Lorretta Kistmah Craig and Ors v Kia Silverbrook and Ors

The first plaintiff, Lorretta Kistmah Craig (Ms Craig) and (to a lesser degree) her husband, being the second plaintiff, Vincent Desmond Craig (Mr Craig), were, at the relevant times, family friends of the first defendant, Kia Silverbrook (Mr Silverbrook or the first defendant) and the second defendant, Janette Lee (Ms Lee or the second defendant). The third to fifth plaintiffs are corporate entities owned and controlled by Mr or Ms Craig or both of them.

Mr Silverbrook is an inventor, a product designer, and the holder of thousands of patents, particularly in the field of print technologies.

Ms Lee is Mr Silverbrook's partner, and is involved in, among other things, the financial aspects of Mr Silverbrook's work and in commercial negotiations with existing and prospective investors in, and licensees of, various technologies invented by Mr Silverbrook. The third to thirteenth defendants are corporate entities owned or controlled by, or otherwise associated with, Mr Silverbrook or Ms Lee or both Mr Silverbrook and Ms Lee.

In a third further amended commercial list statement (filed on 15 October 2012), the plaintiffs alleged that, on the basis of various representations made by Mr Silverbrook and Ms Lee over a period from 1992 to 2002, one or more of the plaintiffs has or have contributed approximately $2.14 million to assist Mr Silverbrook to develop and commercialise his inventions. The key individuals in these proceedings are Ms Craig, Mr Silverbrook and Ms Lee. A number of corporate entities have become involved as parties in these proceedings as a result of the complex corporate structures used by Mr Silverbrook, Ms Lee and Ms Craig in conducting their businesses and in their dealings with one another and others.

One of Mr Silverbrook's inventions, the profits of which are at the centre of the dispute between the parties, is known (or has come to be known) as the Memjet technology (Memjet technology). Broadly, the plaintiffs asserted they were entitled to a share in the profits ultimately generated from Mr Silverbrook's inventions, including profits generated from the Memjet technology. Formally, the relief the plaintiffs sought was articulated in their further amended summons (filed on 15 October 2012). It included causes of action in partnership, contract, misleading and deceptive conduct, and constructive trust, it is framed by reference to a number of complex defined terms, and it may be summarised as follows:

However, during the course of the hearing, counsel for the plaintiffs indicated, and in final submissions confirmed, that the plaintiffs would only be pressing for relief by way of a constructive trust in accordance with the principles expressed in Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137, and for relief in respect of the property known as Unit 1, Frederick Street, Gosford. The defendants deny the existence of any such arrangements.

There is a myriad of factual controversies between the parties. Ms Craig on the one hand purports to reconstruct the relevant chronology over a period of more than twenty-five years. The first and second defendants, on the other hand, almost at every turn, deny the various events alleged by her.

As will later appear, on any view of the evidence, Ms Craig, Mr Silverbrook and Ms Lee were very good friends over a long period of time and large amounts of money moved from the plaintiffs to the defendants and vice versa during the period of that friendship. This included, from time to time, the provision of blank (but signed) cheques by one or other of Ms Craig or Ms Lee, to be completed and used by the other as and when needed. Many of the alleged payments are admitted, but many are put in issue.

Although Ms Craig gives very specific detail about many of the payments, she does not purport to deal with all of them. The defendants, on the other hand, provide little by way of specific information. They also deny most if not all of the conversations asserted by Ms Craig and deny any arrangements amounting to a "deal" for a profit interest. What follows is therefore not intended to be exhaustive, but only deals with the payments to which the plaintiffs attached prominence. In addition, it is not intended to exhaustively outline every fact which is controverted between the parties. I will later deal with the specific facts in issue.

Ms Craig first met Mr Silverbrook some time between the late 1970s and the early 1980s, while they were both working at a company, Fairlight Instruments Pty Ltd (Fairlight).

In February of 1987, Mr Silverbrook asked Ms Craig to work with him at a new company he had formed, Integrated Arts Ltd (Integrated Arts), which had been given a research and development grant of $2.4 million. Ms Craig commenced working at Integrated Arts in March of 1987, and she met Ms Lee there in April of 1987.

In approximately October of 1988, Ms Craig purchased a company, D & L Craig and Associates Pty Ltd (formerly named Idameneo (271) Pty Ltd, DLCA), as a corporate vehicle through which she would provide consultancy services. DLCA is the third plaintiff in these proceedings.

In January of 1990, administrators were appointed to Integrated Arts. At or about the same time, Ms Craig commenced working as a "bounty consultant", obtaining Federal government research and development grants under the Bounty (Computers) Act 1984 (Cth) for companies operating in the electronics industry.

In May of 1990, Mr Silverbrook commenced working as an executive director of Canon Information Systems Research Australia Pty Ltd (Canon). He developed a personal relationship with Ms Lee in about May of 1991.

From about May of 1990 to some time in 1992, Ms Craig had regular dealings with Mr Silverbrook whilst he was working at Canon. She worked as a purchasing consultant for Canon, and later as a bounty consultant, also for Canon. Also in May of 1990, Ms Lee incorporated a company, Lee Edison Pty Ltd (Lee Edison) to carry out consulting work and research and development work with Ms Craig for joint clients (Lee Edison is now named Precision Mechatronics Pty Ltd, and is the sixth defendant in these proceedings).

Ms Craig asserts that in early 1992, she became aware that Mr Silverbrook had developed a large range of new computer products for Canon and was very impressed with his work.

Ms Craig asserts that in mid-1992, Ms Lee spoke to her about Mr Silverbrook's inventive capability, lack of remuneration at Canon, and Mr Silverbrook's desire to leave Canon to commence working independently on inventions which would generate an enormous amount of profit. Ms Craig asserts that Ms Lee and herself, agreed to jointly provide funds to Mr Silverbrook to enable him to acquire the equipment he needed so that when he left Canon he could work on developing inventions independently, on the basis that they would all share in the proceeds of his inventions. Ms Craig asserts Ms Lee requested Ms Craig to advance funds, for this purpose, to Lee Edison.

In June 1992, DLCA allegedly made its first advance of $15,075 to Lee Edison. Ms Craig asserts that later that month, Ms Lee informed her that a company, Owen Scientific Imaging Pty Ltd (OSI), had been incorporated, that this marked the commencement of a shared enterprise, that Mr Silverbrook had already filed patents for inventions he had developed, and that he was continuing to investigate camera lenses he had purchased for his research. Ms Craig also asserts that Ms Lee advised her to continue to make payments to Lee Edison, not OSI, as the necessary equipment would be purchased through Lee Edison.

In November 1992 to June 1993, DLCA allegedly made advances to Lee Edison (or directly purchased computers for Lee Edison) totalling $144,592. Ms Craig alleges this money was advanced to enable Mr Silverbrook to purchase the equipment he needed, and that Ms Lee mentioned that when Mr Silverbrook sold something, they would all share in the benefits of his inventions. Ms Craig also alleges Mr Silverbrook said he will pay Ms Craig back "tenfold".

In late 1993, Mr Silverbrook resigned from Canon (though he appears to have officially departed from there in March of 1994). Ms Craig alleges that at this point, she started to have more regular dealings with Ms Lee and Mr Silverbrook, and that Ms Lee made regular requests for money.

Also in late 1993, DLCA allegedly made further advances to Lee Edison totalling $13,500, at Ms Lee's request to enable Mr Silverbrook to purchase equipment needed to develop inventions.

Ms Craig asserts that in June 1994, Ms Lee and Mr Silverbrook advised her that Mr Silverbrook was working on a new printing technology that could be used in a wide range of consumer products, that it would revolutionise the printing industry, and that everyone would need to pay to use his patent. Ms Craig alleges Ms Lee also requested further money to enable Mr Silverbrook to continue his research work. In the same month, DLCA allegedly made further advances to Ms Lee, Lee Edison and Mr Silverbrook, totalling $77,066, to enable the development of the printing technology.

On 26 September 1994, Ms Lee and Mr Silverbrook incorporated Silverbrook Research Pty Ltd (SRPL). SRPL is the third defendant in these proceedings. Ms Craig alleges Ms Lee advised her to make all future advances to SRPL instead of Lee Edison.

Ms Craig alleges that in October 1994, Ms Lee and Mr Silverbrook described to her a printing technology being developed, later known as "LIFT", and advised that patents protecting the technology would be lodged in all market sectors, that it was a "billion dollar market", that "anyone wanting to use [Mr Silverbrook's] inventions would need to pay", that "[they] would be rich", that "the potential is huge", but that Mr Silverbrook needed to be properly funded in order to do this.

Between November 1994 and March 1995, DLCA allegedly advanced to SRPL and Lee Edison a total of $140,015.

Ms Craig alleges that some time between April and September 1995, Mr Silverbrook said he was about to file provisional patents, that he was starting to promote the sale of the LIFT patents, and that "[they] would all make a lot of money". At or shortly after this time, fifty-nine provisional patents were filed in Australia. Ms Craig alleges that, also around this time, Ms Lee asked for further advances.

Between October and November 1995, DLCA allegedly made further advances to SRPL totalling $28,000. On 13 October 1995, Mr and Ms Craig incorporated DLC Properties Pty Ltd (DLCP) to carry on, among other things, property development. DLCP is the fourth plaintiff in these proceedings.

In February and March of 1996, SRPL sold the patents in relation to the LIFT technology to Kodak for approximately $6 million. Ms Craig alleges Mr Silverbrook advised her he was thinking about how to return some money back to the plaintiffs, and that he had started working on a project to further develop the print technologies he had been working on.

Ms Craig alleges that in March 1996, a meeting took place, attended by Ms Lee, Mr Silverbrook and herself, at which the plaintiffs' advances were reconciled to a total sum of $418,248, and Ms Lee advised Ms Craig that Mr Silverbrook needed funds to further develop print technologies. Ms Craig also alleges it was agreed at the meeting that the defendants would pay $200,000 to the plaintiffs (from the defendants' sale proceeds of the LIFT technology to Kodak), and that any further share of the plaintiffs in the sale proceeds received from Kodak would remain as capital to allow Mr Silverbrook to continue working on his inventions.

On 24 April 1996, SRPL made a payment of $200,000 to the plaintiffs (by two separate cheques for $100,000 each). Also in April of 1996, Ms Craig alleges she attended a meeting with Mr Silverbrook and Ms Lee to discuss a new project, known as Artcam, and to prepare a research and development tax concession application.

In the period 1997 to mid-1998, Ms Craig alleges she had dealings with Mr Silverbrook and Ms Lee to assist SRPL with its research and development tax concession application, but that no requests for further advances were made during this period.

Ms Craig alleges that in June of 1998, Ms Lee asked her for further advances, to enable various properties owned by various corporate entities owned and/or controlled by Ms Lee and/or Mr Silverbrook to be refinanced, in order to release funds into SRPL in order to pay for patent filings in the United States. The corporate entities owned and/or controlled by Mr Silverbrook and/or Ms Lee which are alleged to own the properties the subject of the refinancing are Le'Brook Pty Ltd (the fifth defendant in these proceedings, Le'Brook), Allplaces Pty Ltd (the ninth defendant in these proceedings, formerly named Cosmic Osmo Pty Ltd, Allplaces), and Chesreal Pty Ltd (the tenth defendant in these proceedings, Chesreal). The plaintiffs allege they understood Le'Brook, Allplaces and Chesreal to be part of the alleged partnership in the development of technologies.

From 24 June 1998 to 6 July 1998, the plaintiffs allegedly made further advances totalling $120,753. The plaintiffs allege that some of those advances were drawn from the bank account of Mr and Ms Craig's superfund, namely D & L Craig Superannuation Fund, of which DLCF Pty Ltd (DLCF) is the corporate trustee, and is the fifth plaintiff in these proceedings. The plaintiffs allege that, of the advance of $120,753, a sum of $112,673 was used to pay for patent filings, and that $50,753.11 of that sum was paid directly to the US Commissioner of Patents and Trademarks for the filing of patents.

Ms Craig alleges that on 7 July 1998, Ms Lee advised her that once the patents were lodged, Mr Silverbrook would start promoting their sale and that a "deal" would be made between the plaintiffs and the defendants once the patents were sold or licensed. Ms Craig alleges she understood, from these conversations, that the patents were in respect of the same inventions in respect of which patents were filed in Australia. Ms Craig also alleges that later that month, Ms Lee informed her that Mr Silverbrook was talking to many potential buyers, but that the process was taking longer than expected.

In the period from 7 August 1998 to 8 February 1999, the plaintiffs allegedly made further advances to the defendants totalling $430,760.20. Ms Craig alleges that, also during this period, she had regular conversations with Ms Lee in the course of which Ms Lee said Mr Silverbrook was "working so hard", that he was having discussions with a number of computer chip manufacturers including Motorola and IBM, that "[they] would all be rich from his invention", that he was talking to investors, and that the defendants needed further funding to "keep things going". It appears that, some time during this period, a print technology was conceived, named "Memprint", which later became known as, or is somehow related to, the Memjet technology.

Ms Craig alleges that in February 1999, Ms Lee advised her that Philips made an offer of $50 million, but that even greater returns could be achieved if the technology was further developed, by the defendants, into a working prototype, and that this would require assistance from a wealthy investor.

Ms Craig alleges that in mid-February 1999, during a visit by Mr Silverbrook and Ms Lee to Mr and Ms Craig, Mr Silverbrook said he had been working to find an investor, that he would strike a deal and repay Mr and Ms Craig "tenfold", that Mr and Ms Craig would "never have to worry about money again", that he was grateful for Mr and Ms Craig's assistance, that he would not let them down, that they could trust him, and that he needed a further advance of $400,000. Ms Craig alleges she agreed to advance the sum of $400,000.

In March of 1999, DLCP mortgaged property it owned at Frederick Street and White Street in East Gosford. Ms Craig alleges that, from the proceeds of the mortgage, a sum of $400,000 was advanced to the defendants.

Ms Craig alleges that in May of 1999, Ms Lee advised her that Mr Silverbrook was in the United States having discussions with a wealthy potential investor of millions of dollars, and informed her that the defendants needed more money to "keep things going".

Between 5 May 1999 and 27 July 1999 the plaintiffs allegedly made further advances to the defendants totalling $94,793. Ms Craig alleges this sum was to meet SRPL's operating expenses, patent expenses and for payment of instalment obligations under an arrangement reached with the New South Wales Office of State Revenue (due to the alleged failure of Le'Brook to pay certain taxes). Ms Craig alleges the monies comprising these advances were sourced partly from the proceeds of the mortgage over DLCP's property at Frederick Street and partly from Mr and Ms Craig's personal "Mortgage Equity Account" (which was a line of credit secured against their then family home in Narara, Gosford, Mortgage Equity Account).

On 12 July 1999, Mr Silverbrook and Ms Lee incorporated Memjet Ltd in Ireland (the eleventh defendant in these proceedings, formerly named Pamry Ltd, Memjet Ireland), to facilitate a proposed investment by a third party in the Memjet technology. Ms Craig alleges that, on the same day, Ms Lee advised her that Mr Silverbrook found a very wealthy investor for the Memjet technology, who would enable them to develop a working prototype and take the technology to a licensing stage. Ms Craig alleges that in response to Ms Craig expressing concerns to Ms Lee about the timeframe for that expected investment, Ms Lee assured her "[they] would make lots of money" and requested further funds.

From 27 July 1999 to 23 August 1999 the plaintiffs allegedly advanced a further sum of $82,500 drawn from their Mortgage Equity Account.

Ms Craig alleges that in the period from September to October of 1999, the plaintiffs were struggling to meet mortgage repayments, and that Ms Lee said she would transfer to the plaintiffs whatever sum she could, to enable the plaintiffs to meet interest payments on their mortgages. During this same period, the defendants allegedly made payments to the plaintiffs totalling $18,000.

In November 1999, DLCP exchanged contracts for the sale of its property at Unit 1, Frederick Street, East Gosford, to a corporate entity owned and controlled by Mr Silverbrook and Ms Lee, namely Broadwater Rest Pty Ltd (the seventh defendant in these proceedings, now named Priority Matters Pty Ltd, Broadwater Rest). The plaintiffs allege the purpose of this transaction was to alleviate the mortgage stress the plaintiffs were experiencing as a result of the mortgage they had earlier provided over the Frederick Street property in order to avail themselves of a source of funding for the defendants. Ms Craig alleges that this transaction gave effect to a trust arrangement, whereby Broadwater Rest held Unit 1 on trust for the plaintiffs, to be reconveyed at a later stage for nil consideration. Ms Craig alleges that in the same month, Mr Silverbrook advised her that a deal with an investor was almost complete, and that he wanted Ms Craig to visit him at some stage so she could view the progression of the development of the technology and hear from Mr Silverbrook about the "deal" he had in mind for Mr and Ms Craig. Ms Craig also alleges that Ms Lee said they had found the right investor, that they just had to work out the details, and that in the meantime they needed more funds.

Between November and December 1999, the plaintiffs allegedly made further advances to the defendants, totalling $65,000.

Ms Craig alleges that on 20 January 2000, a day-long meeting took place, attended by herself, Ms Lee and Mr Silverbrook, at which, among other things, Ms Lee and Mr Silverbrook explained the plan for commercialisation of the Memjet technology, including the development of a working prototype, licensing the technology to a "Memjet Group" of companies (not as yet formed) which would in turn licence the technology for use in consumer products, and identified projected income streams, target markets and potential licensees. Importantly, Ms Craig alleges that, at this meeting (among other things), it was agreed that the plaintiffs would receive shares of 4.34%, in both the company (or companies) owning the Memjet technology, and the company (or companies) owning the licensing rights and income streams from the Memjet technology. Converted into dollars, this allegedly amounted to expected cash payments from SRPL in the sum of US$9,548,000 to the plaintiffs, in specified tranches. This alleged agreement referred to as the January agreement.

Ms Craig alleges that on 3 February 2000, she was advised by Ms Lee that the expected funds from the US investor, a Mr Ray Stata (Mr Stata), had not yet been received, and that she was asked to provide further funding in the meantime. The plaintiffs allegedly advanced a further $40,000.

On 4 February 2000, Mr Silverbrook, Ms Lee, SRPL and Mr Stata entered into an agreement entitled "Share Allocation and Capital Subscription Agreement" under which Mr Stata invested US$4 million in a newly formed Australian company, Memjet Pty Ltd (the eighth defendant in these proceedings, Memjet Australia).

On 11 February 2000, Mr Stata's investment of US$4 million was remitted to Memjet Australia's USD account. The funds were then allegedly transferred to SRPL's account to fund the further development of the Memjet technology.

Between 14 June and 27 December 2000, SRPL allegedly made cash payments to the plaintiffs totalling $623,040. The plaintiffs allege these payments were made in pursuance of the January agreement.

On 11 August 2000, Memjet Australia and Mr Stata entered into agreements referred to as "Option Deeds", by which, among other things, Mr Stata granted Memjet Australia a put option, which, broadly, entitled Memjet Australia to require Mr Stata to purchase 6% of Memjet Australia's shares for a further US$6 million.

In May of 2001, Ms Craig (through DLCA) commenced working as SRPL's general manager. Ms Craig alleges that she created a "Creditors List" and other financial documents, that she had weekly meetings with Mr Silverbrook and Ms Lee to discuss SRPL's financial position, and that Mr Silverbrook advised Ms Craig that he had emailed Mr Stata advising that Ms Craig would be assisting SRPL.

Between 7 June 2001 and 8 August 2001, SRPL allegedly made further payments, totalling $108,000, to the plaintiffs. The plaintiffs allege the payments to them by SRPL were made in pursuance of the January agreement.

Ms Craig alleges that between 12 July 2001 and 17 August 2001, SRPL began struggling financially. She alleges that Mr Silverbrook and Ms Lee were reluctant to require further investment by Mr Stata by exercising their rights under the agreement of 4 February 2000 with Mr Stata, as it would have involved a material loss of equity, and that Ms Craig agreed with Ms Lee that payments due to the plaintiffs under the January agreement would be deferred. She also alleges the plaintiffs made further advances totalling $21,703 in order to pay SRPL's creditors.

The plaintiffs allege that by September 2001, the funds invested by Mr Stata had been exhausted and SRPL was experiencing very serious cash flow difficulties. It appears, from various contemporaneous materials, that statements of claim were being served on, creditors were demanding payment from, and there were overdrawn bank accounts for, SRPL. It also appears that Mr Silverbrook was having discussions with an ink manufacturer which could have resulted in cash inflows, but no deal had been finalised. Ms Craig alleges that Ms Lee asked her to refinance a property, owned by DLCA, located at Pearl Beach, in order to make further advances of money to the defendants. Ms Craig alleges she agreed with Ms Lee that any further advances by the plaintiffs would be dealt with separately to the January agreement. In particular, it was allegedly agreed that the defendants would repay what they could of these further advances when the re-financing of a property owned by Le'Brook, known as the "Manor House" (the Manor House), had settled.

Between 21 September and 9 November 2001, the plaintiffs allegedly refinanced the Pearl Beach property owned by DLCA, and allegedly used the funds to make further advances to the defendants totalling $164,166.64, to pay SRPL's creditors, contractors and staff wages. However, SRPL appears to have continued to experience significant cash flow difficulties, as it received statutory demands and calls for payment from creditors.

On 18 November 2001, refinancing of the Manor House had settled, and at about this time, SRPL received $1 million from Le'Brook. As a result of the settlement of the Manor House, Ms Craig alleges that, two days later, she had discussions with Ms Lee and Mr Silverbrook about being repaid some of the post-January 2000 advances, and that SRPL paid to DLCA $149,671.61 in respect of such advances.

In December 2001, SRPL appears to have continued experiencing financial difficulties, as it was served with statutory demands, and had its direct debit arrangements and credit cards with Westpac cancelled. It would appear that the funds raised by the defendants from the refinancing of the Manor House were depleted. Mr Silverbrook and Ms Lee continued to engage in discussions with an ink manufacturer, E I DuPont Ne Nemours and Company (DuPont), and were regularly travelling to attempt to finalise a deal. Also in the same month, the plaintiffs allege they made further advances, totalling $161,975, to pay SRPL's creditors and staff wages. The plaintiffs allege they obtained this money by having DLCP remortgage properties it owned at 17 and 19 White Street, East Gosford.

Also in December 2001, Ms Craig's brother, Bernard Govender (Mr Govender), was engaged as SRPL's finance and administration manager. Mr Govender provided his services through a corporate vehicle, namely DLCA.

On 21 December 2001, SRPL and DuPont executed a document entitled "Letter of Intent" (Letter of Intent), securing exclusive discussions to negotiate a long form agreement under which, among other things, DuPont would develop suitable jetable fluids for use with the Memjet technology.

On 2 January 2002, SRPL received a payment from DuPont of US$2 million, apparently under the Letter of Intent.

Between 4 January 2002 and 3 March 2002, the defendants allegedly made further payments to the plaintiffs, totalling $48,258. The plaintiffs allege these payments were in pursuance of the January agreement.

By February 2002, a final agreement with DuPont had not yet been reached, and the due diligence process remained to be conducted or finalised. Ms Craig alleges she was informed by Ms Lee that, until the deal with DuPont was finalised, they needed to "keep things going" for the next few weeks. The plaintiffs allege that SRPL was again experiencing financial difficulties, and that the plaintiffs therefore obtained short term loans, secured by mortgages over their properties located at Pearl Beach and White Street, in order to advance funds to SRPL.

On 25 February 2002, Mr Silverbrook and Ms Lee arranged for the incorporation of various companies based in Ireland (Irish Companies), apparently as a step to progress commercialisation plans for the Memjet technology.

On 28 February 2002, SRPL and a number of the Irish Companies entered into various licence agreements for the manufacture and supply of Memjet components in designated markets. Ms Craig alleges that the licensing arrangements mirrored the commercialisation plans explained to her in the meeting on 20 January 2000.

The following day, on 1 March 2002, SRPL and three Irish Companies entered into three agreements (separately) with DuPont, called "Certified Supplier Agreements", under which DuPont was required, among other things, to make significant payments to the relevant Irish Company upon completion of certain "Memjet Milestones". Those payments would then be transferred to SRPL. The first payment under any of the Certified Supplier Agreements was not due until seven days following execution (being 8 March 2002).

The plaintiffs allege that between 7 and 8 March 2002, no monies had been received by the defendants from DuPont pursuant to the Certified Supplier Agreements, and that the plaintiffs made further advances totalling $83,171 in order to enable payment of SRPL staff wages. The plaintiffs say those monies were sourced from the Pearl Beach and White Street mortgages created in February 2002.

Between 13 March 2002 and 3 April 2003, the plaintiffs allege that substantial monies had been paid by DuPont (or third party investors) to the Irish Companies, and, in turn, transferred from the Irish Companies to SRPL. The plaintiffs allegedly received several payments totalling $283,972 from SRPL, which they allege were paid pursuant to the January agreement. Also in April of 2003, Ms Craig ceased to be the general manager of SRPL.

The plaintiffs allege that, from May 2003 to March 2007, substantial sums of money continued to be paid to SRPL by DuPont (or third party investors), that the George Kaiser Family Foundation and related charitable trusts (the GKFF Entities) invested in the Irish Companies, and that SRPL made further payments to the plaintiffs totalling $1,260,500 in accordance with the January agreement. Mr Silverbrook and Ms Lee incorporated further Irish Companies, which entered into various licence agreements for the manufacture and supply of Memjet components in designated markets. Ms Craig alleges that, as a result of becoming aware, through conversations with Mr Govender, that the defendants were still struggling to develop a prototype and commercialise the Memjet technology, she refrained from calling for further payments from the defendants under the January agreement.

Ms Craig alleges that, in April 2006, at Ms Lee's request, Ms Craig provided a personal guarantee for $2 million, to meet SRPL's staff wage requirements and other urgent debt.

Ms Craig alleges that, from conversations with her friends still working at SRPL, she learnt that Mr Silverbrook had unveiled the Memjet technology at a Global Ink Jet Printing Conference in Prague on 21 March 2007, and that he had demonstrated a working prototype through an internet website at the conference.

Between 28 March 2007 and 8 August 2007, SRPL allegedly made further payments to the plaintiffs totalling $64,000. The plaintiffs allege the payments were made pursuant to the January agreement, and that the defendants made no further regular payments to the plaintiffs since 8 August 2007.

Ms Craig alleges that, in April of 2008, she was considering taking legal action against the defendants, and that she arranged for a meeting with Mr Silverbrook, at which she made a demand for payments from the defendants pursuant to the January agreement. A final payment was made on 12 April 2008, which the plaintiffs allege was pursuant to the January agreement. This was the last payment made by the defendants to the plaintiffs.

Between 2010 and 2011, the Irish Companies commenced selling commercial licences for mass production of consumer products incorporating the Memjet technology.

In October 2010, the plaintiffs commenced these proceedings (2010/333159) against the defendants.

Other legal proceedings were also commenced, against SRPL, Mr Silverbrook and Ms Lee, by the GKFF Entities, in the High Court of Justice in England on 23 September 2011 and in the United States District Court for the Northern District of Oklahoma on 5 March 2012, alleging, among several other things, breaches of various agreements, fraud, misrepresentation and deception. These foreign proceedings were all settled on 3 May 2012 by an agreement called the "Memjet Restructure Agreement", entered into by the GKFF Entities, the Irish Companies, SRPL, Mr Silverbrook and Ms Lee (among others), providing for payment of US$20 million to SRPL, Mr Silverbrook and Ms Lee, the assignment of the Memjet technology to one of the Irish Companies in which the GKFF Entities were the majority shareholders, and a sale of the Memjet technology on terms entitling SRPL, Mr Silverbrook and Ms Lee to substantial distributions of the sale proceeds.

Given the bases on which the plaintiffs ultimately put their case, the areas of law relevant to these proceedings are those relating to the Baumgartner constructive trust, conventional estoppel, and general rules as to burden of proof.

The plaintiffs' principal case is that they have been in a joint relationship with the defendants since 1992, involving the contribution of more than $2 million of the plaintiffs' money, as requested by the defendants from time to time, together with the personal exertions of Ms Craig, in order to enable the defendants to invest, research and develop technologies for the financial benefit of the plaintiffs and defendants. The plaintiffs submit that, as the inventions were met with success, and there was a pooling of the parties' resources to that end, and the relationship between the parties has now broken down, it is unconscionable for the defendants to deny the plaintiffs their share in the assets and profits of the joint relationship.

Therefore the plaintiffs' principal case was founded on the principles set out in Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137. It is appropriate to commence the discussion of legal principles with an analysis of Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, where the High Court considered in some detail the principles governing the availability of a remedial constructive trust in circumstances bearing some similarity to those of this case. Although those principles were embraced in the subsequent decision of Baumgartner v Baumgartner, the theoretical foundation, and a fuller exposition, of those principles is found in the judgment of Deane J in the earlier case.

The facts of Muschinski v Dodds are concisely summarised in the headnote to the report. An unmarried couple purchased land by a contract under which they were jointly and severally liable. They intended to renovate a cottage on the land which would be used by Mrs Muschinski as an arts and craft centre and to buy a prefabricated house which was to be erected on the land. Mrs Muschinski paid the price of the land from her own funds and agreed to include Mr Dodds' name on the title if he undertook to renovate the cottage and pay for the prefabricated house. The land was transferred to them as tenants in common in equal shares. The parties separated without the cottage having been renovated or the house acquired. The woman claimed sole beneficial ownership of the land, pursuant to a resulting trust, or alternatively a constructive trust. The New South Wales Supreme Court (Waddell J) and Court of Appeal (Hope, Samuels and Mahoney JJA) held there was no relevant resulting or constructive trust, and therefore found for Mr Dodds. A finding made by each of the courts below and accepted by the High Court was that at the time of the purchase of the property, Mrs Muschinski intended to give to Mr Dodds an immediate and unconditional beneficial interest in the property and did not intend to limit it, suspend it or make it conditional on the extent of Mr Dodds' contributions.

All members of the court (Gibbs CJ, Mason, Brennan, Deane and Dawson JJ) rejected Mrs Muschinksi's argument that Mr Dodds held his one half interest pursuant to a resulting trust, in favour of Mrs Muschinski. All members of the court also agreed that there is no place in Australian law for the notion of a constructive trust which is imposed by law whenever justice and good conscience require it, but rather, proprietary rights fall to be determined by principles of law and not by some mixture of judicial discretion, subjective views about which party ought to win, or the "formless void of individual moral opinion". Beyond this point, there was significant divergence in opinion. Gibbs CJ, Mason and Deane JJ ultimately found in favour of Mrs Muschinski. Gibbs CJ did so on a basis different to that of Deane J. Mason J generally agreed with Deane J. In separate dissenting judgments, Brennan and Dawson JJ considered that Mrs Muschinski's appeal should be dismissed, for the reasons given in Brennan J's judgment.

Since the plaintiffs in the proceedings before me rest their case on constructive trust principles, it is unnecessary to consider the principles relating to resulting trusts. It is sufficient to say that, in the course of their reasoning, all of the members of the court in Muschinski v Dodds rejected a case based on a resulting trust.

When considering whether a constructive trust should relevantly be imposed, Gibbs CJ commenced by noting, as the Court of Appeal found, that the evidence did not reveal any equitable fraud on the part of Mrs Muschinski, and that Mr Dodds had been fulfilling his assurances up to the time the "joint venture" came to an end through no fault on either side. Gibbs CJ considered whether there was a broader principle, allegedly based on comments in the judgment of Lord Diplock in Gissing v Gissing [1971] AC 886, permitting the imposition of a constructive trust whenever the conduct of the legal owner makes it equitable to do so. His Honour understood Lord Diplock's opinion as somewhat narrower than this, requiring some conduct on the part of the trustee inducing the beneficiary to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land. Gibbs CJ was unable to find any such conduct by Mr Dodds. His Honour then considered, but distinguished, a number of subsequent English decisions influenced by, or based on, Lord Diplock's judgment. Ultimately, Gibbs CJ found for Mrs Muschinski on the basis that, as the parties were made by the contract jointly and severally liable to pay the price of the land, they were under a common obligation to pay the debt, and they were obliged to bear the burden equally, and therefore if one discharged more than his or her proper share, he or she could call upon the other for contribution.

Brennan J considered that the beneficial interest, which Mrs Muschinski intended to, and did, confer on Mr Dodds, was conditional on the performance by Mr Dodds of the renovation of the cottage and the erection of the prefabricated house. His Honour noted that non-fulfilment of a condition annexed to a gift generally produced one of two results, namely the forfeiture of the gift or alternatively the creation of an enforceable personal obligation. His Honour held that, in the circumstances of the particular case, Mr Dodds' non-performance of the condition produced the latter result, and that as Mrs Muschinski claimed only a proprietary right, but not (for example) a right to compensation, her claim failed.

Although this disposed of the matter as far as Brennan J was concerned, he nonetheless went on to consider Mrs Muschinski's constructive trust submission. His Honour first commented that the alleged constructive trust could not arise from anything done or promised after Mr Dodds first acquired his interest in the property, but must have its origins in the arrangements existing at the time he acquired his interest, namely the purpose for which he was given his interest. His Honour said Mrs Muschinski must show that it is not merely unfair, but unconscionable, for Mr Dodds to retain his interest. His Honour could not identify any principle of equity which might restrict a donee's proprietary interest in a gift beyond any restriction imposed expressly or impliedly by the donor (and his Honour had previously rejected the view that any such restriction existed here). Since Mr Dodds' non-fulfilment of the assurances was not intended to effect a forfeiture of his interest, it was not unconscionable for him to retain his interest. His separation from Mrs Muschinski was not in breach of any equitable obligation. His Honour considered the argument for a constructive trust to be, in substance, based merely on fairness, and therefore insufficient.

Deane J commenced his reasons with an acknowledgement that there was no express or implied agreement, arrangement, understanding, or contract between the parties that they should hold their legal interests on trust for themselves in shares corresponding to their respective contributions. To the contrary, the evidence established that their shared intention was that, from the time of purchase, each would immediately and unconditionally have a one half beneficial and legal interest in the property. There was therefore no room for a resulting trust. His Honour also considered there was no room for the doctrine of contribution (as it was actually the common intention of the parties that the burden or price of the property would be borne by Mrs Muschinski alone), and that there was no true partnership or contractual joint venture between the parties.

Deane J commenced his analysis of Mrs Muschinski's constructive trust case with some relevant academic discussion about the state of Australian law relating to constructive trusts. His Honour's observations included that although the constructive trust remains predominantly remedial, it is available only when warranted by established equitable principles or by the legitimate process of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principles. It is not available simply on the basis of notions of fairness and justice. Although the principal operation of the constructive trust in Australia has been in the area of breach of fiduciary duty, it is not confined to such cases. His Honour said that once its predominantly remedial character is accepted, there is no reason to deny the availability of the constructive trust in any case where some principle of the law or equity calls for the imposition upon the legal owner of property, regardless of actual or presumed agreement or intention, of the obligation to hold or apply the property for the benefit of another.

Applying this to the case, Deane J said it was therefore necessary to consider whether there was any basis on which, independently of the actual intention of the parties, Mrs Muschinski could be entitled to relief by way of constructive trust in the particular circumstances of the case. His Honour observed that, where some consensual joint relationship or endeavour fails without attributable blame, the set of rules applicable to determine the distribution of assets and liabilities depends on the nature of the relationship that has broken down. For example, sometimes the law draws a line leaving assets and liabilities to be borne according to where they lie, as a matter of law, at the time of the failure. Where there are contractual provisions regulating the parties' rights and duties in the event of premature failure, those rules will be given effect. Where there are no such provisions, and a merely contractual relationship has been frustrated without fault on either side, contributions are generally refunded if there has been a complete failure of consideration in performance. Where the failed relationship is a partnership, the relevant rules of equity provide that the partners will ordinarily be entitled to a repayment (or proportionate repayment in the case of a fixed term partner) of their capital contributions after the discharge of the partnership debts. If the relevant relationship is a contractual joint venture, a similar rule of equity applies.

His Honour then reasoned that the rules applying to a premature dissolution of partnerships and the collapse of joint ventures (which provide for a proportionate refund of capital contributions), are only instances of a more general principle of equity, and that the circumstances of the case before his Honour provided the necessary context for the operation of that general principle. His Honour "more precisely defined" the circumstances in which the general principle operates as follows (at 620): The principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do.

His Honour noted that if the relationship between Mrs Muschinski and Mr Dodds was merely a commercial one, then there would be no doubt that Mr Dodds' conduct (in seeking to retain the unfair advantage of unforseen circumstances by asserting his legal entitlement to a one half interest without compensating Mrs Muschinski for the unintended gross disproportion between their contributions) is of the type which the general principle exists to preclude. Deane J noted, however, that the relationship between the parties was a mixture of the commercial and the personal. The presence of a personal element in the relationship does not displace the application of the general principle, but it introduces a multitude of additional "special considerations" which need to be taken into account in determining whether the conduct of the relevant party bears an unconscionable character. Deane J described it as "a practical equation between direct contributions in money or labour and indirect contributions in other forms such as support, home-making and family care". Deane J held that, in the circumstances of the case, the considerations arising from the personal relationship between Mr Dodds and Mrs Muschinski did nothing to override or negate the unconscionable character of Mr Dodds' conduct.

Deane J therefore concluded that equity required an adjustment of the parties' rights and obligations to compensate for the disproportion of their contributions. That adjustment involved a discharge of the debts involved in the joint undertaking and a proportionate repayment of the parties' capital contributions to the extent allowed by any sale proceeds. As to the distribution of any surplus (following the discharge of any debts incurred in their joint undertaking and the repayment of capital contributions), the extent to which the relevant principle of equity operates to qualify legal entitlement is only that to which it positively appears that it would be unconscionable for one party to assert or retain the benefit of property contributed by the other party. It may vary depending on the circumstances of each case. In that case, Deane J held that it would not be unconscionable for Mr Dodds to retain his one half share in any residue of the proceeds of the sale of the property.

Deane J therefore proposed to make an order declaring a constructive trust of the property to the effect that the parties held their respective legal interests as tenants in common upon trust (following payment of any joint debts) to repay to each their respective contribution and as to the residue for them both in equal shares.

Mason J agreed with Deane J. He commented that although it was not inequitable for Mr Dodds to retain his interest, it would be inequitable for him to do so without crediting to Mrs Muschinski her contributions to the acquisition and improvement of the property. That was because the parties shared an expectation that Mr Dodds would be making substantial contributions to the projected development. Mason J also expressed particular agreement with Deane J's application to the present case of the general principle underlying the proportionate repayment of capital contributions to joint venturers on the failure of a joint venture.

Stepping back from the detail for a moment, it is clear that although a majority of the court ultimately found for Mrs Muschinski, the constructive trust basis for that outcome was only accepted by a minority (that is Mason and Deane JJ, but rejected by Gibbs CJ, Brennan and Dawson JJ). It is therefore unclear whether that case stands as authority for the imposition of a constructive trust in those circumstances. The position was clarified two years later in Baumgartner v Baumgartner. As noted in J D Heydon and M J Leeming, Jacob's Law of Trusts in Australia, 7th ed (2006) LexisNexis Butterworths (at [1352]), the prevailing principle in Australia is a result of the adoption and adaptation in Baumgartner v Baumgartner by Mason CJ, Wilson and Deane JJ of what had been said by Deane J in Muschinski v Dodds.

Again, the facts of Baumgartner v Baumgartner are adequately narrated in the headnote to the report. The parties to a de facto relationship pooled their incomes for living expenses and fixed commitments. They lived at first in a unit owned by Mr Baumgartner, which they sold when they acquired a house in his name. The house was purchased with the aid of a mortgage in the name of Mr Baumgartner, who also contributed the net proceeds of sale of the unit. The parties' aggregate earnings were pooled in the proportions of roughly fifty-five percent by Mr Baumgartner and forty-five percent by Ms Baumgartner. They later separated and Mr Baumgartner asserted that the land was his sole property. Accepting the views expressed by Deane J in Muschinski v Dodds, all members of the court (Mason CJ, Wilson, Deane, Toohey and Gaudron JJ) held that Mr Baumgartner's assertion after the relationship had failed that the property that had been financed in part through the pooled funds was his to the exclusion of any interest in Ms Baumgartner was unconscionable conduct which attracted the intervention of equity and the imposition of a constructive trust.

Mason CJ, Wilson and Deane JJ delivered a joint judgment. Their Honours first held that the finding by the majority of the Court of Appeal that the parties held a common subjective intention to create a trust, was made on the basis of an impermissible alteration to the factual landscape as found by the primary Judge, and was therefore unsustainable. Their Honours then turned to the remaining question of whether, in the circumstances, Ms Baumgartner was entitled to relief by way of constructive trust. Their Honours quoted the passage from Deane J's judgment in Muschinski v Dodds which I have quoted above (at [89]), and said it was a: ... general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them ... ... ... the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention "to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle" ...

Their Honours described the parties' relationship as involving a pooling of earnings to meet all expenses and outgoings arising from their living together as a family (at 148), designed to ensure that their earnings would be expended for the purposes of their joint relationship, their mutual security and benefit, and to secure accommodation for themselves and their child (at 149). Accordingly, their Honours noted that the parties' contributions, financial and otherwise, were on the basis of, and for the purposes of, that joint relationship (at 149). In this situation, their Honours considered that, Mr Baumgartner's assertion, after the relationship had failed, that the property, which was financed in part through the pooled funds, is his sole property, beneficially, to the exclusion of any interest at all on the part of Ms Baumgartner, amounted to unconscionable conduct which attracted the intervention of equity and the imposition of a constructive trust.

When turning then to consider the terms of the constructive trust to be imposed, their Honours commented that, consistent with the maxim that equity favours equality, in circumstances where the parties have lived together for years and have pooled their resources and their efforts to create and (at least largely) finance a joint home, they should, as a starting point, share the beneficial ownership equally as tenants in common. However, that is subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their contributions (either financially or in kind). Their Honours found (and it was apparently the subject of agreement), that Mr Baumgartner's contributions were approximately fifty-five percent and Ms Baumgartner's were approximately forty-five percent. Further adjustments needed to be made, entitling Mr Baumgartner to repayment of the contributions effectively made by him before and after the period of the parties' pooling of resources, and entitling him to an amount equal to the value of furniture, taken by Ms Baumgartner after termination of the relationship, which was purchased by the parties during the period of pooling of resources.

Their Honours therefore asked the parties to agree on short minutes of order to the effect that the sale proceeds of the property would be first applied to discharge any debt outstanding under the mortgage; secondly, to effect the adjustments described above (and that Mr Baumgartner receive a lien over the property securing his entitlement to those adjustments); and thirdly, that the property would be held on trust for the parties in the respective percentages as described above.

In a separate judgment, Toohey J agreed with the joint judgment and added the observation that, in his view, the imposition of a constructive trust based on unconscionable conduct produced the same result as the imposition of a constructive trust for the prevention of unjust enrichment. Gaudron J also delivered a separate judgment, in which her Honour largely expressed agreement with the joint judgment.

A fundamental difference between constructive trusts and other forms of trusts, such as express and implied (including resulting) trusts, is that the constructive trust arises regardless of intention. As Deane J observed in Muschinski v Dodds, although the rationale of express and implied trusts is usually identified by reference to intention, the rationale of the constructive trust "must still be found essentially in its remedial function" (at 613). A constructive trust nonetheless requires identification of the traditional ingredients of subject-matter, trustee, beneficiary, and personal obligation attaching to property (at 614 per Deane J). Another similarity is that, once established or imposed, a constructive trust is a relationship governed by a coherent body of "traditional and statute law" (at 614 per Deane J).

Although widely followed in a number of subsequent cases, the reasoning in Baumgartner v Baumgartner has been widely criticised. In Jacob's Law of Trusts, J D Heydon and M J Leeming commented (at [1352] and [1353], footnotes omitted): [1352] ... [Deane J] identified a general equitable principle which restores to any party contributions which that party has made in a joint endeavour which fails, the contributions having been made in circumstances that it was not intended the other party should enjoy them. Examples were given of premature partnership dissolution and collapse of joint ventures. In the latter regard, reference was made to United States decisions. However, an examination of those cases shows that they are examples of the fiduciary characterisation given in the United States to joint ventures generally, and contrary to the position established in Australia by United Dominions Corp Ltd v Brian Pty Ltd. Deane J saw the examples he gave as instances of the basic concern of equity to interpose and prevent the assertion or exercise of a legal right in circumstances where this would constitute unconscientious conduct ... ... [1353] It may be said the reasoning in Baumgartner v Baumgartner, while purporting to be rooted in basic equity, gives no more predictability or consistency in result than that which follows from the English decisions espousing the 'new model' constructive trust. It remains unclear as to when and why the interposition of equity to prevent unconscientious reliance on legal rights in the Australian cases will give rise in equity to a proprietary rather than a personal right, and a proprietary right which is a constructive trust 'fashioned' by the court.

In John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2010) 241 CLR 1 (at 8), in the course of argument, Gummow J said, with reference to Muschinski v Dodds and Baumgartner v Baumgartner, "[i]t may be necessary to look at those cases some day", and in its judgment, the court described Baumgartner v Baumgartner in possibly narrow terms, describing it as a case "dealing with the property rights of de facto spouses after their relationship ended" (at [58] per French CJ, Gummow, Hayne, Heydon and Kiefel JJ). I am acutely cognisant of the proper place of special leave transcripts (Heydon v NRMA Ltd [2000] NSWCA 374; (2000) 51 NSWLR 1; NRMA Limited & Ors v Heydon S26/2001 [2001] HCATrans 439), but I simply note that in Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460; (2009) 2 ASTLR 336, Ward J referred (at [49]) to the following exchange which took place in the special leave application of Friend v Brooker & Anor [2008] HCATrans 344: GUMMOW J: There were a lot of cases cited in the Court of Appeal, including Muschinski and Baumgartner, but I can think of at least two occasions in the last 10 years in which we have referred to those cases, and it escaped the attention of counsel in the Court of Appeal. One was in Giumelli 196 CLR 101 at 113. The other is Bathurst City Council 159 CLR 566 [sic] at 585, which at least would suggest some caution in jumping into the pool with the words "Baumgartner" in front of it. MR WALKER: Yes, your Honours, it is an important doctrine. We have to accept that. What I am trying to persuade your Honours is, however - - - GUMMOW J: We say these things and hope that they will be read. It is a hope the flags from time to time. It is certainly flagged here.

In any event, the decisions which have applied Baumgartner v Baumgartner assist in distilling precisely what is required for the imposition of a constructive trust of the nature contended for by the plaintiffs in this case. In West v Mead [2003] NSWSC 161; (2003) 13 BPR 24,431, Campbell J said (at [58], [59] and [62]): [58] Before any particular asset can become subject to a constructive trust in accordance with the Baumgartner principle, one needs to have a joint relationship or endeavour, and an asset acquired in the course of, and for the purposes of, that joint relationship or endeavour ... [59] In accordance with this approach, a plaintiff needs to establish that there is indeed a joint endeavour between the parties, in which expenditure is shared for the common benefit. It is also necessary to identify what the scope of that joint endeavour is. It is a question of fact, for any couple, what the scope of the joint endeavour they are engaging in is ... ... [62] The Baumgartner type of constructive trust is imposed to prevent an unconscionable assertion of legal title, in circumstances where the parties had no explicit intention about how the legal title would be held in the circumstances which have arisen. By contrast, the presumption of a resulting trust is one which seeks to give effect to the intention of the parties, by making a presumption about what that intention was [citations omitted]. Even so, that is not to say that the intention of the parties has no role to play in whether a Baumgartner constructive trust should be held to exist. Part of the justification for imposing the Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available for the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and assets acquired from it, would be used for their ongoing common benefit.

The defendants submit that although the parties need not have a common subjective intention to create a trust for the imposition of a Baumgartner trust, it is a requirement that the parties had a common intention to enter into a joint enterprise. The defendants submit that the relevant distinction is between an intention to create a trust (which is not required) and an actual intention to enter into a joint enterprise (which is required). In support of their submission, the defendants cite Pullin J (with whom Hasluck J and in effect Murray J at [46] agreed) in Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360 (at [86], emphasis added): [86] What has to be established over and above the de facto relationship is that the parties embarked upon a joint enterprise in the nature of a "commercial venture". In my view, the learned trial Judge correctly observed that the proof of the joint endeavour required proof of an actual intention to pool resources. Proving the existence of an intention of a joint enterprise in the nature of a "commercial venture" will usually lead to evidentiary issues, such as whether the parties expressly agreed to embark upon such a joint enterprise or whether that intention can be inferred from all the circumstances.

These comments would appear to be consistent with the High Court's formulation of the principle (Baumgartner v Baumgartner at 149; see also P W Young, C Croft and M L Smith, On Equity (2009) Lawbook Co at [6.780], page 448). In Australian Building & Technical Solutions Pty Ltd v Boumelhem, Ward J adopted Campbell J's analysis in West v Mead, and articulated the principles as follows (at [51]-[53]): [51] First, it is necessary that there be both a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired. The scope of the joint venture in which the parties were engaging may be of relevance and as Deane J in Muschinski considered, may change from time to time. [52] Secondly, the substratum of that joint relationship or endeavour, must have been removed or the joint endeavour prematurely terminated "without attributable blame". [53] Thirdly, there must be the requisite element of unconscionability - it would be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.

The plaintiffs submitted that, as a matter of principle, proof of the precise words spoken by the parties at the time they embarked upon the transactions leading to the acquisition of the relevant property is not essential for a finding on the balance of probabilities that there was a joint endeavour, nor is the lack of objective record to corroborate the alleged arrangements necessarily fatal in such cases. No doubt those propositions are true as a matter of principle (see Australian Building & Technical Solutions Pty Ltd v Boumelhem at [83]-[84]), but equally, the absence of such matters will affect proof.

The plaintiffs submitted that, as the evidence they adduced was allegedly sufficiently weighty, the defendants bore an onus to displace the plaintiffs' allegations, which they failed to do. In support of that submission, the plaintiffs relied on certain comments made by Foster J in Jeffrey-Potts v Garel [2012] VSC 237 (at [103]-[105]). In my view, Foster J was not stating a new principle relating to onus of proof specifically applicable to cases of this nature. His Honour was simply applying the second of three general propositions articulated by Heydon J in Strong v Woolworths Ltd [2012] HCA 5; (2012) 246 CLR 182 (at [52]-[54], footnotes omitted): [52] In the first sense, "evidential burden" refers to the duty of one party (usually the party bearing the legal (i.e. persuasive) burden, who in most instances will be the plaintiff) to call sufficient evidence to raise an issue as to the existence or non-existence of a fact in controversy ... [53] In the second sense, "evidential burden" refers to circumstances in which a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff's favour. There is then said to be an "evidential burden" in the sense of a "provisional" or "tactical" burden on the defendant: if the defendant fails to call any or any weighty evidence, it will run a risk of losing on the issue - that is, a risk that at the end of the trial the trier of fact will draw inferences sufficiently strong to enable the plaintiff to satisfy the legal (i.e. persuasive) standard of proof. The "provisional" or "tactical" burden raises the question whether a defendant should as a matter of tactics "call evidence or take the consequences, which may not necessarily be adverse". [54] The third sense in which the expression "evidential burden" is employed arises where a plaintiff, in discharging the evidential burden in the first sense, calls evidence so strong that a reasonable trier of fact would be bound to decide the issue in the plaintiff's favour if the defendant calls no evidence.

Returning then to the principles governing the imposition of a Baumgartner constructive trust, I would adopt Ward J's analysis in Australian Building & Technical Solutions Pty Ltd v Boumelhem, but emphasise that whilst there is no need for the parties to possess an intention to create a trust, the parties' intention remains relevant in that it must be shown that "the benefit of money or other property contributed by one party [was] on the basis and for the purposes of the [joint] relationship or endeavour" (Muschinski v Dodds at 620). Therefore the plaintiffs must demonstrate both the existence of a joint relationship or endeavour, and that the parties made contributions on the basis and for the purpose of that joint relationship or endeavour.

Whether the plaintiffs have established the existence of a joint endeavour, and that they made contributions on the basis and for the purpose of it, calls for a detailed analysis of the evidence which I undertake below.

As a stand-alone claim, the plaintiffs allege that Unit 1 in the Frederick Street property was held by Broadwater Rest on trust for the benefit of DLCP, on terms that it would be re-conveyed from Broadwater Rest to DLCP for nil consideration following the commercialisation of the Memjet technology. The plaintiffs seek such a re-conveyance. The defendants deny the existence of a trust arrangement, and submit that the alleged trust arrangement must fail for want of compliance with writing requirements under ss 23C and 54A(1) of the Conveyancing Act 1919. The plaintiffs do not contest that the relevant provisions in the Conveyancing Act apply to an agreement to create a trust over land, but submit that the requirement for writing does not defeat the alleged trust arrangement on the basis that a conventional estoppel arises from the conduct of the parties in the period 1999 to 2012. The particular conduct in that period allegedly founding the estoppel is said to include:

It may be said that there are three general classes of estoppel, namely estoppel of record, estoppel of writing, and estoppel in pais, and that estoppel in pais includes both estoppel by convention (a common law doctrine) and estoppel by representation (a doctrine of equity) (Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 at 430 per Mason and Deane JJ). The principles determining whether a conventional estoppel arises have been stated on numerous occassions.

Isaacs J said that the "governing principle" is that "when parties have agreed to act upon an assumed state of facts, their rights between themselves are justly made to depend on the conventional state of facts, and not on the truth" (Dabbs v Seaman [1925] HCA 26; (1925) 36 CLR 538 at 549). Mason and Deane JJ said it is "the common law estoppel which precludes a person from denying an assumption which formed the conventional basis of a relationship between himself and another or which he has adopted against another by the assertion of a right based on it" (Legione v Hateley at 430). Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ said it "is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying" (Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) [1986] HCA 14; (1986) 160 CLR 226 at 244).

The "classic statement of [the underlying] principle" (Legione v Hateley at 430) is said to be that of Dixon J in Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 (at 547, citations omitted): The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct ... ; or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted.

His Honour shortly thereafter provided the following further exposition in Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 (at 675-676): The justice of an estoppel is not established by the fact in itself that a state of affairs has been assumed as the basis of action or inaction and that a departure from the assumption would turn the action or inaction into a detrimental change of position. It depends also on the manner in which the assumption has been occasioned or induced. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it. But the law does not leave such a question of fairness or justice at large. It defines with more or less completeness the kinds of participation in the making or acceptance of the assumption that will suffice to preclude the party if the other requirements for an estoppel are satisfied. A brief statement of the recognized grounds of preclusion is contained in the reasons I gave in Thompson v. Palmer, and it is convenient to repeat it [his Honour then quoted part of the quote extracted above]. It is important to notice that belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.

The requirement that the assumption be as to a state of facts (as distinct from law) has been discarded (see the authorities cited in Waterman v Gerling Australia Insurance Company Pty Ltd [2005] NSWSC 1066; (2005) 65 NSWLR 300 at [79] per Brereton J).

The doctrine of conventional estoppel applies to post-contractual, not just pre-contractual, assumptions (Legione v Hateley at 432). Therefore, as with equitable or promissory estoppel, in conventional estoppel, "after a formal contract is made, parties may so conduct themselves as to treat provisions of the contract as no longer relevant or varied in some way or suspended in operation" (Waterman v Gerling Australia Insurance Company Pty Ltd at [82]).

There is some debate in the authorities as to whether parol evidence of pre-contractual negotiations which culminate in a written contract may be relied upon to set up alleged estoppels by convention (Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 at [204]-[214] per Tobias JA with whom Mason P and Campbell JA agreed). Whatever the true position, that restriction (if it exists) does not apply in respect of post-contractual conduct (Waterman v Gerling Australia Insurance Company Pty Ltd at [81]-[82]).

The elements a plaintiff needs to establish for common law conventional estoppel are "(1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff" (Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) 13 BPR 24,713 at [32], cited approvingly in Ryledar Pty Ltd v Euphoric Pty Ltd at [200]).

The similarities and differences of other doctrines related to consensual departures from contractual rights were identified by Brereton J in Moratic Pty Ltd v Gordon. In contractual variation, the parties must possess an intention to vary the original terms, whereas no advertence to the original terms is necessary to found a conventional estoppel having the same effect (at [31]). Brereton J (at [30]) adopted the observations of Denning MR in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd (in liq) [1982] QB 84 (at 121), that "there is no need to inquire whether [the parties'] particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it".

As to the distinction between conventional estoppel and promissory estoppel, Brereton J said (at [33], [35]-[37]): [33] ... Promissory estoppel, a creature of equity, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced or acquiesced in the adoption by the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscionable (or unconscientious) insistence by the defendant on its strict legal rights. On the other hand, conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding. ... [35] Thus, in promissory estoppel, it is the defendant's knowledge of the potential for the plaintiff to incur detriment if it remains silent that may impose on the defendant's conscience an obligation to speak. [36] In a case of conventional estoppel, however, all that is required is the mutual adoption of the relevant assumption ... [37] ... detriment is an element of conventional estoppel ... and ... each party must know or intend that the other act on the relevant assumption, [but] there is no requirement that either [has] induced, or acquiesced in, the adoption of the assumption by the other, and in particular there is no requirement that either know that the other may incur detriment by reliance on the assumption. To the contrary - since the assumption is one common to both parties, and may involve a mistaken interpretation of the contract - the possibility that either party might incur detriment by reliance on it will usually not occur to the other.

There was a significant debate before me about the manner in which the plaintiffs might prove their case. Here, almost the entirety of the plaintiffs' case turns on alleged representations made from time to time by one or more of Mr Silverbrook or Ms Lee. Those representations, as I have already observed, purportedly occurred over many years. The defendants, in order to point to the inadequacy of the plaintiffs' case in this regard, relied on Watson v Foxman (1995) 49 NSWLR 315.

Watson v Foxman involved a claim for misleading and deceptive conduct, based on spoken words, with little or no contemporaneous record. McClelland CJ in Equity commented on the evidentiary difficulties involved in conducting a case on that basis. Although his Honour made those observations in the context of a claim for misleading and deceptive conduct, they are no less applicable in the context of the case before me, where one side alleges something was said, which the other side denies. His Honour said (at 318-319): Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances ... ... ... human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. ... Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on [misleading and deceptive conduct], in the absence of some reliable contemporaneous record or other satisfactory corroboration. That is the position in the present case.

The difficulties involved in a case constructed on the basis of perception and memory, which are amplified by the passage of time, were alluded to by the then Chief Justice Spigelman, in J J Spigelman, "Truth and the Law" (2011) 85(11) Australian Law Journal 746 (at 756-759). These difficulties associated with reliance upon spoken words as a foundation of a cause of action in the absence of some reliable contemporaneous record or other satisfactory corroboration, have been noted in several other cases (see for example Pennimpede v Pennimpede [2009] NSWSC 85 at [29] per Bryson AJ and Murtagh v Murtagh [2013] NSWSC 926 at [105]-[109] per Hallen J).

I remind myself that the plaintiffs must prove each element of the cause of action to the reasonable satisfaction of the court. As explained by Dixon J in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 (at 361), approved shortly thereafter in Helton v Allen [1940] HCA 20; (1940) 63 CLR 691 (at 712 per Dixon, Evatt and McTiernan JJ), and applied in countless subsequent cases, this means that "when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found". In Briginshaw v Briginshaw, Dixon J also commented (at 362): But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences.

Related principles to bear in mind include what Lord Mansfield said long ago in Blatch v Archer (1774) 1 Cowp 63 at 65, that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other side to have contradicted" (see also Apollo Shower Screens Pty Ltd v Building and Constructions Industry Long Service Payments Corp (1985) 1 NSWLR 561 at 565 and Vetter v Lake Macquarie City Council [2001] HCA 12; (2001) 202 CLR 439 at [36]). Furthermore, a trial judge is in no way restricted in his or her assessment of a witness; he or she is not bound to accept any of that which the witness attests to or indeed may only accept part thereof (Cubillo v Commonwealth of Australia [2000] FCA 1084; (2000) 174 ALR 97 at [188] to [123]). However, a rejection of the evidence given by one side of the record does not necessarily prove the opposite of what was asserted, nor does it necessarily result in an acceptance of the evidence on the other side of the record (except perhaps where there are two mutually exclusive possibilities) (Steinberg v Federal Commissioner of Taxation [1975] HCA 63; (1975) 134 CLR 640 at 684 per Barwick CJ and at 694 per Gibbs J).

In her affidavit and oral evidence, and in some contemporaneous documents, Ms Craig describes the monies advanced by one or more of the plaintiffs to one or more of the defendants, or monies allegedly outstanding by one or more of the defendants to one or more of the plaintiffs, as "loans" or amounts to be "repaid". Counsel for the plaintiffs submitted that no legal characterisation of the advances should be drawn from Ms Craig's use of the word "loan" or from her expressed expectation of "repayment". In support of that submission, counsel for the plaintiffs pointed to the decision of Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460; (2009) 2 ASTLR 336, where, in the context of a dispute as to whether a particular sum was advanced as a loan, Ward J (at [63]) said she "cannot place great significance on the use of one particular verb [in an affidavit]" (the verb being "lend"). However, I do not think Ward J's observation provides the degree of support to the plaintiffs' submission as counsel for the plaintiffs would have it. It is important to understand the context in which Ward J made that statement. The witness in that incident, Mrs Boumelhem, was unable to speak and read English. It would therefore understandably be unsafe to proceed on the basis that she understood the connotations of the word.

It is of course true that a party's direct evidence as to the legal characterisation of a particular payment or of a relationship or of a transaction is not conclusive, as that generally (perhaps always) involves a question of law. However, that does not mean no significance should attach to the words parties choose to use to characterise a particular relationship or payment or transaction. For example, in the case of Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, an execution of an acknowledgement of trust was not conclusive, but certainly relevant, and in that case, significant, to the characterisation of the relevant relationship as one of trust. In Australian Building & Technical Solutions Pty Ltd v Boumelhem, however, Ward J refused to attach significance to the use by one of the parties of the word "lend" (even though the legal implication of that word could be seen as an admission against Mrs Boumelhem's interest).

The decisions are obviously distinguishable. In Byrnes v Kendle, the acknowledgement of trust was a legal document, and therefore it is sensible to draw a prima facie inference that the words in such a document used have their legal meaning. In Australian Building & Technical Solutions Pty Ltd v Boumelhem, the word "lend" was not used in a legal document recording a transaction between the parties, but in an affidavit of a party who was unable to speak and read English, and who was not cross-examined on her understanding of the meaning of that word.

The significance of the use by a lay person of a word which includes legal connotations raises a more general question of whether admissions of such a nature can even be made. The extent of the commentary on this issue in J D Heydon, Cross on Evidence, 9th ed (2013) LexisNexis Butterworths is that "[t]here is a dispute as to whether admissions may be made of matters of mixed law and fact" (at [33465]). The author then provides a lengthy footnote citing various authorities considering the question.

In Grey v Australian Motorists & General Insurance Co [1976] 1 NSWLR 669, Mahoney JA, citing Allen v Roughley [1955] HCA 62; (1955) 94 CLR 98, said (at 684) that "[a]n admission may provide material from which a court may find a question of law, a question of fact, or a question being a conclusion from a mixture of fact and law". The particular context in which his Honour made that comment was when considering whether a party-witness can be asked in court to admit a conclusion depending on a legal standard. His Honour repeated that view in Jones v Sutherland Shire Council [1979] 2 NSWLR 206, saying (at 231) that "[a] party to litigation may make an admission, not only of a fact, but also a conclusion from facts, a mixture of fact and law, or even of law". In Pitcher v Langford (1991) 23 NSWLR 142 (at 160), Handley JA accepted Mahoney JA's views. Kirby P agreed with Handley JA (at 147). In Dovuro Pty Ltd v Wilkins [2003] HCA 51, (2003) 215 CLR 317, Gummow J said (at [68]) that Mahoney JA's "statement state[s] the proposition too widely", and expressed doubt as to whether an admission could be made where it involves a conclusion depending on the application of a legal standard, and said that an admission of a breach of a duty of care was not receivable. Ward J discussed the unsettled position in some detail in Le Meilleur Pty Ltd and Others v Jin Heung Mutual Savings Bank Co Ltd [2011] NSWSC 1115, (2011) 256 FLR 240 at [293]-[296].

As in the case of Hopcroft & Edwards v Edmunds [2013] SASCFC 38; (2013) 116 SASR 191 (at [109]), the particular situation before me does not involve the application of a legal standard as such. Ms Craig is a clearly intelligent and commercially sophisticated person. That is apparent from her successful engagement in procuring significant grants under government bounty schemes, her provision of general manager services to the defendants, her provision of business consultancy services, her establishment of an investment vehicle for a superannuation vehicle for her family, and her involvement in property development and investment. She has been living in Australia for more than thirty years, prior to which she was living in South Africa.

In light of these considerations, I consider it appropriate to attribute some significance to the words Ms Craig used to describe the character of the monetary advances from the plaintiffs to the defendants. It is true that the words chosen by her to describe what occurred between herself and the defendants is implicitly suggestive of an equity interest as opposed to a debt interest, but I am primarily concerned with the selection of her words in the contemporaneous material that is in evidence. Ms Craig's use of the word "loan" is perfectly consistent with the complete absence, from all of her contemporaneous correspondence with the defendants, of any reference to an equity interest in, or any reference to an interest in the profits or any or expected revenue streams of, the Memjet technology or any other technology.

There were three principal witnesses called by the parties, namely Ms Craig, Mr Silverbrook and Ms Lee. I must say at the outset that I found none of them satisfactory.

One main difficulty confronted by Ms Craig of course was that the critical meeting (on 20 January 2000) which she purported to have an ability to recreate in some considerable detail took place in excess of ten years ago. Apart from some very minor notations of her own (allegedly written at the time), she has no contemporaneous note of the meeting. She reconstructed the alleged meeting from what are almost entirely the notes of the second defendant.

It is fair to say that the parties conducted a somewhat Bohemian lifestyle, especially in relation to their respective finances. Their financial affairs were unstructured and haphazard to say the least.

In each and every other case where a conversation is related by Ms Craig, it is reconstructed principally, it seems to me, from banking records.

In the end I am by no means satisfied that Ms Craig has any actual detailed recollection of many if not most of the events in respect of which she purports to give evidence. Given the passage of time and the lack of contemporaneous support generally (apart from banking records), the ability of any person to recreate at least at the level of detail asserted by Ms Craig is somewhat dubious.

I am equally satisfied however that the defendants have reconstructed their versions of events largely it seems not by reference to any clear or independent recollection of various events but rather in an argumentative fashion, to the effect that certain matters could not have been said by reason of other and sometimes extraneous circumstances which it is asserted did not exist at the various times of the alleged conversations.

Whilst a trial judge is entitled to make observations relating to the demeanour of certain witnesses, it is a notoriously crude and inaccurate methodology. Its defects have been exposed on numerous occasions.

In that regard, I am of course mindful of the comments of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 (at [30]-[31]) when they remarked (citations omitted): [30] It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly form the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Societe d Avances Commerciales (Societe Anonyme Egyptienne) v Merchants Marine Insurance Co (The "Palitana"): "... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." [31] Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility...

In the recent decision of McGraddie v McGraddie and another [2013] UKSC 58; [2013] 1 WLR 2477, the UK Supreme Court emphasised that, especially in cases where a trial judge is faced with a stark choice between irreconcilable accounts, the credibility of the parties' testimony, and the trial judge's assessment of the character of witnesses and the manner in which the witnesses give evidence, is of primary importance. Those observations are particularly relevant to the present case. Similar observations have been made in Australian authorities (Fox v Percy at [23]; Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 at [41] per McHugh J and see generally comments in Ritchie's Uniform Civil Procedure NSW at SCA s 75A.20).

In this case, I have considered it necessary to examine some aspects of the evidence in some considerable detail to arrive, as I have, at a very firm conclusion in the end.

Ms Craig impressed me as highly intelligent, organised and businesslike, especially in her approach to financial matters. She was numerate and was clearly very successful during, for example, the years she provided consulting services to the defendants and others in making claims under the Bounty (Computers) Act 1984 (Cth). She seems to have had a long-term association and interest in the information technology industry, and was, it seems, very familiar with applying for research and development concessions. She also, with her husband (a carpenter by occupation), was very experienced in property development.

She was, it seems to me, consumed by and extraordinarily focussed on matters of detail concerning her financial affairs. She kept many historical banking and other accounting records. At various points over the years, she was unsurprisingly anxious to take stock of where she was going financially. This, she alleged, prompted meetings with Ms Lee from time to time for the purpose of attempting various financial reconciliations. She was partly driven to do this in my view no doubt by reason of her personality but also by reason of the fact that her husband's ill health had placed an additional burden upon her in relation to matters of financial administration for her family.

However, there is little doubt that Ms Craig, her husband, Mr Silverbrook and Ms Lee had known each other for many years, and for a significant period (from at least the 1990s up to perhaps 2007) were probably very close friends. This was especially so of Ms Craig and Ms Lee.

Large sums of monies moved from each party to the other from time to time. Partly, this was due to consulting services performed by Ms Craig and/or Mr Silverbrook for each other. Loans certainly were made between the relevant parties. They clearly assisted each other when they could. Ms Craig was of course for a time the general manager of SRPL in the years 2001 to 2003. It is clear that Ms Craig knew a lot of people who worked for Mr Silverbrook (including his brother), and she frequently describes her "friends" at SRPL in her evidence. Her brother also worked there for a time.

One of the main questions in the case is, however, whether these monies (some or all) were loans or non-interest bearing advances or for services rendered or whether the arrangement in part became an arrangement whereby the parties relevantly pooled their resources in order to assist Mr Silverbrook commercialise his invention(s).

The plaintiffs' case can broadly be divided into two periods, namely the period up to the year 2000 and the period thereafter.

Long before the year 2000, Ms Craig asserts that she and for that matter Ms Lee recognised Mr Silverbrook's talents and went out of their way to encourage and enable him to leave his employment with Canon and set up on his own as an inventor.

There are perhaps three meetings of some particular significance; two in 1996 and another in January 2000, each of which is of considerable importance to the plaintiffs' case. In relation to two, there allegedly are contemporaneous notes which it is accepted were largely made by the second defendant and which Ms Craig insists were made by the second defendant at those meetings. However, a significant issue in the trial was whether such meetings ever took place as alleged by Ms Craig. It may be accepted however, that the two met from time to time over the years both in the workplace and socially. It may also be accepted that Mr Silverbrook would have had meetings with Ms Craig and Ms Lee as well from time to time over the years.

Ms Craig it seems became friendly with Mr Silverbrook from about late 1981. In the years that followed I am persuaded they developed a firm friendship and a mutual respect. For a time, they were both employed at Fairlight. Mr Silverbrook was however the first to leave Fairlight but maintained a role as a consultant thereafter. He clearly though remained in contact with Ms Craig.

After Mr Silverbrook commenced employment at Integrated Arts, I am satisfied that he persuaded Ms Craig to work for that company in or about March 1987. It was about at this time that Ms Craig met the second defendant who was studying law and was employed as the office manager and personal assistant to the manager of Integrated Arts.

By early 1990, the first defendant had become engaged by Canon as its executive director. He had designed some technology called "Seraph" which was a board and software that converted a colour laser copier into a full colour laser printer. However, the proposal was owned by Integrated Arts and all payments by Canon for Seraph went to Integrated Arts. Canon paid $500,000 for the proposal and although there was a possibility of a royalty stream, this did not eventuate.

From about August 1990, Ms Craig commenced providing specialised services to companies in the electronics industry under a Federal government scheme which had been established under the Bounty (Computers) Act 1984 (Cth). Ms Craig (through a corporate entity) provided services to clients who were local manufacturers of electronic microcircuits, computers, modems and other computer goods who were disadvantaged as a result of a change in tariff policy, which occurred at about that time. In that regard, I am persuaded that the second defendant and Ms Craig met regularly and referred clients to each other in relation to activities in connection with the bounty scheme.

Ms Craig asserts that in about early 1992 when Mr Silverbrook was at Canon he had developed a whole range of new consumer products mostly to complement the existing Canon range. She alleges that in about June 1992, Mr Silverbrook showed her a drawer full of product design documents relating to approximately one hundred and forty products. She asserts that she was most impressed by his ingenuity and industry, which was a significant factor in her later decision to "support him" to work independently.

Incidentally, the first defendant denies these events and asserts that there could not have been one hundred and forty such products or projects, but rather only twelve to fifteen. In any event, the first defendant asserts that they were documents which were confidential to Canon. Notwithstanding this conflict in the evidence, I am satisfied that Ms Craig certainly saw correctly in Mr Silverbrook an immense energy and creativity which impressed her such that she asserts that she sought (with the second defendant's cooperation) to encourage Mr Silverbrook to move from Canon. I am not persuaded, however, that the first defendant needed to be told how good he was, and he certainly outgrew Canon as it were anyway. Ms Craig also asserts that the second defendant informed her that she thought effectively Canon was not paying Mr Silverbrook very much money and that his skills and expertise were much more valuable. That may well have occurred.

The impression Ms Craig sought to create was that Mr Silverbrook was unhappy at Canon, and particularly unhappy being under-remunerated, and that Ms Lee was of the same view, and that jointly they tried to encourage him to leave. Mr Silverbrook, on the other hand, asserted in his evidence that he thoroughly enjoyed working at Canon and regarded himself as being on a good salary with use of a new company-supplied motor car. Further, Mr Silverbook indicated that his working conditions were more than acceptable, with a budget that he himself had primarily determined and a staff of about seventy under his direction. Further, he travelled extensively to the various Canon locations around the world and had a very stimulating existence whilst employed there. I am persuaded that for a time that situation was probably true.

Ms Craig asserts that she had a conversation with Ms Lee during this time, in which she told her that she and her husband would have some surplus funds as a result of a big fee she was about to receive for work conducted under the bounties scheme for AWA. Ms Craig insisted that she encouraged both Mr Silverbrook and Ms Lee to believe monies would be made available by way of spare cash to fund Mr Silverbrook were he to leave Canon. It was from this time that Ms Craig asserted that Ms Lee said to her that as her funds were made being available for Mr Silverbrook's inventions, the plaintiffs would in turn benefit from any such projects should they be successfully commercialised. As with many such conversations of this type, Ms Lee denied such a conversation had ever occurred.

Ms Craig asserts that in or about April of 1993 when she discovered that the first defendant was considering leaving Canon, a conversation took place in which she told him that her company, then Idameneo (later to become DLCA), was making plenty of money from fees and she would be prepared to make monies available to fund his research. She alleges that Mr Silverbrook said to her that he would have Ms Lee talk to her about the issue and that he would pay Ms Craig back "tenfold"; a phrase which Ms Craig asserts Mr Silverbrook habitually used. Mr Silverbrook denies using the term "tenfold" and asserts that he either used phrases such as "an order of magnitude" or "a factor of ten" when he intended to convey the notion of "approximately ten times as much". More to the point, Mr Silverbrook denied ever saying anything to Ms Craig whereby he indicated that she would receive back some multiple of what she had advanced or contributed. Insofar as it really is relevant to anything, I do not think the evidence supports the proposition that the term "tenfold" was habitually used by Mr Silverbrook at any point in time. I accept his evidence when he says it was not a term he used. Apart from the assertion by Ms Craig, there is no corroboration in my view that he used such a term. I also accept his evidence when he denied that he promised her some multiple of what she advanced, and I reject Ms Craig's account of that alleged meeting. I have little doubt he would have indicated she would be paid back.

Because they were all close friends for a number of years, I am satisfied that, from time to time, Mr Silverbrook and for that matter Ms Lee, would have told Ms Craig quite candidly where various projects and technologies were up to and indeed for that reason would have made no secret of many of their plans and expectations. They all clearly trusted each other, and there was no reason why they would not have shared a very large amount of information during the years when they were working together and before their obvious falling out.

In March 1996, Mr Silverbrook's company, SRPL, sold what was described as the LIFT technology to Kodak for approximately $6 million. I am satisfied the parties (Ms Craig, Mr Silverbrook and Ms Lee) discussed the sale and I have little doubt that Mr Silverbrook would have been quite candid in telling Ms Craig what had occurred. Again, he had no reason to keep it from her. But Ms Craig insists however that during the course of a particular conversation, Mr Silverbrook said that "he could not have done it without Des and me". Ms Craig asserts that Mr Silverbrook went on to say that he wanted to meet with her to work out where they were up to with the advances and how monies could be paid back to she and her husband. Mr Silverbrook denies that he ever said to Ms Craig that he could not have achieved the sale of the LIFT technology to Kodak without Ms Craig's assistance. Again, in my view, nothing in particular turns on this, but I am inclined to accept Mr Silverbrook's denial.

Ms Craig and interests associated with her assert that she/they had advanced, to SRPL, some $418,248 as at 30 November 1995. Whilst there may be a dispute about the precise amount advanced, I am satisfied that considerable funds were in all likelihood advanced by Ms Craig and/or her interests in the period 1992 to the end of 1995 to one or more of the defendants. Some of those monies, I am satisfied, were loans, and some were for the provision of professional services. Equally, I have no doubt that, out of friendship and trust, and a very significant degree of respect for Mr Silverbrook's talents, Ms Craig was prepared to advance monies in the expectation that she would however, in due course, be repaid. The extent of their friendship and trust never extended to either fixing a time in which the amounts were to be repaid nor for that matter that any interest be payable on the advances. This mutual respect for each other professionally clearly extended to performing services for each other from time to time.

Ms Craig asserts that shortly after she was told in March 1996 of the successful sale of the LIFT technology to Kodak, she and the second defendant met at SRPL's offices in Sydney. She asserts that she took to the meeting some accounting records and a spreadsheet recording the total payments she had made for the purposes of discussing a reconciliation process. She further asserts that both the first and second defendants were present at the meeting, but the first defendant did not actively engage in the discussion. This meeting, along with another in 1996, is of some considerable significance for the plaintiffs' case.

Ms Craig asserts that she told the second defendant that she had prepared a spreadsheet that showed all of the payments made by one or more of the plaintiffs to one or more of the defendants from 1992 to the end of 1995, and that the total amounted to $418,248, and that the second defendant agreed with that figure.

The first defendant simply denies that the meeting took place at all or that Ms Craig provided any services to SRPL. The second defendant, acknowledging, as she must, that SRPL sold patents relating to the LIFT technology to Kodak for approximately $6.6 million in March 1996, nonetheless denied having such a meeting or having such a conversation with Ms Craig. She denies ever being presented with any spreadsheet totalling $418,248 and further denies ever having agreed that that amount was provided or represented a total amount provided by Ms Craig or any company associated with her.

Ms Craig asserts that during the course of this conversation, she said that although the arrangements were informal she wanted to make sure that their respective financial commitments one to the other were, as she put it, "netted off" (at [119] of Ms Craig's affidavit of 2 March 2012). Ms Craig asserts that she saw the second defendant tick the amounts on her spreadsheet and draw a line under the June 1994 advances. She further alleges she saw the second defendant write $200K on the spreadsheet and then she asserts that the second defendant told her that she would pay Ms Craig and her husband an amount of $200,000 as a repayment of the amounts that Ms Craig had provided to Lee Edison prior to the incorporation of SRPL (at [120]).

In addition, Ms Craig asserts that the first defendant said to her again that the achievements that had occurred to date could not have been done without Ms Craig and her husband's help, and further, that a lot more money would be made out of the next sale, but that it was important to ensure that there was enough capital to continue the work. Ms Craig asserts that the second defendant promised that she and the first defendant would come to some arrangement or make a deal with Ms Craig and her husband. Ms Craig asserts that her understanding effectively was that the balance of the monies which were owed (approximately $218,000) would be left in the coffers of SRPL and used for further development of what she described as "our project".

It appears that on or about 24 April 1996, two cheques, each for $100,000 were received by Ms Craig from SRPL. The cheques were, it seems, sent by courier to Ms Craig's house at Gosford.

The first defendant asserts that some of that amount was for services rendered by Ms Craig and part of it was a gift. So far as the second defendant is concerned (at [121] of her affidavit of 5 July 2012) she asserts that after the sale of the LIFT technology to Kodak "Kia wanted to give Ms Craig and Mr Craig money to help them financially and that he paid to them $200,000".

There is no issue therefore that $200,000 was paid on any view of it. According to the first and/or second defendant, part, if not all, of the monies were by way of a gift. Ms Craig clearly asserts it was in part a repayment of monies outstanding. There is however a dispute about how much was allegedly outstanding at the time, by the defendants to the plaintiffs or vice versa. Further, there was a vigorous dispute about whether and if so what conversations took place. Ms Craig asserts that the second defendant retained a copy of "my spreadsheet", which was, however, not available in the course of the trial.

It was put to Ms Craig in cross-examination that effectively the spreadsheet did not exist, and that the second defendant never agreed to the relevant amount, and that the calculation of the amount of $418,248 only came into existence when proceedings were started. Ms Craig denied that that was the case and further denied that she had made up the story of the meeting and for that matter the spreadsheet.

She was asked to concede that in 2008, when she attempted a further reconciliation, the actual amount she had then calculated as outstanding as at the end of 1995 was $390,812 (T98.35). Ms Craig accepted that there were errors in her 2008 reconciliation and that she did not in 2008 have the documents that she had with her at the end of 1995 and in April of 1996 (T99.25).

In the course of one of her many answers on the topic, and by way of explanation for such differences in the various amounts, she stated that her affidavit (which I took to be her principal affidavit in the proceedings of 2 March 2012) took her approximately two years to compile. She said she had started the process in 2009 (T101.4). This has some significance for reasons that will appear later.

I am prepared to accept that she may well have met with one or other of the defendants in 1996 in order to attempt some form of reconciliation. I certainly would not rule it out as a possibility, given Ms Craig's concern to attend to her financial affairs. However, I found her explanation as to why there were differences between the reconciliation she was able to do in 1996 as opposed to the one she asserts she did in 2008, unconvincing and unsatisfactory. Essentially she blamed a lack of time in 2008 (when compiling the materials) for the errors in the "reconciliation". She in effect agreed (T100.20-T100.24) that the schedules to the pleading (the schedules) particularising, as they do, the figure of $418,248, was the first time the figures appeared in a "full schedule like this". It is worth noting that there does not appear to be any contemporaneous document in existence (that is, one created in 1995 or 1996 supporting the $418,248 figure).

Following receipt of the two $100,000 cheques, Ms Craig insists that she attended a further meeting at 214 Catherine Street, Leichhardt (a property owned by the defendants). Her affidavit appears to suggest that the meeting (which is dealt with at [123] of her affidavit) occurred shortly after 24 April 1996, when she received the cheques. However, in her evidence, she corrected that to suggest that the meeting in fact that she was referring to took place in November 1996. She was able to identify the date because she recalled doing some work in relation to a tax concession which she prepared in or about November 1996 seemingly for the defendants.

During this meeting, Ms Craig asserts that the first defendant explained that he and others were doing further development on the LIFT technology and a project called "Artcam". Ms Craig said that she retained a document from the meeting which she asserted recorded the first and second defendants' notations on it and from which she had refreshed her recollection for the purposes of setting out the detail of a somewhat lengthy conversation she asserts took place during the meeting.

The piece of paper (which became Exhibit P3) was one of two important notes (the second of two pages said by Ms Craig to be created in 2000) in largely the first defendant's and/or second defendant's handwriting, which were allegedly given to Ms Craig in the course of the meetings held between herself and them. Ms Craig of course had asserted earlier in her affidavit (at [53]) that during her meetings with the second defendant from time to time, it was the second defendant's "common practice" to write "our" plans and proposals on plain paper or on the back of documents. She asserted that she did not retain copies of all such notes she was given from time to time.

Ms Craig (at [123]) sets out in the first person a lengthy conversation which she says took place between herself and both the first and second defendants, and which concerned what was described in the course of the conversation according to Ms Craig, as the further development of the LIFT technology.

By reference to certain parts of the handwriting and/or printing on the document (Exhibit P3), Ms Craig asserts that at various points in the conversation the second defendant and/or the first defendant wrote words or printed words on one side of the page. The reverse side comprises some jottings, but mostly numbers and/or calculations. The implied purpose of the meeting was to keep Ms Craig updated with the most recent developments of the particular technology, and in particular the project Artcam.

The first defendant denies that such a meeting took place. However he accepts that the document (Exhibit P3) is a document that he and the second defendant worked on as the checklist of the information required for a research and development tax concession. He asserts in his affidavit (at [60] of the affidavit of Kia Silverbrook dated 3 July 2012) that he and the second defendant prepared this type of document on many occasions. He denied that he would ever have referred to Artcam as being a "further development of the LIFT technology". He asserted that it was a separate technology to LIFT and in any event Artcam did not begin as a concept until 1996, after he had completed the sale of the LIFT technology to Kodak. The first defendant agreed that the notes were created in 1996 and relate to the overall technologies required for Artcam. He denied in particular that he would ever have said ninety patents were sold to Kodak, as Ms Craig contends, as precisely fifty seven provisional patent applications were in fact sold to Kodak of which forty four were filed as complete patent specifications. I will return to a more detailed consideration of the first defendant's evidence below. For reasons however that emerged in his cross-examination, he was not entirely credible on aspects of this conversation.

The second defendant said she did not recall such a conversation but agreed that she and first defendant created the document. However she denied that the document was created in the presence of Ms Craig. She confirmed what the first defendant had said, namely that the document identified matters that were to be dealt with in a submission by SRPL for a research and development tax concession for original research and development for Artcam. Although she could not recall the date that the document was created, she recalled that the closing date for submissions for such tax concessions was the end of April each year, and that it was her practice to commence drafting the submissions at or about that time.

In her affidavit filed in the proceedings, Ms Craig had only referred to the writing on one side of the document. Ms Craig was asked some questions about why her affidavit in these proceeding omitted any reference to the calculations on the reverse side of the document. She volunteered that the explanation had indeed appeared in an earlier version of her affidavit which, in its original form, was apparently some four hundred pages, and it had been omitted (T104.40-T104.45).

Counsel for the defendants made a call for the previous affidavit. In due course a portion of an affidavit seemingly dated 23 July 2010 (at a time when the plaintiffs were apparently self-represented) was produced to the court. The first part of the affidavit is identical to that portion of Ms Craig's affidavit in these proceedings. However, in her earlier affidavit, she does purport to give some explanation in relation to the reverse of the document.

In the previous version, Ms Craig asserts that she saw the second defendant write the numbers 5,686,323 on the sheet of paper. In the course of doing so, she asserts that the second defendant indicated that she had paid the first defendant $30,000 for his shares and that he had made a capital loss of $2,843,164, which again Ms Craig asserts she saw the second defendant write on the piece of paper. Indeed that figure appears on the page. She also points to the number "$30K", which also appears on the sheet of paper. Ms Craig also purports to indicate that the numbers "2.5" and "6", which appear also on the page along with the number "1.9", were all referred to by the second defendant in the course of the conversation. She went on to indicate that the second defendant did other calculations on the sheet at the time, and she could not recall what all of the calculations related to.

In the course of her previous affidavit, in order to substantiate or corroborate the figure of 5,686,323, Ms Craig makes reference to an extract from the Integrated Arts Limited 1988 Annual Report which apparently showed that the number of shares held by the first defendant at the date of the report were 5,698,252 which Ms Craig asserts in her affidavit was "similar" to the figure she asserts the second defendant wrote on the page.

Given the way in which the matter developed at the trial, neither the first nor second defendant were privy to that portion of Ms Craig's earlier affidavit. Neither of them gave any evidence in the end about Ms Craig's assertions about what took place at the meeting in relation to the calculations on the reverse side of Exhibit P3. I should also observe however that counsel for the plaintiffs did not put to the first or second defendants Ms Craig's assertions about the alleged conversation about the purchase of shares for example, nor was there any attempt objectively to prove the matters true. In other words, there was no attempt to corroborate this detail provided by Ms Craig as to the jottings on the reverse side by cross-examination or otherwise.

Ms Craig accepted that she had reconstructed the conversation that she asserts took place (at [123]). She rejected any suggestion that she had simply made up the narrative based on, in effect, inferences she had drawn from writings on either side of the page.

It should be noted that the original of Exhibit P3 was in fact discovered by the plaintiffs. When asked how she came to possess the original, Ms Craig indicated that it was given to her at the meeting by one of the defendants (T114.40-T114.42). It should also be noted however that there is no reference in her affidavit, nor in the extract from her earlier affidavit of July 2010, to her receiving the original at the alleged meeting with the first and second defendants. There was a general allegation by the defendants that whilst working as general manager, for example, Ms Craig took certain possession of certain documents and/or information belonging to the defendants. For reasons I later come to, I certainly think there is much substance in such a suggestion.

As close and trusted friends, it may well be that the first and second defendants and Ms Craig had some general discussions about Artcam. It may also be the fact that they discussed aspects of a possible research and development tax concession. I note of course that both the first and second defendants deny that such a meeting took place, but I am not necessarily persuaded that that is in fact the true position. However, I have grave misgivings about accepting the proposition that either of the defendants would have given such a document to Ms Craig. The references on either page are cryptic and by no means self-explanatory. There is no suggestion that Ms Craig had any particular need for the document. Ms Craig did not make any contemporaneous note of the meeting herself, and hence felt no need to make one, presumably. However, as I have already observed, she and the first and second defendants, I am satisfied, would have talked freely to each other about various financial matters at times when they had money and certainly at times when they did not. No doubt they discussed matters concerning what technology was being developed.

On balance, I am of the view that Ms Craig most probably took this document (i.e. Exhibit P3) along with other documents from the defendants' possession at some point when she was general manager. Her account of the meeting is, I think, contrived. I have formed this view for a number of reasons. Her ability to recreate the conversation in such detail dating, as it does, from 1996 is somewhat implausible in the absence of any contemporaneous note of her own. Undoubtedly she did her own investigative work to discover the number of shares in Integrated Arts. The technique she adopted in relation to this note is similar to that which she later adopts in relation to the January 2000 meeting. It involves, I am satisfied, simply contriving a narrative to conform to the handwritten notations. I am satisfied that more probably than not, this document is a remnant of musings between the defendants as opposed to a meeting with Ms Craig. I do not think a meeting took place of the sort alleged by Ms Craig, and I accept the defendants' denials in that regard.

From about September 1996, Ms Craig and her husband had commenced the development of four units in Frederick Street, East Gosford. One of the units, Unit 1, is the subject of a substantive issue in the trial. I will return to that matter in more detail later.

The parties, it must be said, conducted their financial dealings in a most unorthodox and informal way, which led for example from about June 1998, to Ms Craig providing signed but blank cheques from the DLCA cheque book to the second defendant for her use from time to time. The reverse also occurred. Ms Craig asserts in her affidavit (at [150]) that whenever such funds were required, she understood that they were to be used for "our project". She asserts that she provided the blank but signed cheques because of her "commitment to our common goals". She refers to four cheques which fall into this category, all signed and provided to the second defendant (or entities associated with her), and which totalled around about $70,000 in June 1998. Generally, the second defendant denies the alleged purpose of these cheques, but not the fact that they were given to her.

Further, in early June 1998, Ms Craig asserts that she recalls receiving a telephone call from the second defendant indicating that patent applications needed to be filed in the United States by 15 July 1998 and that the second defendant requested that Ms Craig provide some funds for the filing fees in the United States. Although in straightened circumstances herself, Ms Craig asserts that on or about 6 July 1998 she ordered a US dollar bank draft in favour of the Commissioner of Patents and Trademarks to the value of US$31,000. She said she felt unable to refuse the requests because she wanted, she says, to keep the "project" alive, and therefore on 8 July 1998, she met the first and second defendants at the airport and handed over the bank draft.

Much of Ms Craig's account on this issue is denied by the second defendant who says she does not recall meeting Ms Craig at the airport but does not deny that the meeting could have taken place. She is unable to provide any explanation for the US dollar bank draft, but denies having to rely upon funds from Ms Craig at that point in time. The second defendant attempts to explain away the draft on the basis that it was part of an informal practice from time to time that monies were advanced or loaned or transferred from one to the other for various reasons. It seems to me the evidence in relation to the bank draft is compelling and I have little doubt that, probably as a result of a request by the second defendant, Ms Craig assisted the defendants by providing the bank draft in early July 1998. However, I also consider it was a slightly more exotic example of the very informal arrangement the parties had with each other.

In early January 1999, Ms Craig's husband told her that he had found a property close to the beach at Pearl Beach. Following their discussion, they decided to acquire the property as part of their property development activities. Ms Craig asserts that at or about the same time, the second defendant told her that she needed about $100,000 "to keep things going". Ms Craig alleges that she told the second defendant that she and her husband in turn needed about $200,000 for the settlement of Pearl Beach. She said that she explained to the second defendant that if monies were provided she and her husband would be short, to which the second defendant responded that "they" were getting close to finding a buyer and that once the first defendant sold the patents they would meet to discuss "our equity share". As a result, Ms Craig asserts that she told the second defendant that she could only afford to provide $75,000 because they did not want to lose out on the Pearl Beach property. Further, she allegedly provided four blank cheques and sent them by a courier to the second defendant. In turn, she asserted she authorised the second defendant to draw upon those cheques to the total amount of $75,000. Ms Craig asserts that on 21 January, 25 January and 8 February 1999 the second defendant negotiated those cheques to an approximate total of $75,000.

The second defendant denies that such conversation took place and denies ever asking Ms Craig for funds at this point in time, and also denies indicating that she would meet to discuss any equity share with Ms Craig. I am by no means satisfied, in the absence of a contemporaneous note or other corroboration that the notion of an equity share was mentioned.

Ms Craig asserts that as a result of providing the $75,000 to the defendants at the same time as developing Pearl Beach, this created a degree of financial strain on she and her husband. As a result, they decided to investigate taking out a mortgage on Units 2 and 3 of the Frederick Street development, but she asserts they had decided to keep Units 1 and 4. In the end, a loan of $500,000 was raised with Westpac on the condition that the bank took a mortgage over Units 1, 2 and 3 of the Frederick Street development and their property at 17 White Street, East Gosford. However, this and other property dealings need to be considered in detail and in context, which I deal with again below.

In or around February 1999, Ms Craig asserts that she received a telephone call from the second defendant indicating that the first defendant had received an offer of $50 million from Philips for Artcam. Ms Craig asserts a discussion took place between herself and the second defendant about a possible sale of the technology and that the second defendant told her that she and the first defendant were looking for an investor to fund the development of a prototype. The discussion however progressed to the question of the possibility of the defendants needing further funds and a request that Ms Craig give consideration to advancing some of those monies which had been raised in connection with the Pearl Beach development for the use by the defendants. Ms Craig asserts that at a meeting at her home in East Gosford, the first and second defendants talked about the need for a further $400,000 and it was at this meeting that, in the presence of her husband, the first defendant again used the phrase "tenfold" as an indication of the return which she and her husband would receive from funds invested. Ms Craig again asserts that during the course of this conversation the first defendant thanked she and her husband for their help and the second defendant reiterated that "our deal" would include an equity share in the technology on the part of Ms Craig and her husband. Ms Craig's husband does not, however, corroborate the use of the word "tenfold" by the first defendant. I reject Ms Craig's evidence on this latter aspect for reasons I have already given. I am also not satisfied that the second defendant used the term "our deal" again in the absence of corroboration.

The first defendant does not give an account of this meeting. However the second defendant denies any discussion concerning a $50 million offer from Philips. Further, she asserts that she recalls a visit to Ms Craig's home in February 1999, but denies ever raising a question of an equity share at such a meeting and also denied ever having raised the question of Ms Craig or her husband contributing a further $400,000. Ms Craig however asserts that she gave nine blank cheques to the second defendant, each signed by herself. Ms Craig asserts further conversations took place in March 1999 concerning the $400,000. The second defendant denies these conversations as well. The second defendant also denies any knowledge of the cheques or the amounts for which they were drawn. Ms Craig asserts however (at [225]) that she authorised the second defendant to draw cheques to a total amount of about $400,000. Again, the movement of funds from one side to the other is considered elsewhere. There is little doubt, on Ms Craig's schedule of payments, that some $716,171.26 was provided by Ms Craig and her interests to the defendants in 1999. The defendants, however, in that year, again according to Ms Craig, only advanced approximately $75,000. But in the year 2000, the defendants advanced around $623,000, whereas Ms Craig advanced only $40,000.

Ms Craig alleges that further transactions occurred between she and the second defendant from time to time in which monies were advanced. That is obviously correct. The second defendant largely denies the conversations alleged and/or has no recollection of the funds moving from one party to the other. However, given the frequency with which these transactions seemingly occurred and the total informality adopted by the parties, I am unable to accept to a large extent the defendants' denials. Equally however I have grave misgivings about Ms Craig's ability, in the absence of any contemporaneous notes, to reconstruct the rather elaborate detail as she does concerning these transactions. She has accepted that her banking records are really all she has to go on and either she has an incredibly good memory in the absence of any contemporaneous notes or the conversations are in large measure contrived.

Ms Craig asserts that on or about 27 June 1999, she received a telephone call from the second defendant who told her that the first defendant had found an investor for Memjet. Ms Craig said that she asked the second defendant questions about the time frame, and about how much the person was going to invest, but also told the second defendant that she and her husband were "out of money" (at [251]). Ms Craig asserts that the second defendant said that the deal would be done within the next few months and that the investor had "loads of cash". She also asserts that the second defendant said that the deal was for many millions of dollars, which would be invested in the development of a working prototype and that she and the first defendant would compensate Ms Craig and her husband for the use of their Mortgage Equity Account and that they would be making an equity deal with she and her husband. Again apparently the second defendant said that they could not have done "any of this" without "their" help and as a result, Ms Craig asserts that she "reluctantly" drew down further on the Mortgage Equity Account in the sum of $61,560. I am satisfied some of these conversations could well have taken place and that in 1999 (accepting the plaintiffs' schedules) the defendants needed and obtained cash from the plaintiffs. I am also persuaded the second defendant would have told Ms Craig about Mr Ray Stata and the potential for his investment. I am not persuaded the notion of an equity deal was mentioned, in the absence of corroboration.

The second defendant denies such a conversation and any mention of an equity deal, and I accept her denial. Further, she asserts that the first defendant was not looking for and had not found any investor at that time. Instead she asserts the first defendant was trying to find a chip fabricator which could be used to gain a proof of concept of the MEMS device (micro electrical mechanical systems chips). She denies having used the term "loads of cash".

The first defendant, however, accepts (at [71]) that a Mr Ray Stata asked him in around July 1999 whether he could invest in the first defendant's business. The first defendant asserts that he rebuffed Mr Stata at that point, indicating that he had been "badly burnt" by venture capitalists in the past and was not interested in an investment at that point. The next conversation he had with Mr Stata, he asserted, was not before December 1999.

The parties agree that they all attended Ms Craig's daughter's engagement party in August 1999. During the course of the evening, Ms Craig asserts a number of conversations took place about both the extent of the development of the technology and funding for it. Further, Ms Craig asserts that more detail about Mr Stata and his potential investment was provided by the first defendant and/or the second defendant. It was a few days later, according to Ms Craig, that she received a telephone call from the second defendant and she asked for more information about Mr Stata. The second defendant, according to Ms Craig, told her that Mr Stata was going to invest millions of dollars and asked whether Ms Craig could advance more funds. She allegedly complied in due course.

Again, the second defendant denies that she ever said to Ms Craig that she was working on agreement details with Mr Stata and indeed asserts she was not. She also denies asking Ms Craig for a further advance and has no recollection now of why monies were transferred by Ms Craig to one of the second defendant's corporate entities. Again, I am prepared to accept Ms Craig when she asserts the second defendant sought monies by way of advances.

Ms Craig asserts that during the latter part of 1999, she and her husband were concerned at the depletion of their Mortgage Equity Account and that they were running short of money. She asserts that she asked the second defendant on numerous occasions for an update on when the monies were going to come in from Mr Stata. Ms Craig insists that the second defendant asserted on numerous occasions that it would occur very soon.

Ms Craig asserts that on or about 23 September 1999, the second defendant rang her and told her that she and the first defendant had an idea as to how to assist Ms Craig and her husband. She proposed that they would buy two units from Ms Craig and her husband, which would then assist Ms Craig to pay out their mortgage. The second defendant apparently further volunteered that when the "money came in" she and the first defendant would give the two units back to Ms Craig and her husband unencumbered. The second defendant allegedly said that the units would be "safe" and they would hold them on trust for Ms Craig and her husband (at [270]). The trust arrangement, according to Ms Craig, was only put in place ultimately in relation to one unit. For reasons I later come to, I am not satisfied the question of a trust was ever discussed as alleged by Ms Craig.

The second defendant, in her affidavit (at [185]-[186]), asserts that she had wanted to buy a property in the Gosford area for family reasons for some time. She accepts that she gave consideration at some point prior to October 1999 to purchasing two units at Frederick Street, Gosford. However, the corporate entity, Broadwater Rest, only purchased Unit 1. Nonetheless the second defendant denies telling Ms Craig that she would purchase the properties and hold them on trust for either Ms Craig or any corporate entity associated with her. She asserts that it was her intention at all times to purchase the units outright and to include them as part of her property business.

The second defendant asserts that in about September 1999, she obtained a property valuation of the Frederick Street unit from Michael J Dick and Associates Pty Limited. Following receipt of the valuation, she sent a letter to Ms Craig on 7 October 1999 which confirmed an agreement to purchase the unit. Broadwater Rest purchased Unit 1 in late 1999 for $262,000 with settlement in early 2000.

In relation to Unit 2, Ms Craig asserts that she received an offer for Unit 2 at $255,000 which was ultimately accepted. On the same day (i.e. 7 October 1999) a letter of offer for Unit 2 was received from Broadwater Rest for $246,000.

Ms Craig asserts that she telephoned the second defendant to ask for an update on how the negotiations were going with the Stata deal. Again apparently the second defendant stated that she and the first defendant would compensate she and her husband when the "equity deal" was done, but indicated that the deal was progressing slowly. By this time, Ms Craig asserts that she had received an offer on Unit 4 which in fact she wanted to keep, but as pressure was mounting financially, on 18 October 1999 Ms Craig and her husband accepted an offer of $258,000 for Unit 4 from a third party. At the same time, Ms Craig and her husband instructed their agent to show buyers through Unit 2. By 1 November 1999, she and her husband had received an offer of $255,000 for unit 2, at which point Ms Craig informed the second defendant of that fact. Ms Craig asserts that she told the second defendant in the course of that conversation that she had comforted her husband by telling him that the defendants had agreed to compensate herself and her husband for the "premature sale of the units at the time that we made the equity deal". Ms Craig asserts that the second defendant said she would not let she and her husband down. The second defendant again denies any notion of a promise of an equity deal. I am again by no means satisfied that an equity deal was mentioned, but clearly, the second defendant and Ms Craig were discussing the sale of the units.

However, undaunted by their financial pressures, Ms Craig and her husband it seemed viewed a property at 22 Lushington Street, East Gosford. Apparently they could not resist it, as commercially it was a good buy and Ms Craig says she was able to arrange a mortgage from Westpac in order to acquire the property by way of refinancing two other properties at 17 and 19 White Street, East Gosford. In the meantime, she and her husband had sold Unit 2 to a third party. By agreement between Ms Craig and the second defendant, the second defendant provided an early release of the deposit of $26,200 for Unit 1 in order to assist Ms Craig and her husband purchase the property at 22 Lushington Street, East Gosford.

Ms Craig asserts that the first defendant rang her and assured her that the Stata deal was almost complete and that he and the second defendant were very excited. Ms Craig asserts that she mentioned to the first defendant that the second defendant had talked about a proposal regarding an equity deal. Ms Craig asserts that the first defendant agreed and said that he and the second defendant had discussed a deal that he thought would make "me and Des very happy" (at [314]).

A few days later, Ms Craig asserts that she had a conversation with the second defendant and told her she was coming to Sydney and that the second defendant indicated that she wanted to see Ms Craig to outline the "deal" proposed for Ms Craig and her husband. The second defendant apparently told Ms Craig that she and the first defendant had found the "right investor" and that he had "loads of money to invest". At the same time however the second defendant apparently asked if Ms Craig could advance $50,000, to which she apparently indicated that she was not then in funds and that she and her husband were living off their Mortgage Equity Account, plus an overdraft. Ms Craig indicated that she would have some money to spare when there was a settlement on the sale of Unit 4. The second defendant denies the substance of this conversation and certainly denies ever saying that she would meet to discuss any equity arrangement. I am again prepared to accept that some of this discussion took place, but I am not satisfied the notion of an equity deal was mentioned.

On 23 November 1999, Ms Craig asserts that Westpac approved she and her husband's application for an increase in the credit limit of their Mortgage Equity Account from $360,000 to $420,000. A few days later, on 26 November 1999, the sale of Unit 4 settled. Ms Craig asserts that she made an advance of approximately $50,000 on 26 November 1999 in favour of Allplaces Pty Limited, a corporate entity controlled by the second defendant.

Ms Craig asserts that again on 9 December 1999, the second defendant asked for a further advance of funds, to which she indicated she could only "do" $15,000 at that time. Ms Craig told the second defendant that she needed monies for the further development of Pearl Beach. Nonetheless, on 9 December 1999, she asserts she wrote a cheque in favour of Ms Lee in the amount of $15,000.

On 7 January 2000, the title of Unit 1 of 49 Frederick Street was transferred to Broadwater Rest, and Broadwater Rest paid the balance of the purchase price, namely $234,734.74, to DLCP. On 1 February 2000, the sale of Unit 2 of 49 Frederick Street also settled, with proceeds of $230,141.24 being paid into DLCP's account.

The second defendant does not recall the payment to Allplaces of $50,000 nor does she recall it seems requesting the monies. She asserts however that in December 1999 she and the first defendant travelled overseas and hence denies that she could have had a discussion with Ms Craig during December of that year. She agrees however that the final amount as asserted by Ms Craig was paid by Broadwater Rest in early January 2000.

I accept that during 1999 Ms Craig and the second defendant probably had many discussions concerning advancing funds in the context of their respective financial positions. No doubt they discussed the acquisition by the second defendant of one or more of the units at Frederick Street. I am not satisfied however the defendants or either of them discussed any equity deal with Ms Craig or made any such promises. Part of my reason for this is the total lack of any relevant contemporaneous support for such a notion. I am equally unpersuaded by Ms Craig's assertion of the supposed trust arrangement in relation to Unit 1 at Frederick Street again because of a lack of contemporaneous support.

Ms Craig however sets out in some considerable detail what she says occurred during a meeting which she says took place on 20 January 2000.

Ms Lee and Mr Silverbrook deny any such meeting took place and deny that any arrangement or understanding as asserted by Ms Craig was reached at that meeting or otherwise.

There are two pages of handwritten materials, allegedly emanating from the meeting of 20 January 2000, which were marked Exhibit P4 in the proceedings. The first page contains, entirely so it seems, the handwriting of Ms Lee. The second page contains almost entirely the handwriting of Ms Lee but some very minor additions made by Ms Craig. In her affidavit, Ms Craig describes the first page as the "Memjet Marketing Plan", and the second page as the "Equity and Cash Document". I refer to these pages as Document A and Document B respectively.

Ms Lee and Mr Silverbrook (insofar as he made any contribution) assert that the documents are internal musings which somehow or other disappeared from their files at some point, and found their way into Ms Craig's possession.

It is also alleged that Mr Silverbrook was there for the first part of the meeting which took place, according to Ms Craig, in his office. The second part of the meeting allegedly took place in Ms Lee's office, just between Ms Lee and Ms Craig.

According to Ms Craig, the meeting took most of the day, with lunch intervening at a café in Balmain.

Again, according to Ms Craig, she and her husband had travelled to Sydney from Gosford for the purpose of the meeting. Mr Craig remained at the hotel they stayed at in Darling Harbour, where Ms Craig rejoined him later in the afternoon to apparently tell him that an arrangement had been made between their interests and those of Mr Silverbrook and Ms Lee.

However, it seems the object and purpose of the meeting was to discuss where the parties were up to in terms of their respective financial dealings and, according to Ms Craig, to set the scene for contributions or financial dealings going forward.

It is accepted by Ms Craig that she made no contemporaneous note or notes of the alleged meeting of 20 January 2000 at any time or afterwards, but for her brief jottings on Document B.

Although many years passed before Ms Craig apparently sat down to compose what she said occurred on this and on other occasions when she spoke to Ms Lee and Mr Silverbrook, she purports to have a clear recollection of a very large amount of detail which she says was the subject of discussion at this meeting.

Before embarking upon a detailed description of what occurred at the meeting, she describes, in the second part of the meeting for example, Ms Lee as having, to her left hand side as it were, on the table, a bundle of documents. They were apparently secured by a bulldog clip. In turn, Ms Lee apparently took out the two pages which have typescript on the front and wrote on the blank reverse sides. At the end of the meeting, Ms Lee allegedly put the two pages upon which she had made written notations, together with the other documents in the "Bundle", secured it again with a bulldog clip, and handed all of the documents to Ms Craig. It is apparent from the documents (Exhibit P4), that they comprise some twenty-one pages. Apart from the two pages, which have handwriting on their reverse sides, the other pages are a sequence of documents commencing with a covering letter from Robert E. Bicknell Pty Ltd, a quantity surveyor in respect of a property which at some point was owned by Ms Lee, and which comprise a detailed bill of quantities. It is not in issue that the particular property was not the subject of any discussion at the meeting of 20 January 2000, nor is it immediately clear in the circumstances where the documents were loose pages, why Ms Lee would have handed (apart from perhaps the two handwritten documents) the balance of the "bundle" to Ms Craig at the end of the meeting. They were utterly irrelevant as I say, to anything discussed.

In her evidence, Ms Craig purports to bring to life a number of words, figures and squiggles on Documents A and B. In some instances, she asserts that calculations were done which do not appear on either of the pages but which she can apparently recall being done on a spreadsheet on a computer screen and having refreshed her memory from the notes. She asserts that at the end of the meeting, although Ms Lee gave her the bundle papers to take away, this did not include a copy of the spreadsheet. Ms Craig it seems did not ask Ms Lee for a copy of it. She however placed the bundle of papers into a plastic envelope for safe keeping.

Ms Craig asserts in her affidavit that she arranged to spend two days in Sydney on 19 and 20 January 2000 (at [334]). She further asserts that she called the second defendant to arrange a meeting and a date was fixed for 20 January 2000. Ms Craig has no diary entry or seemingly any other piece of paper supporting the fixing of the meeting on 20 January 2000. I should say in passing that rather than having set two days aside Mr Craig gives what on one view is quite contrary evidence, namely that he and his wife drove from Gosford on the day of the meeting which he simply fixes as "in or about January 2000", again without the benefit of any diary, and asserts that he dropped his wife off to attend a meeting in Balmain and then apparently returned to the hotel he and his wife were staying at in Darling Harbour. No material corroborating the alleged stay at the hotel was provided.

Ms Craig asserts that she took a copy the suspense transaction report from DLCA and DLCP to the meeting and which she had previously sent to the second defendant. One particular purpose of the meeting, at least according to Ms Craig, was to reconcile the names of the entities in favour of which the second defendant had drawn blank cheques which had been left with her by Ms Craig.

The detail of what Ms Craig says transpired at the meeting is set out over approximately one hundred and thirteen paragraphs.

Ms Craig sets out an exercise described as a "chronological analysis" (at [353]) of each of Documents A and B. Ms Craig asserts the second defendant wrote all of the words on the page either when the first defendant was speaking or when the second defendant herself made some contribution. At various points in her recitation, Ms Craig elaborates, sometimes by the use of direct speech, sometimes by a narration, what she asserts either the first defendant and/or the second defendant said about various of the items noted on the page.

Ms Craig's account of what discussion took place in the first part of the meeting is very largely assertions to the effect that she saw the second defendant write the various words and figures on the page. It is, as compared to her account of the second part of the meeting, a relatively brief account.

She describes however, in some detail, the sequence of events the second defendant followed for the process.

According to Ms Craig, those in attendance at the alleged meeting in the first instance were Ms Craig and the first and second defendants. Ms Craig asserts that the first defendant initially spoke about his plan to build a prototype of the Memjet printhead and controller chips. She describes in some considerable detail how the first defendant pulled up a chair next to her and moved his computer screen so that she could see it. She also recalled the second defendant pulling up a chair at the same desk. What followed was a detailed explanation of Memjet by the first defendant.

Apparently in the course of this presentation, Ms Craig asserted that the first defendant said that one "printhead wafer" had thousands of tiny nozzles which were not visible to the human eye and that the inkjet droplet would eject from each of the nozzles, and when printing on an A4 size page about 70,000 nozzles would simultaneously eject the ink droplets onto the page.

As at January 2000, the first defendant says he could not have mentioned 70,000 nozzles. His evidence is (which was not challenged) was that the 70,000 nozzles described an intended configuration of the technology from 2003 onwards and that it was not conceived as at January 2000, as at that period the proposed A4 Memjet printhead had precisely 84,480 nozzles. In his affidavit (at [79]) the first defendant explains how that was the case.

Ms Craig was challenged about this in cross-examination but was steadfast in her apparent recollection of that figure of 70,000 nozzles being mentioned. It was put to her that that information had come from a document as recent as April 2007, but she rejected that notion. She was taken to another document, dated May 2001, which indicated that there were 84,480 nozzles. She appeared to reject any notion that that could have been the fact as at that date. I am satisfied that if any conversation took place at all at any time in January 2000 about the number of nozzles which would simultaneously eject ink droplets, the first defendant would not have mentioned 70,000 and would have (had the topic arisen) mentioned 84,480 or thereabouts.

I am satisfied, having heard both Ms Craig and the first defendant (and in particular because the first defendant was not challenged on that assertion), that his evidence should be accepted over that of Ms Craig on this point. It seems to me that Ms Craig has simply invented this part of the conversation by reason of material that she must have had access to possibly years after the alleged meeting in January 2000. The allegation on her part is too precise to merely, I consider, be the result of some mistake on her part.

Ms Craig also asserts that the first defendant spoke to her at this meeting about digital cameras and showed her some prototypes from a shelf behind him. She also asserts that print rolls were discussed and that the first defendant told her that "we" had entered a deal with Mr Stata.

The first defendant denies showing Ms Craig prototypes or print rolls or for that matter the deal having been done with Mr Stata. As to the latter he simply asserted that the conversation could not take place and that Mr Stata's original investment did not occur before February 2000 when $4 million was invested. I have to say that I found the first defendant in relation to these items entirely unreliable as a witness. I am satisfied that he may well have discussed the matter and mentioned either a prototype, or a print roll or for that matter Mr Stata being an investor with Ms Craig, in January 2000.

She attributes a comment from the first defendant to the effect that the "Memjet technology" was valued at US$20 million and asserts the second defendant wrote that figure on the bottom of Document A.

Ms Craig also asserts the second defendant wrote "15" at the top of the document and then also write the figures "1 million" and "10 million" below "5 million" and then circled that figure. This is apparent from the face of the document. Ms Craig asserts she was told that Mr Stata would invest 50% of "15 million" which amounted to "7.5 million". Again, these numbers are apparent on the face of the document.

Ms Craig asserts that the second defendant wrote the names of a number of companies on Document A, followed by conversations about "chip manufacturers" and how certain of them would be targeted for the sale of licences for "mass consumer electronic markets". In particular, Ms Craig alleges she saw the second defendant write a list of companies in the electronics industry on the top-left side of the page, representing companies identified by the first defendant as potential chip manufacturers for the Memjet technology, and that the first defendant said that IBM was their "number 1 target". Ms Craig asserts she then saw the second defendant write a second list of companies, this time on the top-right side of the page, representing companies in the consumer electronics market which the first and second defendants had identified as potential purchasers of licences for the Memjet technology.

Ms Craig asserts the second defendant said "we" expect a revenue stream of "260 million". The "260 million" clearly appears on the document. She also says she saw the second defendant write ">220 US" (which appears on the bottom left of the document) and then write "400" and then "800" and then "4.4b" above the "400" (which all appear on the far right of the document). She attributes the second defendant as having said she expected revenue to go to "400" and then double to "800" and "peak at 4.4 billion".

The second defendant denies this conversation as does the first defendant. I have to say the conversation is somewhat nonsensical and is, it seems to me, Ms Craig making up a conversation simply to fit the figures on the page. I consider it important that counsel for the plaintiffs did not put to the second defendant that the conversation on the revenues as alleged by Ms Craig actually took place, and this fortifies my view that it is a pure concoction on the part of Ms Craig.

I am however satisfied that some of the topics Ms Craig asserts were discussed at the meeting may well have been discussed at various levels of detail from time to time during the years perhaps 1999 and 2000. This is particularly so of the possible companies to manufacture chips and/or with which SRPL might hope to have a commercial relationship.

In passing I should say that I am not satisfied that Ms Craig was ever present at a meeting at which she observed the first defendant make the various notations on Document A. It is, however, indeed probable that Ms Craig and the second defendant were together when some of the notations were made on Document B. Also, I am by no means satisfied that Documents A and B were created at the same time. They are, I consider, concerned with very different topics. Document B for example, seems to me to be concerned, as asserted by the second defendant, with property dealings, although Ms Craig relies heavily upon some of the jottings on that page to allegedly corroborate her case on the equity arrangement.

However, to return to Ms Craig's narrative. Having had what appears to be a somewhat preliminary discussion described by her as the "Memjet Marketing Plan", she asserts that the first defendant left the meeting (at [376]). She then asserts (at [377]) that she and the second defendant moved from the first defendant's office to the second defendant's office. The second defendant apparently took the bundle of documents with her, at which point Ms Craig asserts the second defendant and she discussed the suspense transaction report.

The first page of the typescript of the bundle is a covering letter from a Mr Bicknell is dated 19 June 1997 which makes it clear that it is in relation to a dwelling (owned by a corporate entity of the second defendant) at 5 Warring Avenue, Emu Plains. The letter is in fact addressed to a Ms Jo-Ann Peet, an accountant at the relevant time, retained by the first defendant and/or second defendant. It is common ground that property was not the subject of any discussion at the meeting.

It was put to Ms Craig in cross-examination that in fact she had not received these documents at a meeting at all but had come across them whilst she had been working at SRPL as general manager and she took them with her when she left. Further, that she had used these documents to simply make up a story about such a meeting. She denied such an assertion (T168.37).

The second defendant in particular accepts that it is possible that she and Ms Craig saw each other during the month of January 2000. Quite specifically however she denies the particular conversation and asserts that she could not think of any reason why she would hand a bundle of 1997 documents relating to a residential property to Ms Craig. She has no recollection of creating the handwritten documents but accepts that she would regularly create notes of the sort and use the back of such documents for that purpose. She accepts that the handwriting on what has been described as Document A is entirely her own handwriting. In relation to Document B, she accepts that it is primarily in her handwriting.

Under the heading "Equity in Memjet" in her affidavit, there commences what is a most detailed reconstruction of the second half, and on any view, much more important part, of the alleged meeting. As the two sat down, the second defendant allegedly turned her computer screen towards Ms Craig so that the contents of the screen could be easily viewed by both. Thereafter a conversation ensued in which the second defendant allegedly said to Ms Craig that she and the first defendant had worked out "our deal with you" and that he/they would first pay Ms Craig and her husband the monies back that had been advanced. The second defendant allegedly reiterated that Ms Craig and her husband had made it possible for things to reach the stage they had reached. The second defendant also allegedly directed Ms Craig's attention to a spreadsheet on the computer screen and explained that she had prepared a summary of all of the money she and her husband had put in right from the start, in 1992. The second defendant apparently acknowledged that Ms Craig and her husband had "partnered" with the defendants from the very start of the "project".

The second defendant denies making these comments. Further she denies ever having seen a spreadsheet setting out the money that had been paid to SRPL prepared by herself or the first defendant. She asserts the only document of such kind that she has ever seen is one prepared by Ms Craig herself and which had been sent, she acknowledged, to her by Ms Craig in 1999. This is the same document which Ms Craig asserts was handed to the second defendant at the meeting.

Ms Craig however turns her attention to a number of items on Document B. She asserts that during the course of the discussion, the second defendant said that she had done an analysis of all monies put in by Ms Craig and her husband and "in round numbers" it was $1,674,000 (this figure does not appear on Document B). Ms Craig insists that she corrected the second defendant by indicating that some monies had been paid back to which the second defendant responded by acknowledging the payment of the $200,000 when the patents had been sold to Kodak. She asserts that she saw the second defendant write "200K" and then type "200,000" on the spreadsheet and then said that she would deduct the $200,000 from the $1,674,000 thus leaving $1,474,000. Ms Craig asserts that she saw other numbers on the screen and then she asserts that she saw on the spreadsheet (on the screen) $1,474,000. The figure of "1,474,000" also appears on the handwritten document in a box in the second defendant's writing on Document B.

The only notation of "200K" which appears at all is not on Document B but rather appears for some unexplained reason at the very top on the left hand side of Document A.

However, the second defendant, explains in response, that as at 1999 or 2000, her corporate entity Le'Brook had a facility with Macquarie Bank with a limit of $1,474,000. She points out that above the amount $1,474,000, appearing as it does in a box on Document B, is an arrow coming through two letters "MQ" and joined to another figure higher up in the page of "2 million". She explained that she had originally been offered a fully drawn advance for $2,000,000 by Macquarie Bank in May 1999, but elected instead to take a revolving line of credit.

In respect of both of these figures the second defendant refers to various documents. At CB559 to CB562 are statements from Macquarie Bank to Le'Brook Pty Limited as Trustee for the Ingodwe Trust covering the period January through to May 1999. The documents certainly indicate that the limit of the facility was $1,474,000. It is important to observe (which will become a recurrent theme below) that on this matter the second defendant was not challenged in cross-examination. This fortifies my view that the second defendant's explanation is much more plausible and I accept it. The consequence is that, in my view, Ms Craig has used the jottings relevantly to entirely contrive a conversation on this matter which fitted in with the figures, but which simply did not take place.

This, along with other matters to which I will refer, has very serious implications not only for the principal claim put forward by the plaintiffs, but in relation to their alternative relief.

Ms Craig then asserts that the second defendant created a blank spreadsheet on her computer. Thereafter, Ms Craig says she herself (i.e. Ms Craig) wrote the number "200", and above this the figure "50" in a circle and adjacent to that the words "DLC & Assoc", on Document B.

Ms Craig says she herself again (i.e. Ms Craig) drew a line to the top and wrote the word "exp", short she said for expense. She then asserts she said to the second defendant that there should be a reconciliation of the amounts owed by way of consulting fees, with which the second defendant agreed. She said that she had paid DLCA consulting fees of $103,000 which she would round to $100,000. Ms Craig then says she saw the second defendant write "100" under "DLC" and indeed in a box just to the right of the figure $1,474,000 appears "DLC" and underneath that "100".

But Ms Craig then asserts that the second defendant said "what we'll do is take 250 and add it to the 100 which will give us 350 [and then halve that number which comes to] 175". The second defendant then apparently said that "we will split the fees of 350K into two". Ms Craig then says she saw the second defendant draw a line from the "200" that Ms Craig had written at "my end" of the sheet and then write "1/2 sh". Ms Craig then asserts some discussion took place whereby the second defendant said that she would "round the $175K down to 174K to give us a nice round figure of one point three" (at [396]). Towards the top of Document B there is what appears to be the "1/2 sh".

Ms Craig then asserts that she saw the second defendant write "1,300,00" on the sheet before saying to Ms Craig that she and the first defendant had agreed that "your investment is $1.3 million".

First, in relation to the consulting fees exercise, it was put to Ms Craig in cross-examination that the calculation undertaken was nonsensical. She was asked to agree that the amount of $250,000 for consulting fees was owed by her to the first and second defendants, to which she agreed (T188.10-T188.12). She then agreed that the calculation was nonsensical because the total of $350,000 was arrived at by adding the $250,000 owed by her and the $100,000 already paid to her by the defendants, to total $350,000. This was done in order to arrive at $175,000, apparently rounded down to $174,000. It was put to Ms Craig that the exercise she had undertaken defied all reason. I must confess, the answers she gave, I found unintelligible (T189.5-T189.9). I reject her explanation as quite frankly making no sense at all and a further attempt on her part to try to explain various jottings on the page, however illogical the explanation appeared.

So far as the $1.3 million was concerned, it was put to her that she had again tried to use that figure purely for the purposes of concocting the alleged conversation. Again, Ms Craig rejected that notion (T189.11-T189.21).

The second defendant denies that any such conversation took place. In addition, the reference to "1,300,00" below "1,474,000" was intended by the second defendant she says to refer to the total outstanding mortgage amount held over the entirety of her property portfolio in November 1999. She refers to documents which refer to a total figure of $1,325,240.88. Again, she was not challenged in cross-examination on her explanation for the figure of "1,300,00" being on the page, nor that the total of her facilities as at November 1999 was of the amount just mentioned. On that basis, I am satisfied her explanation is much more plausible over that of Ms Craig's. Again I am satisfied that Ms Craig has simply invented this aspect of the alleged conversation.

Ms Craig then asserts that some calculation was undertaken by reference to the US$20 million figure which strangely appears not on Document B but on Document A and she alleges there was a discussion about the USD/AUD exchange rate as at 20 January 2000. She says the exchange rate was given to her by the second defendant as being US$0.6666 to AU$1, which the second defendant then rounded up to 0.667 for the purposes of a calculation to approximately work out Ms Craig's share of the expected revenue. The calculation, as the second defendant explained it, was to convert the AU$1.3 million to US$867,000. Nowhere on either Document A or B does the exchange rate or the conversion of AU$1.3 million to US$867,000 appear.

I have rejected Ms Craig's explanation of the $1.3 million and it therefore follows that I reject her explanation on this aspect as well. No doubt she thought it necessary that there be a conversion because the revenues being discussed were in US dollars, but I consider this part of her evidence, again, to be pure concoction.

As to the exchange rate on the day, that figure is readily available from historical records. Conveniently perhaps for Ms Craig the calculation was undertaken on the spreadsheet on the computer screen which of course is not available. In passing I should observe that nowhere does Ms Craig suggest, even though many of the important calculations were undertaken apparently on the computer screen, that she ever asked the second defendant for a printout of the calculations. Not only would that have been helpful in terms of explaining to others what arrangement she alleged she had made, but it would be powerful corroboration if it ever existed. I am not persuaded however that it ever existed.

Ms Craig then asserts that there was a discussion about the units at 49 Frederick Street, East Gosford. She explains that that is the reason why she made notations on the top of Document B. There may well be an element of truth in this as indeed in the latter part of 1999 both Ms Craig and the second defendant accept that the two did have conversations about the possible purchase by the second defendant of two units of the Frederick Street development. In my view however, the fact that Ms Craig's contribution to this document only really relates to property dealings, fortifies my view that the document was in fact likely to be the product of discussion at some point between Ms Craig and the second defendant as to the proposed property transaction they discussed probably in the latter part of 1999, but limited to that topic.

Ms Craig however next goes through a torturous process in an attempt to explain some of the other jottings that appear Document B. She explains that at one point in the conversation, she saw the second defendant type into the spreadsheet on the screen certain amounts totalling $760,000. For reasons unexplained she asserts the second defendant said she would round that down to $750,000 and then she says she saw the second defendant perform on the computer screen a calculation whereby she multiplied the $750,000 by the rate of exchange of 0.667 which totalled a figure of $500,000. She then says that she saw the second defendant divide $500,000 by US$20 million and then announced to her that DLCP owned "2.5% share in Memjet". Ms Craig asserts she then saw the second defendant write 2.5% at the left of the letters "DLC Properties" on her "side of the sheet". Ms Craig then explains how the second defendant did other calculations and wrote "the percentage" that she had calculated in three places "on her side of the sheet". Ms Craig asserts that "2.5%" appears (as least the "2.5" does) at three points on Document B; once at the very top, once towards the middle, and once towards the very bottom, adjacent, as Ms Craig asserts, to the words "DLC Properties". When asked about this in her evidence, Ms Craig indicated on one view contrary to her affidavit (at [412]) that the second defendant wrote the "2.5" on three separate occasions.

Ms Craig then asserted that the second defendant went through a further calculation by deducting the $500,000 from the $867,000, leaving $367,000, which she again divided by US$20 million to come up with 1.84%, which she then asserts Ms Lee wrote on the page in the box immediately below one of the "2.5" figures.

The second defendant then apparently announced to Ms Craig that "DLC and you and Des own 1.84% share in Memjet" (at [413]). Ms Craig agreed in cross-examination that the split between DLCP on the one hand and she and others on the other, was not necessary and it had really nothing to do with the second defendant but according to Ms Craig it is just how the meeting evolved (T204.15). I find myself unable to accept that explanation.

It was put to Ms Craig (T214.30) that she saw the figures on the sheet and had invented conversations to conform to those figures. She rejected that suggestion (T217.30-T217.50).

In answer to these specific calculations the second defendant asserts that as at November 2001, Le'Brook had obtained a mortgage facility over the "Manor House", a property owned by the defendants, in the order of $2,555,000. She asserts that the "2.5", rather than it being "2.5%" at least where it appears in the centre of Document B, likely referred to the fact that she was planning to obtain that facility. At CB3/936 there is indeed a letter dated 16 November 2001 from Bush Burke & Co solicitors referring to a proposed advance to Le'Brook, secured over the "Manor House" totalling $2,555,000.

The second defendant also asserts that the figure of "1.84" below the figure of "2.5" represents a total of valuations of properties that she had at that time. The second defendant explained that, in December 1999, as part of considering her property portfolio, she had a valuer do valuations on seven of her properties owned by her corporate entities, Chesreal and Allplaces. The valuation, the second defendant asserts, totalled $1,485,000. That figure appears clearly from a document at CB2/680. The second defendant also asserts that she had another property in her name that she had valued separately. She could no longer locate the valuation, which she said that it was approximately $400,000. Together of course those two figures approximate $1,840,000. She was not challenged in cross-examination on these matters. I am inclined to accept her explanation of these figures and hence that would lead inevitably to the conclusion that, yet again, Ms Craig has simply concocted this aspect of her evidence.

In passing, the second defendant asserts that at no time did she write "2.5%" on Document B and denies that the "2.5" notation at any point is adjacent to a percentage sign. This is certainly true of the "2.5" appearing at the top and the middle of the page although there is some squiggle adjacent to third "2.5" which by no means is a clear percentage sign. The second defendant rightly points out that there are two very clear percentage signs on the document, one after the figure "5.94" (to which I will return) and another after the figure "100". Both of these are plain to the naked eye. The second defendant asserts that whenever she wrote percentage signs she did so clearly. Again, she was not challenged on this and I accept her evidence which is further corroboration of Ms Craig's concoction of this part of the conversation.

Ms Craig asserts (at [424]) that she saw the second defendant write "5.94% above the box that surrounded all three boxes" in which other abbreviations appear. On this occasion the percentage sign is plainly apparent. She then asserts she saw the second defendant "draw four arrows from the smaller box and that she had marked Ches" and then "a small box below each arrow and another arrow to the right and smaller than the other four arrows that she had drawn earlier". She then asserts the second defendant said to her that she would hold her "4.34% share in Memjet on trust in Le'Brook because the Memjet Group is not yet formed. The other 1.6% will be held by Le'Brook for my family members". The second defendant then allegedly promised to transfer Ms Craig's share to Ms Craig and her husband's names when the "Memjet Group" started selling commercial licences.

The second defendant denies ever discussing the "5.94%" or the 1.6% supposedly referable to her family's interests. It was not put to her that she had discussed the figures in that context, nor was Ms Craig's conversation put to her at all on this point. The second defendant explains that the entry "5.94%" adjacent to the abbreviations "Le'B", "Cosmic" and "Ches" (representing as she asserts, correctly in my view, Le'Brook, Cosmic Osmo and Chesreal, each of her three property companies) refers to an interest rate of 5.94% applicable to mortgages granted by Chesreal and Cosmic Osmo as at 1999 over certain properties. There are many documents in the court book which support this proposition (CB2/644-658). These account statements all relate to the second defendant's property interests in the period 1999. The second defendant also asserts that she always represented properties owned by a company by using arrows and small boxes as indeed is clear from her handwriting in this regard on Document B. The second defendant was not challenged on this, and I accept her evidence and her explanation of the "5.94%". This again inevitably leads to a conclusion that in this regard Ms Craig has invented this aspect of the alleged conversation. It is plain that the figure of 4.34% does not appear anywhere on either page, although one does obviously arrive at that figure arithmetically by adding together 2.5 and 1.84, which is likely what Ms Craig did in the course of inventing her story.

Ms Craig had to agree in cross-examination that the fact that Le'Brook was holding apparently 1.6% for the second defendant's family had nothing to do with her (T229.5-T229.9). In my view, given what I have already found, I am satisfied Ms Craig invented that part of the conversation out of a perceived need, on her part, to make some sense of the "5.94%" in conjunction with the two other numbers of "2.5" and "1.84".

Next, Ms Craig asserts that the second defendant reverted to the spreadsheet on her computer screen in the context of discussing what Ms Craig describes as the "cash component" portion of the arrangement. She asserts she saw the second defendant turn to the spreadsheet on her computer screen and type "220,000,000" onto the spreadsheet (at [428]). Ms Craig then asserts that the second defendant explained that the revenue stream during the next five years for the Memjet Group would be "$220 million". The "$220 million" is a reference to a notation which appears at least on Document A as "> 220 US".

Ms Craig then asserts the second defendant, referring to the 4.34% "as your share", multiplied it by US$220 million to come up with a figure of US$9,548,000. She then asserts that the second defendant said that that amount would be paid in three stages. In the first stage there would be a payment of US$548,000. The second defendant then asked how much DLCA needed per year for wages, to which Ms Craig responded that she and her husband paid themselves each $100,000 but they had also to fund Pearl Beach. She asserts (at [428]) the second defendant said that she would then convert the US$548,000 to Australian dollars and came up with a figure of $821,000 indicating that "SRPL will pay DLC 300 starting in 8 weeks and another 300 to follow".

Ms Craig asserts she saw the second defendant write "300 + 300" (which appears to the right of the figure "1,474,000" on Document B) with an arrow coming down from the notation "8 weeks". Ms Craig asserts that she also saw the second defendant write the words "expense with an arrow pointing to SRPL". The word "expense" does indeed appear on Document B, but on one view quite unconnected to the notation "8 weeks" or for that matter "300 + 300".

According to Ms Craig, the second defendant then indicated that SRPL would pay these monies as consulting fees starting in eight weeks and that SRPL would expense this figure "100%". The second defendant then apparently said that after the payment of the $600,000 there would be a further payment of $221,000 making up the total of $821,000. Ms Craig then asserts she saw the second defendant write "Le'B Mara Hara". Ms Craig understandably gives no explanation of what is apparently meant to be understood by this notation. By this stage, I presume she ran out of imagination and industry. I am not satisfied any of this part of the conversation took place. It is partly nonsensical, but I am firmly of the view it is a contrivance simply created by Ms Craig to explain the jottings.

Ms Craig then asserts she saw the second defendant type "2,000,000" onto the spreadsheet on the computer screen and divide it by the exchange rate of 0.667 leading to a figure of AU$2,998,000. She then alleges that the second defendant indicated that "SRPL would pay DLC 1.5 million at the rate of three hundred thousand each year for the following five years following the payment of $600K". She said she then saw the second defendant write the figure "1,500,000" in the circle immediately below the "300 + 300". There is some writing which does appear as suggested on Document B which may well be the figure of $1.5 million. Again, I consider this to be a contrivance. None of these figures or for that matter those in the preceding few paragraphs were put to the second defendant, which again fortifies my view they are simply manufactured.

Ms Craig asserts that the second defendant mentioned a person called "Parr". She says she does not "now" recollect who "Parr" was (at [417]). However, she asserts she saw the second defendant write that word "near my end of the sheet", on Document B. Indeed, the word "Parr" does appear in the second defendant's handwriting at the top of Document B. Ms Craig then said she saw the second defendant draw a line from the word "Parr" and then drew a box, and then put an "X" in the box. Again, so much is apparent to the naked eye from the top of the document. However, Ms Craig then asserts that the second defendant said to her: We will not be providing an equity share on his loan. Instead we pay them a General Interest Charge.

Ms Craig then (at [418]) says that she saw the second defendant write the word "GIC" on the sheet. I should observe here that, to my knowledge, the only context in which that term is used is income tax legislation. Counsel for the plaintiffs made no attempt to show that the term had any use outside of that context. Ms Craig then says she saw the second defendant draw a line from the "X box" to the word "GIC". She then asserts that the second defendant said that she and the first defendant wanted to make sure that people who had helped them were rewarded. There were only a few people who were to be rewarded with shares which allegedly included a Greg McAvoy and a Paul Lapstun, as Mr McAvoy had "worked relentlessly with [Mr Silverbrook] on the proof on concepts" and Mr Lapstun "was one of the first employees". The second defendant then apparently said that she and the first defendant would not be offering or giving shares to others and that she wanted Ms Craig to keep the arrangement that she and the defendants had arrived at as confidential. Ms Craig says the meeting continued on the basis that the second defendant requested her not to email her about the "agreement" and if she needed to discuss the "agreement" she should call the second defendant or send her a note by express mail and mark it confidential. Ms Craig agreed to this regime.

The second defendant (in her affidavit at [248]) asserts that she at no time knew anyone called "Parr". She did not know of any corporate entity by that name at that time either. She believed however that the so called word "Parr" was an abbreviation for Parramatta. Appearing also on Document B are the letters "PAES" in a box. This was a company owned by the second defendant at the time. The full name of the entity was Peachtree Auto Electrical Services Pty Ltd. The second defendant further says that this company was planning to expand its daily car parts distribution services to Parramatta. I observe that there is an arrow on the page leading from (or to) the word "Parr" to (or from) what is clearly "PAES" which appears in a box immediately below. Again I accept the second defendant's explanation. The consequence again is that Ms Craig has simply invented this part of the alleged conversation. There is simply no basis for the view that this aspect of Ms Craig's evidence could be the result of an honest but mistaken recollection.

In addition, the second defendant says there was never any intention to issue or transfer shares to a Mr McAvoy or a Mr Lapstun. I observe of course that Ms Craig did not attempt to call either of these persons.

In addition however the second defendant refers to the notation which Ms Craig described as "GIC", and the so-called "General Interest Charge". Implicit in her evidence is her denial that she used such a term, but in any event, it being her handwriting, she points to the fact that the so-called "GIC" is in fact a "GYC". As it is her handwriting I am inclined to accept the second defendant on that matter and her deciphering of those letters. In addition however the letters "GYC" make perfect sense. At the relevant time, a Ms Genevieve Yan-Colebourn (Ms Yan-Colebourn) was an accountant who had provided accountancy services to the defendants from approximately 1989 until 2008. That is not disputed by Ms Craig.

Again, having accepted the second defendant's explanation I find that the conversation which Ms Craig alleges she had with the second defendant about the so called "Mr Parr" and the "general interest charge" as pure concoctions.

Ms Craig then moves to another portion of Document B. She refers to a large box towards the right hand side of the page and to the letters "Le'B" and then to other letters that appear in boxes including "Ches" and what appears to be "KCS". Ms Craig asserts, as I have said, that she was watching the second defendant as she made these various notations. The second defendant is alleged to have said to Ms Craig that she had "taken Kia", the first defendant, "off as a director from the property companies just in case there was still anyone out there looking for him". Some further discussion ensued. Implicit in Ms Craig's evidence is that the alleged acronym "KCS" refers to the first defendant. The second defendant denies having made any notation of "KCS" as referring to the first defendant. When asked in cross-examination, Ms Craig asserted that it did refer to the first defendant, as his middle name was she said "Charles" (T238.44-T239.16). The first defendant denied that that was his middle name (T335.8-T335.9). No attempt was made to prove that that was the fact and indeed the first defendant was not challenged about it. In my view it is yet another example of a blatant concoction by Ms Craig. However, this concoction truly borders on the bizarre. There is no doubt that the reference to "Le'B" is a reference to Le'Brook and the reference to "Ches" is a reference to Chesreal.

The second defendant accepts that in or about September 1998 the first defendant was removed as a director of Le'Brook and Chesreal. She says that Mr Silverbrook was initially appointed because it was her understanding that two directors were necessary. She understood that the law had changed and therefore in September 1998 the first defendant resigned as a director because there was no point in him remaining as such. The second defendant's evidence on this point was not challenged either.

The second defendant says that the notation which Ms Craig asserted was "Le'B Mara Hara" is in fact "Le'B Manor House". I accept her deciphering of those words.

This aspect of Ms Craig's evidence is really another example of the level of absurdity she was prepared to go to in her so called reconstruction of this conversation. Instead of simply saying she did not know what the abbreviation meant, she felt compelled to proffer some evidence about it so she could appear to provide an authoritative and highly detailed account of this conversation, and simply explain every jotting. Again, I regard it as a pure concoction and I reject her account of the conversation on these matters I have just referred to.

In addition, I observe that the figure of US$9,548,000 does not appear on either Document A or B, nor does the figure US$548,000 appear, or AU$821,000. I think those figures are simply invented by what can only be described as evidence again bordering on the bizarre.

The second defendant accepts (at [256]) that doing the best she can Document B appears to relate to a discussion she had with Ms Craig about property investment in general and perhaps about her property portfolio and obviously the units at Frederick Street. That is clearly not only the better view, but given the matters I have referred to above, I think it is really the only view one can come to about this particular document or at least portion of it.

It goes without saying that I largely if not entirely reject Ms Craig's account of what she says took place at the so called meeting in January 2000. In particular, leaving aside the specific matters to which I have made mention, I reject her evidence insofar as she asserts anything like some equity interest or cash payment or the like was ever offered to her by either the first or second defendants during this meeting. Her alleged reconstruction is not, in my view, as her counsel invited me to find, an honest but perhaps in part a mistaken reconstruction of events. The length to which Ms Craig has gone in purporting to reconstruct this conversation in my view could simply not be accepted as honest. I think, as I have said, she has engaged in nothing short of concoction, in circumstances where I cannot accept that she could honestly believe that these things were said to her during the course of this meeting. In large measure, I am satisfied she has invented the conversation in an attempt to advance her claim in this litigation. It may well be she has simply lost touch with what is real as opposed to what is imagined.

In addition, in my view it would make no sense whatsoever for the second defendant to provide the bundle of documents including the two pages with handwriting to Ms Craig at the end of the meeting. In the absence of the computer screen printout of the alleged spreadsheet, apart from their cryptic nature, the jottings on Documents A and B are no more than a series of random notations, themselves devoid of any intelligible meaning. The more likely scenario in my view is that Ms Craig removed these documents from the possession of SRPL, perhaps when she was there as general manager. It matters not when or indeed how she obtained the documents, but I accept the second defendant's denial that she ever gave these documents to Ms Craig. It defies common sense that the bundle of documents which bore no relationship to anything the two had discussed on the day or seemingly at any time would be just handed over. Without an accompanying and/or clarifying note or email they would be meaningless.

This was a most significant meeting, from the plaintiffs' point of view. That explains in part why it played such a prominent part in the trial. However, Ms Craig made no note of the meeting independently of her somewhat cryptic jottings on Document B, during the course of that day or it seems at any time for probably the best part of a decade and not prior to claims being made against the defendants. At no time did she sit down with the two pages and attempt to put her recollections in some form of order, as she apparently was capable of doing a decade later. Not a note of what was said, or how the calculations were explained to her, was made by her at the time. She never sought to ask for a copy of the alleged computer spreadsheet from the second defendant. Not once did she communicate in writing with either the first or second defendant confirming the terms of the arrangement. In the decade that followed, she never once consulted a lawyer, an accountant or anyone else about the good fortune which had come her way, and its potential tax and other implications. Given her background, had such an arrangement existed, I would have expected her to have been most businesslike and organised about it.

Ms Craig asserts (at [452]) that when she got back to the hotel, her husband was waiting for her and she alleges she showed him Documents A and B. In my view, her husband does not corroborate her on this. In his affidavit (of 14 December 2012) he says (at [15]) that he cannot recall if his wife showed him any documents in relation to the "deal". It also appears she never once showed him the documents at any time during the decade following the meeting. He says she told him, having been at the meeting as he understood it, that "we" have a deal. He recalled that it was to be a long term interest in the technology that was being developed. As he was struggling with his own mental health issues at the time, and it was, he said, difficult for him to meaningfully engage he says he just trusted his wife and her judgment about the deal and indicated if she was happy then he was happy. He agreed in cross-examination that his memory of the events could be quite vague (T313.26-T313.27). He kept no diary, or record of any meetings or discussions he had at any point, let alone any diary entry in relation to the alleged conversation he and his wife apparently had on the day. He also agreed he had not been involved in any of the payments in particular from the defendants to he and his wife or their entities. Ms Craig however insists that she explained to her husband what had been discussed, which I take to mean that she told him allegedly about the percentage equity they were to get, but more importantly the very large cash payment.

I find it inconceivable that if the critical parts of the so called deal had been explained to her husband he would not have remembered them. It would not be every day of the week that a person would be promised $9.5 million. His evidence was vague, and if I may say so, unpersuasive, and more to the point, as I have said, uncorroborative of his wife's assertions.

In the years that followed, especially when Ms Craig and her husband faced tight financial constraints from time to time, neither seemingly once told any mortgagee about the deal which, if it existed, would have had the consequence of a staggering sum of money being owed to them by SRPL. I really would have expected him to have explained to any mortgagee pressing for payment precisely what obligations the defendants had entered into with his wife and their entities in 2000. As no such evidence was forthcoming, I can only draw the inference that they never did raise it. That fortifies my view that neither he nor his wife at any time in the relevant decade, believed they ever had such an arrangement. It is clear, from what occurs later in the chronology, that mortgagees were indeed pressing Ms Craig and her husband and causing them significant stress.

Ms Craig asserts however that on 25 January 2000 she called the second defendant at her office at Balmain to tell her that she and her husband accepted the "deal". Again, Ms Craig has no contemporaneous note of this, nor did she confirm her acceptance by letter, email or text message. Not to do so, and supposedly to rely upon two pages of scribble and/or jottings which plainly do not speak for themselves defies belief, and again fortifies my view that no such deal ever existed. In her affidavit material, the second defendant does not expressly deal with Ms Craig's assertion that she made contact with her on 25 January 2000 to accept the arrangement. It goes without saying of course that she denies such a conversation because she denies the arrangement in the first place.

Ms Craig asserts that in January 2000 she needed a credit reference for the builder that she and her husband were using for their Pearl Beach project. The second defendant obliged on 27 January 2000. The reference is of some significance for a number of reasons. It is worth setting it out in full: This is a commercial reference for D and L Craig and Associates Pty Limited and Loretta Craig and Vincent Desmond Craig. This is to advise that Lee Edison and Associates Pty Ltd has provided technical support services to D & L Craig and Associates Pty Ltd for the past 7 years. All bills have been paid well within the terms of credit offered. On many occasions these bills have been in the tens of thousands. During this time, both Loretta Craig and Vincent Desmond Craig have fostered and excellent business relationship based on trust, hard work and honesty. At all times, on a personal level, they have ensured that total effort has been put into achieving the commercial arrangements set between the companies. I would recommend Loretta Craig and Vincent Desmond Craig at the highest level for their commercial ethics and integrity.

The first matter to observe is that the description of many of the bills being in the "tens of thousands" explains in part the volume of payments which clearly must have moved from some of the plaintiffs to at least the second defendant and/or her corporate entity, Lee Edison. The plaintiffs were clearly prepared to use the reference and I infer must have believed it was true.

However, the second matter to observe is that this reference was written only two days after Ms Craig asserts that she had accepted the arrangement offered by the defendants. This was an ideal opportunity for Ms Craig to have recorded, albeit for modest purposes perhaps, the fact that she had such a substantial arrangement with a corporate entity with which the second defendant was associated. This not only would have heightened the level of apparent trust between the parties so far as any third person was concerned, but also corroborated the financial substance of the plaintiffs.

Ms Craig then goes on to assert probably correctly in my view, that the second defendant telephoned her and asked for an advance of $40,000 which appears to have been provided on 3 February 2000. The second defendant explained to Ms Craig that she needed the money because funds had not yet been received from Mr Stata. The second defendant denies any such conversation leading to the advance of $40,000. She asserts that having searched the financial records, she can find no record of having received that amount. Given the state of the second defendant's recollection and her own records, I am prepared to accept that such an amount was advanced and in the end it is not in my view determinative of anything in particular. Consistent with my views already expressed however it may be that Ms Craig had the particular conversation she asserts she did with the second defendant (at [463]) prior to the advance.

Ms Craig asserts that she invited the first and second defendants to her daughter's wedding. She asserts that the first defendant asked if he could bring his son, to which Ms Craig agreed. She asserts that the first and second defendants and the first defendant's son were seated at the main table "in recognition of my regard for them". The second defendant denies that she was seated at the main table. Although extraordinarily trivial in one sense, clearly the fact they were all at the wedding corroborates the close relationship they then enjoyed.

Ms Craig asserts that in May 2000 she had a conversation with the second defendant and explained that neighbours had lodged objections to she and her husband's development application at Pearl Beach. The Council had organised a facilitation meeting. She asserts that she asked the second defendant for assistance and it was suggested by the second defendant that a Christine Lee, who was an architect employed by SRPL, could help by generating some 3D models of the Pearl Beach house. As a result, the models were produced and provided to Council under cover of a letter of 6 June 2000. There is little doubt that such activities were undertaken by SRPL seemingly for no fee in order to assist Ms Craig and her husband. The second defendant agrees that she provided the services of Ms Christine Lee and agrees that she went to the Council meeting in order to explain how the 3D images were created and how the modelling worked. Again this is a further instance of ways in which the parties, during the period of their rather close friendship, assisted each other from time to time, often, as is clear, without regard to either time or perhaps cost.

Ms Craig asserts she had a further conversation with the second defendant in or around May 2000 in which she asked why the first instalment, as promised in January 2000, had not been paid. She asserts the second defendant apologised and explained that a little more time would be needed because arrangements had not yet been completed with Mr Stata. The second defendant also allegedly said that there were problems with money transfers from the United States. However, Ms Craig asserts that in or about mid June 2000, "DLCP, DLCA, Des and I, received the first payment contemplated under the January agreement".

The second defendant denies such a conversation took place. It may well be that Ms Craig requested an advance of money from the second defendant in or about May 2000 but I do not accept that a conversation took place which referred to the so called January agreement. In that regard I accept the second defendant's evidence and reject that of Ms Craig.

It is as well to recall that the schedule of payments allegedly promised by the second defendant on 20 January 2000 included a first stage payment of US$548,000 which Ms Craig asserts the second defendant converted during their meeting to AU$821,000. Thereafter followed promises to pay $300,000 "starting in eight weeks and another $300,000 to follow". However when one looks at the schedule of payments alleged by the plaintiffs, there were seven payments made in June 2000. No further payments were then received until October, November and December of that year. However in June 2000, the payments were as follows: $8,000 - 14 June 2000, $92,000 - 19 June 2000, $33,300 - 21 June 2000, $36,700 - 26 June 2000, $65,300 - 27 June, $59,3000 - 29 June 2000 and $55,000 - 30 June 2000. These payments were made to either DLCA, DLCP, Ms Craig and her husband directly, or alternatively to their Mortgage Equity Account.

It is simply inaccurate in my view as is asserted by Ms Craig (at [488]) that in mid-June 2000 she, her husband and their various entities received the "first" payment contemplated under the January agreement. Quite the contrary, the schedule alleged by Ms Craig in the case shows a pattern not dissimilar to that which had previously existed between the parties, of somewhat odd amounts being advanced from time to time. Ms Craig gives no evidence whatsoever of the circumstances in which these various payments were made in June 2000 nor does she explain why the amounts are as they are. It is no doubt convenient for her to simply assert that they were by agreement because they clearly must have been. But I do not think that they were referable to any so called agreement allegedly reached in January of that year.

Ms Craig asserts further conversations took place in the latter part of 2000 which she says relate to cheques being sent to her by the second defendant in an envelope. The second defendant does not recall issuing cheques to Ms Craig at this time, nor does she recall whether payments were in fact made. I am however prepared to accept that the cheques were indeed provided to Ms Craig as indeed they had been in the past. I do not accept however that these monies were advanced pursuant to the so called January agreement.

In the last quarter of the year 2000, Ms Craig asserts that something in the vicinity of $300,000 was advanced by SRPL to either DLCP, DLCA, herself, her husband and/or their Mortgage Equity Account. On the schedule of payments provided by Ms Craig that would appear to be so. There are in fact a total of ten alleged payments totalling that amount ranging from approximately $10,000 to $50,000. The second defendant is really in no position, it seems to me, to deny that payments of some order were made, and I accept that they were again consistent with the pattern of providing monies or advances to each other when monies were available for that purpose.

Many if not all of the conversations which are dealt with in Ms Craig's affidavit from about 2001 onwards are of course predicated upon the existence of the January agreement, either expressly or implicitly. Because I do not accept that such an agreement came into existence, I reject those portions of Ms Craig's affidavit which proceed on that basis. I will of course from time to time deal with specific conversations where relevant.

In any event, Ms Craig alleges that in the year 2001, certain conversations took place with the second defendant about advances of monies from time to time. In no case does she have a contemporaneous note of the conversation. In most cases the second defendant denies that the conversation took place but equally has no contemporaneous note. Again, Ms Craig has apparently reconstructed the conversations predominantly if not entirely from banking records which in many cases are ten or more years old. I am persuaded, having carefully considered the materials and heard her give her evidence, that she has on each occasion simply invented a reason for the advance of funds, consistent with the case that she seeks to make, rather than with any independent recollection of the relevant events. For various reasons she attempts to explain the amounts and the fact that the advances were in accordance with the so called January agreement, rather than as a result of indulgences extended to the plaintiffs as and when sought from time to time, which I think is the fact.

Again, in some cases she provides a narrative of a conversation (e.g. at [510] and [526]). In some cases however she purports to set the conversations out in direct speech (e.g. at [519], [550], [556] and [562]).

As is clear from what I have already said, I regard Ms Craig as a wholly unreliable historian. In large measure, I consider her attempts to reconstruct conversations in the absence of an actual note of the conversation to be an artificial and unrealistic exercise. As I have said, I am satisfied the better view is that these conversations are purely invented for the purpose of the litigation. I have no doubt however that conversations between Ms Craig and the second defendant may well have taken place and probably did from time to time when monies were advanced. I am also quite certain that these friends were quite content, often at short notice, to provide funds that may be required from time to time, subject to their respective cash flow positions.

As I elaborate below, I am of the view that the "beans" emails are a much more accurate guide to the contemporaneous state of mind of Ms Craig, and they cover a significant period of time, indeed the period from mid-November 2004 to at least the mid-2007. In none of these emails is there ever so much as hint at an arrangement vaguely approaching the so called deal struck in January 2000. This in my view is of considerable importance.

Ms Craig of course became general manager of SRPL at the request of the second defendant in or around May 2001. After discussion with her husband, Ms Craig asserts that she decided to provide her services through DLCA. She asserts that she started work on or about 7 May 2001. She also asserts that the second defendant told her that she could pay herself whatever she wanted by way of remuneration.

The second defendant agreed that at or about in or about May 2001, as she and the first defendant were doing a lot of travelling, she did invite Ms Craig to become their general manager. The second defendant said that she expected Ms Craig would bill SRPL at her hourly industry rate. She also asserts that Ms Craig mainly worked from home, but sometimes attended the offices of SRPL. The second defendant also asserts, which appears uncontroversial, that she was aware that Ms Craig or DLCA employed additional staff to assist Ms Craig from time to time, including her brother Mr Bernard Govender, her daughter's partner, Mr Charles Revoltar, his brother Mr Joseph Revoltar and other persons who were friends of or associates of Ms Craig.

There appears no real issue that Ms Craig, her corporate entities and/or those associated with her charged for services rendered. I invited her, through her counsel, to provide details of amounts of money which were received for her consulting services. Although I was provided with certain materials, they did not disclose what amounts are said to relate to the provision of these services by Ms Craig or DLCA to SRPL. I infer, however, as I have already indicated, that monies were indeed paid for these services. It may be her records do not permit such a calculation.

Ms Craig however (at [510]) says that she told the second defendant that she would not immediately invoice for her services.

In passing, Ms Craig asserts that in July 2001, in a period when she was consulting at SRPL, she was given a number of Zip Discs for storage. Ms Craig came to be in possession of a good deal of what is clearly confidential financial information of one or other of the defendants. At one point she suggested that she was provided the discs by a Mr Marcus Tilbrook (Mr Tilbrook), Mr Silverbrook's brother (at [538]). However, having heard Ms Craig and Mr Tilbrook give their evidence respectively, I do not accept that Ms Craig received that information from Mr Tilbrook. He denied he had ever prepared such disks, and further that he had given anything of the sort to Ms Craig. I accept his denials. Although it is by no means clear how she came to obtain the information, the better view on the evidence is that she took it knowing that she was not authorised to either take and/or retain such information. In addition, I consider the better view is that she either took it out of prurience or alternatively was stockpiling information which she thought might become useful for some reason or another at a later point in time.

By about September 2001, Ms Craig and her husband were, it seems, facing serious cash flow issues. She asserts that she informed the first and second defendants about this problem. She says that this conversation took place at what she describes as one of their regular monthly meetings. On the other hand, the second defendant denies that such regular monthly meetings were ever held. In my view nothing turns upon whether they did or did not. However, this was the time when Ms Craig was acting as general manager and I would not regard it as improbable that regular meetings of some sort would have taken place. However, Ms Craig indicates that she told the defendants that she had been fielding numerous calls from creditors of SRPL demanding payment. She also explained that a number of the development engineers employed at SRPL were complaining that their projects were being put on hold.

In addition, Ms Craig asserts that the first and/or second defendant explained that there was an attempt being made to refinance the Manor House mortgage, but because of their irregular repayment history there was some doubt about whether this could be achieved. She asserts that at the time the Pearl Beach property was unmortgaged and she gave consideration to whether or not a mortgage could be taken out for the purpose of advancing further funds to the defendants.

She asserts that she made the point during the conversation that such an arrangement had to be dealt with "outside our January agreement", (at [578]). There is little doubt that at or about this time, Ms Craig and her husband made application via DLCA to borrow monies from Westpac. I deal with this and other finance transactions in a separate section below. I am persuaded however that the predominant purpose in the borrowing was to complete the Pearl Beach development, although it does appear at or about the same time that certain funds were made available to SRPL.

Notwithstanding the fact that Ms Craig and/or her husband and/or one or other of their corporate entities advanced funds (especially in 2001) for the purposes of assisting SRPL to pay wages and other debts, Ms Craig rightly acknowledges monies coming back the other way. For example she acknowledged receipt of a cheque in favour of DLCA from SRPL for the amount of $149,671.64 in late 2001. Notwithstanding Ms Craig's assertion that she did not wish to make demands for payment pursuant to the January agreement because she did not want to jeopardise the financial viability of SRPL, she nonetheless accepted the cheque provided to her by the second defendant for that amount.

The second defendant denies that such a conversation took place about certain arrangements standing outside the January agreement, and I accept the second defendant's denial. I reject Ms Craig's account of that conversation (at [636]) in her affidavit.

The second defendant asserts (at [341]) that Ms Craig simply presented a cheque completed for the amount and asked the second defendant to sign it on the basis that it represented an amount owing. The second defendant said she merely complied and signed the cheque which was already made out for the relevant amount. That she would simply trust Ms Craig's account of what was outstanding and immediately sign the cheque in my view is entirely consistent with the nature of their relationship at the relevant time.

For the year 2001, Ms Craig purports to set out numerous conversations referring often to either "our agreement" or "the arrangement" allegedly struck in January 2000, as a result of which, Ms Craig asserts, monies were advanced from time to time partly or wholly under that arrangement or agreement. Without exception, the second defendant denies any acknowledgement or reference to such an arrangement. For reasons already advanced, I accept the second defendant's denials and reject the assertions to that effect by Ms Craig, although I accept monies were undoubtedly advanced.

According to the schedules prepared by the plaintiffs, for the year 2001 the first payment was a payment from SRPL to Ms Craig and her husband's Mortgage Equity Account in the sum of $33,000. Thereafter, according to the schedule for that year, many payments (usually for odd amounts) were made by either DLCA, or DLCP to the first defendant, employees of the first defendant, SRPL and/or Le'Brook totalling some $408,045.05. However, according to the plaintiffs' schedules, in the same year, the defendants appear to have advanced the sum of $320,671.64 to DLCA, Ms Craig and her husband's Mortgage Equity Account or in one case to Ms Craig and her husband's "Classic Plus Account".

Ms Craig asserts that she and her husband went to great lengths and suffered some commercial disadvantage to borrow monies for the purpose of advancing funds to SRPL and/or one or other of the defendants. In particular, she gives an account of a transaction with AAA Finance Services Pty Ltd (AAA Finance). There were apparently two transactions with that company. It would not be an understatement to describe AAA Finance as a lender of last resort given the interest rate disclosed in the second of the two loans.

Ms Craig asserts (at [737]) that in February 2002 for example she (in her role as general manager) had a conversation with the second defendant in which they discussed the balances in the various SRPL accounts. Ms Craig asserts that Ms Lee indicated that she expected monies would have come in prior to that date under an arrangement with DuPont. As a result, she asserts that she was prevailed upon by the second defendant to approach AAA Finance and borrow monies in order to provide monies to SRPL. There is little doubt that such a financing arrangement took place. The impression Ms Craig seeks to create is that but for the request from the second defendant she would not have ever entered into the arrangement with AAA Finance.

The second defendant denies ever requesting Ms Craig to enter into any mortgages or loans for the purposes of advancing funds. She also asserts that in any event she left Australia on 12 February 2002 and did not return until 14 March 2002, and so could not have had such a conversation. There are materials from the Department of Immigration to support those dates. However, the physical absence from Australia does not exclude telephone contact.

Ms Craig asserts, and the documentation does appear to support the assertion, that $100,000 was provided by way of loan was provided by AAA Finance at or about this time. She asserts that there were a number of other amounts paid by way of establishment fees etc, for the purposes of the loan (at [731]). Ms Craig then asserts that monies were provided to SRPL, totalling approximately $25,000. However the suspense account for SRPL for the relevant time indicates certain monies coming back from SRPL to Ms Craig and/or her entities, and for that matter AAA Finance, which I deal with below in some detail. Ms Craig does not deal with these events nor frankly does the second defendant. However, a reasonable inference is that even if, as I have said, Ms Craig's version is correct, monies were transferred back in various amounts in some instances seemingly direct to AAA Finance. I should observe that there is no evidence that SRPL or any of the other defendants had any loan facility with AAA Finance.

However, it seems Ms Craig was clearly suspicious about what she was being told by the second defendant about the DuPont deal in particular and about monies coming in. She asserts that in or around late March 2002, apparently by accident, she found a document in the photocopier in the offices at the Manor House (at [763]). She asserts she confronted the second defendant with the document which apparently disclosed matters about the DuPont deal which the second defendant had not told her about. She asserts that, upon being confronted with the document, the second defendant told Ms Craig that within a few months some US$65 million would be received into the coffers of SRPL. Ms Craig said she warned the second defendant not to be so confident that this would happen. She asserts that the second defendant told her about the establishment of a number of companies in Ireland. As a result, Ms Craig requested that a meeting be scheduled that there could be a reconciliation and the commencement of payments under the January agreement (at [765]).

The second defendant denies that such a conversation took place and denies any such request by Ms Craig or any agreement by her to have a meeting to discuss the "January agreement". Again, for reasons already articulated, I reject Ms Craig's version of this conversation and accept the second defendant's denial that any such conversation took place particularly one in which reference was made to the "January agreement". It may well be that Ms Craig discovered materials concerning the DuPont arrangement, and it may well be that she felt in some way betrayed that she had not been given up to date information about it. This may be one of those matters which flamed some sense of grievance.

In any event, Ms Craig asserts that in or about March 2002 she became aware that SRPL had indeed successfully completed a contract with DuPont. As a result, she alleges she had a conversation with the second defendant in order to again reconcile various financial matters. She asserts she told the second defendant that she had not been invoicing SRPL for the services provided by DLCA and that that could no longer be sustained. The second defendant allegedly invited her to invoice for the work and to pay herself out of SRPL. The second defendant, according to Ms Craig, also invited her to tell Mr Govender to invoice SRPL for any consulting services outstanding so far as he was concerned as well. Ms Craig asserts that she indicated her willingness to discount her fees but was told by the second defendant that that would be unnecessary. Ms Craig alleges certain invoices were then raised.

The second defendant denies that such a conversation took place. However, she accepts (at [369]) that Ms Craig was authorised to arrange for payment of expenses incurred by DLCA in the course of providing services to SRPL and that she believed that such invoices had in fact been raised and paid.

However, I am by no means persuaded that such a conversation took place as alleged by Ms Craig. This is yet another example where she (at [770]) purports to set out in direct speech without the benefit of any contemporaneous diary note a conversation which allegedly took place in March 2002. There may well have been a conversation about invoices, but I am not persuaded Ms Craig can reliably recreate in direct speech the extent of the alleged conversation.

For the year 2002, again accepting the accuracy of the plaintiffs' schedules, DLCP advanced the sum of $83,171.36 to one or more of the defendants. For the same year, the plaintiffs assert the defendants advanced on the other hand some $321,650 to either DLCA, DLCP and/or herself and her husband directly. These amounts comprise generally odd amounts, ranging from approximately $4,105 to $50,000, suggestive of payments for quite specific activities or services.

Ms Craig deals rather briskly in her affidavit with the years 2003 to 2008 (at [821]-[877]).

As I have already observed, between these years, Ms Craig and her husband and related entities were in some financial difficulties from time to time. This was largely due to, it seems, their property development activities. The defendants on the other hand had monies coming in (or monies had come in) and clearly at the second defendant's direction, monies were made available on a regular basis to Ms Craig and others in an attempt to ease their financial burdens.

It is also clear that the type and frequency of contact between Ms Craig and the second defendant in particular changed significantly during this period. This may be accounted for by reason of the fact that with an influx of cash the defendants became much more self-sufficient and employed people to perform managerial and other tasks that might in the past have been performed either by Ms Craig or her relatives. Indeed, Ms Craig's account of this period would suggest that contact between herself and the second defendant was almost entirely by email. She managed, as she puts it, to be kept up to date by her brother Mr Govender, who was still employed on behalf of SRPL during a part of this period (at [930]).

The second defendant asserts that Ms Craig's position as general manager was terminated in early 2003 by Ms Craig herself on the basis that she wanted to concentrate more on her property investment business with her husband. She allegedly indicated to the second defendant that she did not have enough time to continue working for SRPL. Ms Craig accepts (at [821]) that indeed she did cease her consulting arrangement in about April 2003. Thereafter she says she no longer invoiced SRPL.

According to the plaintiffs' schedules, from the year 2003 no further monies were advanced by them to any of the defendants. All of the payments from April 2003 to April 2008 are all from the defendants to either DLCA, DLCP or Ms Craig and/or her husband, with two payments to Mr and Ms Craig's superannuation fund. However, from the year 2003 there begins to emerge somewhat of a pattern. For that year, according to the plaintiffs, the defendants advanced some $471,680. Interestingly though, there were six payments, each for $33,000, in July, August, September and October 2003. This pattern is unexplained on the evidence.

In the year 2004, according again to the plaintiffs' schedules, the defendants advanced $376,000. However, a further pattern emerges. For that year, eleven of the eighteen payments were for $16,000. This pattern, which follows into subsequent years, is, however, in my view clearly explained by the emails to which reference is made below.

In the year 2005, according to the plaintiffs' schedules, the defendants advanced $197,800. Eleven of those payments (out of thirteen) were for $16,000. The two other payments were for $16,800 and $5,000 respectively.

Ms Craig asserts that as a result of a conversation with Ms Yan-Colebourn, she agreed to provide, and at the request of the second defendant, what she describes as a "letter of guarantee". Indeed, she describes it as a "personal guarantee" (at [842]). She did so because she said she wanted to assure the future financial viability of SRPL. The second defendant denies that she requested that Ms Craig provide such a guarantee (at [385]).

However such a letter does exist (CB4/1235). It is dated 6 April 2006. The letter, which is signed by Ms Craig, confirms that she guarantees from "my own resources" that she would fund a repayment of a loan of some $2,070,000 at the close of six months from the date of the letter. There is no evidence as to what (if any) use was made of the letter. It is not a standard form guarantee and its legal enforceability as such is highly doubtful. I have little doubt however that Ms Craig, as an act of goodwill and in recognition of the considerable indulgences which had been provided to her, her husband and their corporate entities by the defendants up to this point, decided to do what she could to assist. Ms Craig and her husband at this time in 2006 had been in regular receipt for years of monies from SRPL. This had been as a result of her direct requests for indulgences contained in the relevant "beans" emails. She no doubt felt it was the least she could do for a close friend. I am not persuaded it was done in order to assure her alleged January agreement, and I reject her characterisation of the provision of the letter in that context.

For the year 2006, according to Ms Craig's schedules, an amount of $193,600 was advanced. There were thirteen payments for that year, according to Ms Craig. Two were for $8,000 each. Two were for $16,800, and the rest were for $16,000.

Ms Craig says she was concerned by 2007 by what she describes as a dramatic drop in property prices in the Gosford region, in particular, she thought, of about 25% to 30% (at [851]). As a result, Ms Craig asserts that she sent a number of urgent emails to the second defendant.

She asserts that in August 2007, the payments from SRPL ceased without any communication from the defendants. The last payment of $16,000 was deposited into the DLCA account, so it seems, on 8 August of that year. As I have already observed, notwithstanding the financial difficulties confronted by the plaintiffs, there is no suggestion from her or indeed her husband that they told any mortgagee for example that they had any arrangement or understanding with the defendants of the sort alleged. Nor did these financial difficulties provoke Ms Craig to request the defendants to put in writing the details of the so called January agreement. These were, if I accept Ms Craig, very difficult times and yet she remained silent as to the somewhat lucrative arrangement to which she and her husband were apparently entitled.

For the year 2007, the amount advanced according to the plaintiffs' schedules, was $96,000. There was a pattern, however, as there were six payments, each of $16,000.

By the end of August 2007, Ms Craig, it seems, had been told by her brother that the second defendant wanted to place the Frederick Street unit on the market. As a result, after some time, she decided that she should meet with the first defendant to explain her situation. She asserts that such a meeting took place on 4 April 2008. Further, she asserts she took a bundle of documents with her to the meeting and complained to the first defendant that she had not received any further payments of $16,000 for almost ten months. She asserts the first defendant indicated he knew nothing of the arrangements and indeed had understood that all monies which had been provided by Ms Craig and others associated with her had been repaid. Ms Craig asserts she told the first defendant that that was not correct and that there were still monies outstanding (at [871]). In particular, Ms Craig asserts she provided the first defendant with a copy of Exhibit P4 (or Documents A and B (at [873])). She asserts she informed the first defendant that the second defendant had given her the documents.

In response, the first defendant informed Ms Craig that he had no idea about the documents however he would try to sort the matter out and asked Ms Craig how much she needed. She told him she needed $16,000 straightaway but would need another $100,000 soon thereafter (at [874]). She asserts the first defendant said he was completely uninformed but would take the matter up with the second defendant. Thereafter Ms Craig acknowledges that on or about 12 April 2008, DLCP received an amount of $16,000 from SRPL. This was the last payment ever received.

The first defendant acknowledged that he met with Ms Craig in early April 2008. He does not recall the conversation attributed to him and he recalls the meeting taking about ten minutes. He further concedes that Ms Craig handed him a folder of documents and also a single sheet of paper which had numbers on it. He recalls that there appeared to be something in the order of $500,000 said to be owing as allegedly outlined in the document. He asserts that Ms Craig said to him that the document was a reconciliation of what was owed to which he replied that he was aware that SRPL had been paying $16,000 a month "to help you out" and that he did not think anything was owed. He accepts that Ms Craig asserted that not all monies had been paid back (at [135]).

The first defendant does recall that Ms Craig asked for a further $16,000 to which he replied he would have to speak with the second defendant and that the payment of further monies could not come from Memjet as Memjet had external investors and that monies would have to come directly from either the first or second defendant or from companies they control.

The documents which the first defendant acknowledges he was handed at the April 2008 meeting (at [135] of his affidavit, CB5/1248-1324) are indeed a miscellany. There are two pages which deal with what is described as a "loans summary" and a "loans document". There are copies of deposit slips, there are other pages dealing with what are described as "Silverbrook loans" and a transaction report, being a document dealing with cash advances to SRPL, the 6 April 2006 "guarantee", some bank statements and, as Ms Craig asserts, Exhibit P4.

Importantly however, Ms Craig does not assert that in the course of this meeting, she alleged there was any arrangement such as the January agreement. Her evidence is entirely silent on this issue. If there ever was a moment when she should have asserted the existence of such an arrangement, this was her chance, yet she failed to do so. She did not raise the January 2000 deal not because she forgot, or she lacked composure. She failed to do so in my view because no such arrangement existed. This was a meeting she requested and prepared for because she had compiled pages of material to give to the first defendant.

What is even more significant is that Ms Craig sent two emails shortly following the meeting, and in neither of those emails did she mention the alleged agreement in January 2000. The first email, which was sent on 6 April 2008 simply refers to the discussion and the fact that "we" had not received any money for ten months. The plaintiffs then asserts "our mortgages are (sic) in default".

A further email however was sent by Ms Craig on 8 April 2008. She makes no reference to this in her affidavit. It is an important email in my view and I therefore propose to set it out in full: Subject: Our Meeting Hi Kia, It seems that you have been misinformed about a number of things This is an attempt to set the record straight You mentioned the $70K paid for the cafe equipment "to help Sam and Heydon" I was surprised you even knew about that. Especially since you said that you did not know the extent of our loans [emphasis added] to Silverbrook Research I checked my records and this is what happened I told Janette that the valuation for the equipment was $45K Janette offered $75K for the equipment I told her that I thought that $75K was too much but that I would apply the balance of the payment to the Silverbrook loans [emphasis added] I received two payments $42,000 and $33,020 The $42,000 was applied to the Sale of the equipment and used for the surrender of the lease The $33,020 was applied to the Silverbrook loans [emphasis added] in 2002/3 This is as reflected in the summary of payments from Silverbrook Research that I handed to you at our meeting on Friday It did not make sense to trigger a capital gain for the sale of the equipment when so much money was still owed to DLC Regarding your comment that the food was marked up by 30% This too is incorrect. If Geoff told you this he was lying. They did receive a discount from a number of their suppliers because of the volume that they purchased In the normal course of their business they used this discount to defray their other expenses incurred, refrigeration, electricity and water I know this is history but we might as well know the truth Regards Lorretta [emphasis added]

Not only did Ms Craig fail to mention the alleged agreement she apparently reached with the second defendant when she met the first defendant on 4 April 2008, but she failed in two subsequent emails to even hint that such an agreement existed. This was at a time when she and her husband were under the most extraordinary financial stress and if it be true that not only the equity agreement was in place but the unit at Frederick Street was merely being held on trust and could be reconveyed at her request, the failure to raise one or both of those matters either with the first and/or second defendant if it be the truth is not capable of a plausible explanation. This corroborates my view that Ms Craig's assertion about the existence of the January agreement and/or the trust arrangement in relation to Frederick Street is simply not "the truth" to quote from the last word of her email of 8 April 2008.

As mentioned, Ms Craig asserts that in the year 2008 there was one payment only, namely on 12 April 2008, for $16,000. That was the last of the monies ever advanced by the defendants to the plaintiffs.

For the reasons set out above (at [305] to [307]) I reject Mr Craig's evidence and do not consider it to corroborate Ms Craig's evidence.

In his affidavit evidence, Mr Silverbrook denied that a number of key conversations alleged by Ms Craig took place. Mr Silverbrook's denials were frequently based not on the faith of his actual recollection, but on an alleged inconsistency between the content of Ms Craig's evidence and objectively ascertainable facts at the time. For example, Mr Silverbrook denies Ms Craig's allegation that in January 2000 he advised her that the Memjet printhead included 70,000 print nozzles, on the basis that as at January 2000 the printhead had precisely 84,480 nozzles, and that a configuration of 70,000 nozzles was not conceived until 2003 ([79] of Mr Silverbrook's affidavit). On that issue, I have already formed the view he is probably correct. Many of Mr Silverbrook's denials are of the content of conversations alleged by Ms Craig, and especially the one said to have taken place during the alleged meeting of January 2000. But on many other aspects of his evidence, his so called recollection was exposed as faulty and unreliable.

Again, contrary to Ms Craig's evidence, Mr Silverbrook denied the possibility that he mentioned to Ms Craig in January 2000 that he had plans to develop a prototype of the Memjet printhead, as no such plans were in place in January 2000, and he only had an intention to progress the technology to no more than a proof-of-concept stage, and that any process to develop a prototype would take at least three to four years ([78], [87]-[88] and [95]-[96] of Mr Silverbrook's affidavit). During cross-examination, Mr Silverbrook initially confirmed that this was his view (T345.31-45, T346.46-T347.8, T422.1-14), but later conceded that it was likely that as early as November 1999 he had a meeting a Mr Perham in which he discussed the possibility of a prototype being prepared, and that he may have been mistaken to assert in his affidavit that he had no intention as at January 2000 to develop a prototype, and he also conceded that it was possible to arrange for a prototype to be prepared by mid-2000 (T427.3-20, T429.7-30, T456.10-26, T465.23-466.10).

Mr Silverbrook challenged Ms Craig's evidence that she was advised by himself and Ms Lee in 1999 that he had been to the United States seeking investors for the Memjet technology. Mr Silverbrook asserted that he could not recall any such conversation. He also alleges such a conversation was unlikely to have taken place because its content was inconsistent with the allegedly objective fact that as at 1999 he firmly had no interest in obtaining venture capital ([70]-[71] in Mr Silverbrook's affidavit and T339.4-340.29, T371.32-372.21, T421.32-38). However, Mr Silverbrook ultimately conceded in cross-examination that venture capital investment was being discussed and contemplated in 1999 (albeit through a separate corporate vehicle) (T426.21-25, T427.26-43, T428.30-31).

Also contrary to Ms Craig's evidence, Mr Silverbrook denied that a list of companies (appearing on the top left of CB 714) which were handwritten by Ms Lee, represented potential chip manufacturers to be involved in manufacturing chips for the Memjet technology ([90]-[93] of Mr Silverbrook's affidavit), on the basis that (all except two of) these companies only manufactured "CMOS" chips (complementary metal oxide semiconductor chips) and not "MEMS" chips (micro electrical mechanical systems chips), and the Memjet technology required MEMS chips. However, in cross-examination, Mr Silverbrook conceded that the MEMS chips manufacturing process required CMOS chips as a starting point, and it emerged from the evidence that it was therefore possible to have a separation of CMOS and MEMS manufacturing facilities (T367.6-368.42, T369.5-370.33, T433.46-434.30).

Likewise, Mr Silverbrook initially denied Ms Craig's assertion that a second list of companies (appearing on the top right of CB 714) handwritten by Ms Lee represented target companies or potential market segments for the Memjet technology ([94] and [96] of Mr Silverbrook's affidavit and T420.29-44) but subsequently indicated in cross-examination that at least some of those companies were in contemplation as potential market segments for the Memjet technology (T433.21-44).

Mr Silverbrook also denied Ms Craig's assertion that there was a "Letter of Intent" payment from DuPont, on the basis that he would never have described any payment as such, and that DuPont never paid any money simply to look at the technology, as it was "heavily patented" and therefore publicly available for observation. However, during cross-examination, Mr Silverbrook again conceded that there was in fact such a payment, and that the evidence he gave in his affidavit was incorrect (T441.30-442.41).

In a number of respects, Mr Silverbrook also denied Ms Craig's evidence on the basis that the content of her evidence included assertions about the Memjet technology which were allegedly inconsistent with the developmental stage of the technology at the time. For example, Mr Silverbrook asserted that, contrary to Ms Craig's evidence, the Memjet project had nothing to do with an earlier project known as "Artcam" ([84] of Mr Silverbrook's affidavit), that print rolls were specific to Artcam and had never been used in Memjet, and that the concept of print rolls became obsolete along with Artcam in 1998 ([86] of Mr Silverbrook's affidavit). During cross-examination, however, Mr Silverbrook somewhat qualified his evidence and said that Memjet "came out of" Artcam, that Artcam was one of the potential markets for the Memjet technology, and that the Artcam technology was "revivable" (T729-432).

Other concessions of a similar nature were elicited during Mr Silverbrook's cross-examination. Some of these concessions were more qualified than others. It is fair to say that a number of the allegations expressed with certainty in Mr Silverbrook's affidavit were subsequently accepted as inaccurate or were qualified in some way by Mr Silverbrook during his cross-examination. Mr Silverbrook conceded in the early stages of his cross-examination that he was generally "never very confident with dates" (T340.49-50, 346.21-22, 356.17-31), and expressed some doubts about the accuracy of some of the content of his affidavit (T347.21-22, 373.10) and generally about the reliability of his memory on some aspects of his evidence.

At the commencement of the second day of his cross-examination, Mr Silverbrook candidly stated that his confidence in the "peripheral things" of his affidavit was "shattered" (T440.12-15). Mr Silverbrook indicated that some of the inaccuracies in his affidavit may be attributable to a lack of time spent preparing his affidavit, to a failure to check details by reference to contemporaneous documents, and to a failure to check aspects of his affidavit before giving oral evidence (T443.36-45, 389.3-390.26, 366.18-31), as he was too busy to do so (T390.21-26).

It is necessary to consider where Mr Silverbrook's evidence is left, given the concessions he made and the justifiable lack of confidence he expressed in his evidence during cross-examination. As counsel for the plaintiffs recognised, a recurring "theme" or pattern in Mr Silverbrook's evidence was to deny certain allegations made by Ms Craig, and to support that denial by reference to an apparently objective factor rendering Ms Craig's allegations necessarily untrue. Mr Silverbrook indicated, in my view honestly, that he had no actual recollection of what occurred during the lengthy but distant periods of time covered by Ms Craig in her affidavit. As indicated above, Mr Silverbrook conceded that a number of these "objective factors" by reference to which he supported his denials of Ms Craig's evidence, were in fact misconceived on his part. In my view, this takes away from the strength of his denials of those particular aspects of Ms Craig's evidence, but it does not require an acceptance of Ms Craig's evidence (Steinberg v Federal Commissioner of Taxation [1975] HCA 63; (1975) 134 CLR 640 at 684 per Barwick CJ and at 694 per Gibbs J). It "leaves open" the possibility (but does not confirm) that those particular allegations made by Ms Craig are true, but the burden remains on Ms Craig (or the plaintiffs) to establish the truth of her own allegations. For the reasons already given above, I have rejected nearly all of Ms Craig's allegations as untrue or unreliable.

Despite his concessions, Mr Silverbrook confidently maintained that he was in a position to assert that there was no agreement pursuant to which one or more of the plaintiffs would receive an equity participation in the commercialisation of any technologies. When it was put to him in cross-examination that there was an agreement giving Ms Craig an equity interest in the profits to be generated from the commercialisation of the Memjet technology, Mr Silverbrook denied it. Although it was not specifically put to him that there was an agreement for a precise share to Ms Craig of 4.34%, that may be attributable partly to a forensic decision on the part of counsel for the plaintiffs, but also to the fact that, on Ms Craig's own evidence, Mr Silverbrook was not present at the second half of the relevant alleged meeting where that figure was allegedly raised. In my view, whether or not there was an agreement to give Ms Craig an equity participation, is in a separate category to the balance of Mr Silverbrook's evidence, and I do not think Mr Silverbrook's denial of the formation of such an agreement or arrangement was affected by inaccuracies or concessions he made in relation to other parts of his evidence. I accept his denials therefore that he ever promised an equity participation to Ms Craig.

I also found Ms Lee's evidence unsatisfactory in a number of respects. However, in my view, in crucial respects she had both plausible and I believe truthful explanations for a number of the handwritten comments written for example on Exhibit P4. I have already dealt with a number of these and I have already indicated where I accept Ms Lee's evidence in preference over that of Ms Craig.

Notwithstanding her intelligence, I am, as I have already commented, of the view that Ms Lee was commercially dysfunctional. She was disorganised in the sense that she was unwilling or unable to provide ready explanations to either Ms Yan-Colebourn or Mr Govender so that a number of matters assigned to the suspense account could be resolved and eliminated. Some of them must have been obviously capable of expeditious resolution. For example, expenditure in relation to Qantas.

She had little if any recollection of a number of significant matters particularly concerning the provision of substantial advances by Ms Craig and/or her entities to SRPL. Ms Craig on the other hand, as I have already commented, purported to be able to provide considerable detail (implausible in my view) in relation to many of those payments.

Because of the informal manner in which the parties conducted their affairs, especially in financial matters, on balance I accept Ms Lee's inability to recall precise detail as being a much more truthful and accurate indication of the situation over that of Ms Craig's. The second defendant, although unable to recite seemingly in great detail, was, in my view, able to cogently address and plausibly deny key aspects of Ms Craig's account of matters especially in relation to crucial aspects of the alleged meeting in January 2000.

I am satisfied that when it came to financial matters, the second defendant had little interest or concern for proper accounting methodology. I am also satisfied that in many instances payments were inappropriately or inaccurately characterised. I am not certain however that Ms Lee adopted such an approach to secure some financial advantage. As I have already said I think she was simply just commercially dysfunctional.

From what I have already said, where there is any dispute between Ms Craig on the one hand and the second defendant on the other, in the absence of corroboration, I would without hesitation prefer the evidence of the second or for that matter the first defendant over that of Ms Craig.

The conduct of Ms Craig and the second defendant, especially in relation to blank cheques, was quite extraordinary. However I am certain it happened on many occasions and it is entirely consistent with the rather cavalier approach adopted from time to time by the parties without the slightest regard to the proper characterisation of expenditure.

In addition, the "beans" emails, in my view, entirely support and corroborate the second defendant's assertion that no such equity arrangement was entered into as is alleged by Ms Craig nor in my view was there a trust arrangement in relation to the Frederick Street property as asserted by Ms Craig.

The second defendant was, if I may say, skilfully cross-examined by counsel for the plaintiffs. He commenced the cross-examination unsurprisingly with the topic of the Frederick Street unit. The second defendant was exposed at the very least as adopting a breathtakingly indifferent position in relation to the acquisition of that unit. Her failure to obtain the key for the property and even seek access at the time of the settlement or seemingly for years thereafter was odd to say the least. However, in the end, for reasons I explain elsewhere, I am satisfied that the second defendant acquired the unit expressly for the purpose of assisting Ms Craig, her husband and family both in the short and long term; in the short term by provision of money as the result of the acquisition of the property, and in the long term by effectively permitting Ms Craig to continue to use the unit for her own purposes or those of her family.

It was put expressly to the second defendant that she had come to an arrangement with Ms Craig in which she had agreed to buy the property and that Ms Craig would receive the purchase money on the understanding that the true position was that beneficially Ms Craig would continue to own the property (T520.30-T520.35). The second defendant denied that, and I accept her denial. One of the reasons for which I accept her denial is that the level of generosity displayed by the second defendant in relation to this transaction is entirely consistent with her generosity otherwise in respect of making monies available to Ms Craig and her husband for some years to assist them to make their mortgage payments and complete the development of Pearl Beach. However, I think equally important is the fact that Ms Craig never once in an email, a letter or otherwise sought to assert her supposed right in relation to the property nor did she ever seek the reconveyance of the property in circumstances where the two were still on good terms and yet she and her husband were having difficulty with financiers and/or mortgagees. If she was truly the beneficial owner of the property, and believed so, there is no reason, when financial pressure was mounting, for her not to seek the reconveyance so as to discharge debt or alternatively inform a financier or mortgagee about the asset she beneficially owned. Nothing apparently prevented either she or her husband from doing so.

Counsel for the plaintiffs also exposed what he described as a technique used in the second defendant's affidavit where she relied upon collections of paragraphs which provided what might be described as somewhat generic explanations rather than dealing specifically with the detail of Ms Craig's particular allegations (T525.20-525.35).

Again the second defendant was simply unable to give any clear or precise evidence about consulting services and/or the issue of particular invoices which were raised from time to time. She of course had kept no contemporaneous notes herself and was probably reliant upon Ms Craig for reconciliations of outstanding amounts.

She conceded what, if I might say so, was plainly obvious that until the two had a falling out there was a large degree of trust between herself and Ms Craig (T537.45).

On occasions she sought to deny that SRPL was either in financial disarray or financial distress. On balance it seems to me highly likely that both the second defendant and for that matter Ms Craig assisted each other from time to time when they were respectively in financial distress in an unquestioning way. I think it is plain that often the time at which advances were made was when a mortgagee was pressing Ms Craig, and/or alternatively SRPL had insufficient resources to pay wages and from time to time personal credit card expenses. I have no doubt that at relevant times both the second defendant and Ms Craig came to each other's aid as and when required. No doubt it was convenient for both parties to have, as it were, advances and/or loans available for indefinite periods at no fixed rate of interest. There is no doubt that the second defendant found this a much more congenial way to proceed rather than put her affairs in order. She did however have a substantial property portfolio which had grown over the years. Whether or not SRPL needed money from time to time, I am satisfied that the second defendant, as the person in control of SRPL's finances, did not turn her mind or indeed bother to organise its affairs in a businesslike way. She relied upon Ms Craig from time to time clearly, as I have said, as a convenient source of interest-free funds.

So far as the advance and/or gift, whatever it was, in April 1996 of $200,000 is concerned, there is little doubt that the second defendant's attempt to explain that was vague and unconvincing. She clearly had very little if any recollection of the amount except that two lots of $100,000 were advanced. She attempted to suggest that it was within the general practice and/or arrangement concerning consultancy fees and/or business dealings. Whatever it was, I am certainly not prepared to entirely accept Ms Craig's version of events in which she alleges the $200,000 came to be advanced. I have certainly taken into account the fact that the second defendant's explanation is unconvincing but equally I am not persuaded that Ms Craig is telling the truth about the circumstances in which those monies were advanced. More probably than not, monies having become recently available from Kodak, both the first and second defendant, undoubtedly in recognition of the support financially and otherwise they had received from Ms Craig, considered it was not inappropriate to advance or give $200,000 to her. It may well be they owed her some monies at the time, which is what Ms Craig asserted.

Counsel for the plaintiffs confronted the second defendant with Exhibit P4, but, as will appear, did so only in a limited respect and in my view, critically, not to the level of detail approached by Ms Craig in her purported reconstruction of the meeting on 20 January 2000. In my view this speaks volumes forensically. When a skilful cross-examiner, such as counsel for the plaintiffs, makes a deliberate forensic decision not to cross-examine on an area which may been seen as central to his client's case, I consider it is reasonable to conclude that he did not feel able to advance his client's case in that respect by doing so (Browne v Dunn (1893) 6 R 67 (HL); R v Manunta (1989) 54 SASR 17; R v Birks (1990) 19 NSWLR 677). Counsel does not have to believe in his or her client's case, and forensic judgments have to be made all the time as to if, and to what extent, issues that are on the table so to speak are to be challenged and confronted. In some instances no inference could reasonably be drawn by reason of a counsel's failure to cross-examine on a topic. But whereas here, where counsel for the plaintiffs is one of the most competent currently in practice, his failure to cross-examine a witness on a topic carries with it, in my view, significant forensic consequences.

For example, while counsel for the plaintiffs did put to Ms Lee that there was a meeting in January 2000, that Ms Lee made notes at that meeting, that a fixed percentage of equity for the plaintiffs was agreed, and that there was an agreement to pay approximately $9 million to the plaintiffs, he did not test Ms Craig's elaborate assertions that Ms Lee specifically mentioned the figure of 5.94%, or that such a figure represented a 4.34% interest for the plaintiffs and 1.6% for Ms Lee's family members, or that the 4.34% was further broken down to 1.84% and 2.5%, or that the figure "1,474,000" bears the meaning ascribed to it by Ms Craig, or that Ms Lee performed calculations on a laptop during the meeting. There were numerous other details asserted by Ms Craig on which Ms Lee was not challenged, including whether "Parr" referred to an individual named "Mr Parr", whether "GIC" was an acronym for "general interest charge", whether individuals named Greg McAvoy and a Paul Lapstun would receive shares or equity interests in the expected profits of the Memjet technology, whether "KCS" represented Mr Silverbrook's initials, and whether she could recall the meaning of "MQ", "Mara Hara", and a multitude of other notations. Given the alleged significance to the plaintiffs' case of the meaning of these notations (in particular the figures), their omission, in my view, from cross-examination is not trivial.

In any event, it was put to the second defendant that Document A concerned Memjet marketing and Web TV. The second defendant on more than one occasion preferred to describe her handwriting on Exhibit P4 as her musings (T631.5). She did not recall creating it. She did not believe that the note was created by her in a meeting with the first defendant and Ms Craig in which they discussed the future potential of Memjet (T633.40-T633.45).

The second defendant accepted that the second page did contain Ms Craig's handwriting in the top left hand corner. She also conceded that the acronym "DLC" appeared twice on the document together with references to 49 Frederick Street, the units which Ms Craig and her husband had developed. However the second defendant persisted in her characterisation of the second page as mere musings (T635.22).

The document in my view does in part corroborate the uncontroversial fact that Ms Craig and the second defendant in the latter part of 1999 discussed the purchase by the second defendant of the unit in Frederick Street. This would certainly explain the references on the page both contributed to by the second defendant and for that matter Ms Craig.

The second defendant had to concede that she may well have had meetings with Ms Craig at which other matters might have been discussed, but she denied that she would have had any meeting about the so called January agreement (T637.15-T637.32). Counsel for the plaintiffs put directly to the second defendant that in January 2000 the second defendant and Ms Craig had reached an agreement on the basis that when the "project" had reached commercialisation the plaintiffs would receive a share in the profits. It was further put in general terms that an actual percentage was struck (without specifying the percentage). The second defendant rejected those propositions (T638.40-T638.46) and I accept her evidence in that regard for reasons I have earlier advanced.

When confronted with the volume of monies which had on the plaintiffs' case passed from the defendants to them in the second half of 2000, the second defendant simply indicated that it was part of an "ebb and flow" of monies between the two of them at various points. Whilst this is a vague response, I think it is more probably than not the truth. I am certainly satisfied that the monies were not paid by the defendants in recognition or in the purported implementation of some January agreement.

The second defendant was briefly asked about the "beans" emails. She asserted that she had used the code name "to make searching for the emails effective". She also agreed that she did not use this terminology in respect of anybody else (T689.20-T689.25).

I am satisfied that one reason at least that the second defendant used this description was perhaps to keep out of obvious view particularly from the first defendant the precise detail of the sums of money being provided from time to time to Ms Craig and her interests, and the circumstances in which they were being advanced.

A little later in the cross-examination, counsel for the plaintiffs put that a meeting had taken place in January between Ms Craig and the second defendant in which the second defendant detailed the future plans for Memjet and further discussed how future expected profits would be divided up. The second defendant again rejected the proposition accepting that there may well have been meetings in January 2000 but certainly not on the topic of dividing expected profits. Counsel for the plaintiffs did however specifically put, as I have said, to the second defendant that part of the arrangement that she came to with the plaintiffs in early January 2000 was that she (Ms Craig and/or her interests) would be paid about $9 million as and when commercialisation occurred. Again, the second defendant rejected such a notion (T704.11-T704.20). Again, for the reasons already expressed I accept the second defendant's denial.

To give appropriate consideration to SRPL's financial accounts tendered by the parties, it is necessary to appreciate the accounting practices (or lack thereof) of the defendants. Two witnesses are relevant for that purpose, namely Ms Yan-Colebourn and Mr Govender.

Ms Yan-Colebourn was the accountant for the SRPL from 1989 to 2008. She gave oral evidence only at an interlocutory stage in the proceedings, on 27 June 2013, and did not provide any affidavit evidence. During the course of the hearing before me, the plaintiffs tendered a copy of the transcript of her oral evidence, and it was marked Exhibit P7. Ms Yan-Colebourn was a partner at Moores Chartered Accountants (Moores) between 1989 and June 1999 and PKF Chartered Accountants (PKF) from around June 1999 until 2008.

Mr Govender was the Finance and Administration Manager at SRPL from December 2001 until March 2008. According to his affidavit evidence, his services were initially supplied by DLCA but he later became directly employed by Le'Brook (in 2003) and then by SRPL (in 2004).

The defendants did not cross-examine Ms Yan-Colebourn or Mr Govender. The plaintiffs therefore contend that the evidence of both of these witnesses should be accepted.

Ms Yan-Colebourn gave evidence that she first met Ms Lee around 1990 in the offices of Moores, where Ms Lee came to see her and informed her that she controlled the corporate entity, Lee Edison. Ms Yan-Colebourn could not recall precisely the type of accounting services she provided to Ms Lee at the commencement of their relationship, but she recalls that over a number of years she prepared a number of tax returns for Lee Edison.

Ms Yan-Colebourn also gave evidence that, while still working at Moores, she was introduced to Mr Silverbrook through Ms Lee, who she understood was in a relationship with Mr Silverbrook. Although she could not recall precisely, Ms Yan-Colebourn gave evidence that Mr Silverbrook probably came to see her for the purpose of setting up a company for scientific research, SRPL, and she recalls having discussions with him about his departure from Canon, and being advised by him that the intellectual property in any inventions he developed whilst he was at Canon belonged to Canon.

She also gave evidence that she was advised by Mr Silverbrook about a proposed sale to Kodak by Mr Silverbrook or SRPL of a technology he had developed, and she in turn may have provided or sourced from a third party advice about the tax implications of the sale. Although she could not recollect dates precisely, the documents to which she was taken would indicate that these discussions took place during 1995 and into early 1996. Ms Yan-Colebourn also gave evidence that she understood, in around mid-1996, that "LIFT" was an acronym referring to a printing technology project on which Mr Silverbrook was working, but she could not recollect if it was the technology the subject of the sale to Kodak.

Further, she gave evidence that following the sale of the LIFT technology to Kodak and the payment of $200,000 of the proceeds to Ms Craig, Ms Lee told Ms Yan-Colebourn that Ms Craig was her "best friend" and that the money was for repayment of a loan. On this topic, Ms Yan-Colebourn also gave evidence generally about the intimacy of the relationship between Ms Lee and Ms Craig. She said that Ms Lee and Mr Silverbrook spoke of Ms Craig "with respect" and that Ms Lee always referred to Ms Craig as "her best friend, her one and only friend left".

Some time after the conclusion of the 1996 financial year, Ms Yan-Colebourn was involved in the preparation of financial accounts for SRPL. She gave evidence that in-house staff at SRPL would prepare and provide to her the underlying accounting data which she would then use to prepare financial reports and account summaries. Ms Yan-Colebourn would not, however, check the underlying data provided to her, as she was not providing auditing services.

After the sale of the LIFT technology to Kodak, the proceeds, of over $6 million, were initially recorded in SRPL's accounts as consulting fees. Ms Yan-Colebourn gave evidence that "knowing the client", this would probably be a misdescription or misallocation. During the course of cross-examination, Ms Yan-Colebourn gave evidence that she understood the companies controlled by Mr Silverbrook and Ms Lee to be operating as a "group" (which she called the "Silverbrook group"), with loans going backwards and forwards between the various entities within the group, and bills being paid by one member of the group on behalf of another.

Ms Yan-Colebourn said that as at 2001, she understood, from something Ms Lee or Mr Silverbrook had told her, that the Silverbrook group was having cash flow difficulties. She could not recall the precise date, but she was aware there were claims by creditors and statutory demands served on the company. She said she attempted to have discussions with Ms Lee or Mr Silverbrook about it, but her calls were not returned.

Relevantly, Ms Yan-Colebourn gave evidence to the effect that the accounting systems within the Silverbrook group were very poor. For example, Ms Yan-Colebourn was asked to prepare tax returns for which she was only partially provided information. She was asked to sign off on documents for which she required further data and information, and it was simply not forthcoming. She was very frustrated with the level of information she was given, and indicated in her evidence a degree of exasperation as a result of SRPL's carelessness in recording or providing financial information.

Ms Yan-Colebourn also gave evidence specifically about the unsatisfactory state of SRPL's suspense account. She said that her attempts to clear the suspense account by allocating the items located in it to their appropriate account, were frustrated by a lack of information from Ms Lee. She could recall one particular conversation, at some time after 1999 but before Ms Craig commenced working as general manager at SRPL, in which Ms Lee described a number of the items in the suspense account as a "flow of monies between a friend" back and forth. It was her understanding that although the suspense account items should have been capable of being properly accounted for, she could not do so because she did not understand where monies had been applied. Ms Yan-Colebourn said she felt the topic of the suspense accounts was sensitive, that the suspense account remained uncleared for a number of years, that she was therefore unable to prepare a balance sheet for several years, and that this caused Ms Yan-Colebourn some degree of annoyance.

Mr Govender's duties included day-to-day management of the finance and administration of SRPL, recording data in MYOB (the accounting software used by SRPL), preparing weekly cash flow estimates, liaising with creditors and the Australian Taxation Office, and liaising with external accountants regarding accounting and tax matters.

When he commenced in 2001, the data entries on MYOB had been neglected since the time that PKF had ceased to act as internal accountants (approximately 12-18 months prior to his arrival). Accounting and financial documents were stored at various premises and not in what he considered to be an organised or proper fashion. Shortly after he commenced at SRPL, Mr Govender started a back-up system of MYOB data, and then established a system of regular weekly back-ups.

In his affidavit, Mr Govender gave evidence about SRPL's financial position generally. He said that, from around July 2002, his spreadsheets identifying current liabilities, forecast expenditure and available cash, regularly disclosed a deficiency in available funds. He alleges he had regular meetings with Ms Lee in which she would direct which liabilities or expenditures should be paid and which should not. He alleges that Ms Lee told him during their meetings that he should include payments to DLCA in his forecast expenditure of $16,000 per month, although from time to time the amount changed. He said he assumed Ms Craig had an agreement with Mr Silverbook and Ms Lee but that he did not know what it was.

Mr Govender also gave evidence that between April 2003 and the year 2008, he updated Ms Craig on the financial difficulties SRPL was experiencing.

Mr Govender also gave evidence about SRPL's unsatisfactory accounting practices, particularly in relation to its suspense account. He said he prepared suspense accounts which identified receipts and cash payments about which he had received no advice or information from management as to the correct allocation in the SRPL accounts. The suspense accounts disclosed receipts from Ms Craig or companies associated with her and payments by SRPL to her or companies associated with her. He alleges that in the course of preparing SRPL's tax returns for the financial years 2001/02 and 2002/03 (and also prior to this), Mr Govender made regular requests of Ms Lee for information as to how the receipts and payments in the suspense account should be treated, but Ms Lee regularly responded to these requests by saying it was unimportant, that it would be sorted out later, and that he should continue attending to his daily duties.

I have no difficulty accepting the evidence of Ms Yan-Colebourn and Mr Govender. Not only were they not called for cross-examination, but their evidence is largely or wholly consistent as between themselves, and also with the suspense account documents which I admitted into evidence at an interlocutory stage in the proceedings.

The plaintiffs contend that the suspense account documents show that there were amounts held in an account known as a "suspense account" and that those items could not be allocated or properly accounted for. The plaintiffs submit that Ms Lee's inability or unwillingness to explain the character of the payments to the plaintiffs supports the plaintiffs' case that these were payments made pursuant to an earlier agreement for repayment of monies previously advanced, and made pursuant to a promise for an equity interest, which the defendants wanted to keep secret from third parties (in particular from Mr Stata, as the existence of third party equity interests had not been disclosed to him).

It however seems to me that there are items in the suspense account which could have been allocated to an appropriate account, with little or no difficulty, had Ms Lee actually turned her mind to them. Examples include expenses paid to Qantas, Harvey Norman Computers and Optus Mobile. There are innumerable other examples, most of which are expenses of this nature, rather than payments to the plaintiffs. An alleged fear by Ms Lee that properly allocating the items in the suspense account would reveal the existence of an equity interest held by the plaintiffs does not explain the presence of these simple expenses in the suspense account. In my view, the inference irresistibly emerging from the evidence of Ms Yan-Colebourn and from the evidence of Mr Govender and from the face of the suspense account documents, is that Ms Lee's failure to give instructions for the proper allocation of items in the suspense account is attributable not to a fear of disclosure of third party equity interests, but to Ms Lee's disinterestedness and carelessness as to matters of accounting.

That inference is fortified by the likely fact that a failure to properly allocate relevant items from the suspense account into an appropriate business-expense account would have had the consequence of preventing SRPL from claiming tax deductions to which it may well have been entitled. It demonstrates the extent of Ms Lee's disinterestedness in matters of accounting, and is consistent with the evidence that Ms Lee was commercially dysfunctional generally.

It is necessary to deal with the evidence of Mr Silverbrook's brother, Mr Tilbrook. Mr Tilbrook was employed as SRPL's facilities manager from August 2000 to November 2001, and gave evidence, which was limited in scope, and largely responsive, but nonetheless relevant, to determining the provenance of financial information Ms Craig alleges she obtained from SRPL's databases. During the course of the proceedings, it was necessary to consider the evidence of Mr Tilbrook and the competing evidence of Ms Craig, and to make some findings, for the purpose of making a ruling as to the admissibility of a number of documents.

In her evidence, Ms Craig disclosed a number of documents which she alleged were documents of SRPL. Ms Craig alleges these documents were contained on what she described as a "SRPL Back Up File" and/or a "My Back Up File" (together, the Zip Disks). Her evidence is that, in July 2001, whilst she was working as SRPL's general manager, she was given the Zip Disks by Mr Tilbrook. In cross-examination, Ms Craig said that after receiving the Zip Disks, they were incrementally backed up by her or by SRPL's IT staff, a number of documents were created and added on the Zip Disks by her or others during the course of her duties as general manager, and certain documents were created and added by Mr Govender while he was working as SRPL's finance and administration manager.

Mr Govender gave evidence that while working at SRPL, he started a back-up system of MYOB data and later established a system of regular weekly back-ups. This process of updating explains why the documents allegedly sourced from the Zip Disks postdate the date on which Ms Craig alleges she was given the Zip Disks. Although Mr Govender gave evidence that he backed up SRPL's financial data, he did not say that he gave the Zip Disks with such data to Ms Craig.

Mr Tilbrook gave evidence contrary to Ms Craig's evidence. He gave evidence that he never backed up financial data, that he did not know if backing up of financial data was being done, that he did not have access to financial data, that he never saw financial data, that he did not and indeed could not give to Ms Craig a back up of the financial data, and that he was never asked by Ms Lee to do so. Having heard the evidence given by Mr Tilbrook during cross-examination, I accept Mr Tilbrook's evidence.

To be clear, I do not make a finding that Ms Craig fabricated the information on the Zip Disks. On the evidence, that would be improbable. However, insofar as it touches her credibility, I am satisfied that Ms Craig, without permission, took from SRPL confidential information at the time she ceased to be employed there.

The plaintiffs helpfully provided a consolidated chronological narration of the flow of money between the plaintiffs and the defendants. It is not entirely accepted by the defendants. Although I have dealt with some of the matters that follow earlier in this judgment, I consider it is appropriate to have this entire analysis in one place. I have, from time to time, identified payments not admitted or denied by the defendants. However, in calculating what I describe as the "running balance" (representing the net, or "off-setted", position of funds flowing between the parties), I have assumed, for the purpose of this analysis, that the payments alleged in the plaintiffs' schedules are correct. I have proceeded on this basis partly because the state of the evidence has not made it possible to make a finding in respect of the character of each payment, and partly because it does not, I consider, affect the ultimate analysis and conclusion.

As previously noted, Ms Craig commenced working as a bounty consultant (obtaining research and development grants from the Federal Government) in the early 1990s. The plaintiffs allege that in 1992, DLCA advanced $15,075 (in June) and $24,000 (in November) to Lee Edison, coming to a total of $39,075. The defendants do not admit the first payment, and deny the second payment.

The plaintiffs allege that over the course of 1993, DLCA made nine further payments to the defendants, in amounts varying from $5,000 to $27,100, totalling $134,092. One of these payments is alleged to have been made to the Apple Centre to acquire equipment for the defendants, and another of these payments is alleged to have been made directly to Ms Lee personally. The running balance alleged by the plaintiffs is therefore a sum of $173,167 advanced by the plaintiffs to the defendants. The defendants deny all of the alleged payments during 1993.

The plaintiffs allege that in 1994, five payments were made in June and one payment was made in November, by DLCA to the defendants, ranging from $5,785 to $70,000, and totalling $147,066. The payments were made to one of Ms Lee, Lee Edison, OSI, Mr Silverbrook (twice) and SRPL. The alleged running balance therefore comes to a sum of $320,233 advanced by the plaintiffs to the defendants. The defendants deny the alleged payment to OSI, and do not admit the other alleged payments during 1994.

The plaintiffs allege that in 1995, DLCA made three payments in March, one payment in October and one payment in November, to the defendants, ranging from $14,300 to $30,415, and totalling $98,015. One of the March payments is alleged to have been made to Lee Edison, and the balance of the payments that year are alleged to have been made to SRPL. The alleged running balance is therefore a sum of $418,248 advanced by the plaintiffs to the defendants. The defendants do not admit any of the alleged 1995 payments.

The plaintiffs accept that on 24 March 1996, SRPL paid to Mr and Ms Craig together an amount of $200,000 (in two instalments of $100,000). Neither the plaintiffs nor the defendants allege any other flow of money in 1996. These two payments appear to have been made at a time shortly after the sale of the LIFT technology by the defendants to Kodak for approximately $6 million. The effect of these payments is to reduce the alleged running balance to a sum of $218,248 advanced by the plaintiffs to the defendants.

There is no allegation by either the plaintiffs or the defendants that there was any relevant flow of monies between the parties in the year 1997.

The plaintiffs allege that from June to December of 1998, DLCA made fourteen payments to various corporate entities of the defendants, and DLCP made one payment of $50,753.11 to the US Commissioner of Patents and Trademarks at the direction of the defendants. The fifteen payments raged from $8,080 to $99,150, and totalled $477,636.31. Of these fifteen payments, an amount of $8,080 allegedly paid by DLCA to Allplaces (or Lee Edison) on 29 June 1998 is not admitted, and an amount of $99,150 allegedly paid by DLCA to Lee Edison on 23 December 1998 is denied. The alleged twelve other payments by DLCA and the one payment by DLCP, are admitted by the defendants. The parties do not allege that any payments were made by the defendants to the plaintiffs in 1998. This brings the alleged running balance to $695,884.31. Ms Craig said (both in her affidavit and orally at T77.41-T77.42), and Mr Silverbrook in effect agreed (T408.33-T408.35), that after about September 1998 she performed no more bounty scheme work.

The plaintiffs allege that throughout 1999, they made twenty-one payments (either from DLCA or Mr and Ms Craig's personal Mortgage Equity Account) to, or to meet expenses of, the defendants. These alleged payments range from $4,067.63 to $106,571.40, and total $716,171.26. The defendants do not admit eleven of these payments, but they do admit the remaining ten. It is accepted by the parties that during the second half of 1999, the defendants made six (of the twenty-one) payments to the plaintiffs, ranging from $2,000 to $41,876.78, and totalling $75,276.13. The alleged payments have the effect of bringing the alleged running balance to a sum of $1,336,779.44, advanced by the plaintiffs to the defendants.

The plaintiffs allege that in the year 2000, only one payment of $40,000 was made by DLCP to Ms Lee personally, on 3 February 2000. No other payments are alleged to have been made by the plaintiffs in the year 2000. The defendants do not admit the plaintiffs' allegation of this single payment. It also appears that, in early to mid February 2000, an investment of some $4 million was made by Mr Stata into one of the defendant corporate entities, Memjet Australia. The parties accept that from June to December of 2000, the defendants (through SRPL) made seventeen payments to the plaintiffs (being to either DLCA, DLCP, Mr and Ms Craig personally, or their Mortgage Equity Account), ranging from $8,000 to $92,000, and totalling $623,040. The alleged payments bring the net alleged running balance to $753,739.44.

The plaintiffs allege that during the second half of 2001, they made thirty-five payments to, or for the benefit and at the direction of, the defendants, ranging from $954.55 to $58,000, and totalling $408,045.05. The defendants admit three of those alleged payments, deny one of those payments, and do not admit the remaining thirty-one alleged payments. The parties accept that the defendants made seven payments to the plaintiffs, between June and December 2001, ranging from $5,000 to $50,000, and one payment on 20 November 2001 of $149,671.64. Therefore the total of the payments made by the defendants to the plaintiffs during 2001 is $320,671.64. The alleged payments during 2001 bring the alleged running balance to $841,112.85.

The plaintiffs allege that on 7 and 8 March 2002, DLCP made three payments to SRPL (or to meet employee expenses of SRPL), ranging from $11,906 to $50,000 and totalling $83,171.36. No further payments are made from the plaintiffs to the defendants after this point in time. The defendants do not admit any of the three alleged 2002 payments. The parties accept that the defendants (mainly via SRPL) made twenty payments to the plaintiffs between January and November of 2002, ranging from $1,000 to $40,030, and totalling $321,650. The net effect of these alleged payments is to bring the running balance to $602,634.21. The plaintiffs allege that from around early to mid 2002, the defendants began to receive a substantial inflow of monies from third parties, namely DuPont, the Irish Companies and the GKFF Entities.

During the first half of 2003, eight payments were made from SRPL to the plaintiffs (either DLCA or Mr and Ms Craig personally), ranging from $10,000 to $27,800.

It is appropriate at this point to pause to make some observations about the nature of the payments between the parties thus far. It is apparent that until this point, the defendants' advances to the plaintiffs (and for that matter the plaintiffs' advances to the defendants) have been in numbers of uneven or unrounded amounts, and were unprincipled in frequency. That is strongly suggestive, in my view, of payments of bills, invoices or for services, rather than payments of the alleged agreed instalments pursuant to an equity arrangement between the parties. It is not even the plaintiffs' case that, in recognition of an equity arrangement, SRPL paid Ms Craig's bills or other personal or business expenses. The payments made to this point are consistent with the mention, in the credit reference of 27 January 2000 provided by Ms Lee for the plaintiffs, of transactions involving "bills ... in the tens of thousands". The evidence did not permit me to identify with any degree of precision the consulting fees charged by Ms Craig (or DLCA) to SRPL.

In contrast, from the second half of 2003 and in the relevant years that followed, three new trends began to emerge, though not at exactly the same time. First, there began to appear some regularity in the frequency of the payments made by the defendants to the plaintiffs. Secondly, a similar regularity began to appear in the quantum of such payments. Thirdly, the payments were almost always in round numbers (i.e. always in thousands). Between July and October of 2003, six payments were made from SRPL to DLCA, each being exactly $33,000. There were also two further payments made in October, being $36,000 and $34,000, and one payment of $65,000 to Mr and Ms Craig in December of 2003.

The total amount paid by the defendants to the plaintiffs in 2003 was therefore $471,680. This reduces the running balance to $130,954.21 (paid by the plaintiffs to the defendants).

As I have already observed, in the year 2004, the defendants made eleven payments of $16,000 to the plaintiffs between May and December (totalling $176,000). The defendants made other payments that year, in round numbers, ranging from $10,000 to $75,000 (totalling $200,000). Therefore the total of the payments made by the defendants to the plaintiffs in 2004 was $376,000. For the first time, the running balance indicated that the net effect of the various payments was that the defendants had paid to the plaintiffs an amount of $245,045.79. On Friday, 12 November 2004, at 2:06pm, Ms Craig wrote to Ms Lee (with a copy to Mr Silverbrook) an email in a calm but somewhat unhappy tone, stating, among other things, "I get the impression that you think you have repaid all the monies you owe us". It is not entirely clear why Ms Craig wrote this email, given that the defendants were making regular payments to the plaintiffs at this time, but it may be that the plaintiffs desired more than just the regular monthly payment of $16,000. It is important to set out the full text of that email (though I note that the email, as provided in the relevant exhibit, is incomplete at the end): Subject: Urgent Beans ... Dear Janette, It is with a heavy heart that I am writing this e-mail. I get the impression that you think you have repaid [emphasis added] all the monies you owe us. Am I wrong? The last thing I expect is for there to be an issue between us about money. I have requested to see you several times to sort out the loan situation [emphasis added] between us. I either get no reply or you are too busy.... I have summarised the monies we gave to you since 1990/91. As an example prior your Kodak deal we gave you $398K. We received back $200K..... Believe me....... I am not happy doing this type of analysis..... I thought we were friends... To summarise our current position Almost all the monies we received from you in 2003/4 was used to complete Pearl Beach, pay taxes and the extra mortgage costs. Pearl Beach ended up costing us much more than we anticipated because we slowed down the builder. This blew out the project cost by some $300K (we spent $1million on the project) Pearl Beach is now on the market and can be viewed at www.pearlbeachrealestate.com.au I have sent you 2 e-mails, one on the 31st October and one on the 6th Nov and no response..... It is possible that you did not receive as I had a virus on my computer, so I will copy this e-mail to Kia as well in the hope that I will get a response. In my earlier e-mails I told you that our mortgage payments are $13.5K per month, group tax $1.8 K per month. I cannot make ends meet with the $16K per month as we have quarterly expenses, BAS; Super etc. These amounts are set and Claire is unwilling to vary it. I do not know what sort of pressures you are under or how you are both

From January 2005 to August 2007, Ms Craig sent emails on a regular basis to Ms Lee requesting money. These emails, which are more than eighty in total, are known as the "beans" emails, though it is clear from the subject of the November 2004 email (above) that the word "beans" was, according to Ms Craig and Ms Lee, used deliberately, but for different reasons. The emails are sent from Ms Craig to Ms Lee, and contain a request in a tone of some desperation for "beans", or consist of a follow-up a few days later (by way of reminder) explaining that the "beans" are needed urgently in order to meet overdue mortgage payment obligations, or they simply contain an expression of thanks in the subject line, with little or no text in the body of the email. Unless an email contains something of substance and of relevance, I do not propose to quote the content of these repetitive emails.

During the course of 2005, SRPL provided to DLCA eleven payments of $16,000 (on an approximately monthly basis), one payment of $16,800 (in November 2005), and one additional payment of $5,000 in April 2005. The additional payment in April may have been prompted by an email sent from Ms Craig to Ms Lee on 5 April 2005 (with follow up emails on 7 and 11 April 2005) requesting "more than the usual 16K this month" because the Pearl Beach development remained unsold, its marketing costs were high, and Mr and Ms Craig were making efforts "to refinance to help us through the winter in case it does not sell". In addition to the usual "beans" emails (including follow-up and thank you emails), there was some email correspondence during 2005 between Ms Craig and Ms Lee in which Ms Craig advised Ms Lee of the difficulties she was experiencing in attempting to secure finance. In total, SRPL paid to DLCA $197,800 during the year 2005, bringing the running balance to a net amount of $442,845.79 paid by the defendants to the plaintiffs.

In the year 2006, SRPL paid to DLCA $16,000 each month, with the exception of the payment in January (which was made in two separate instalments of $8,000) and two payments near the middle of the year (which were $16,800 each, instead of $16,000). Therefore the total amount paid by SRPL to DLCA in 2006 was $193,600. These payments brought the running balance, as at the end of 2006, to a sum of $636,445.79 paid by the defendants to the plaintiffs.

In addition to the usual "beans" emails (including explanations of financial pressure) sent during 2006, Ms Craig sent to Ms Lee the following email on Monday, 30 January 2006, at 5:42pm: We had a bit of a disaster at Pearl Beach. A doz or so wild cockatoos ate right through the cedar cladding in the front of the house causing quite a bit of damage. Neighbours say that some holiday makers have been feeding them on their decks..... so they associate decks with food. Apparently when there is no food they get frustrated and chew anything in sight. From what we can see they don't actually eat the wood because all the shavings are still there. I checked with Gio insurance today and they state that the policy exclude damage caused by animals such as birds, dogs, rats or mice. Not quite sure what it will cost to repair but the big worry is the structural beams on the side of the house. We don't have the cash to do the repairs and have been refused finance. How are you do doing? Are you and Kia in a position to loan us the money [emphasis added] until we sell Pearl Beach? Will also repay the $16K you are paying per month. Agents say the market is improving but if we sold now, they say we could achieve $1.4.... down $400K from the valuation I had done 2 years ago. If we can we would like to hold off until the market improves.... would have to work a couple of years to earn $400K. I would be willing to work for the money [emphasis added] if you have a job for me.......... Please let me know if you can help

Ms Craig also sent to Ms Lee an email in the following terms on Friday, 6 October 2006, at 1:21pm: Subject: Urgent Beans Hi Janette, Can you do beans for this month's mortgages? Our interest payments now $15K per month. Banks have such short memories... we used to be good customers ... now we are not. Will help if I can find a job or if PB can sell... sinking further and further into debt.

On Tuesday, 14 November 2006, at 6:41am, Ms Craig sent an email to Ms Lee in these terms: Have you and Kia got a job for me? [emphasis added] Preferably something that I can do from home. I am looking for ways to help us cope with the interest rate rises. Things are quite bad here.

From early to mid 2007, SRPL paid to DLCA six instalments of $16,000 each, and no other payments were made that year. The "beans" emails Ms Craig sent to Ms Lee during this year were more frequent, and suggested a torturous desperation for money. Some of the emails are headed "Urgent Beans", many are headed "Very Urgent Beans", some are headed "Very Very Urgent Beans", some are headed "Desperate for Beans". Most of the emails briefly explain the dire financial circumstances Ms Craig was facing, including her inability to meet mortgage payments, Westpac's imposition of a stop on Mr and Ms Craig's bank account (around 1 March 2007) and her receipt of a demand from a bank (in late April 2007). From close to mid 2007, Ms Craig began questioning Ms Lee about whether she had been receiving her emails, and regularly requested urgent replies to her emails. On 13 June 2007, she sent an email to Ms Lee requesting a meeting with Ms Lee and Mr Silverbrook. The last of the six payments of $16,000 during 2007 was made on 8 August 2007. The total of the payments made by the defendants to the plaintiffs during 2007 was $96,000, bringing the running balance to a net sum of $732,445.79 paid by the defendants to the plaintiffs.

Following a meeting between Ms Craig and Mr Silverbrook on Friday, 4 April 2008, Ms Craig sent an email to Mr Silverbrook on Tuesday, 8 April 2008, at 12:21pm, which I have already set out in full at [369].

Following this email, there was a one-off payment of $16,000 from SRPL to DLCP on 12 April 2008. That was the final payment ever made, and brought the running balance to a final amount of $748,445.79 paid by the defendants to the plaintiffs. That amount (i.e. the final running balance) is arrived at by deducting the total amount advanced by the plaintiffs to (or for the benefit of) the defendants (being $2,143,271.98), from the total amount paid by the defendants to the plaintiffs (being $2,891,717.77).

The consistency in the frequency and quantum of the payments of $16,000 compels a conclusion, in my view, that there was clearly an understanding or arrangement between the parties. According to Ms Craig, these payments were made pursuant to the alleged January agreement (T255.44-T255.46). Mr Craig understood that these sums of $16,000 were not loans to Ms Craig and himself to be repaid, but were repayments by the defendants of monies the defendants owed to the plaintiffs (T317.49-T318.4).

The defendants of course deny any January agreement, but their evidence as to why these regular payments of $16,000 were made was unsatisfactory. For example, it was put to Ms Lee in cross-examination that if she truly believed that Ms Craig was mistaken to assert in her initial email of 12 November 2004 that the defendants owed money to the plaintiffs, Ms Lee would have responded to correct Ms Craig's understanding (T688.28-T688.39, T689.19-T689.29). There is no explanation by Ms Lee in the email correspondence as to why she was making regular payments to the plaintiffs. In cross-examination she offered the explanation that she "was acting under a general practice ... of many years", which apparently involved a request being made for money to address a specific problem, and money being given, provided it was available (T689.46-T689.50). When asked directly whether she understood that such monies were to be repaid by the plaintiffs to the defendants, Ms Lee indicated that at some future stage an accounting exercise would be performed to determine what amount should be repaid (T690.6-T690.10), although it is doubtful whether any reliable record of the payments was actually being kept by the defendants (T690.12-T690.20).

The evidence on both sides of the record as to the reason for these regular payments is extremely unsatisfactory. The plaintiffs submit that the payments were made pursuant to the alleged January agreement. For reasons I have already given, but which can briefly be restated, the contemporaneous material militates strongly against the plaintiffs' submission. The defendants on the other hand deny this and give evidence that the payments were simply advances pursuant to a "general practice", and that some form of reconciliation would take place at a future time.

On their face, the emails do not suggest that the defendants were under any obligation to make the monthly payments to the plaintiffs. In cross-examination, Ms Craig accepted (T258.39-T258.50, T261.29-T261.46), and Mr Silverbrook agreed (T414.46-T415.16), that the text and tone of the emails indicate that Ms Craig was asking, begging, or pleading with the defendants, to make the monthly payments. As I have observed, there is absent from the emails any indication of an obligation on the part of the defendants to make the payments. When Ms Craig was asked in cross-examination to explain the inconsistency between the tone of the emails on one hand, and the alleged obligation on the part of the defendants to make payments to the plaintiffs pursuant to a prior agreement on the other, she said she was simply "not pressing and being ... demanding" (T258.48-T258.50), and that because of her friendship with Ms Lee and Mr Silverbrook, and also because of the difficulties she believed the defendants were facing in commercialising the Memjet technology (T261.35-T261.43), she was trying to be polite.

As I have observed on numerous occasions already, there is no doubt that there was a close friendship between Ms Craig and Ms Lee. However, I am not satisfied that mere courtesy explains the content and tone of the emails. It is significant that in none of the eighty emails sent over the years, is there a reference to the existence of an agreement or understanding that the plaintiffs would share in the profits, revenues or benefits generated by any technology developed by the defendants. There is not even any indication of an expectation of a large sum of money at any point in the future. There is not even a request for an update on the commercialisation of the Memjet technology. Again, as I have observed, given the financial difficulties the plaintiffs were experiencing in meeting their obligations to their bank, and given the plaintiffs' assertion of the existence of the January agreement, it is surprising there was no request by the plaintiffs for a letter from the defendants confirming their imminent expectation of a large sum of money, which the plaintiffs could show to the bank to provide it with some comfort.

At the risk of undue repetition, the difficulty in accepting Ms Craig's attribution of her failure to raise these points in correspondence with Ms Lee to considerations of natural politeness or shyness is amplified by the terms of her email to Mr Silverbrook on 8 April 2008. I have quoted that email above in full. Ms Craig does not hold back in that email. Her purpose in writing that email was apparently "to set the record straight" and for everyone to "know the truth", yet again there is not even a vague allusion to the existence of a vague expectation to receive any kind of benefit from the commercialisation of any technology. It is striking to my mind that when the time arrived, as it did, for Ms Craig to put her foot down and identify her rights, in order to avoid the potential financial ruin of herself and her family, she made no reference to her alleged entitlement to a share in the expected millions of dollars in profits arising from the commercialisation of the relevant technologies developed by the defendants, nor to her alleged beneficial entitlement to Unit 1, Frederick Street. It is well established that remaining silent when speech could have been expected, or failing to raise a matter in correspondence where the relationship between the parties is such that a particular reply might be expected, may amount to an admission, and is at least relevant evidence (Young v Tibbits [1912] HCA 23; (1912) 14 CLR 114 at 122 per Griffith CJ and 128 per Barton J; Lustre Hosiery Ltd v York [1935] HCA 71; (1935) 54 CLR 134 at 143 per Rich, Dixon, Evatt and McTiernan JJ; Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) [1981] HCA 59; (1981) 150 CLR 225 at 230 per Gibbs CJ; Thomas v Hollier [1984] HCA 35; (1984) 156 CLR 152 at 157 per Gibbs CJ). Accordingly, in my view, the contemporaneous material weighs heavily against the plaintiffs.

Ms Craig and her husband at all relevant times were engaged in a very active property development strategy, involving properties at Frederick Street in East Gosford (four units), White Street in East Gosford, Lushington Street in East Gosford and Beryl Boulevard in Pearl Beach. Ms Craig asserted that the purpose, or the dominant purpose, of a number of property transactions was to advance to the defendants funds for the development of technology. To assess the accuracy of this assertion, it is necessary to examine the available evidence surrounding the plaintiffs' property transactions. Although the evidence is insufficient to paint a complete picture, it assists to provide an understanding of what was then taking place.

At some point, Mr and Ms Craig obtained a line of credit from Westpac, secured against their family home at Narara in Gosford (CB 506), known as a Mortgage Equity Account. The precise date on which this line of credit was obtained is not clear to me from the contemporaneous material.

Based on a valuation report, dated 17 February 1999, prepared at the request of Westpac, it would appear that on 21 November 1995, DLCP purchased for $120,500 the land on which the Frederick Street property is located (CB 481). It is not clear however whether 21 November 1995 is the date of exchange of contracts or the date of settlement. It appears that a loan secured by one or more of the units at the Frederick Street property was granted by Westpac around February 1996 (CB 508). A plausible inference is that exchange of contracts occurred in late 1995 and settlement took place in early 1996 when the Westpac loan was provided.

Ms Craig alleges that from about September 1996, Mr Craig commenced the development of four units in the Frederick Street property (I note that by February 1999 the units had only "recently been completed and some finishing off works [were] still being undertaken within one of the units", CB 487). It is not clear on the evidence where the costs of developing the Frederick Street property were sourced from, but it would appear quite possible, from Ms Craig's evidence, and I think it is probable, that such costs were financed from Mr and Ms Craig's Mortgage Equity Account, which she alleges was used wholly for business purposes by DLCP and DLCA (even though it was secured against their family home).

On 9 February 1999, DLCA purchased the Pearl Beach property for $225,000 (CB 475), with settlement occurring on that date (CB 474). The only contemporaneous material recording the transaction is a letter from the solicitor acting for DLCP on the conveyance, advising of the settlement and attaching a settlement sheet. However, there are references in those documents to a "Mortgagee" (CB 474) and an "Incoming Mortgagee" (475), which would appear to indicate that a mortgage was granted against the Pearl Beach property on settlement.

On 17 February 1999, the Frederick Street property (all four units) was valued at $820,000 (CB 489). The valuation report was prepared by a registered valuer, on the instructions of Westpac, "for mortgage purposes" (CB 480).

The date on which DLCP acquired the White Street properties is not clear on the evidence, but it must have been prior to 26 February 1999 (CB 510). It is not clear how early prior to February 1999 the White Street properties were acquired, nor it is clear how the acquisition was financed. In any event, after DLCP acquired the White Street properties, but again prior to 26 February 1999, the White Street properties, together with Units 1-3 of the (four) Frederick Street units, were given as security for a proposed loan of $500,000 advanced from Westpac to DLCP (CB 510). The loan offer was accepted by DLCP on 4 March 1999 (CB 520). The term of the loan was 25 years, and its "purpose" was "[t]o recover construction costs for 1-4/49 Frederick Street East Gosford" (CB 509). Also on 4 March 1999, as contemplated by the terms of the loan, Units 1-3 in the Frederick Street property were mortgaged (CB 529) and it appears the White Street properties were also mortgaged (CB 510), to secure a sum of $681,000.

As I have noted, the evidence suggests that construction of the Frederick Street properties commenced in September 1996 and finished in early 1999. Accepting, as I think is probable, that the costs for constructing the Frederick Street properties were drawn from Mr and Ms Craig's personal Mortgage Equity Account, it is probable that Mr and Ms Craig would seek to "recover construction costs for 1-4/49 Frederick Street" in order to effectively transfer the encumbrance (arising from construction costs) from their family home in Narara, to the newly developed investment properties in Frederick Street.

Based on a Westpac document which appears to have been completed by Mr and Ms Craig (CB 500 - CB 507) prior to August 1999 (see CB 503), Mr and Ms Craig were seeking to obtain (through their corporate entity DLCP), a loan of $500,000 from Westpac. They were offering, as security for the loan, Units 1-3 of the Frederick Street property. It is justifiably tempting, and it does appear to be appropriate, to date this application for finance before 26 February 1999, and to find that it was prepared in connection with the loan of 4 March 1999.

Ms Craig alleges that on or about 23 September 1999, she had a conversation with Ms Lee about the transfer of one or two of the Frederick Street units to Broadwater Rest, to be held on trust in favour of Mr and Ms Craig, and to be reconveyed to them unencumbered at some future stage for nil consideration. Although the chronology relating to the alleged Frederick Street trust arrangement is dealt with more fully elsewhere in the judgment, I think it is appropriate to simply note the alleged arrangement here.

On 12 October 1999, contracts signed by the vendor for Unit 1 (for $262,000) and Unit 2 (for $246,000) of the Frederick Street property were sent by the vendor's solicitor to the proposed purchaser's (Broadwater Rest) solicitor (CB 625 and CB 627). There was not at this point, however, an exchange of contracts.

On 18 October 1999, DLCP sold Unit 4 of the Frederick Street property for $258,000 (CB 628 and CB 635). However, settlement of the sale only took place at a later stage.

Unit 2 of Frederick Street was ultimately not sold to Broadwater Rest, and on 4 November 1999 contracts for the sale of Unit 2 were exchanged with another purchaser (for an alleged sale price of $255,000). Settlement took place at a later date.

On 15 November 1999, exchange of contracts for the sale of Unit 1 took place as between DLCP and Broadwater Rest (CB 636 - CB 637, though as noted the plaintiffs allege a trust arrangement). The sale price was $262,000. Settlement took place at a later date.

On 24 November 1999, Westpac offered to DLCP a loan of $164,000 to assist with the purchase of the Lushington Street property (CB 667 - CB 668). The loan was to be secured by mortgages over the Lushington Street property and the White Street properties. The date on which DLCP acquired the Lushington Street property is not in evidence, but it clearly had taken place before March 2003 (CB 1322), and probably occurred in early 2000, around the time the Westpac loan and mortgage transaction settled.

Around this time, a number of settlements took place. On 26 November 1999, DLCP's sale of Unit 4 at Frederick Street to a third party settled (CB 672). On 7 January 2000, the sale of Unit 1 Frederick Street by DLCP to Broadwater Rest settled (CB 711 - CB 712 and CB 727). On 1 February 2000, the sale of Unit 2 Frederick Street by DLCP to a third party settled (CB 728 - CB 729 and CB 740). Summing the alleged sale prices yields a total cash inflow of about $775,000 (less the deposits which would have been received prior to settlement). No doubt, of the money coming in, some or most would have been applied to facilitate the discharge of Westpac's mortgage over the Frederick Street property. As noted above, this was an amount of $681,000 (though that sum was also secured by the White Street properties). Even assuming the settlement funds were used to effect a total discharge of the secured sum of $681,000, there would have been money left over, which Mr and Ms Craig were presumably free to dispose of.

Ms Craig alleges that in early January 2000, DLCP refinanced the White Street properties, thereby obtaining a sum of $164,105.10. This would appear to be the same transaction involved in acquiring the Lushington Street property, and coincides with DLCP's acceptance of the loan offer made by Westpac on 24 November 1999. If that is correct, then it would follow that DLCP's acquisition of the Lushington Street property settled in early January 2000. Ms Craig alleges that the sum loaned (i.e. approximately $164,000) was transferred to another DLCP account with Westpac, of which $40,000 was drawn in favour of Ms Lee (see CB 731 and following).

On 6 September 2001, Westpac sent a letter to DLCA offering a loan of $280,000, for a term of five years, secured against the Pearl Beach property, for the purpose of "complet[ing] building on Pearl Beach property" (CB 889 - CB 892). The precise date on which the loan was accepted by DLCA is not shown in the evidence, but the first drawdown on the loan was on 21 September 2001, and the loan was fully drawn by 14 December 2001 (CB 893). Ms Craig alleges that, between September and October of 2001, at least $131,000 of the loan was advanced by DLCA to pay SRPL creditors.

On 20 or 21 November 2001, SRPL paid $149,672 to DLCA (CB 929). The plaintiffs allege this was a direct repayment of the amounts allegedly comprising the $131,000 previously advanced by DLCA to SRPL.

On 13 December 2001 (CB 970 and following), DLCP received a letter from AAA Finance Services Pty Ltd (AAA Finance) offering a loan, secured against the White Street properties, for a term of six months. The amount proposed to be advanced was the lesser of $412,500 or 75% of the valuation of the property securing the advance, and its purpose was said to be "business purposes only". The interest rate was "12% reducing to 9.5% upon payment within seven days, monthly on the total amount to be advanced".

On 24 December 2001, settlement of the loan transaction took place, and the proceeds of the loan were distributed in accordance with a settlement sheet prepared by the solicitors acting for DLCP on the loan transaction (CB 998). The total amount advanced by AAA Finance was $412,500. The mortgage document indicated that the amount secured was $413,000, and the mortgagee was an Edward Gerald Scarf (CB 992). Of the loan amount, $336,831.13 was paid to Westpac (in discharge of Westpac's mortgage over the White Street properties), and $62,833.37 in net proceeds was paid to DLCP (I also note that various lesser amounts from the loan proceeds were paid to meet fees and other expenses associated with the loan transaction). Of the net proceeds received by DLCP, the plaintiffs allege that on 28 December 2001, $59,005 was advanced to SRPL to meet its staff wages.

On what appears to be 6 March 2002, DLCP entered into a "Loan Deed" with AAA Finance, under which AAA Finance would loan the sum of $100,000 to DLCP, secured by a second mortgage against the White Street properties and a second mortgage against the Pearl Beach property (CB 1045 and following, and CB 1318). Interest was chargeable "at the rate of 90% per annum calculated daily in advance for the term provided that if" interest was paid on the Loan Deed, AAA Finance would "accept payment of interest calculated at the rate of 60% per annum calculated daily".

On 6 March 2002, settlement of the loan transaction occurred, and the proceeds of the $100,000 loan were distributed in accordance with a settlement sheet prepared by the solicitors acting for DLCP on the loan transaction (CB 1052). Relevantly, $83,939 was paid to DLCP, and the balance of the $100,000 was paid on account of various fees and pre-paid interest. The plaintiffs allege that the proceeds were used to pay SRPL staff wages.

However, SRPL's suspense account documents indicate that between 9 July 2002 and 8 August 2002, SRPL made three payments to "Edward Scarf", totalling $29,530. It also appears from the entries in SRPL's suspense account that SRPL made four payments directly to AAA Finance on 4 September 2002, totalling $97,227.53 (CB 1137). The suspense accounts also appear to disclose one payment of $1,000 on or around 17 December 2001 (CB 1169), which appears to be a payment for legal fees incurred by DLCP in the first AAA Finance transaction (though I note that there is also in evidence a cheque dated 12 December 2001 drawn on DLCA's account in favour of AAA Finance, for $1,000, CB 966). In any event, it would appear that a number of payments were made from SRPL directly to AAA Finance. There is no contemporaneous document before the court indicating that SRPL or any other defendant received finance from AAA Finance. In my view, the payments from SRPL to AAA Finance were therefore likely to be on account of DLCP's indebtedness to AAA Finance.

Around 6 September 2002, DLCP refinanced the loan from AAA Finance which was secured against the White Street properties. DLCP obtained a loan from Perpetual Trustees Victoria Ltd (with Interstar Securities (Australia) Pty Ltd as manager) of $390,000 (CB 1147 and CB 1161) secured by a mortgage against the White Street properties (CB 1321). The total amount which was apparently payable to outgoing mortgagees was $417,161.31 (CB 1148), and including fees, the total amount payable on settlement by DLCP was $421,666.11 (CB 1149). There was therefore a shortfall of about $33,228.61 (CB 1149), which appears to have been paid by SRPL.

SRPL's suspense accounts also show that on or around 28 November 2002, a payment of $14,052.50 was made from SRPL to AAA Finance (CB 1169). Again, for reasons just expressed, it is likely that such a payment was on account of DLCP's indebtedness to AAA Finance. However, it is surprising that any payment should be made at this stage to AAA Finance given the refinancing transaction which settled in September of 2002.

In early March 2003, DLCP refinanced the late 1999 loan from Westpac, which was secured against the Lushington Street property. The only contemporaneous document indicating that such a refinancing took place is a settlement sheet prepared by the solicitors acting for DLCP on the loan transaction (CB 1322). According to the settlement sheet, the lender/mortgagee appears to be a "SA Teen", and the amount borrowed was $240,000, of which $165,445.77 was paid to discharge Westpac's existing mortgage, and $59,896.73 was paid to DLCP (as surplus). The balance of the loan monies were used to meet various expenses associated with the transaction.

Relevantly, what emerges from the analysis of the plaintiffs' property and financing transactions is that almost each occasion on which the plaintiffs encumbered one or more of their properties coincided with an acquisition of further property or another business purpose for their own benefit. Contrary to what was submitted on behalf of the plaintiffs, I do not think that Mr and Ms Craig (or any of their corporate entities) were "mortgaging themselves up to the hilt" (T762.37) to give money to the defendants. The inference which is therefore open, and plausible, is that the plaintiffs obtained financing predominantly for their own purposes, but provided excess funds, only as was available to them from time to time, to meet requests from the defendants.

For example, the 1995/1996 mortgage granted by the plaintiffs to Westpac over the Frederick Street properties coincided with the plaintiffs' acquisition of the Frederick Street property. The 1999 mortgage which appears to have been granted over the Pearl Beach property coincided with the plaintiffs' acquisition of the Pearl Beach property. The mortgage granted by the plaintiffs to Westpac on 4 March 1999 coincided with the conclusion of the construction of the Frederick Street properties, and was probably for the purpose of transferring an accrued encumbrance over the family home to the investment properties at Frederick Street. Indeed, that is consistent with the purpose of the loan, as represented by the plaintiffs to Westpac at the time of application for the loan.

Pausing here for a moment, I was invited by counsel for the plaintiffs, to find that his own client had misled the bank, and that the real purpose of the loan was to make advances to the defendants rather than for the sated purpose of recouping construction costs. I reject that submission, as it is contrary to contemporaneous material and there is nothing in the evidence to support it.

Moving on, the inflow of settlement monies in early 2000 were undoubtedly used to discharge a mortgage which Westpac had against the Frederick Street mortgages. The mortgage granted to Westpac in early 2000 coincided with the acquisition of the Lushington Street property. The mortgage granted by the plaintiffs in favour of Westpac in September 2001 was for the stated purpose of meeting expected construction costs for developing Pearl Beach. For reasons already stated, I reject the submission to find that this represented purpose was inaccurate. The mortgage granted to AAA Finance in late December 2001 was predominantly for the purpose of discharging a Westpac mortgage over the White Street properties. It is true, that it appears that a loan from AAA Finance secured against the White Street and Pearl Beach properties was for the primary or perhaps even the sole purpose of advancing money to the defendants, but such monies were seemingly soon repaid by the defendants (e.g. in March 2002 it is alleged DLCP paid approximately $84,000 on account of SRPL staff wages, and by September 2002 SRPL had paid more than $100,000 directly to AAA Finance). The mortgage in favour of "SA Teen" in early March 2003 was for the purpose of discharging an existing Westpac mortgage over the Lushington Street property.

In the light of this analysis, I find it difficult to accept the submission that the plaintiffs heavily burdened themselves and encumbered their properties in order to advance monies to the defendants. To the contrary, I think it is clear that the plaintiffs were helping themselves, but assisted the defendants when they were able to conveniently do so.

Since the plaintiffs' claim in relation to the Frederick Street property is separable from the balance of their case, I propose to deal with the facts relevant to that claim separately. The Frederick Street claim effectively stands or falls depending on whether the evidence makes good their conventional estoppel submission. I have identified above the relevant principles governing conventional estoppel, but I should repeat what the High Court emphasised in Con-Stan Industries of Australia v Norwich Winterthur Insurance (Australia) Ltd, namely that "there is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship" (at 244).

Ms Craig alleges that on or about 23 September 1999, Ms Lee called Ms Craig to advise that Ms Lee and Mr Silverbrook wanted to purchase two units at Frederick Street from Mr and Ms Craig, and that "when the money came in they would give the two units back to [Mr and Ms Craig] unencumbered" and that the units would be held on trust for Mr and Ms Craig. Ms Craig alleges she then spoke to Mr Craig, before calling Ms Lee to advise that they agreed to the transfer of the units, to be held on trust and returned unencumbered following commercialisation of the Memjet technology.

Ultimately, there was a transfer of only one unit to Broadwater Rest, namely Unit 1/49 Frederick Street (with contracts for the sale of that unit being exchanged shortly after 12 October 1999, and the transaction settling on 7 January 2000). It is unclear why only Unit 1 was transferred to Broadwater Rest rather than Units 1 and 2. Ms Craig alleges that Ms Lee advised her in a conversation that she was unable to proceed with the purchase of Unit 2. Ms Lee denies that such a conversation took place. In the end, Unit 2 was sold to a third party for a price higher than that for which Unit 1 was sold to Ms Lee.

In any event, the defendants deny there was any trust arrangement in place in relation to the unit they acquired, and assert that the transaction was simply a conventional conveyance.

In cross-examination, counsel for the plaintiffs investigated the reasons for which Ms Lee acquired the unit. Ms Lee gave evidence that she acquired the unit for a variety of family reasons, including so that her father could visit sick relatives living in or around the Gosford area. However, she later conceded that her father ultimately never visited the unit, and accepted that "the family reasons fell through" (T496.24-T496.25).

During cross-examination, a number of concessions were made which firmly established that the conveyancing transaction was in fact not what may describe as in accordance with conventional practice. For example, whilst Ms Lee accepted that "part of a normal conveyance" is for the purchaser to receive the key on settlement, she conceded that she never in fact received the key for the Frederick Street property (T496.27-T493.17). Ms Lee explained that she did not receive a key because the property was occupied by tenants (T497.25-T497.36). Ms Lee conceded she did not know the tenants' tenure, and when she was asked how her father could visit the unit given the presence of the tenants, she said "it would have been easy with notice to have a tenant not in the property" (T497.31-497.36).

While Ms Lee also accepted that the "usual conveyancing practice" for a property occupied by a tenant at the time of settlement, involved a notice being sent to the tenant directing future rental payments to go to the purchaser, she conceded that no such notice was given in this transaction, because the rent could have been collected by "another person ... like the Craigs" (T497.38-T500.8). Despite these concessions, Ms Lee refused to qualify her evidence that the transaction was a "standard" or "normal conveyance" (T500.10-T500.20), and said that Mr and Ms Craig were to collect rent on her behalf (T500.26-T500.28), even though Mr and Ms Craig never accounted to Ms Lee for any rental income (T.500.48-T.500.50), and there is no written record of any arrangement with Mr and Ms Craig (T501.20-T500.21).

There were other unusual features about the transaction, including that the sale contract indicated that the property would be sold with vacant possession, while Ms Lee in fact knew that there were tenants occupying the property (T502.8-T502.16); that Ms Lee only visited the property on two or three occasions and had to break in on one of those occasions (T503.9-T503.22), even though at the time she decided to drive to the property she knew she did not have a key (T504.43-T504.48); that Ms Lee only paid some of the outgoings in relation to the property, including council fees, and limited strata rates, but no other bills; that Ms Lee did not seek to challenge a caveat which Ms Craig lodged in 2009 claiming an interest in the property (Exhibit P11); that Ms Lee instructed her solicitors retained at the time to write letters (dated 121 December 2012 and 5 January 2013 respectively) alleging that Mr and Ms Craig had been "fraudulently" using the property (CB 4211 and CB 4215), and that the collection of rent from the property by Ms Craig was a recent discovery when Ms Lee had probably known for two years that the premises were being let out by Mr and Ms Craig (T394.45-T394.50).

Ultimately, the plaintiffs bear the burden of demonstrating the existence of a conventional estoppel. The "common assumption" which the plaintiffs contend was adopted by the parties was that the property, though conveyed to a defendant corporate entity, would be held on trust for Mr and Ms Craig or one of their entities. The evidence in support of that assertion comes from Ms Craig's oral testimony about the negotiations, and the unusual events which took place after the transaction.

In relation to Ms Craig's affidavit (and oral) evidence about the conversations which allegedly occurred prior to the transaction, the defendants submit that legal principle does not permit me to take into account the evidence of Ms Craig about what was said between the parties prior to the transaction, on the basis that such evidence was superseded by entry into the contract. There are, as I have said above, conflicting lines of authority on this point. I do not need to express any view, because even if I was to admit Ms Craig's evidence of the alleged pre-contractual negotiations, there remains a serious question as to Ms Craig's credibility. Given the observations I have already made about Ms Craig's credit, I am simply not prepared, in the absence of relevant contemporaneous material or corroboration from an independent witness, to accept her affidavit or oral testimony that there was an agreement that the property would be held on trust.

In relation to the evidence of the unusual events which took place after the sale transaction, the plaintiffs attribute such unusual features to the existence of a trust arrangement in the terms Ms Craig alleges. Under ordinary circumstances, I think that such a submission would be persuasive. But I think the circumstances of this case are far from ordinary. In particular, it is clear that the relationship between the parties was highly unusual. Although the features of this sale transaction could be consistent with the existence of a trust arrangement, I think it is also explicable by the nature of the relationship between the parties. Once one appreciates the nature of the relationship between the parties (for example, the provision of blank cheques from one to the other and the failure to properly account for large sums of money given by one to the other), it would hardly be surprising to learn that Ms Lee in fact did purchase the property for personal reasons, but permitted Mr and Ms Craig or their daughters to use it for their family purposes as and when they needed.

As close friends, I am prepared to accept that on many occasions over the years, Ms Craig and the first and second defendants discussed where the defendants' inventions were at from time to time. I am also prepared to accept that, at least up until perhaps 2003, significant detail may have been imparted by the defendants from time to time to Ms Craig about their hopes or expectations about the commercialisation of the various technologies, and the details of the persons investing. I have little doubt that the second defendant in particular kept Ms Craig informed and indeed enthralled at the prospect of SRPL's commercial success, and that Ms Craig was there when it counted, as it were, making funds available for wages and other pressing needs, and when the first defendant and/or second defendant had either little interest or little ability to do so. Likewise the defendants made funds available to the plaintiffs from time to time. But the provision of assistance cannot simply be equated with the existence of a joint endeavour or relationship, or with a pooling of resources, in the relevant sense. That is particularly so on the unusual facts of this case where the parties, seemingly haphazardly provided friendly, ad hoc assistance to one another over a number of years. It was not suggested, and it would be untenable to suggest, that the assistance the defendants provided to the plaintiffs should result in the defendants having an interest in the plaintiffs' property development activities.

Having carefully considered the various contemporaneous materials, I am simply not satisfied that there was a pooling of the respective parties' resources with any hope or expectation on the part of Ms Craig or any promise made to her about participation in profits from the technologies as and when commercialised or indeed any equity at all in any of the technologies invented by the defendants. I am not persuaded that the defendants at any point, notwithstanding the rather unsatisfactory nature of their evidence, made any of the representations as alleged by Ms Craig insofar as they relate to profits and/or equity participation in the technologies, or insofar as they relate to an alleged trust arrangement over Unit 1, Frederick Street.

Although the affidavit evidence of Ms Craig was both lengthy and detailed, there was little or no contemporaneous material, in my view, relevant to the critical issues. I have found it necessary to analyse her evidence extensively. I have found it helpful to do so by reference both to the chronological order of the events alleged, and a number of specific topics. That has unfortunately produced some repetition.

To summarise, the plaintiffs alleged that, on commercialisation of certain technology developed by one or more of the defendants, one or more of the plaintiffs would be entitled to a share of the profits. In substance, that allegation rested on two alternative (but related) grounds. First, the plaintiffs alleged that an agreement, arrangement or understanding to that effect was reached at a meeting in January 2000. Secondly, the plaintiffs alleged that even if no such understanding was formed at the alleged meeting in January 2000 in isolation, the parties' conduct, not only at the meeting, but also over a period of time extending from several years prior to that alleged meeting, to several years after it, is such as to warrant the imposition of a constructive trust to the same effect. The defendants dispute this. In my view, the evidence is overwhelmingly against the plaintiffs.

I have come to the firm conclusion that no meeting took place in January 2000 (or at all) at which the parties formed an agreement or understanding of the nature alleged by the plaintiffs. The success of the plaintiffs' case regarding the alleged January 2000 meeting necessarily depended on my acceptance of the meaning ascribed by Ms Craig to various unintelligible notations on one of two pages allegedly made at that meeting. In my view, not only did Ms Craig not produce contemporaneous material or other corroborative evidence supporting her detailed assertions as to the meaning of the various notations, but Ms Lee gave evidence, supported by contemporaneous material, positively proving that many of the notations critical to the plaintiffs' case in fact bore a meaning entirely unrelated to that ascribed by Ms Craig. Counsel for the plaintiffs did not cross-examine Ms Lee on the notations and on the quite specific and detailed account by Ms Craig which I regard as critical to the plaintiffs' case. In giving evidence as to the meaning of these notations, Ms Craig went to such lengths, and descended into such a level of detail, and did so, in my view, in such an overly elaborate manner, that it is impossible to resist the conclusion that her evidence was largely contrived. In hindsight, I find it unsurprising that it took Ms Craig two years to prepare her affidavit, as it would have required an enormous degree of diligence, careful consideration and imagination to cover, and to appear to cover, every contingency. Her attempts, unrealistically, to breath life into every squiggle on Document B, for example, leaves me in no doubt that Ms Craig would take any course she thought expedient to advance her case.

It is true that in closing submissions the plaintiffs largely abandoned their pleaded case of a formal agreement arising from the January 2000 meeting. However, the analysis of that alleged meeting remains important not only because it is relevant to determining whether there existed a joint endeavour or relationship (to provide the necessary context for the imposition of a Baumgartner constructive trust), but also because of matters of credibility.

There is competing evidence as to whether certain amounts passing between the parties should be characterised as payments for services, interest-free loans, advances between friends, repayments of such advances, or gratuitous payments from the defendants to the plaintiffs. There is, however, in my view, no sound evidentiary basis for characterising any of these payments as being made in the course of and for the purpose of a joint relationship or endeavour, or on any understanding of an equity participation by any of the plaintiffs.

The parties never indicated in writing that any agreement, arrangement, understanding, expectation or joint endeavour of the sort alleged by the plaintiffs, existed. Again, the absence of any contemporaneous record, in the years that followed January 2000, of a transaction supposedly valued at more than $9 million, is significant. In the little available correspondence and other contemporaneous material in the months and years following January 2000, there is no reference, either specifically or generally, to any agreement, arrangement, understanding or even expectation of profits or revenues from the commercialisation of technology. There is nothing suggesting the plaintiffs were interested to learn of the progress of commercialisation from time to time, even though this was the event which would supposedly trigger their entitlement to significant sums of money and alleviate their financial distress. There is no mention by the plaintiffs of an expected revenue stream to creditors and mortgagees who were hounding them for repayment of loans. Even on Ms Craig's evidence, there was apparently no mention, during her meeting of 2008 with Mr Silverbrook and in her follow-up email, of any expectation of profits or the existence of any relevant understanding or joint endeavour, in either a general or specific sense.

Characterising the plaintiffs' payments to the defendants in the months and years prior to January 2000 as necessarily either advances (to assist the defendants), or alternatively, as fees due to the defendants on account of services rendered, is difficult. The difficulty arises because there is contemporaneous material unequivocally stating that for the seven years prior to January 2000, the plaintiffs had paid fees to the defendants on account of technical support services, and that on many occasions such fees were "in the tens of thousands". The odd, unrounded, and sporadic nature of the monies between the parties (at least prior to mid 2003) is consistent with the payments being for services, bills, or friendly loans to assist as and when each party was able to do so.

To the undefined extent that monies were advanced by the plaintiffs for the purpose of assisting the defendants (rather than a payment for services provided by the defendants), the little contemporaneous material available indicates that such monies were advanced with the expectation of repayment of those same amounts without interest, rather than a repayment of any multiple of those amounts or a percentage of profits generated by the defendants' inventions. The evidence shows that Ms Craig persistently felt a need to prepare financial reconciliations to gauge her position in relation to the defendants, that she was often begging the defendants for advances of money during times of financial distress in order to meet mortgage repayments, that she was prepared to be employed by the defendants to work to earn those advances, and that at the time the defendants stopped making regular monthly payments to the plaintiffs she believed that there were still monies unrepaid by the defendants to the plaintiffs. The financial reconciliations she prepared compared the sums she had advanced against the amounts she had been repaid, rather than against an alleged promised equity-based payment of some $9 million.

An analysis of the plaintiffs' property and financing transactions indicates, contrary to the plaintiffs' submissions, that the times at which the plaintiffs encumbered their properties usually coincided with a time when they were in need of funds for their own property development business. Although the plaintiffs clearly did provide monies to the defendants, from time to time, from their secured borrowings, they did so as and when they could, and the defendants made payments back fairly quickly either to the plaintiffs or to the plaintiffs' creditors directly (in the case of AAA Finance).

The better view of the evidence is that the payments by the defendants to the plaintiffs were not in connection with the alleged January 2000 agreement or some joint endeavour, but were either repayments of advances previously made by the plaintiffs to the defendants, or simply payments made, sometimes gratuitously, without documentation and without interest charges, in recognition by the defendants of the plaintiffs' financial difficulties, and on the basis that the plaintiffs would repay such advances only if and when they could. It was only Ms Craig who ever sought to conduct financial reconciliations. In particular, the regular payments of $16,000 by the defendants to the plaintiffs were expressly stated in the available contemporaneous material to be linked to the plaintiffs' monthly mortgage repayment obligations, rather than to the alleged January agreement or some other equity arrangement or joint endeavour.

I have also rejected the plaintiffs' claim for a reconveyance of Unit 1 Frederick Street. There is no contemporaneous material supporting the existence of a trust arrangement, and there is no mention of such an arrangement in communications where one would have excepted such a reference to appear, nor is there any request by the plaintiffs, during the times when the plaintiffs were under immense financial pressure, for the reconveyance to which they were supposedly entitled. The admittedly unusual features of the sale of the unit from DLCA to Broadwater Rest are explicable by the nature of the unusual relationship that existed between the parties at the time. Finally, insofar as this claim depends on Ms Craig's uncorroborated oral assertions, and therefore her credibility, I am not satisfied that such an arrangement existed. On the unusual facts of this case, as I have found them, I do not think the parties adopted an assumption that there was a trust.

It follows that I would dismiss the plaintiffs' proceedings in their entirety. I invite the parties to send to my Associate short minutes of order giving effect to my reasons and to arrange with my Associate a suitable time to re-list the matter to address the question of costs, unless it is the subject of agreement.