase of the Annandale property provides no rational basis for a finding that Westpac would be prepared to fund a purchase of a different property at Punchbowl for development, at a price of $100 million which was more than twice then then market value of that property, by a company which had no substantial assets. I will address Mr Savell’s evidence as to the execution of the Contract and the inclusion of a guarantee in it below. Mr Savell was in ill-health, was not available for cross-examination and was not cross-examined.

Westwood also reads an affidavit dated 25 June 2025 of Mr Vaggis, a real estate agent, who refers to discussions with an investor from Hong Kong who expressed interest in the Property. His evidence of those discussions was plainly hearsay and was admitted with a limiting order under s 136 of the Evidence Act as evidence of the conversation and not evidence of the truth of the asserted facts and that evidence does not advance any issue as to the valuation of the property.

The agency agreement which was annexed to Mr Vaggis’ affidavit (Ex J1, 3952) was replete with errors, which are, at best, surprising in an agency agreement relating to a sale of a property purportedly valued at $100 million, which would generate commission for Mr Vaggis’ firm between $750,000 and $1 million. There is reference to an “ABC” for Westwood, possibly intended to be a reference to an Australian business number or an Australian company number, but the number referred to does not related to Westwood. The relevant property is identified “as Per Contract” but the relevant contract is not identified; the “agent’s opinion” of the estimated market price is said to be $100 million; and the price to be “offered” is also $100 million, although Mr Vaggis repeatedly denied that he had any instructions from Mr Gertos as to the offer price; the commission calculation in turn records alternative prices of $75 million or $100 million, leading to commission of $750,000 or $1 million at a commission rate of one percent. The agreement is recorded as commencing on 10 October 2020 but a handwritten note that “This agreement is valid until December 31st 2019”. In cross-examination, Mr Vaggis suggested that these figures were reversed, so that the agreement commenced on 31 December 2019 and was valid until 10 October 2020; however, he did not explain how he, in a handwritten statement of the date to which the agreement was valid, could have made so substantial an error.

Mr Vaggis also annexes a purported letter of offer from a large Chinese property company to acquire the Punchbowl property for a price of $75 million, purportedly valid for two weeks expiring on 3 December 2019; however, that agreement, as purportedly executed by the Executive Director Acquisitions of that company, misspells its own name. Again, little turns upon that error, where Mr Vaggis accepted that the suggested discussion with that investor was subject to an extended due diligence period and the suggested “offer” was not in a form that could be accepted.

Mr Golledge submits, and I accept, that:

The Plaintiffs also tender the report (Ex P5) of Mr Geoff Green, who is a principal at Harborside Advisory Pty Ltd, who has extensive credit risk experience with bank lenders and extensive debt advisory experience for private businesses. He recognises, as the Company’s financial statements indicate, that the Company did not have an income stream and did not have tangible assets capable of providing collateral for a loan. He expresses the view that the Company may have been able to secure deposit funding from private lenders, but would have required it to arrange real estate security with a value of at least $8.5 million in order to do so, since the payment of the two deposit instalments would not create an asset that lenders would regard as providing real estate security. He also expresses the view that the available information indicated that the Company would not have been able to arrange real estate security with that value, even if Mr Pamboris had provided a guarantee and granted mortgages over his personal assets. I accept Mr Green’s evidence as to that matter; but, even if I had not done so, it would still have been apparent there would have been no advantage to the Company in raising funds to pay the deposits, where it had no realistic capacity of raising funds to pay the balance of the amount due under the Contract to purchase the Property and no realistic prospect of profiting from an onsale of that property to a third party, where it was contracting to purchase the Property at a substantial over-value.

Mr Golledge submits, and I accept, that:

Both parties led valuation evidence as to the value of the Property at the Contract date. The Plaintiffs tender a report dated 21 March 2025 of Mr Peter McSwiggan (Ex P6), who is a director at Preston Rowe Paterson Sydney Pty Ltd. Mr McSwiggan adopted two alternative approaches, by reference to scenario 1 which reflected existing planning controls on 26 March 2020 and scenario 2 which reflected proposed zoning and planning controls, which derived a higher value for the Property than scenario 1. He expressed the view that the Property had a retrospective market value, as at 26 March 2020, exclusive of GST, in the order of $38 million, which reflected a mid-point between those scenarios, on the basis that a vendor and purchaser share the benefit and risk attached to those scenarios. It seems to me that that valuation likely exceeded the then market value of the property, to the extent that he took into account a position in scenario 2 which did not then exist.

Westwood tendered the expert report of Mr (Constantine) Dean Galanos of Property Logic Valuers. By letter dated 9 April 2025 (Ex D1, 372), the solicitors for Westwood had instructed Mr Galanos’ firm the basis on which the valuation was to be undertaken as follows:

Mr Galanos’ report made clear that, consistent with that instruction, he had valued the property by reference to its highest and best use as a redevelopment in accordance with the “gateway proposal/determination”, although he was also instructed that the gateway determination was cancelled in March 2021, and his inquiries confirmed that to be the case. I recognise that there was no necessary inconsistency between the assumption that he was asked to make and facts which were known to him, since the gateway proposal did not cease to have effect until after the valuation date to which his report was directed. On that basis, he valued the property at the somewhat higher figure of $50,450,000 as a retrospective market value as at 26 March 2020. Little turns on the difference between that value and the valuation prepared by Mr McSwiggan, where Mr Galanos’ valuation itself indicates that the Company contracted to acquire the property at nearly double its market value.

Mr Golledge submits that:

As I have noted above, there is little difference between the valuers so far as each of them value the Property in the order of about $50 million, if the gateway determination or other similar planning proposals had taken effect. As I also noted above, Mr McSwiggan also addresses the position if the gateway proposal had not taken effect, which is not addressed by Mr Galanos. The valuers’ common view is that the Property had, at best, a value of about half of the amount which the Company had contracted to pay for it under the Contract. For completeness, the valuers also addressed, in additional oral evidence by leave, the possible impact of specific terms of the Contract under which Westwood had acquired the Property from the Croatian Club Ltd (“Club”) (Ex J1, 1047), including the Club’s rights under cl 15-17 to an option to acquire the Club Premises and Additional Area (as defined), its entitlement to a lease on specified terms, and the obligations imposed upon Westwood as to completion of the development within a specified time, in potentially further depreciating the value of the Property. It is not necessary to address that question, or the question whether the Company would have been bound by those obligations had it acquired the Property from Westwood, where the Contract price substantially exceeds the value of the Property, even apart from those obligations.

Westwood also tendered a report dated 29 April 2025 of Mr Gheorghui, a town planner, relating to the Property. It is not apparent that this report significantly advances any issue in the proceedings, where it is plain enough that the Contract to acquire the Property was at a substantial overvalue and the Company could not afford to pay the deposit for it, still less the balance that was due; and it had no prospect, on the evidence, of funding the development so as to obtain any benefit from that development or recouping any amount overpaid to acquire the Property if (contrary to the fact) it ever had any realistic prospect of acquiring the Property.

The Plaintiffs bring several claims in respect of the Property. First, they seek an order that Mr Pamboris pay to the Company damages and/or compensation under s1317H(1) of the Corporations Act 2001 (Cth) (“Act”) in the amount of $3,225,297.01 (as amended in closing submissions). Second, the Plaintiffs seek an order under s 588FF(1)(a) of the Act directing Mr Pamboris to pay to the Company the sum of $5,000,000. Third, the Plaintiffs seek an order in respect of that amount against Westwood and also seek an order under s 588FF(1)(e) of the Act releasing and discharging any debt owed by the Company to Westwood in respect of the unpaid portion of the deposit under the Contract.

Mr Golledge describes this claim in submissions as directed to:

Mr Jordan, who as I noted above appears for Westwood, emphasises, and I have regard to, aspects of Westwood’s dealings with the Property. On 24 December 2014, Westwood entered into a Call Option Deed with the Club providing for Westwood to purchase the Property for $26,000,000, which was subsequently amended by deeds executed on 19 May 2017 and 24 July 2018. It seems likely that, as Mr Jordan submits, that allowed Westwood to acquire the property at a lower price when it ultimately did so, well after it had purportedly entered the Contract it sell it to the Company and then terminated that Contract.

In July 2017, Westwood submitted a planning proposal seeking to rezone the Property and increase development controls. They sought to rezone the whole of the Property to "B1 Local Centre" with an improved Floor Space Ratio ("FSR") control of 1.7:1 (Gheorghui 29.4.25 [43]). That proposal was not approved. On 25 May 2018, a Gateway Determination granted by the then Minister for Planning, conditional upon Council's finalisation of requisite legislative amendments within nine months, which did not occur.

It is common ground that the Company was incorporated on 3 June 2016 and Mr Pamboris was its sole director (ASC [5], substantially admitted by Mr Pamboris’ Defence filed 11 November 2024 (“PD”) [5], admitted WAD [5]; Ex J1, 2634). It is common ground that, in the same month, the Company entered a contract to purchase the Annandale property. It may be unlikely that the Company could have funded that purchase, and I have referred to evidence touching upon that question (and admitted on a limited basis) above. It was ultimately not required to do so, since TfNSW compulsorily acquired the Property and that contract did not complete. On 13 August 2018 the Company received $8,033,663.31 as compensation from TfNSW, although it did not then own that property.

The next day, on 14 August 2018, the Company transferred $8 million into a trust account of solicitors as the deposit on the Company’s proposed purchase of part of the Property for $80 million by way of an option deed. That purchase did not proceed and, on 21 September 2018, Mr Pamboris requested the return of that amount, which was paid on 23 September 2018.

Mr Pamboris then caused the Company to pay over $3 million from the Company to Waldron Projects over an 18 month period (Ex J1, 3343, 3517ff; ASC [20], admitted PD [20]). I address a further claim arising from those payments below.

On 19 December 2019, a further development application for the construction of purpose-built registered club premises over the southern part of the Property was submitted and later refused on 16 December 2020.

On 27 December 2019, Westwood entered into a contract to purchase the Property from the Club for $26,000,000.00, with an extended settlement date. The contract contained the clauses relating to the development of club premises, to which I have referred above, and a charge securing Westwood’s performance of those obligations. Westwood submits that those contractual obligations did not prohibit nor preclude Westwood from settling the subsequent contract with the Company and that Westwood could have assigned its rights and interests under the Contract to the Company. The Plaintiffs did not contend to the contrary and I need not and do not decide that question.

On or about 26 March 2020, the Company entered into the Contract with Westwood to purchase the Property from Westwood for $100,000,000. It was a term of the Contract that the Company was liable to pay the deposit to Westwood, in the amount $100 on the date of the Contract; $5,000,000 on or before 31 March 2020; and $4,999,900 on or before 30 June 2020 or termination of the Contract by Westwood (ASC [7]–[8], substantially admitted in PD [7]–[8]; substantially admitted WAD [8]; special condition 14 of the Contract). The times for payment of the deposit were essential (ASC [9]; substantially admitted PD [9]; admitted WAD [9]; special condition 14(d) of the Contract). It was also a term of the Contract that, if the Company did not comply with the Contract in an essential respect, Westwood could terminate the Contract and keep or recover the deposit and that the deposit would be released unconditionally to Westwood immediately upon the payment of each instalment and without requiring the Company’s express consent (ASC [10]–[11]; substantially admitted PD [10]–[11]; admitted WAD [10]–[11]; cl 9.1 and special condition 10 of the Contract).

On or about 25 March 2020, the Company paid the sum of $5,000,000 to Westwood (ASC [12], admitted PD [12], admitted WAD [12]). On or about 26 March 2020, the Company paid the sum of $100 to Westwood (ASC [13], substantially admitted PD [13], admitted WAD [13]). By entering into the Contract, the Company became indebted to Westwood in the amount of $4,999,900 being the balance of the deposit owing pursuant to the Contract, payable by 30 June 2020 (ASC [14], substantially admitted PD [14], admitted WAD [14]). The entry into the Contract also exposed the Company to a significant liability for stamp duty, of $5,483,055 (Ex P5, [9.9]), which was due and payable about the same time.

By written agreement dated 19 June 2020 between the Company and Westwood, the date to pay the balance of the deposit in the amount of $4,999,900 was extended to 30 September 2020 (ASC [15], admitted PD [15], admitted WAD [15]).

On 8 October 2020, Westwood terminated the Contract for the Company’s breach of the requirement that the Company pay the balance of the deposit by 30 September 2020 (ASC [16], substantially admitted PD [16], admitted WAD [16]).

On 10 August 2021, Westwood and the Club executed a Deed of Variation to their contract for sale of the Property and Westwood then settled the purchase of the Property from the Club in August 2021 and only then became the registered proprietor of the Property. I need not address subsequent steps in relation to the potential development of the Property, which do not affect any issue which I have to determine.

The Plaintiffs plead (ASC [25]) general law, equitable and statutory duties of care owed by Mr Pamboris to the Company, including his duties under ss 180–181 of the Act. The Plaintiffs seek an order that Mr Pamboris pay damages and/or compensation under s1317H(1) of the Act to the Company in the amount of $13,225,297.01 (as amended in closing submissions). I will first address the applicable principles.

Section 180 of the Act requires a director or other officer of a corporation to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were a director or officer of a corporation in the corporation’s circumstances and occupied the office held by, and had the same responsibilities within the corporation as, the director or officer. The statutory duty of care and diligence under that section overlaps with directors’ duty of care arising at general law. I summarised the applicable principles in Colorado at [408] as follows:

A question whether this duty is breached can only be answered by balancing the foreseeable risk of harm against the potential benefits that could reasonably have been expected to accrue to the company from the conduct in question: Vrisakis v Australian Securities Commission (1993) 9 WAR 395 at 450; (1993) 11 ACSR 162 at 209; Australian Securities and Investments Commission v Cassimatis (No 8) (2016) 336 ALR 209; [2016] FCA 1023 at [479], aff’d Cassimatis v Australian Securities and Investments Commission (2020) 376 ALR 261; (2020) 144 ACSR 107; [2020] FCAFC 52 (“Cassimatis”); Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476 at [55] (“FAL”); Mudgee Dolomite & Lime Pty Ltd v Murdoch [2020] NSWSC 1510 at [99]–[100]; Alora Davies Developments 104 Pty Ltd (in liq) & Ors v Raphael & Anor [2024] NSWSC 547 at [139]ff (“Alora Davies”) (from which I have drawn the summary that appears above).

Section 181 of the Act requires a director or officer of a corporation to exercise his or her powers and discharge his or her duties in good faith in the best interests of the corporation and for a proper purpose. I summarised the relevant principles in respect of that section and the broadly corresponding general law duty in Colorado at [419]–[421] as follows:

In Special Gold Pty Ltd (in liq) v Dyldam Developments Pty Ltd (subject to DOCA) (No 2) [2025] FCA 825, Jackman J held that several directors had breached, inter alia, s 181 of the Act in respect of the dissipation of the sale proceeds of a property, where payments had been made in apparent breach of a freezing order, without corporate benefit and in a manner that left the company unable to pay its debts and tax liabilities. His Honour there noted (at [77]) the lack of utility in distinguishing between a subjective and objective criterion in respect of breach of the duty of good faith in s 181 of the Act and undertook a detailed review (at [78]ff) of the matters relevant to determining whether a director’s conduct was in good faith, concluding that that standard required that a director act in accordance with what he or she honestly and reasonably believed to be the company’s best interests. Nothing turns on the subtleties of that standard here.

The Plaintiffs plead (ASC [26]–[27], denied PD [26]–[27]) that Mr Pamboris breached his general law and statutory duty of care in causing the Company to enter into the Contract and that:

The Plaintiffs also plead (ASC [28]–[29], denied PD [28]–[29]) that Mr Pamboris breached his general law and statutory duty of good faith in causing the Company to enter into the Contract and that:

The Plaintiffs in turn plead (ASC [37]–[39], denied PD [37]–[39]) that, had Mr Pamboris acted in accordance with his duty of care or his duty of good faith, the Company would not have entered into the Contract and, by reason of his breach of those duties, the Company has suffered loss and damage. That loss is particularised as the deposit paid to Westwood and forfeited on termination of the contract, being $5,000,000 and the balance of the deposit, being $5,000,000, for which the Company is liable to Westwood.

The Plaintiffs also plead (ASC [43], denied PD [43]) that Mr Pamboris is liable to pay damages or compensation under s 1317H of the Act to the Company for loss and damage suffered as a result of his breaches of the duty of care and/or duty of good faith, relevantly in respect of the Contract. That section allows the Court to order a person to compensate a corporation for damage suffered by it, if that person has contravened a civil penalty provision in relation to the corporation and the damage resulted from the contravention. The relief available to the Company under s 1317H of the Act for a breach of a civil penalty provision includes the profit made by a third party, relevantly, Westwood, by that breach: V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; (2013) 93 ACSR 76; [2013] FCAFC 16 at [54]; Re IW4U Pty Ltd (in liq) (2021) 150 ACSR 146; [2021] NSWSC 40 at [46]ff.

Mr Golledge submits that:

Mr Akinyemi, who appears for Mr Pamboris, submits that:

The first aspect of this submission is not supported by the evidence since, at the time the Company entered the Contract, it did not have sufficient funds to pay either the balance of the deposit due on 30 June 2020 or stamp duty payable at about the same time or any committed funding for those payments. Mr Akinyemi’s submission that Mr Pamboris could have provided financial support to the Company implicitly relies, in that respect, on a statement of assets dated 7 November 2018 which was apparently prepared by Mr Pamboris, although it is not signed by him (Ex J1, 667). However, the difficulties with that statement of assets are that, first, it refers to the value of several properties, but the accuracy of Mr Pamboris’ estimate of the value of those properties is not established. Second, two of those properties are in Cyprus and the Philippines and it is not apparent whether they, or the other properties, could be readily realised to provide funds to the Company to pay in the order of $10 million by way of the second instalment of the deposit and stamp duty within three months of the Contract. Third, the references to amounts in bank accounts are mere assertions, and there is no evidence that Mr Pamboris was preparing to sell his furniture and whitegoods so as to fund the Company’s immediate obligations. Fourth, that statement of assets also does not identify the amount of Mr Pamboris’ liabilities, although he acknowledged in the liquidator’s examination that amounts were likely still owing on at least two of the Australian properties (Ex J1, 2397). Fifth, and perhaps most fundamentally, there is no evidence that Mr Pamboris had made any commitment to the Company to sell his personal assets so as to meet the Company’s obligations due under the Contract. He does not give evidence in these proceedings that he intended to do so and it appears that he did not do so. Mr Akinyemi’s reliance on the COVID-19 pandemic does not assist Mr Pamboris where the Company had no realistic basis to expect it could complete the purchase of the Property, insufficient funds and no funding commitment to pay the deposit or stamp duty when due, even prior to the pandemic.

I am satisfied that the entry into the Contract caused the Company to become insolvent, where the Company had insufficient funds to pay the whole of the deposit at the time of the Contract and Mr Pamboris had no apparent plan as to how the Company could fund the balance of the deposit within the short time it was due and no commitment from a lender in that regard. Mr Pamboris also made no apparent attempt to obtain a third party valuation of the property and the Company in fact contracted to purchase it at least twice its market value. I am satisfied that the Plaintiffs have established their claim for breach of general law and statutory duties on that basis. They are only entitled to recover compensation in the amount of $5,000,000 paid out by the Company as to the first instalment of the contract under this claim, where the Company is not liable to pay the balance of the deposit for the reasons noted below, and Westwood has not profited by more than the deposit it has received.

Mr Golledge describes this claim in submissions as directed to:

Mr Pamboris was at relevant times the sole director of Waldron Projects (“Waldron Projects”) (ASC [17], substantially admitted PD [17]). On 21 December 2018, the Company directed Bank of Sydney to pay to Waldron Projects all payments of interest due on a term deposit to which the Company was entitled (ASC [18], admitted PD [18]). The Plaintiffs plead that Bank of Sydney made numerous payments of the interest due to the Company on the term deposit to Waldon Projects totalling $225,297.01 (as amended in closing submissions) (ASC [19]; that allegation was denied, possibly in error, in PD [19] but Mr Pamboris did not seek to support that denial in submissions). Between 25 February 2019 to 24 December 2019, the Company also made payments to Waldron Projects totalling $3,000,000 (ASC [20], admitted PD [20]). The Plaintiffs plead (ASC [21]–[23A], partly admitted and otherwise denied PD [21]–[24]):

On 14 July 2024, Waldron Projects was deregistered (ASC [24], admitted PD [24], WAD [24]).

I have referred to the pleadings of Mr Pamboris’ general law and statutory duties above. The Plaintiffs plead (ASC [30]–[34]) that Mr Pamboris breached his general law and statutory duty of care and his duty of good faith in causing the Company to make the Waldron Payments where:

The Plaintiffs also plead (ASC [34]–[36]) that:

The Plaintiffs in turn plead (ASC [40]–[42]) that, had Mr Pamboris acted in accordance with his duty of care or his duty of good faith, the Company would not have made the Waldron Payments and, by reason of the breach of those duties, the Company has suffered loss and damage, particularised as the total of the Waldron Payments, being $3,225,297.01 (as amended in closing submissions). The Plaintiffs also plead that Mr Pamboris is liable to pay damages or compensation under s 1317H of the Act to the Company for loss and damage suffered as a result of his breaches of the duty of care and/or duty of good faith, relevantly in respect of the Waldron Payments. I have addressed the applicable principles above.

Mr Golledge submits that:

Mr Golledge also submits that:

Mr Akinyemi responds that:

The purpose of the Waldron Payments is unclear on the evidence. On one view, at least partly adopted by Mr Gertos, they were made As compensation to Mr Gertos or his companies, where Mr Gertos had claimed that Mr Pamboris’ errors in earlier development applications had caused loss to Mr Gertos or his companies. However, there is no suggestion that the Company (as distinct from Mr Pamboris or other entities associated with him) had caused any such loss to Mr Gertos or his companies, or that the Company had any liability to make such a payment in compensation. Alternatively, it seemed to be suggested that the payments were made to advance the development of the Property and would benefit the Company on acquiring the Property. That also did not provide a proper basis for the payments, where they were all made before the Company entered into the Contract and, even when that Contract was later executed, the Company did not have funding in place for or any real capacity to raise the balance of the deposit or the stamp duty payable in respect of the Property.

There can also be no suggestion that the payments were properly characterised as a loan by the Company to Waldron Projects, where they are not recorded as a loan in the Company’s financial records and, even if they had been, Mr Pamboris had taken no apparent steps to document that loan or establish whether Waldron Projects was capable of repaying it. Even if a loan was made, that also breached Mr Pamboris’ director’s duties for the reasons noted by Chen J in OLI 1 Pty Ltd (in liq) v OLG 1 Pty Ltd (No 2) (2022) 164 ACSR 171; [2022] NSWSC 1199, where his Honour noted the need for special vigilance by a director where that transaction has the potential for conflict between a director’s interest and duty. His Honour there referred to Australian Securities and Investment Commission v Adler (2002) 41 ACSR 72; [2002] NSWSC 171, where Santow J dealt with the position in respect of an undocumented loan agreement that was not on arm’s length terms and to my decisions in FAL at [55] and again in Re Sirrah Pty Ltd (in prov liq) (2021) 152 ACSR 212; [2021] NSWSC 413 at [77] and held that a loan agreement which made no provision for repayment, was interest-free and unsecured, amounted to a transaction which no reasonable director would have caused or permitted a company to have entered into. Any loan made by the Company to Waldron Properties here had the same features.

For these reasons, I am satisfied, for these reasons, that Mr Pamboris breached the pleaded duties in causing the Company to make these payments and the Company is entitled to recover the pleaded amount of these payments against him.

Second, the Plaintiffs seek an order under s 588FF(1)(a) of the Act directing Mr Pamboris to pay to the Company the sum of $5,000,000, the first instalment of the deposit that it had paid out.

I first summarise the applicable principles. The term “transaction” is relevantly defined, for the purposes of that section, as a transaction to which the body is a party, including, without limitation, a payment made by the body or an obligation incurred by it. That definition gives several examples of transactions, which have the common characteristic that the conduct or dealing engaged in by the company has the consequence of affecting a change in its rights, liabilities or property: Re Emanuel (No 14) Pty Ltd (in liq); Macks v Blacklaw & Shadforth Pty Ltd (1997) 147 ALR 281; (1997) 24 ACSR 292 at 299; Capital Finance Australia Ltd v Tolcher (2007) 164 FCR 83; (2007) 64 ACSR 705 at 719; [2007] FCAFC 185; Re Employ (No 96) Pty Ltd (in liq) (2013) 93 ACSR 48; [2013] NSWSC 61 at [15]; Alora Davies at [129]. A transaction is an uncommercial transaction for the purposes of that section if it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to the benefit and detriment to the company in entering the transaction, the benefit to other parties to the transaction and any other relevant matter.

The Plaintiffs plead (ASC [44]–[45], admitted PD [44]–[45], admitted WAD [44]–[45]) that the Contract constitutes a transaction of the Company within the meaning of that term as defined in s 9 of the Act (“Transaction”) and Westwood was a party to the Transaction; and they plead (ASC [46], denied PD [46]) that it may be expected that a reasonable person in the Company’s circumstances would not have entered into the Transaction having regard to the lack of benefit to the Company of entering into the Transaction, particularised by reference to its inability to pay the balance of the deposit and, at the time of entering the Transaction, had no reasonable prospects of doing so; the detriment suffered by the Company of entering into the Transaction, particularised by reference to the amount of $5,000,100 paid to Westwood and the $4,999,900 debt to Westwood for the unpaid balance of the deposit; and the benefits to Westwood of entering into the Transaction, particularised as at least $5,000,100, being that part of the deposit paid by the Company to Westwood.

The Plaintiffs in turn plead (ASC [47], denied PD [47], denied WAD [48]) that, by reason of these matters, the Transaction was an uncommercial transaction of the Company within the meaning of s 588FB of the Act.

The Plaintiffs in turn plead (ASC [48], denied PD [48]) that, at the time of entering into the Transaction on 26 March 2020 or alternatively as a result of entering into the Transaction, the Company was insolvent. The applicable principles as to proof of insolvency are well-established and I have here drawn on my summaries of them in Re Swan Services Pty Ltd (in liq) [2016] NSWSC 1724 at [136]ff and Re Novo Pty Ltd (in liq) [2025] NSWSC 1033 at [15]ff. The question whether the Company was or would become insolvent by entering the transaction is to be determined by reference to s 95A(1) of the Act. That section provides that a company is solvent if, and only if, it is able to pay all its debts, as and when they become due and payable. Section 95A(2) of the Act has the effect that a person who is not solvent is insolvent. That definition adopts a “cash flow test” of insolvency which turns upon the income sources available to the company and the expenditure obligations that it has to meet, although a balance sheet test can provide context for the application of the cash flow test: Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 39 ACSR 305; [2001] NSWSC 621 (“Southern Cross Interiors”); Australian Securities and Investments Commission v Plymin (No 1) (2003) 46 ACSR 126; [2003] VSC 123 at [370]ff, aff'd Elliott v Australian Securities and Investments Commission (2004) 10 VR 369; [2004] VSCA 54. The test of solvency is “directed to a present inability to pay all debts as and when they become due and payable, including debts that will become immediately payable in the future”: Anchorage Capital Masters Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88 at [253]. Whether a company is able to pay its debts as and when they fall due and payable is a question of fact to be determined objectively and without hindsight in all the circumstances, including the nature of its assets and business, and the Court will have regard to commercial realities in that regard: Southern Cross Interiors at [54]; White Constructions (ACT) Pty Ltd (in liq) v White (2004) 49 ACSR 220; [2004] NSWSC 71 at [289]; Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran (2005) 54 ACSR 410; [2005] NSWCA 243 at [103]; Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384; [2011] NSWSC 186 at [48]–[49].

The Plaintiffs particularise that claim as follows:

Mr Golledge in turn submits, and I accept, that:

Mr Akinyemi responds that:

I do not accept this submission. First, the expert valuation evidence has valued the Property, at best, at about half of the Contract price, even after adopting favourable assumptions as to development approvals. I have addressed the reliance on the China Evergrande “offer” above, which, if authentic, was subject to extended due diligence and was not capable of acceptance. I do not accept Mr Gertos’ evidence for the reasons noted above and, even if I did, a vendor’s rejection of an offer plainly does not establish a market price in excess of that offer, where it is equally consistent with an inflated price expectation or a hope that a foolish purchaser will later emerge and pay more than the rejected price. I address Mr Pamboris’ evidence in the liquidator’s examination in dealing with Westwood’s submission below and recognise that he did not give evidence in these proceedings.

Mr Akinyemi also relies on the matters noted in paragraph 60 above to submit that the entry into the Contract was not an uncommercial transaction. I do not accept those submissions for the reasons noted above and they do not support that proposition where the uncommercial character of the transaction arose, at least, from the extent to which the price to be paid for the Property (if, contrary to the fact, the Company could have paid it) exceeded its true value.

Mr Jordan, for Westwood, fairly accepted in closing submissions that there was nothing that Westwood could put to rebut a claim that the Contract was an uncommercial transaction, given the common view of the valuers as to the extent to which the contract price had exceeded the value of the Property, other than Mr Pamboris’ claim in the liquidator’s examination that, if COVID-19 had not intervened, “once the property is completed to its maximum use, it should have a projected $125 million gain in the end”. That evidence does not assist Westwood. First, Mr Pamboris was there unable to identify any support for that proposition, beyond his assertion of it; and, even if it were correct, the Company have sufficient funds to pay the balance of the deposit or the stamp duty in respect of the Property, so as to achieve ownership of it; nor would it affect the value of the Property, where the valuers had addressed its potential in their valuations.

I am satisfied that, having regard to these matters and in the circumstances which I noted above in addressing the claim for breach of director’s duties and where Mr Pamboris had made no apparent attempt to obtain a third party valuation of the property and the Company in fact contracted to purchase it at least twice its market value, a reasonable person in its circumstances would not have entered the Contract and the Contract was an uncommercial transaction within the meaning of s 588FB of the Act.

The Plaintiffs also plead (ASC [49], denied PD [49]) that the Transaction was an insolvent transaction within the meaning of section 588FC of the Act. A transaction is an insolvent transaction of a company, as defined in that section, if, relevantly, it is an uncommercial transaction of the company and the transaction is entered into at a time the company is insolvent or the company becomes insolvent because of matters including its entry into the transaction.

Mr Golledge submits that:

Mr Golledge also submits, and I accept, that:

Mr Akinyemi relies on the matters noted in paragraph 60 above to submit that the entry into the Contract did not of itself cause the Company to be insolvent. I do not accept those submissions for the reasons noted above and they do not support that proposition where the Company’s insolvency arose from its inability to pay the balance of the deposit or stamp duty in the short term and, for the reasons noted above, the evidence does not establish that Mr Pamboris had sufficient assets to pay those amounts and he had not committed to do so.

I am satisfied that the Company’s entry into the Contract caused the Company to become insolvent, where it had insufficient funds to pay the whole of the deposit at the time of the Contract and Mr Pamboris had no apparent plan as to how the Company could fund the balance of the deposit within the short time it was due and no commitment from a lender in that regard. A mere hope that the Company could obtain some of financing, at some point in the future, for the obligation to pay the balance of the deposit does not displace the fact of insolvency at the point the liability to pay that amount arose under the Contract. Mr Jordan fairly accepted in closing submissions that, if (as I have found) the entry into the Contract was an uncommercial transaction under s 588FB of the Act, then it was also an insolvent transaction under s 588FC of the Act.

The Plaintiffs also plead (ASC [50]–[51], denied PD [50]–[51], denied WAD [50]–[51]) that the Transaction was entered into during the two years ending on the Relation-Back Day (as that term is defined in s 91 of the Act) and the Transaction is voidable pursuant to s 588FE(3) of the Act. That is plainly established.

The Plaintiffs succeed in their claim for an order under s 588FF(1)(a) of the Act directing Mr Pamboris to pay to the Company the sum of $5,000,000, the first instalment of the deposit that it had paid out.

The Plaintiffs also seek (ASC [52], denied PD [52], denied WAD [52]) orders under s 588FF(1)(a) of the Act directing Westwood to pay to the Liquidator the amount of $5,000,000 and an order under 588FF(1)(e) of the Act releasing and discharging any debt owed by the Company to Westwood in respect of the unpaid portion of the deposit under the Contract. Section 588FF allows the Court to make any one or more of the orders set out in the section on the application of a liquidator, including an order that a person repay the relevant money, where a transaction is voidable because of s 588FE of the Act. The scope for an order under s 588FF(1)(c) for recovery against a party which received a benefit from a voidable transaction was considered in Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd (in liq) [2022] NSWSC 394, where Stevenson J held that provision did not require focus on the recipient’s knowledge nor a strict application of the rules of equitable tracing, and merely required common sense causation between the voidable transaction and the benefit received. In that case, orders were made against directors and associated entities who had received the benefit of payments that constituted, inter alia, an uncommercial transaction within the scope of s 588FB. The orders sought by the Plaintiffs against Westwood, as counterparty to the contract, are properly made. For the reasons noted above, and subject to Westwood’s affirmative defence, I am satisfied that the Plaintiffs’ claims against Westwood on this basis are established.

Westwood pleads (WAD [47], [68]) a good faith defence under s 588FG(2) of the Act and that it had no reasonable grounds for suspecting the Company was insolvent and a reasonable person would have had no such grounds. I now turn to the applicable principles and have here drawn on my summary of them in Re Alsafe Security Products Pty Ltd atf the Alsafe Trust (in liq) [2016] NSWSC 428 at [31]ff. Subsection 588FG(2) of the Corporations Act provides:

Westwood bears the onus of establishing the defence under s 588FG(2) and, in order to do so, must establish that, first, it had entered the Contract and received the first deposit payment from the Company in good faith (subs (2)(a)). Importantly, as Mr Golledge points out, the requirement of “good faith” in an uncommercial transaction case will focus attention on the defendant’s “purpose motive and intention” in entering the transaction including the defendant’s appreciation of the uncommercial or possible uncommercial nature of the transaction: Cussen v Sultan (2009) 74 ACSR 496; [2009] NSWSC 1114 at [34]–[36]. In Cussen as liquidator of Akai Pty Ltd (In Liq) v Commissioner of Taxation (2004) 51 ACSR 530; [2004] NSWCA 383, Spigelman CJ at [123] also observed that:

Mr Jordan submits that Westwood’s entry into the Contract in good faith is established by several matters, namely that the transaction was negotiated at arm's length over a period of approximately three months, with a purchase price arrived at by “commercial negotiations” and the purchase price of $100,000,000 was within the range of market valuations, a matter that was plainly not established by the valuation or other evidence. He submits that Westwood had no reason to suspect the transaction was uncommercial and “[t]he mere fact that the price could be considered a ‘premium’ does not make it uncommercial”. I do not accept that submission where the price was so far out of market and that must have been apparent to Mr Gertos in the circumstances. Mr Jordan submits that Mr Gertos believed that Mr Pamboris and his “overseas equity partners” had the financial capacity to complete the transaction and that Mr Gertos had spoken directly with the Mr Pamboris’ equity partner in Cyprus, who confirmed that funds were available through a large financial institution and that Australian lenders, including Westpac, would provide the balance and that Mr Gertos verified this with Mr Smith. I do not accept that submission, which seeks to treat evidence as proof of the fact where it was admitted only on a limited basis that it does not prove the fact, and I have pointed to the inconsistencies in Mr Gertos’ evidence at various times above. Fifth, Mr Jordan submits that the transaction was consistent with the Company’s “ordinary course of business as a property developer and investor”, but that is not established by its one previous attempt to acquire the Annadale property which it needed to complete.

I am not satisfied that Westwood’s good faith is established, where it must have been apparent to Mr Gertos that there was at least a prospect the Property was being sold at overvalue, given the difference between the price for which Westwood would acquire the Property (albeit with the benefit of the option) and the sale price under the Contract; he knew that the Company was a proprietary company that had paid $5 million as the first part of the deposit; he knew the Company was assuming a liability to pay a little short of that amount as the second part of the deposit within three months, and substantial stamp duty; he knew the Company was assuming liability to pay $100 million within two years; and, on his own evidence, he made no inquiry to determine whether there was even a slight prospect that it could do so, prior to any difficulties arising from COVID-19.

In order to establish the defence, Westwood must show that, at the time of entering the Contract and receiving that first deposit payment, it did not have reasonable grounds for suspecting that the Company was insolvent or would become insolvent by reason of entering the Contract and making the payment (subs (2)(b)(i)) and that a reasonable person in its circumstances would not have had reasonable grounds for such a suspicion (subs (2)(b)(ii): Chicago Boot Co Pty Ltd v Davies & McIntosh as Joint & Several Liquidators of Harris Scarfe Ltd (2011) 85 ACSR 309 at [17]; [2011] SASCFC 92 (“Chicago Boot”). The test under s 588FG(2)(b)(i) is hybrid in character, since it is directed to whether the particular creditor, with its perspicacity, the information available to it, and with any analysis of that information that it had made, had “no reasonable grounds” for suspecting insolvency at the relevant time, and the requirement for “no reasonable grounds” is objective in character: Sims v Celcast Pty Ltd (1998) 71 SASR 142 at 146 (“Sims v Celcast”); Cook’s Constructions Pty Ltd v Brown (2004) 49 ACSR 62; [2004] NSWCA 105 at [45]; Chicago Boot above at [21]. The test under s 588FG(2)(b)(ii) is objective in character, and is directed to whether a reasonable person in the creditor’s circumstances, using the information reasonably available in those circumstances and making the analysis of that information which a reasonable person would make, would have had reasonable grounds to suspect the debtor’s insolvency: Sims v Celcast at 146; Chicago Boot at [21]–[22]. That matter will be determined by reference to a person who has the knowledge and experience of an average businessperson: Harkness v Commonwealth Bank of Australia Ltd (1993) 12 ACSR 165 at 167–169: Sutherland (as liquidator of Sydney Appliances Pty Ltd (in liq)) v Eurolinx Pty Ltd (2001) 37 ACSR 477; [2001] NSWSC 230 at [43]. In Pegulan Floor Coverings Pty Ltd v Carter (1997) 24 ACSR 651 at 658, Doyle CJ observed that the requirement to establish the negative under s 588FG(2)(b)(ii) was a fairly demanding test.

Mr Jordan submits that Westwood had no reasonable grounds for suspecting the Company's insolvency at 26 March 2020 where the Contract provided for an extended settlement period of two years from exchange and this was consistent with the Company's stated intention to obtain development approval and funding from overseas equity partners and Australian lenders. This does not assist Westwood where the obvious risk of the Company’s insolvency arose in respect of the balance of the deposit and stamp duty due by June 2020. Mr Jordan also submits that Mr Gertos had been informed by Mr Pamboris that funding was available through overseas equity partners and again refers to the conversation with Mr Smith, but this does not assist Westwood for the reasons noted above. Third, Mr Jordan submits that the Company had previously contracted to purchase the Annandale Property for $68,000,000 in June 2016, “demonstrating a track record of engaging in large-scale property transactions.” That matter demonstrates no such thing where, as Mr Gertos plainly knew, the Company was never required to perform that contract because of the compulsory acquisition of the property by TfNSW. Fifth, Mr Jordan submits that Westwood had no knowledge of the Company's internal financial position nor was he reasonably required to have such knowledge and “[t]here were no external indicators of insolvency at the time of exchange.” However, as I note below, Westwood at least knew the Company was a proprietary company that had assume obligations to pay in the order of $10 million in three months and that was sufficient to indicate insolvency, absent reason to think that it had the capacity to make those payments. Mr Jordan also submits that Mr Pamboris gave a personal guarantee of the Company’s obligations. I address the evidence as to that mater below, but that does not assist Westwood where that contemplates the Company’s failure to meet those obligations, rather than supporting its solvency.

Mr Jordan also submits that the Contract was executed on 26 March 2020, at the onset of the COVID-19 pandemic in Australia, and the request for an extension to pay the deposit in June 2020 must be assessed in this context as it did not indicate pre-existing insolvency but rather the impact of the pandemic on funding markets. Again, this does not assist Westwood where the Company’s inability to pay the balance of the deposit and stamp duty due in June 2020 pre-existed any issue arising from the pandemic.

Mr Jordan relies on much the same matters to submit that a reasonable person in Westwood’s circumstances would not have had reasonable grounds for suspecting insolvency and submits that:

At the risk of repetition, the first of these matters does not assist in addressing the Company’s insolvency arising from obligations due in June 2020. The last two additional points arising from the Gateway Determination also do not assist Westwood, where any outcome of that determination was (as the submissions recognise) only prospective, and would not assist the Company where it could not fund the payments due in June 2020 or complete the acquisition of the Property so as to benefit from any later appreciation of its value. I otherwise do not accept that submission for the reasons that I did not accept that the corresponding matters displaced reasonable grounds for Westwood to submit the Company’s insolvency.

I am not satisfied either that Westwood did not have reasonable grounds for suspecting that the Company was insolvent or would become insolvent by reason of entering the Contract and making the payment or that a reasonable person in its circumstances would not have had reasonable grounds for such a suspicion. Westwood’s knowledge of no more than the fact that a proprietary company, without apparent financial backing, was assuming liability to pay the balance of the deposit within three months and an obviously substantial amount of stamp duty raised the risk of the Company’s insolvency, and Mr Gertos made no inquiry that was capable of displacing that risk. The relevant matters were known to Westwood, through Mr Gertos, at the relevant time, where they arise from the obvious disconnect between the magnitude of the contractual obligations assumed by the Company and its financial and borrowing capacity, which was self-evident to Mr Gertos. I am satisfied that Westwood cannot establish a defence because the matters which gave rise to the Company’s insolvency were known to it, through Mr Gertos, at the relevant time and Westwood had plainly had reasonable grounds to know, and not merely suspect, that the Company would become insolvent by its entry into the Contract.

Fourth, in order to establish the defence, Westwood must show that, at the time of entering the Contract and receiving that payment, it had provided valuable consideration for the entry into the Contract and the receipt of the payment. I am satisfied that it had done so, by the rights conferred on the Company under the Contract, but that alone is not sufficient to establish the defence.

Where the Plaintiffs have established the elements of their claim under ss 588FB–588FF, and Westwood has not established its defence under s 588FG, the Plaintiffs are entitled to the relief claimed against Westwood on this basis.

It is convenient to deal here with Westwood’s Cross-Claim filed on 11 November 2024, Westwood seeks judgment against Mr Pamboris in the amount of $4,909,900 and judgment against the Company and/or the liquidator in the same amount. The claim against the liquidator personally was rightly not pressed. Mr Jordan fairly recognises this claim is the converse of the Plaintiffs’ claim under s 588FF of the Act and would fail if their claim succeeds, as it has. I will nonetheless address this claim more fully.

Westwood pleads substantially the same terms of the Contract as the Plaintiffs in that regard and relies, in its claim against Mr Pamboris, on his personal guarantee of the Company’s obligations under the Contract under special condition 22. Westwood claims the amount of $4,999,900 was due to it on its termination of the Contract on 8 October 2020 and pleads that neither the Company, the Liquidator nor Mr Pamboris have paid that amount. By his Defence to the Cross-Claim, Mr Pamboris largely admits the allegations against him, including that he is liable to pay Westwood the balance of the deposit in the amount of $4,999,990 pursuant to the personal guarantee. By its Defence to the Cross-Claim, the Company largely admits the terms of the Contract and denied it is liable to pay the balance due under the Contract.

I should address the evidence as to the guarantee on which Westwood relies here. As I noted above, by his third affidavit dated 17 April 2025, Mr Darin referred to the circumstances in which he became aware of the personal guarantee purportedly given under the Contract, which is deleted in the copies of the Contract held by the Company (see also Ex J1, 1331, 1361, 1616, there followed by a further page purportedly containing an executed copy of the guarantee at 1617) and apparently retained in another version of the Contract on which Westwood relies. By her affidavit dated 5 November 2025, Ms Pettit referred to documents produced to the Court including a file produced by Westwood in respect of the sale of the Property (Ex P4). That file contained a copy of the Contract dated 26 March 2020, signed by Mr Gertos, in which the pages of the special conditions (other than the guarantee by corporate purchaser) was signed by Mr Gertos, and cl 22 providing for a guarantee for corporate purchaser had been deleted and that page was not signed by Mr Gertos. The copies of the exchanged Contracts held by the Company (Ex P3A) and also produced on subpoena also did not include the guarantee on which Westwood now relies.

In his affidavit in the proceedings, Mr Gertos did not address the circumstances in which the Contract had been executed or how it come to include the guarantee on which Westwood relies, although that guarantee is not included in the counterparts of the Contract held by the Company. However, to establish the existence of the guarantee, Westwood relied on a purported file note dated 26 March 2020 prepared by Mr Gertos which read as follows:

I am not satisfied that this note was a contemporaneous or accurate record of events. First, it is the only file note produced by Westwood in respect of any issue in the proceedings. Second, Mr Gertos explained in cross-examination that he had prepared it because he was annoyed by Mr Pamboris’ refusal to give the guarantee and contemplated suing him for wasting Mr Gertos’ time; however, as Mr Golledge pointed out, that evidence made no sense where, if the file note was true, the issue was resolved by the time it was prepared and only 30 minutes had been wasted, before the contract containing the guarantee was delivered.

Mr Savell’s affidavit evidence was that he personally witnessed Mr Pamboris’ signature of the guarantee, in a meeting at which Mr Pamboris and Mr Gertos were present at the same time and he saw Mr Pamboris sign his name and then signed the guarantee as witness. Although that Mr Savell was not cross-examined, I am unable to accept his evidence as to the circumstances in which the guarantee was signed. That evidence related to events about five years before the date of his affidavit. His evidence is entirely inconsistent with Mr Gertos’ account of what occurred, namely that Mr Gertos was left a copy of the contract from which the guarantee had been crossed out and was subsequently provided a signed guarantee, and with Mr Gertos’ purported contemporaneous file note of what had occurred, which did not record any process by which he, Mr Savell and Mr Pamboris met in a conference room and Mr Savell witnessed Mr Pamboris’ execution of the guarantee in Mr Gertos’ presence. I have explained above why I do not accept any aspect of Mr Gertos’ evidence, where it is uncorroborated, and I do not assume that Mr Gertos’ account of what occurred is truthful. However, the inconsistency between Mr Gertos’ account of what occurred and Mr Savell’s account of what occurred also leaves me with no confidence that Mr Savell’s account is correct. Mr Savell’s affidavit is also inconsistent with his evidence at the liquidator’s examination that he could not remember any involvement in the entry of the Contact between Westwood and the Company, and that he “was not involved in that transaction or in that contract” (Ex J1, 2503).

I bear in mind that Mr Pamboris admitted liability under the guarantee and has not sought to withdraw that admission. That admission is not, however, binding upon the Plaintiffs, so far as, for example, Athenee relied on any liability under the guarantee so as to support the grant of the mortgage to it. Westwood’s Cross-Claim against Mr Pamboris must fail, despite his admission, because the internal inconsistencies in Westwood’s and Athenee’s case mean that I cannot be satisfied that Mr Pamboris still owes the amount claimed to Westwood. The first possibility is that Athenee’s defence (that, in effect, it paid that amount at Mr Pamboris’ direction to Westwood so as to support the security it obtained) is unfounded, and Westwood was not paid out. The second possibility is that Athenee’s defence is well-founded and Westwood was previously paid out at Mr Pamboris’ direction with funds advanced by Athenee, and Westwood’s Cross-Claim claim must therefore fail. A third possibility, which is plainly open given the inconsistencies and implausibilities in Westwood’s evidence and the absence of evidence from Athenee, is that the true position is different again and undisclosed by the evidence. The evidence does not establish any one of these possibilities on the balance of probabilities and Westwood’s case against Mr Pamboris must fail for that reason.

Westwood’s Cross-Claim against the Company must fail for these reasons and for the reason that the Company is not bound by the admission made by Mr Pamboris and because I cannot be satisfied on the balance of probabilities that any guarantee by Mr Pamboris became part of the Contract or otherwise took effect, given the inconsistencies between Mr Gertos’ and Mr Savell’s accounts of how that guarantee was given. There was never a proper basis for a claim against by Westwood against the liquidator personally, irrespective of that result, since a liquidator appointed to an insolvent company does not assume personal liability for that Company’s obligations, and that claim has not been pressed . For these reasons, the Cross-Claim is dismissed with costs.

Third, the Plaintiffs a seek declaration that Mr Pamboris’ grant of mortgages to Athenee over real properties in Paddington and Marrickville are void pursuant to s 37A of the Conveyancing Act 1919 (NSW) (“Conveyancing Act”) and a declaration that no amount is secured by the mortgages over the Properties. They also seek an order that Athenee provide a discharge of the mortgages granted by Mr Pamboris over the Properties and otherwise perform all acts and concur in all things necessary to make the Properties available for satisfying the debts owed by Mr Pamboris to the Plaintiffs and to any other creditors of Mr Pamboris.

Mr Golledge describes this claim in submissions as directed to:

I again address the applicable principles and I have here drawn on my judgment in 1derful at [249]ff. Section 37A of the Conveyancing Act relevantly provides that:

In Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3, the High Court observed (at [20] and [31]–[32]) that the section is to be accorded a “liberal construction” and extends to prohibit conduct which may “delay, hinder or defraud” a creditor or potential creditor, and the Court may infer an intention by the transferor of property to defeat or delay creditors, even in the absence of direct evidence of that intention, where that outcome was the necessary consequence of a voluntary settlement.

In Patel v Lal [2011] NSWSC 603 at [6], Biscoe AJ similarly observed that:

In Lakis v Lardis [2017] NSWSC 321 at [81], Sackar J also observed that the Court can:

In Hall v Poolman (2007) 215 FLR 243; [2007] NSWSC 1330 at [550]–[553], Austin J recognised that a person who acts “collusively” with a debtor may be held accountable under s 37A of the Conveyancing Act, and the same view was taken by the Full Court of the Federal Court in Zreika v Royal (2019) 271 FCR 65 at [303]; [2019] FCAFC 82, where the Court stated that the alienation “need not occur solely by reason of acts by the fraudulent debtor”.

Turning now to the applicable facts, by a document titled “Letter of Offer” from Athenee to Mr Pamboris and purportedly dated 31 January 2025, long before Athenee was incorporated, Athenee purportedly proposed first registered mortgages over each of the Paddington Property and the Marrickville Property. A further letter of the same purported date states, inter alia, that Mr Pamboris’ loan has been approved by Athenee Securities and that a letter of offer from Athenee, “a division of” Athenee Securities is enclosed; is signed by “Ms S Polias, director”; and encloses the “Letter of Offer”. A letter dated purportedly dated 24 February 2025 from Athenee, also before it was incorporated, states, inter alia, “We thank you for returning your executed letter of offer delivered to us on the 20th February, 2025”. These communications are inconsistent with the fact that Athenee was not incorporated until 25 March 2025 (Ex J1, 3448), with Ms Polias as its sole director and shareholder.

On 27 March 2025, Mr Pamboris and Athenee purportedly executed a Mortgage Linked Loan Agreement and other documents. The loan agreement referred to a principal of $5 million; Annexure A to the mortgage(s) contained an acknowledgement that the $5 million had been received; and "Ancillary Security Documents" purportedly dated 17 April 2025 included a direction by Mr Pamboris that $5 million less a Retained Amount (as defined) for interest payable under the mortgage be paid to an account in Westwood's name. As I noted above, if those documents were accurate and the transaction recorded by them occurred, then the balance of the deposit due by the Company under the Contract was repaid and Westwood’s Cross-Claim must fail. I cannot reach a finding as to whether that was the fact for the reasons noted below.

On 12 May 2025, at a directions hearing attended by legal representatives for Mr Pamboris and Westwood, Nixon J set this matter down for hearing for five days commencing 4 November 2025. The next day, on 13 May 2025, mortgages in favour of Athenee were lodged over each of the Paddington and Marrickville Properties. Each of the mortgages was stated to secure the amount of $5,000,000 in favour of Athenee, which was stated to be acknowledged as received by Mr Pamboris as mortgagor and was the remaining amount for which the Company was liable to Westwood under the Contract. No further evidence was led by Athenee or Mr Pamboris of any advance in fact made by Athenee to Mr Pamboris or to Westwood at his direction secured by one or more of the mortgages.

The Plaintiffs plead (ASC [62]–[64]) that the effect of the mortgages is to prevent the Marrickville Property and the Paddington Property (including the equity in those properties) from being available to the Plaintiffs and other creditors of Mr Pamboris; further, or in the alternative, to delay or hinder the Plaintiffs and other creditors of Mr Pamboris from realising the Paddington Property and/or the Marrickville Property; and, further, or in the alternative, the effect of the mortgages is to reduce the amount which would otherwise become available to creditors of Mr Pamboris, including the liquidator, for the purpose of satisfying debts owed by Mr Pamboris. They also plead (ASC [65]–[67]) that Mr Pamboris granted the mortgages with those intended effects; that his grant of the mortgages constituted an alienation of property pursuant to s 37A(1) Conveyancing Act; and that the Company is prejudiced by Mr Pamboris’ grant of the mortgages.

Mr Golledge submits that:

Mr Golledge also submits, and I accept, that the facts of this case are similar to those in Peters v Lithgow Forge Pty Ltd & Ors [2011] NSWSC 1185, where Slattery J held that a mortgage granted by a corporate entity controlled by the debtor’s sister on the same day as the debtor became liable under a costs certificate was voidable under s 37A of the Conveyancing Act.

As I noted above, Athenee does not appear. However, Mr Pamboris seeks to support the security taken by Athenee and Mr Akinyemi submits that:

I am satisfied that Mr Pamboris’ grant of mortgages to Athenee over the Paddington and Marrickville Properties should be declared void pursuant to s 37A of the Conveyancing Act. The correspondence that supports the mortgages is plainly false, at least in part, where it includes an offer of finance purportedly made long before Athenee was incorporated. There is a real question, which I need not decide, whether Athenee advanced funds to Mr Pamboris, given the other possibilities I noted above and the fact that it does not appear or seeks to establish any advance of funds.

In any event, the timing of the transaction, occurring on the day after this matter was fixed for hearing by Nixon J, unexplained by any evidence from Athenee, combined with the false documents on which it relies, is sufficient to find the matters for which the Plaintiffs contend, namely that the transaction was entered into to prevent the Marrickville Property and the Paddington Property (including the equity in those properties) from being available to the Plaintiffs and other creditors of Mr Pamboris; and further, or in the alternative, to delay or hinder the Plaintiffs and other creditors of Mr Pamboris from realising the Paddington Property and/or the Marrickville Property; and, further or in the alternative, the effect of the mortgages is to reduce the amount which would otherwise become available to creditors of Mr Pamboris, including the liquidator, for the purpose of satisfying debts owed by Mr Pamboris. I will make the declarations sought by the Plaintiffs on that basis.

The Plaintiffs have been substantially successful in their claims. I direct the parties to submit agreed short minutes of order to give effect to this judgment, including as to costs, within seven days or, if there is no agreement, their respective draft short minutes and submissions not exceeding five pages in Arial font 12, one and a half spacing, as to the differences between them.