FEDERAL COURT OF AUSTRALIA Rambaldi v Mullins (No 2) [2016] FCA 977 File number: VID 193 of 2014 Judge: MURPHY J Date of judgment: 22 August 2016 Catchwords: BANKRUPTCY AND INSOLVENCY – application by trustees in bankruptcy for declarations of entitlement - agreements entered by bankrupt and bankrupt's associate for transfer of interests in business – agreements intended to conceal bankrupt's property AGENCY – whether bankrupt's associate entered agreement for transfer of business as agent for bankrupt – trustees in bankruptcy entitled to enforce rights under agreement TRUSTS AND TRUSTEES – whether bankrupt's associate declared an express trust in respect of monies payable to bankrupt under agreement EVIDENCE – admissibility of transcript of examination pursuant to ss 81(17) and 255 of the Bankruptcy Act 1966 (Cth) HIGH COURT AND FEDERAL COURT – Jurisdiction – exclusive jurisdiction of federal courts in bankruptcy matters – Orders made by Supreme Court of New South Wales declared against the title of the trustees in bankruptcy – Status of orders made without jurisdiction – Orders of a superior court of record are to be observed until appealed or set aside Legislation: Bankruptcy Act 1966 (Cth) Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006 (Cth) Defamation Act 2005 (NSW) Evidence Act 1995 (Cth) NSW Trustee and Guardian Act 2009 (NSW) Probate and Administration Act 1898 (NSW) Cases cited: Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588; [2000] HCA 25 Attorney-General v Kowalski [2015] SASC 123 Baker v Perpetual Trustee Company Limited [2012] FCA 553 Belhaven and Stenton Peerage (1875) 1 App Cas 278, 279 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 Branir v Owston Nominees (No 2) (2001) 117 FCR 424; [2001] FCA 1833 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Bulun Bulun & Anor v R & T Textiles Pty Ltd & Anor (1998) 157 ALR 193; [1998] FCA 1082 Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Cameron v Cole (1944) 68 CLR 571 Chamberlain v The Queen (No 2) (1985) 153 CLR 521; [1984] HCA 7 Citicorp Australia Ltd v Official Trustee in Bankruptcy (1996) 71 FCR 550; [1996] FCA 1115 Colonial Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418; [1998] FCA 364 Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 Garrett v L'Estrange (1911) 13 CLR 430; [1911] HCA 67 Gissing v Gissing [1971] AC 886 Harpur & Ors v Levy & Ors (2007) 16 VR 587; [2007] VSCA 128 Hawes v Dean [2014] NSWCA 380 Hawksford v Hawksford [2008] NSWSC 31 Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 HP Mercantile Pty Ltd v Dierickx (2013) 306 ALR 53; [2013] NSWCA 479 Hunter v Chief Constable of the West Midlands Police [1982] AC 529; [1981] 3 All ER 727 Inland Revenue Commissioners v Raphael [1935] AC 96 Insurance Commissioner v Joyce (1948) 77 CLR 39; [1948] HCA 17 International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644; [1958] HCA 16 J W Broomhead (Vic) Pty Ltd (in liq) v J W Broomhead Pty Ltd [1985] VR 891 James v Abrahams (1981) 51 FLR 16; [1981] FCA 49 James v Commonwealth Bank of Australia (1992) 37 FCR 445; [1992] FCA 617 Jarrett v Seymour (1993) 46 FCR 521 Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62; [2015] HCA 6 Lauren Kay Cordes as Trustee for Alexander George v Dr Peter Ironside P/L & Ors [2010] 2 Qd R 235; [2009] QCA 302 Lee v R (1998) 195 CLR 594; [1998] HCA 60 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor (2008) 171 FCR 380; [2008] FCAFC 172 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Papas v Grave [2013] NSWCA 308 Paul v Constance [1977] 1 All ER 195; [1976] EWCA Civ 2 Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353; [2010] WASC 10 Perpetual Trustee Company Limited v Nebo Road Pty Ltd & Ors [2011] QSC 283 Rambaldi v Mullins [2014] FCA 361 Re Anderson; Ex parte Alexander (1927) 27 SR (NSW) 296 Re Armstrong (dec'd) [1960] VR 202 Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491; [1991] FCA 344 Re Macks; Ex parte Saint (2000) 204 CLR 158; [2000] HCA 62 Registrar, Accident Compensation Tribunal v FCT (1993) 178 CLR 145; [1993] HCA 1 Reitano v Reitano [2012] NSWSC 1127 Rothmore Farms Pty Ltd (in liquidation) v Belgravia Pty Ltd (1999) 31 ACSR 88; [1999] FCA 598 Scott v Bagshaw (2000) 99 FCR 573; [2000] FCA 816 Seeley International Pty Ltd v Jeffrey & Anor [2013] VSCA 288 Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129; [2006] FCAFC 118 Sivritas v Sivritas & Anor [2008] VSC 374 Smith v Lucas (1881) 18 Ch D 531 South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611; [2000] FCA 1541 Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell (2011) ASC 155-107; [2011] NSWCA 389 Date of hearing: 18-19 May 2015 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-Area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 474 Counsel for the Applicants: Mr P Fary Solicitor for the Applicants: ICA Lawyers Counsel for the First Respondent: The First Respondent did not appear Counsel for the Second to Eighth Respondents: Mr M A Ashhurst SC and Mr L Corbett Solicitor for the Second to Eight Respondents: Whittens & McKeough Lawyers Counsel for the Ninth Respondent: The Ninth Respondent did not appear ORDERS VID 193 of 2014 BETWEEN: GESS MICHAEL RAMBALDI First Applicant ANDREW REGINALD YEO Second Applicant AND: TEAGAN MULLINS First Respondent CIVIL PACIFIC SERVICES GROUP PTY LTD Second Respondent GLOBAL HR GROUP PTY LTD (and others named in the Schedule) Third Respondent JUDGE: MURPHY J DATE OF ORDER: 22 AUGUST 2016 THE COURT ORDERS AND declares THAT: 1 The Applicants ("the Trustees"), the trustees in bankruptcy of George Alex ("the Bankrupt"), are vested with half (in number and value) of the shares: (i) held by AR & KH Pty Ltd in the Fifth Respondent, GHR Custodian Pty Ltd ("GHR Custodian"); and (ii) held by GHR Custodian in the Second and Fourth Respondents, namely Civil Pacific Services Group Pty Ltd ("Civil Pacific Services Group") and Global Civils Group (NSW) Pty Ltd ("Global Civils Group") respectively, ("the identified shares"). 2 The Second to Eighth Respondents shall transfer the identified shares to the Trustees within 21 days, and shall do all things and sign all documents necessary to give effect to these orders. As directors of AR & KH Pty Ltd the seventh and eighth respondents shall take all steps necessary to transfer to the Trustees half (in number and value) of the shares held by that company in GHR Custodian. 3 The Second to Eighth Respondents are restrained from transferring, selling, encumbering or dealing in any way with the shares held by AR & KH Pty Ltd in GHR Custodian or held by GHR Custodian in Civil Pacific Services Group or Global Civils Group unless or until they have transferred the identified shares to the Trustees as ordered. 4 Antoun entered into a Deed of Settlement dated 22 October 2013 (described in the reasons for judgment as "the October Deed") as the Bankrupt's agent in respect to half of the $5 million consideration under the deed, payable by parties that include the Second, Fourth, Sixth, Seventh and Eighth Respondents. The Trustees are vested with the Bankrupt's rights under the deed. 5 The Second to Eighth Respondents shall pay $2,395,000 to the Trustees, plus interest to be calculated, within 21 days. 6 The parties are granted liberty to apply generally, including in relation to the form of these orders and for further or varied orders. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MURPHY J: INTRODUCTION 1 This proceeding concerns the affairs of Mr George Alex, a bankrupt ("Alex" or "the Bankrupt"). The applicants, Mr Gess Rambaldi and Mr Andrew Yeo, are the trustees in Alex's bankruptcy ("Trustees"). They brought proceedings to recover property of the Bankrupt which they allege is vested in them by operation of ss 58, 115 and 116 of the Bankruptcy Act 1966 (Cth) ("the Act"), namely the Bankrupt's interest in shares in a labour hire business operating in Queensland ("the Global business") and/or monies payable in relation to that interest under deeds of agreement with the sixth, seventh and eighth respondents, Mr James Byrnes ("Byrnes"), Mr Kevin McHugh ("McHugh") and Mr Angelo Russo ("Russo") and their associated companies in the Global business. 2 The proceeding was brought against nine respondents: (a) the first respondent, Ms Teagan Mullins ("Mullins"), the former partner and the next of kin of Mr Joseph Antoun (deceased) ("Antoun") who was shot and killed on 16 December 2013. He was a business associate and friend of the Bankrupt, and the trustee of JA Investments Trust ("the purported trust), in which Mullins is the "protector". (There are some indications in the materials that the name of the first respondent is properly spelt as "Mullens". I have spelt the first respondent's name as in the pleadings); (b) the second, third and fourth respondents, Civil Pacific Services Group Pty Ltd ("Civil Pacific Services Group"), Global HR Group Pty Ltd (later renamed RK Qld Pty Ltd, now in liquidation) ("Global HR Group"), and Global Civils Group (NSW) Pty Ltd ("Global Civils Group"), which are or were the operating companies in the Global business ("the Operating Companies"); (c) the fifth respondent, GHR Custodian Pty Ltd ("GHR Custodian" or "New Parent Company"), which became the parent company of the Operating Companies on 19 March 2014; (d) the sixth, seventh and eighth respondents, Byrnes, McHugh and Russo, who now jointly control the Global business, and are parties to deeds under which the Bankrupt and/or Antoun agreed to transfer the business to them in return for valuable consideration; and (e) the ninth respondent, NSW Trustee and Guardian ("NSW Trustee"), which is a statutory corporation constituted pursuant to s 5 of the NSW Trustee and Guardian Act 2009 (NSW). Antoun died intestate and the NSW Trustee is deemed to be vested of his real and personal estate until such time as probate or administration is granted to another person: see s 61 of the Probate and Administration Act 1898 (NSW). The first and ninth respondents did not play an active role in the proceeding, and I usually refer to the second to eighth respondents as "the respondents". The Bankrupt is not a party to the proceeding. 3 The Trustees alleged that the property vested in them is the Bankrupt's interest or rights: (a) in shares in GHR Custodian and in shares held by GHR Custodian in the Operating Companies. (b) under deeds made on 11 March 2013 ("March Deeds") in which McHugh, Byrnes and Russo their associated companies in the Global business agreed to pay a total of $12 million by instalments to the Bankrupt and Antoun (as trustee of the purported trust) apportioned as follows: (i) $5.65 million to be paid to Antoun (as trustee of the purported trust) for the transfer of shares in the Global business to the parent company, Global Human Resources Group Pty Ltd, ("Global Human Resources Group" or "Parent Company") of which Russo was the sole director at the time; (ii) $6.35 million to be paid to the Bankrupt and Antoun to settle purported defamation claims, to be paid in the following proportions; (1) $6.2 million to be paid to the Bankrupt; and (2) $150,000 to be paid to Antoun (as trustee of the purported trust); and/or (c) under a deed made on 22 October 2013 ("October Deed") in which McHugh, Byrnes and Russo and their associated entities agreed to pay $5 million by instalments to Antoun (as trustee of the purported trust) for the settlement of unspecified claims for damages. 4 In broad terms the Trustees contended that: (a) the Bankrupt had beneficial ownership of all or part of the companies in the Global business; (b) Antoun acted as either the Bankrupt's agent or as his trustee in entering into the March Deeds; and (c) Antoun acted as either the Bankrupt agent or as his trustee in entering into the October Deed. 5 To the extent that it is necessary for the Trustees to choose between claims that are alternatives, the Trustees seek judgment in the following order of priority: (a) first, judgment for amounts owing under the October Deed; (b) second, judgment for amounts owing under the March Deeds; and (c) third, judgment in respect of the Bankrupt's interest in GHR Custodian and shares in the Operating Companies. 6 Obtaining a clear view of the facts in this matter has not been straightforward. The Trustees are strangers to the Bankrupt's affairs and he did not cooperate with them. The Bankrupt did not give evidence. The evidence tends to show that he operates in a criminal netherworld and it strongly supports the inference that he concealed his business interests from the Trustees. The evidence tends to show that Antoun operated in the same shadowy world as the Bankrupt. He was unable to give evidence, having been fatally shot in his driveway on 16 December 2013. 7 The picture was also obscured because the Bankrupt and Antoun, with the cooperation of McHugh, Byrnes and Russo, signed legal documents which hid the substance of their agreements. For example: (a) the March Deeds falsely described $6.2 million to be paid to the Bankrupt (and $150,000 to be paid to Antoun) by McHugh, Byrnes and their associated entities as being for defamatory statements and imputations made about them. In reality the amount to be paid to the Bankrupt was consideration for the transfer of his beneficial interest in the Global business to McHugh, Byrnes, Russo and their associated companies in the Global business. Describing the monies in that way was to the Bankrupt's benefit because a payment for defamation would be exempt monies under s 116(2)(g) of the Act which would not vest in the Trustees; and (b) the October Deed falsely described $5 million to being paid to Antoun alone, to settle claims for damages outside of the claims made in a Supreme Court of New South Wales proceeding brought by McHugh against Antoun, the Bankrupt and others ("the Supreme Court proceeding"). In reality the monies were to be paid to Antoun in consideration for the transfer of all interests in the Global business (including the Bankrupt's beneficial interest) to McHugh, Byrnes, Russo and their associated companies and on the understanding that Antoun would pay half to the Bankrupt. 8 In different ways the evidence of each of McHugh, Byrnes and Russo was unsatisfactory and I take a dim view of their credibility. The respondents largely did not offer a positive case and instead they relied on asserted gaps in the Trustees' case to contend that the evidence was insufficient to allow the Court to form a reasonable and definite inference that the Bankrupt had a beneficial interest in the Global business and/or an interest under the relevant deeds. I do not agree. 9 For the reasons I explain I consider that: (a) after the commencement of his bankruptcy the Bankrupt acquired beneficial ownership of half of the shares in the companies in the Global business. The Bankrupt's rights in relation to those shares vested in the Trustees; (b) the Bankrupt has contractual rights to be paid $2,395,000 plus interest (being half of the $5 million payable under the October Deed less $105,000 already paid to his benefit). The Bankrupt's rights under the October Deed vested in the Trustees; and (c) under the March Deeds the Bankrupt had contractual rights to be paid $6.2 million in his own name, but those deeds were declared void, unenforceable and of no effect by order of the Supreme Court of NSW on 22 October 2013. As a result of those orders the Trustees cannot enforce the Bankrupt's rights under the deeds. 10 In broad summary, I have made declarations and orders requiring the second to eighth respondents: (a) to transfer to the Trustees half of the shares held by AR & KH Pty Ltd in GHR Custodian, and half of the shares held by GHR Custodian in the Operating Companies; and (b) to pay $2,395,000 to the Trustees, plus interest to be calculated. However, such orders may allow double recovery for the Trustees and I will hear further submissions from the parties as to whether further or varied orders should be made. The orders I have made do not finally determine the proceeding. THE PROCEEDING The application for interim injunctive relief 11 The proceeding was commenced by an urgent application filed on 28 March 2014, made returnable the same day, in which the Trustees alleged that the relevant property of the Bankrupt was vested in them as trustees in bankruptcy. The Trustees relied on documents from the Supreme Court proceeding, being Supreme Court of NSW proceeding No 2013/158050 brought by McHugh against Antoun, the Bankrupt and others, regarding a dispute about ownership of the Global business, effectively between McHugh, Byrnes and Russo on one side and the Bankrupt and Antoun on the other. In reliance on these documents the Trustees contended that: (a) the assets vested in them as trustees in bankruptcy include rights purportedly held in the name of Antoun (deceased) (as trustee of the JA Investments Trust) under the October Deed; (b) the JA Investments Trust was a sham designed by the Bankrupt and Antoun to conceal the Bankrupt's interest under the October Deed and in the Global business; (c) under the October Deed the respondents and their associated entities were required to pay $5 million by way of instalments to Antoun (as trustee) for the Bankrupt's (or alternatively the Bankrupt's and Antoun's) interest in the Global business, with the third instalment being due to be paid the following business day, 31 March 2014; and (d) the October Deed replaced the earlier March Deeds in which the respondents and their associated entities were required to pay $12 million to the Bankrupt and Antoun (as trustee of the JA Investments Trust. Although the March Deeds attributed $6.2 million of that sum to a payment for defamation of the Bankrupt the Trustees contended that the true nature of the payment was, in whole or in part, consideration for the Bankrupt's interest in the Global business. 12 The Trustees sought orders, essentially to preserve the status quo, that: (a) before the second to eighth respondents made any payment under the October Deed the person making the payment was required to give the Trustees as much notice of the payment as was reasonably practicable; (b) Mullins, Antoun's next of kin, and any trustee of the JA Investments Trust pay into Court any further payments made under the October Deed; (c) the second to eighth respondents be restrained from dealing with, disposing of or otherwise encumbering any amounts received in respect of the October Deed, except for paying the amount into Court; and (d) the second to eighth respondents be restrained from exercising any rights under the October Deed in relation to the transfer of shares in Civil Pacific Services Group, Global HR Group or Global Civils Group, Global Human Resources Group or GHR No 3. I made the urgent orders the Trustees sought: Rambaldi v Mullins [2014] FCA 361. The substantive proceeding 13 The matter was then conducted on pleadings. Following amendments the pleadings comprise: (a) an Amended Application dated 19 May 2014, and a Further Amended Statement of Claim dated 18 May 2015 ("FASOC"); (b) a Second Further Amended Defence of the second to eighth respondents dated 19 May 2015; and (c) a Reply to Second Further Amended Defence dated 19 May 2015. THE EVIDENCE The Trustees' evidence 14 The Trustees obtained leave of the Supreme Court of NSW to use evidence filed in the Supreme Court proceeding. They filed the following evidence: (a) affidavits of Mr Rambaldi: (i) sworn 28 March 2014 ("the first Rambaldi affidavit"); (ii) sworn 9 April 2015 ("the second Rambaldi affidavit") which includes five lever arch binders of exhibits, including transcripts of the evidence given by various persons in public examinations of the affairs of the Bankrupt conducted under s 81 of the Act ("public examinations") and documents produced in the examinations or otherwise obtained by the Trustees; and (iii) sworn 16 May 2015 ("the third Rambaldi affidavit"); (b) affidavits of Mr Innis Cull, the solicitor for the Trustees: (i) sworn 28 March 2014 ("the first Cull affidavit"); (ii) sworn 12 May 2014 ("the second Cull Affidavit"); (iii) sworn 13 May 2015 ("the third Cull Affidavit"). The Trustees did not read paragraphs 23 to 26 of this affidavit; and (iv) sworn 18 May 2015 ("the fourth Cull Affidavit"); (c) an affidavit of Ms Alison Lee affirmed 18 August 2014 which went to service of orders on Mullins. The deponents were not required for cross-examination. The respondents' evidence 15 The second to eighth respondents filed the following evidence: (a) affidavits of McHugh: (i) sworn 15 May 2015 in this proceeding, which did no more than exhibit his affidavit in the Supreme Court proceeding sworn 20 May 2013 ("the first McHugh affidavit"); and (ii) sworn 18 September 2013 in the Supreme Court proceeding which was tendered in evidence in this proceeding. McHugh was cross-examined. (b) affidavits of Byrnes sworn 11 May 2015 ("the first Byrnes affidavit") and 18 May 2015 ("the second Byrnes affidavit"). Byrnes was not required for cross-examination; 16 Russo and Ms Filomena Kyriacou ("Kyriacou"), a director of Wentworth Williams & Associates, did not put on affidavits. They gave viva voce evidence and were cross-examined. 17 The first respondent, Mullins, was served with the proceeding and for a short period a solicitor was on record as acting for her. The ninth respondent, the NSW Trustee, filed a Notice of Appearance and indicated that it did not intend to take part in the proceeding. Neither Mullins nor the NSW Trustee put on evidence or participated in the trial. MY ASSESSMENT OF THE WITNESSES McHugh's evidence 18 I accept much of the factual narrative set out in McHugh's first affidavit largely because much of it is uncontentious, much of it is consistent with my view of other evidence, and some of it is contrary to his interests in the present case. The evidence in McHugh's second affidavit is largely not relevant. There are various aspects of McHugh's evidence which I consider unreliable and overall I take a dim view of his credibility. 19 First, for the reasons I set out below (at [294]) I consider McHugh's evidence that in about May 2011 he was forced by duress into handing over his interest in the Global business to the Bankrupt is implausible. 20 Second, McHugh provided a substantially different account in his first affidavit from that which he gave in a statutory declaration in January 2013. In his statutory declaration he made no mention of coercion. Instead he declared that he had sold his interest in the Global business to Antoun in October 2011 because of difficult trading conditions and a concern about the outstanding taxation liabilities of the business. Unlike the account in his affidavit he declared that he retained 4.7% of the business for himself. 21 Third, as I have said (at [7]), McHugh entered into legal agreements with the Bankrupt and Antoun which mischaracterised the substance of the agreements and laid down a false trail. 22 Fourth, while cross-examination of McHugh largely related to matters which are not central to my decision, it led me to conclude that he was more concerned to protect the respondents' interests than to give a frank account. Amongst other things: (a) he initially said that he was unsure why he ceased to be the director of Global HR Group but then, when pressed, he said that while he was not absolutely sure, "it could have something to do with workers' comp". Russo later gave evidence that McHugh ceased to be the director because a large volume of workers compensation claims were made against Global HR Group, and if that company were to go into liquidation with McHugh as a director, then the Global business would lose its Westpac loan facility. In my view McHugh must have known why he ceased to be a director. A troubling but unexplored aspect of this evidence is that it appears that, as a director and the manager of the Global business, McHugh allowed Global HR Group to run up significant workers compensation liabilities, then simply ceased to be director of Global HR Group and continued as director and manager of the other companies in the Global business, running the same labour hire operation; (b) he tried to suggest that he could not remember much because he had suffered injuries in some assaults. I do not accept this. Neither of the assaults about which he gave evidence appear to have been sufficient to have caused him memory loss or brain damage, he proffered no medical evidence in that regard, and throughout the relevant period he continued to manage a large labour hire business. Kyriacou corroborated his account of memory impairment to an extent but I found her evidence unreliable too. It is more likely that his claimed memory impairment was an attempt to avoid difficult questions in cross examination; (c) when questioned as to whether he received legal advice about the March Deeds before he signed them, he said that he was under stress at the time and "wouldn't have a clue what was going on". Then, when pressed, he accepted that he did receive legal advice; (d) he had no difficulty in remembering particular forms lodged with ASIC when it suited him. He readily recalled three ASIC Form 484 Change of Company Details forms, lodged with ASIC on 26 October 2011, on which he said his signature had been forged; and (e) when asked whether the October Deed was intended to supersede the March Deeds he initially answered that he "would say so, yes". Then he said that there were "that many deeds going around backwards and forwards, I'm not up-to-date with it at all. I don't know." That answer is implausible when the October Deed was much more favourable for him than the March Deeds. It reduced the price, from $12 million down to $5 million, that he, Byrnes, Russo and their associated entities agreed to pay for the transfer of the Global business. Byrnes' evidence 23 Byrnes put on two short affidavits. He was not cross-examined on his evidence but, even so, I am not satisfied as to the reliability of his evidence. 24 First, his evidence in his first affidavit relating to the Bankrupt's claims to a proprietary interest in the Global business is inconsistent with the thrust of his evidence in his public examination, inconsistent with an email which he sent to the solicitor for the Trustees and others a short time prior to the hearing of this case, and incompatible with the view I have reached of the evidence overall. In his public examination and his email Byrnes accepted that the Bankrupt had a beneficial interest in the Global business but before me he tried to undercut that testimony. 25 Second, Byrnes entered into legal agreements with the Bankrupt and Antoun which mischaracterised the substance of the agreements entered into and laid down a false trail, as I described above (at [7]). He acknowledged that he was aware at the time he entered into the March Deeds that the $6.2 million defamation payment to the Bankrupt was a sham. 26 Third, his second affidavit essentially concerns a set-off claim for $3.4 million. He did not disclose various significant matters and for such a substantial claim his evidence is far from complete. It is likely that he did not provide the Court with the full picture. 27 In the finish I found the contentious parts of his affidavit evidence to be self-serving and implausible. I do not give his evidence much weight. Russo's evidence 28 Russo only gave evidence on some discrete issues, but I found his evidence on those issues to be unreliable. 29 First, for the reasons I set out below (at [261] to [279]) I do not accept that he wrongly made declarations of solvency in relation to GHR No 3 and Global Human Resources Group by mistake. In my view it is likely that he wrongly made the declarations of solvency as part of an attempt by the respondents to avoid their obligations under the October Deed (and any outstanding obligations under the March Deeds) and to defeat the Trustees' claims. 30 Second, as I have said, Russo too entered into legal agreements with the Bankrupt and Antoun which mischaracterised the substance of the agreements and laid down a false trail. He must have known that. 31 I give his evidence little weight. Kyriacou's evidence 32 Kyriacou gave evidence on similar discrete issues to Russo and she essentially corroborated his account. However, I did not find her a reliable witness either. 33 I reached this view, first, for the reasons I set out below (at [261] to [279]). I also found other parts of her testimony unsatisfactory, including that: (a) she was sometimes vague or evasive in her answers; and (b) she said that in March 2014 she arranged the sale of Global HR Group and McHugh ceased to be a director of that company on 11 March 2014. In my view she feigned that she could not remember the name of the person who purchased the company. She did not provide the name of that person until she was required to do so; (c) she said that in March 2014 she mistakenly failed to lodge an ASIC Form 484 Change to Company Details form to record that McHugh was no longer a director and shareholder in Global HR Group. On her account, upon discovering the error she corrected it by lodging the appropriate form on 12 May 2015, backdating the change to 11 March 2014. I found that evidence implausible when: (i) McHugh had no explanation for why the notice was lodged with ASIC more than one year after he ceased to be a director and shareholder; and (ii) other ASIC records showed that McHugh was still acting as a director of Global HR Group as at 12 March and 19 March 2014. The backdated change was not made until immediately prior to the trial of this case. 34 I give Kyriacou's evidence little weight on the limited issues to which it goes. EVIDENTIARY ISSUES The standard of proof 35 The applicable standard of proof is the balance of probabilities. However, in applying that standard it is appropriate to take into account the factors listed in s 140(2) of the Evidence Act 1995 (Cth) ("Evidence Act"). Although in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 at 361-362 ("Briginshaw"), Dixon J was speaking of the common law position, it is settled that the Court is required to take into account similar considerations through s 140(2): see Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66 at 449-450. 36 Some of the factual findings I have made relate to serious allegations against a party. In particular I have found that: (a) Russo and McHugh took steps to register the New Parent Company and to register a new company to hold the shares in it. Then, as a director of the existing Parent Company, Global Human Resources Group, Russo resolved to transfer the shares it held in the Operating Companies to the New Parent Company. As a director Russo wrongly made Declarations of Solvency in respect to Global Human Resources Group and GHR No 3. As a member Russo resolved to put the Parent Company and GHR No 3 into members' voluntary liquidation. Russo took those steps as part of an attempt by the respondents to avoid their obligations under the October Deed (and any outstanding obligations under the March Deeds) and to defeat the Trustees' claim. (b) the Bankrupt and Antoun characterised $6.2 million that was to be paid to the Bankrupt under the March Deeds as being for defamation in order that it be treated as exempt monies in the bankruptcy and so as to avoid the Bankrupt's obligations to his creditors. McHugh, Byrnes and Russo cooperated in the Bankrupt's and Antoun's mischaracterisation of the substance of the March Deeds; (c) Antoun (I infer with the Bankrupt's agreement) mischaracterised the substance of the October Deed in order to assist the Bankrupt to defeat the Trustees' claim. McHugh, Byrnes and Russo cooperated in that mischaracterisation at a time when they knew that Alex was a bankrupt. I did not make those findings lightly. In doing so I followed the approach in Briginshaw and had regard to s 140(2). Objections to evidence 37 I now deal with the respondents' submissions in which they objected to the admissibility of various parts of the Trustees' case, and in the alternative argued that the use of the evidence should be limited. The Cavric email 38 On 5 February 2013 at 7:19 pm Mr Ned Cavric ("Cavric") the Practice Director of NSW Compensation Lawyers sent an email to Mr Christopher Rumore ("Rumore") a partner of the legal firm, Colin Biggers & Paisley, which said in part: Yes, Mr Alex is a beneficial owner of the shares held by Mr Antoun. 39 The respondents submitted that the relevant statement is inadmissible as hearsay under s 59 of the Evidence Act, and alternatively that the use of the statement should be limited pursuant to s 136 of that Act, because Cavric did not have personal knowledge of the asserted fact, it is therefore second-hand hearsay and there is no evidence that Cavric was not available to give evidence. The respondents submitted that if the email is a business record (which they did not admit) then s 69 of the Evidence Act does not apply because Cavric did not have personal knowledge of the asserted fact, and it cannot be reasonably assumed that the information was directly or indirectly supplied by someone who did. 40 In the alternative, the respondents contended that if the statement is admitted, s 136 of the Evidence Act should apply to limit its use because its reception as proof of the truth of the fact asserted is unfairly prejudicial when the respondents are unable to test it. They argued that the statement is unreliable because at best it is hearsay which must be based on what someone else had told Cavric, and there is no evidence as to the source of the hearsay. They contended that the information did not come from the Bankrupt himself. Cavric said in his public examination that the Bankrupt "on most occasions, referred to the Queensland businesses as Mr Antoun's businesses". 41 The respondents relied on Cavric's evidence about why he made the subject statement in the email. In his public examination he said that: I'm pretty certain what happened was that Moloney Lawyers wanted George Alex in this deed, and then Mr Rumore would have asked in what capacity, and then I would have asked someone in what capacity, and someone would have told me he was a beneficiary of the trust….I can't recall, but it would either be Joseph Antoun or Manny from MKP [Antoun's accountant.] 42 They noted that the email states that the subject statement was Cavric's "initial response" and that Cavric testified in his public examination: "I think that that's a mistake" and that "I must have asked someone and someone would have told me this, but it was incorrect". Cavric was not cross-examined on his disavowals of the subject statement and the respondents submitted there is no reason to suspect that he gave false evidence. 43 The respondents also pointed to Cavric's evidence that the Settlement Deed recites that the Bankrupt is a beneficiary of the JA Investments Trust when in fact that is not the case, and that Cavric said that he did not see the JA Investments Trust deed at the time he sent the email. They argued that Cavric was not at the time a practising solicitor who was acting for the Bankrupt or Antoun, and he was conveying information to Rumore and submitted that it is not clear that he conveyed the information on instructions from Antoun or the Bankrupt. 44 Finally, the respondents noted that Cavric was replying to questions asked by Rumore by email at 6:09 pm, which questions are not in evidence. They submitted that there is a risk of unfairness in considering the statement by Cavric without the proper context, and said that it is possible Cavric made the statement because he erroneously understood Alex to be a beneficiary of the JA Investments Trust. 45 In my view the relevant statement in the email is admissible as a business record, kept in the course of the business of NSW Compensation Lawyers (and/or the business of Colin Biggers & Paisley) pursuant to s 69 of the Evidence Act. That section relevantly provides: (1) This section applies to a document that: (a) either: (i) is or forms part of the records belonging to or kept by a person, body or organisation the course of, or for the purposes of, a business; or (ii) at any time was or formed part of such a record; and (b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business. (2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made: (a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or (b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact. 46 At the time Cavric was employed as the Practice Director of Petrovich Law Group Pty Ltd trading as NSW Compensation Lawyers ("NSW Compensation Lawyers"). Although he was legally qualified he did not hold a practising certificate. For the reasons I set out below (at [188]-[197]) I consider that, through Cavric, NSW Compensation Lawyers acted for the Bankrupt and Antoun. I infer that Cavric undertook legal work for that firm pursuant to the practising certificate(s) and under the supervision of the principal(s) of that firm. 47 Cavric sent the email to Rumore under the subject heading "Advice in relation to Global Group" which is the name of the Colin Biggers & Paisley file relating to the March Deeds. He sent it as a member of the legal team negotiating and drafting those deeds and it forms part of the records belonging to or kept by NSW Compensation Lawyers and Colin Biggers & Paisley for the purpose of their respective businesses. The requirements of s 69(1) of the Evidence Act are met in my view. 48 The next question is whether the relevant statement meets the requirements of s 69(2). It is uncontentious that the email was in reply to questions asked by Rumore in an email at 6:09 pm that day, which questions are not in evidence. Cavric sent an email to Rumore at 6:12 pm and said: I am meeting with Joe [Antoun] and George [Alex] tonight and will draft a response to the issues raised late evening. 49 The evidence shows that Cavric acted for the Bankrupt and Antoun and regularly conveyed instructions from them to Rumore. It also shows that Cavric conferred with the Bankrupt and Antoun on the evening of 5 February 2013 so as to obtain instructions. Cavric told Rumore that he would provide a response to his questions later that evening and he did so in the subject email. 50 Cavric and Rumore were jointly engaged in negotiating and drafting complex commercial deeds for the Bankrupt and Antoun and it is unlikely that Cavric would have made the relevant statement unless he had a proper basis for doing so. I infer that he took instructions from the Bankrupt and/or Antoun as to whether the Bankrupt had a beneficial interest in shares held by Antoun and it is more likely than not that he made the subject statement on the basis of instructions given to him by the Bankrupt and/or Antoun. 51 Each of the Bankrupt and/or Antoun had or might reasonably be supposed to have had personal knowledge of whether the Bankrupt was the beneficial owners of shares held by Antoun. In my view the requirements of s 69(2) of the Evidence Act are satisfied and the relevant statement is admissible as a business record. 52 I accept that Cavric said that it was his "initial response" and he was not cross-examined on his evidence that his statement was a mistake, but I do not consider it appropriate to limit the use of the evidence pursuant to s 136 of the Evidence Act. In my view: (a) it is not to the point that Cavric did not hold a practising certificate. He was legally qualified and employed as the Practice Director by NSW Compensation Lawyers. He undertook legal work pursuant to the practising certificate(s) and under the supervision of the principal(s) of that firm. Nor do I accept that Cavric was just a conduit to Rumore. However, even if he was a conduit, he and Rumore were jointly engaged in negotiating and drafting complex commercial deeds and he is likely to have been careful when providing information at Rumore's request; (b) there is no merit in the respondents' contention that without knowing the question Cavric was asked there is a real risk of unfairness to the respondents. It can only have been a question which concerned the legal or beneficial ownership of the shares in the Global business; (c) there are grounds for treating Cavric's disavowal of the statement with caution. As I later explain I found his evidence in his public examination that he did not act for the Bankrupt to be implausible; and (d) the respondents knew the use that the Trustees proposed to make of Cavric's statement. It was open to the respondents to call Cavric to clarify the evidence he gave in his public examination and they did not do so; 53 I consider the subject statement is admissible and its use should not be limited. However, taking account of the fact that it was Cavric's "initial response" and paying some regard to his disavowal of the statement I give it reduced weight. The statement is just one strand in my conclusion that the Bankrupt had a beneficial interest in the shares in the Global companies. My conclusion would be the same whether or not the statement is admitted into evidence. The Byrnes email 54 On 16 March 2014 Byrnes sent an email to his solicitor, Mr Alistair McKeough ("McKeough") of Whittens Lawyers, which he copied to various other people including the solicitor for the Trustees. The email includes the statement: The trustee as everyone else believes that Antoun was just a front for Alex and never put in any of his money. 55 The respondents contended that this statement is inadmissible on grounds of relevance and that it is in any event unreliable. They argued that what Byrnes thought is irrelevant and contended that it is not clear that the email expresses Byrnes' own view of the matter rather than what he thought everyone else believes. They submitted that the evidence should not even be admitted as proof of Byrnes' state of mind because that is not relevant or admissible as proof of the legal relations between the Bankrupt and Antoun. On their contentions even if the email did express Byrnes' view (rather than what he thought the Trustees and "everyone else" believed) the probative value of the email as to the property rights of Antoun and the bankrupt is limited. They also contended that Byrnes was available to give evidence and it should have in fairness been put to him that the email expressed his belief. 56 In my view the subject statement is relevant and admissible. The passage to which the respondents objected must be seen in context. In the relevant passages of the email Byrnes said: Mr Alex at that mediation in front of you and every other lawyer and myself and Russo said this is my company, I own it and you can't show me where you paid me for it. He made several similar comments and Antoun said this is our company and you have stolen it from us. I later said to G Alex, "George even if we wanted to pay you, how would we because you're a bankrupt" GA "just pay Joe [Antoun] and he will pay me". When asked again he said pay Joe and we will work it out between us. The trustee as everyone else believes that Antoun was just a front for Alex and never put in any of his money. The respondents only objected to the final sentence. 57 In my view the respondents' objection lacks real force because: (a) while the relevant statement is somewhat ambiguous (in referring to what "the trustee as everyone else believes") on a fair reading of the email overall the statement indicates Byrnes' view that Antoun was just a "front" for the Bankrupt. That reading is consistent with the rest of the email and Byrnes' other evidence to the same effect in his public examination; (b) the probative value of Byrnes' view is not as limited as the respondents said. Byrnes worked for the Bankrupt and Antoun on restructuring the Global business from about September 2011. In his public examination he said that he reconstructed the accounts of the business and arranged a forensic audit. He also said that, through a company he controlled, Construction Financial Management Pty Ltd ("Construction Financial Management") he transferred $3.42 million to Antoun in the period March to October 2012 and that he acquired a one third interest in the business (of an unspecified nature). It is likely that he had a close understanding of the Global business including whether the Bankrupt held a beneficial interest in it and whether Antoun acted as the Bankrupt's agent or trustee to assist in concealing the Bankrupt's property (colloquially as a "front"); and (c) whether Antoun acted as an agent, trustee or "front" for the Bankrupt is a central question in the proceeding and the statement is against Byrnes' interests. Byrnes was on notice of the Trustees' proposed use of the email and he put on no evidence to qualify or correct the subject statement. I do not accept that it was unfair of the Trustees not to require him to attend the cross examination to put to him that the email expressed his belief. 58 I consider the relevant statement is relevant and admissible as setting out Byrnes' view that the Bankrupt had a proprietary interest in the Global business and used Antoun as a front man to conceal that interest. I do not treat it as admissible in setting out the views of other persons, including the Trustees. However, the statement has little probative value standing alone because Byrnes only states his own view, but when viewed with other evidence it is a minor strand of the evidence supporting the inferences I have drawn. The admissibility of transcripts of the public examinations generally – the statutory context 59 The balance of the respondents' objections to evidence relate to statements in the transcripts of evidence given in the public examinations. 60 Section 81(17) of the Act provides: Notes taken down and signed by a person in pursuance of subsection (15), and the transcript of the evidence given at the examination of a person under this section: (a) may be used in evidence in any proceedings under this Act whether or not the person is a party to the proceeding; and (b) shall be open to inspection by the person, the relevant person, the trustee or a person who states in writing that he or she is a creditor without fee and by any other person on payment of the fee prescribed by the regulations. (Emphasis added.) 61 The expression "proceedings under this Act" in s 81(17) encompasses any action seeking to take a step, or assert or establish an entitlement, provided by under the Act: Rothmore Farms Pty Ltd (in liquidation) v Belgravia Pty Ltd (1999) 31 ACSR 88; [1999] FCA 598 ("Rothmore Farms") at [14] (Mansfield J). It is uncontentious that the present case is a proceeding under the Act. 62 Section 255 of the Act provides: (1) A transcript or electronic or magnetic recording that purports to be a record of proceedings under section 77C or 81, or of proceedings before a court, is to be taken to be a record of that kind, unless the contrary is proved. (2) The transcript or recording is admissible as evidence of the matters described by a person whose words are recorded in the transcript or recording, unless the Court, or a court in which the transcript is sought to be introduced, makes an order to the contrary. …. (Emphasis added.) 63 The respondents contended that a transcript of a public examination under s 81 is prima facie hearsay (as an out of court representation) but accepted that it was made admissible by s 255. However, they argued that s 255 does not displace the rules of evidence as they apply to proceedings in this Court and that there is no reason to suppose that the effect of s 255 is to displace the restriction in the Evidence Act to the reception and use of only first-hand hearsay. They also submitted that if s 255 does allow second-hand or third-hand hearsay to be used as proof of the facts asserted then ss 135 and 136 of the Evidence Act should be brought to bear to ensure that remote hearsay is not admitted into evidence as proof of the truth of the fact asserted where neither the person who made the representations nor the person whose words they repeat are parties to the proceedings. 64 On the respondents' submissions there is an important distinction between admissions made by the Bankrupt about what he or she did being admitted in proceedings against the Bankrupt and a third party, and the evidence of persons who are not parties to the proceeding of what other people said being admitted as evidence of proof of the truth of what those other people said. In this regard the respondents pointed to the warning about the unreliability of hearsay evidence by the High Court in Lee v R (1998) 195 CLR 594; [1998] HCA 60 at [32]; [34]-[35] (Gleeson CJ, Gummow, Kirby, Hayne and Callinan JJ). 65 I do not quibble with the High Court's warning and there can be no question as to the danger associated with hearsay evidence. However, in the present case it must be kept in mind that the respondents' objection to the admissibility of this evidence is made in the statutory context of evidence taken in a public examination by a trustee in bankruptcy. 66 The Full Court dealt with s 255 of the Act in Colonial Life Assurance Society Ltd v Donnelly (1998) 82 FCR 418; [1998] FCA 364 ("Colonial") at 434 (Wilcox, O'Connor and Sackville JJ). As the Court explained: …this provision was intended to make the transcript of evidence admissible as evidence not merely of the words spoken by the examinee, but of the matters described by the examinee in his or her evidence. If there were any doubts that this was the intended effect of the subsection, they are resolved by the Explanatory Memorandum accompanying the 1996 Bill. The Memorandum (par 182.2) states that the: "provision is designed to overcome the common law rules excluding hearsay evidence, and to enable evidence given at examinations and recorded interviews to be put on the record in proceedings in a court without the need for witnesses to repeat their account of events." This does not mean that the contents of a transcript of a s 81 examination are automatically admissible in subsequent proceedings. First, s 255(2) itself provides that the court in which the transcript is sought to be introduced may make an order to the contrary. Secondly, s 255(2) must be read together with s 81(17). As we have said, s 81(17) is intended, in part, to impose a restriction on the use to which a s 81 transcript can be put in subsequent proceedings. Thus the apparently broad terms of s 255(2) must be qualified so as to make a s 81 transcript admissible (subject to the power of the court to make an order to the contrary) only in proceedings under the Bankruptcy Act to which the examinee is a party. (Emphasis added.) 67 As the Explanatory Memorandum indicates, at that time s 81(17) of the Act provided that a transcript could only be used in evidence in proceedings under the Act in which the person whose evidence is sought to be adduced was a party to the proceeding: Colonial at 425. It is significant that there is no longer any restriction to the use of transcripts only to proceedings to which the examinee is a party. That is made clear by the current s 81(17)(b), into which the words "whether or not the person is a party" were inserted by the Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006 (Cth). 68 Section 255 is intended to overcome the significant difficulties that trustees in bankruptcy may have in proving matters in court proceedings. The present case is a good example of the difficulties that may arise: the Trustees are strangers to the business arrangements between the Bankrupt and Antoun; Antoun is dead; the Bankrupt has not cooperated with the Trustees; and the Bankrupt, Antoun and the respondents entered into deeds which mischaracterised the substance of the agreements. In my view McHugh, Byrnes and Russo cooperated with the Bankrupt's attempts to conceal property from the Trustees and his creditors. 69 Section 81(17) of the Act, read together with s 255, provides that in proceedings under the Act a transcript of evidence of a public examination under s 81 "is admissible as evidence of the matters described by a person whose words are recorded", subject to any order to the contrary by a court in which the transcript is sought to be introduced. A transcript is admissible, whether or not the examinee is a party to the proceeding, and against "all parties": Rothmore Farms at [9]. 70 The question is whether, and if so to what extent, ss 135 or136 of the Evidence Act may impinge on evidence made admissible by s 255 of the Bankruptcy Act. The parties made no submissions and I was taken to no authority as to the proper interaction of s 255 of the Act with ss 135 or 136 of the Evidence Act. In those circumstances I decline to decide the question. I proceed on the assumption that it is open to me to rely on ss 135 or 136 of the Evidence Act to exclude evidence otherwise admissible pursuant to s 255 and to limit the use of evidence admitted pursuant to s 255. Byrnes' evidence of statements by the Bankrupt at the mediation 71 The respondents objected to the admissibility of parts of the transcript of Byrnes' public examination in which he gave evidence of statements made by the Bankrupt at the mediation in the Supreme Court proceeding. Byrnes testified that the Bankrupt: (a) basically thumped the table and said: This is my company and you guys have stolen my company. You've taken this – this is my business… (b) and also said: Well, you will just pay…Joe and we'll sort it out between us. … You pay Joe and he will pay me. 72 The respondents argued that the transcript of what the Bankrupt said is hearsay, there is no evidence that the Bankrupt is unavailable under s 63 of the Evidence Act, and no basis to apply s 64 of that act. They contended that pursuant to s 136 of the Evidence Act the use of the evidence should be limited to proof of the words that were said by the Bankrupt, but not as proof of the facts (alleged) to be asserted. They submitted that Byrnes did not intend to assert the truth of what the Bankrupt said, and he had no knowledge of the matters that the Trustees seek to prove by the statements made by the Bankrupt. They also argued that even if Byrnes thought the Bankrupt was a beneficial owner of the shares, the statement is not capable of proving that to be true (especially absent evidence of why he thought that). On their submissions, the language purportedly used by the Bankrupt is consistent with a number of different legal relationships (including a contractual relationship) and the objective evidence does not support the Trustees' case. 73 The respondents contended that the evidence is unreliable because Byrnes said in his first affidavit that the Bankrupt had referred to the Global business as "his" business since entering into a Deed of No Legal Interest in 2008 in which he declared that he had no legal interest in the business. They also pointed to McHugh's evidence that, in June 2011, the Bankrupt said to him "Joe [Antoun] is going to invest in the business so that we can pay the tax and arrange new finance". The respondents contended that the Bankrupt could not have had a legal or equitable interest in the shares before they were transferred to Antoun in October 2011. 74 I consider the relevant statements are hearsay, made admissible by s 255. I do not consider it appropriate to exclude the evidence or to limit its use in the way the respondents contended, essentially because: (a) the statements are far from remote hearsay. They are direct evidence of what Byrnes saw and heard the Bankrupt say in the setting of a formal mediation in the Supreme Court proceeding; (b) the statements are against Byrnes' interests in this proceeding; (c) Byrnes gave evidence on oath, and there is nothing to indicate that he gave false evidence. Indeed, the statements to which objection is made are consistent with his other evidence as to what took place at the mediation, including his 16 March 2014 email; (d) the respondents put on no evidence to qualify or contradict Byrnes' statements as to what the Bankrupt said, even though the other persons present at the mediation included the respondents' solicitors and senior counsel; and (e) whether the Bankrupt enjoyed beneficial ownership of some or all of the shares in the companies in the Global business is a central issue in the proceeding, as is whether Antoun acted as agent or trustee for the Bankrupt when he entered into the October Deed. Byrnes is a party and he was on notice of the use to which the Trustees proposed to put his earlier testimony yet he put on little evidence to qualify it. While in his first affidavit Byrnes (unconvincingly) tried to explain away the Bankrupt's statements about ownership of the Global business, he did not otherwise contradict that evidence. 75 I do not accept the respondents' contention that Byrnes had no knowledge of the matters that the Trustees sought to prove through this evidence. As I have said, Byrnes worked for the Bankrupt and Antoun on restructuring the Global business from about September 2011 and he reconstructed the accounts of the business and arranged a forensic audit. Through his company he transferred $3.42 million to Antoun in the period March to October 2012 and he said that he acquired a one third interest in the business (of an unspecified nature). It is likely that he had a close understanding of the Global business and a good understanding of whether the Bankrupt had beneficial ownership of the companies in the business and whether, and to what extent, the Bankrupt stood behind Antoun, using him as an agent, a trustee or a "front". 76 I do not accept the respondents' contention that the Bankrupt could not have had a legal or equitable interest in shares in the Global business before they were transferred to Antoun in October 2011. On my view of the evidence in about May 2011 McHugh agreed to dispose of his interest in the companies in the Global business to the Bankrupt. I accept that by October 2011 Antoun also had an interest in the companies in the business. The evidence tends to show that from about that point they had joint beneficial ownership, in equal shares. Byrnes' evidence of statements made by Antoun 77 The respondents also objected to the admissibility of the transcript of Byrnes' evidence in his public examination in which he testified that in a meeting with Antoun to settle the Supreme Court proceeding, held in a café in the MLC Centre in Sydney in the period 16 October 2013 to 21 October 2013, Antoun said to Byrnes: I will sort George out. I will pay George. and that: any payment would be…paid to him …and he would look after and he would pay George his half. 78 The respondents submitted that the evidence of what Antoun said is hearsay. They argued that pursuant to s 136 of the Evidence Act the use of the evidence should be limited to proof of the words that were said by Antoun and it should not be admitted as proof of the facts alleged to be asserted. They also contended that the language used by Antoun was consistent with a number of different legal relationships between Antoun and the Bankrupt (including a contractual relationship) and that the objective evidence does not support the Trustees' case. 79 They also contended that the evidence assumes that Byrnes remembered the conversation accurately. For example, they argued that Antoun could have said "pay George half" rather than "pay George his half". The respondents argued that even if Byrnes had accurately recalled the statement, Antoun was most likely referring to an agreement he had with the Bankrupt to pay him half of whatever he received from the respondents, rather than any trust relationship. 80 Finally, the respondents argued that the evidence is unreliable because McHugh gave evidence that: (a) on 13 October 2011 Antoun demanded that he sign share transfers and said: "There are a lot of George's debts which need to be fixed up. I need the shares signed over" and "Kevin you've got to sign [the share transfers]. I'm paying a lot of George's debts and that is my security" ; and (b) on 7 July 2013 Antoun sent him a text message which said "I paid for the company you have stolen". 81 I consider that Byrnes' evidence of Antoun's statements is hearsay made admissible by s 255 of the Act. Section 59 of the Evidence Act does not apply, but if it did the evidence would be admissible pursuant to the exception in s 63 as Antoun is deceased. 82 I do not consider it appropriate to limit the use of the evidence, essentially because: (a) the statements are direct evidence of what Byrnes saw and heard Antoun say, in the presence of a witness, while they were negotiating the settlement of Supreme Court proceedings; (b) Byrnes gave evidence on oath and there is nothing to indicate that he gave false evidence. Indeed, the evidence is consistent with other evidence as to the nature of the relationship between the Bankrupt and Antoun, including Byrnes' other evidence; (c) the statements are against Byrnes' interests in this case; (d) whether Antoun acted as agent or trustee for the Bankrupt in relation the monies received pursuant to the October Deed are central issues in the proceeding. Byrnes is a party, and he was on notice of the use to which the Trustees proposed to use this testimony, yet he put on no evidence to qualify or contradict it. Byrnes sought (implausibly in my view) to explain away the Bankrupt's statements about his ownership of the Global business. However, he put on no evidence to essentially contradict or qualify his testimony in his public examination that he told the other parties at the mediation of the Supreme Court proceedings that the case could be settled by the respondents paying monies to Antoun, or that he and Antoun would then sort it out between them, or that in their meeting at the MLC Centre Antoun told him that the Supreme Court proceeding could be resolved by the respondents paying Antoun, and that Antoun would pay the Bankrupt "his half"; and (e) for the reasons I explain I do not accept the respondents' contention that the evidence shows that McHugh disposed of his interest in the Global business to Antoun, rather than to the Bankrupt. Byrnes' other evidence 83 The respondents objected to the admissibility of the transcript of Byrnes' evidence in which he said: …in late 2013, George Alex approached Ned Cavric…with a view to protecting his interest on any payments that might have been paid in relation to any settlements between the parties and Mr Antoun. 84 In my view this objection is well made. The transcript shows that Byrnes expressed some uncertainty before he made this statement and he provided no explanation as to how he came to know the reason for the Bankrupt's alleged approach to Cavric. For example, he did not say that he was told this by the Bankrupt, by Cavric or by somebody else. It is unclear whether it is first-hand, second-hand or even more remote hearsay. I also note that the statement that the Bankrupt approached Cavric in late 2013 is inconsistent with evidence in the public examinations which shows that Cavric acted for the Bankrupt in the period February to May 2013. It is appropriate to exclude this evidence under s 255(2) of the Act. 85 The respondents also objected to the admissibility of the transcript of Byrnes' evidence in which he said that in an unidentified period after the execution of the October Deed on 22 October 2013: Mr Alex has had various Sydney underworld figures approach me with a view to telling me that I have to pay. 86 Byrnes did not identify which alleged members of the Sydney underworld approached him, when they did so, what they said, or the basis for his belief that that they did so at the Bankrupt's behest. In my view this evidence is unreliable, has limited relevance and little probative value. It is appropriate to exclude it under s 255(2). Dona's evidence of statements by the Bankrupt 87 The respondents objected to the admissibility of the transcript of the public examination of Noel Dona ("Dona"), a law clerk, who was friendly with and who had performed legal work for the Bankrupt. Dona testified that the Bankrupt told him (in about late 2012) that: …he and Joe [Antoun] had an interest in a labour hire business in Queensland… And I said "What do you mean?" they said "Well, we're getting some big money out of that. We're selling our shares". That was virtually the extent of it. I said "Whose shares?" and I didn't get much details out of it. And in relation to the labour hire business in Queensland: I know that they're being bought out. 88 The respondents submitted that this evidence should not be admitted because its probative value is substantially outweighed by the danger that it might be unfairly prejudicial to them. They argued that the evidence has little probative value and the language used by Dona as to what he remembered is an unreliable basis from which to infer that the Bankrupt had a proprietary interest in the Global business. 89 Dona's evidence is hearsay made admissible by s 255 of the Act. It is direct evidence, given on oath, of what the Bankrupt said to him. There is no reason to think that he gave false evidence. Although only a minor strand, when viewed with the other evidence it is rationally probative of my conclusion that the Bankrupt had beneficial ownership of half of the companies in the Global business. I do not consider it appropriate to exclude the evidence. The objection to tendency evidence 90 In opening submissions the Trustees relied on the transcripts of various public examinations to show that the Bankrupt used other people to "front" for him. They relied on the evidence of: (a) Byrnes - that the Bankrupt used Mazen (aka "Mace") Hourani ("Hourani") as a front for him, and that "George is an undischarged bankrupt, and can't be a director of any companies and he puts up a lot of people who aren't very smart to be directors on his behalf"; (b) Michael Cohen ("Cohen") - that Hourani "is definitely a front for George"; (c) Jimmy Kendrovski ("Kendrovski") - that the Bankrupt "puts certain front men in to deal with certain matters"; (d) Cohen - that he held one sixth of the shares in Elite Highrise Services Pty Ltd as a front for the bankrupt; and (e) Athina Alex, the Bankrupt's sister - from which the Trustees' argued it should be inferred that she acted as a front for the Bankrupt in the Active companies. 91 The respondents flagged their objection to this evidence in the course of the opening of the Trustees' case. They contended that it is tendency evidence, they had not been served with notice under s 97 of the Evidence Act, and that the unreliability of the evidence was exacerbated by the fact that the Trustees were able to rely on hearsay evidence pursuant to s 255 of the Bankruptcy Act. They argued that the Trustees must call the relevant witnesses, and submitted that an order should not be made to dispense with notice pursuant to s 100 of the Evidence Act. 92 The respondents' objection was put over for submissions to be made the following day by both sides, but the following day the objection was not further argued. Then, in written submissions after the close of the case the respondents put on detailed objections to evidence. They did not, however, detail any objection to this evidence. I was left unclear as to the whether the respondents maintained their objection to this evidence but I proceed on the assumption that they do. 93 By operation of s 255(2) of the Act, unless an order is made to the contrary, the transcripts are admissible as evidence of the matters described by the person examined. At the core of the respondents' objection is the proposition that s 97 of the Evidence Act may operate to exclude evidence otherwise admissible pursuant to s 255 of the Bankruptcy Act. The parties did not take me to any authority or make any submissions in this regard, and in the circumstances it is inappropriate to decide the issue. I proceed on the assumption that s 97 applies. Even if it does not strictly apply s 97 reflects well accepted principles and it is a useful guide in the exercise of my discretion to exclude evidence pursuant to s 255(2). 94 Section 97 provides that tendency evidence shall not be adduced unless the party seeking to adduce the evidence provides reasonable notice in writing, and the court considers that the evidence will have significant probative value, either by itself or having regard to other evidence adduced. Section 100 of the Evidence Act allows the Court to prospectively or retrospectively dispense with the requirement for notice. 95 I consider the respondents had sufficient notice that the Trustees intended to rely on this evidence. Whether the Bankrupt used Antoun as a trustee, agent or "front", so as to conceal his interest in the Global business and under the March Deeds and October Deed from the Trustees, are central issues in the case, and the relevant transcripts were exhibited to the second Rambaldi affidavit. 96 I can see little substance to the respondents' contention that they were denied the opportunity of cross-examining these witnesses. It is quite unlikely that they would have done so having regard to the defence they ran, and the fact that Byrnes put on nothing to qualify or contradict his earlier testimony in this regard. It is particularly unlikely that the respondents would have cross-examined Cohen when he provided first-hand sworn testimony from his personal knowledge that notwithstanding ASIC records to the contrary the Bankrupt and Antoun each had a one sixth beneficial interest in the company. 97 However, it is appropriate to exercise my discretion under s 255 to exclude the relevant parts of the transcripts of Athina Alex's evidence, Cohen's evidence in relation to Hourani and Kendrovski's evidence. Although Ms Alex displayed a gross lack of knowledge in regard to the various companies in which she had been a director the Trustees did not take the Court to any specific parts of her evidence to support the inference they sought. Kendrovski and Cohen did not explain the basis of their beliefs and Kendrovski's evidence is vague. In my view this evidence has little probative value. The evidence of settlement negotiations 98 The Trustees accepted that Byrnes' evidence regarding the Bankrupt's statements at the mediation and his evidence regarding Antoun's statements in the meeting at the MLC Centre are evidence of settlement communications pursuant to s 131(1) of the Evidence Act. This provision prohibits adducing evidence of communications between people in a dispute in connection with an attempt to negotiate a settlement of the dispute. 99 Section 131(2) of the Evidence Act provides the following relevant exceptions to the prohibition on adducing evidence of settlement communications: (2) Subsection (1) does not apply if: … (f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; … (i) making the communication, or preparing the document, affects a right of a person; (j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; 100 Section 263(1) of the Bankruptcy Act sets out various offences in relation to defrauding creditors of a bankrupt, concealing the property of a bankrupt, receiving the property of a bankrupt with intent to defraud creditors or assisting a bankrupt to do so. 101 In my view the evidence of settlement negotiations falls within the exceptions in subs 131(2)(f) and (i). In respect of s 131(2)(j), for the purposes of these proceedings, I am satisfied that the Bankrupt's statement was made as part of an attempt to conceal from the Trustees that he was to be paid substantial monies for his interest in the Global business. In my view the evidence is admissible. THE FACTS 102 In setting out the facts I set out my view of the evidence. I have largely drawn the facts from the first McHugh affidavit, the evidence given and documents produced in the public examinations, and submissions titled "Costs Applicant's Narrative and Submissions" made on McHugh's behalf in the Supreme Court proceeding ("the costs submissions"). I infer that the costs submissions were approved by Byrnes as the evidence shows that he instigated and funded the Supreme Court proceeding. The Trustees relied on the costs submissions and the respondents did not suggest they were incorrect. 103 Although the trial was short, the documentary evidence is voluminous. The documents exhibited to the Rambaldi affidavits comprise six lever arch binders. I was taken to comparatively few of these documents but it was unfortunately necessary to look beyond the materials to which I was directed. The Court should not be required to pick through such voluminous materials and often irrelevant materials in search of pearls of relevance. Alex's bankruptcy 104 There is no issue that the Bankrupt's bankruptcy predates the relevant events. 105 It is common ground that on 8 December 2008 the Deputy Commissioner of Taxation obtained judgment against the Bankrupt for $179,652.93 and that on 20 July 2009 the Bankrupt committed an act of bankruptcy. On 19 April 2011 a sequestration order was made against the estate of the Bankrupt. Mr Mark Roufeil was initially appointed trustee of the bankrupt estate and the Trustees were appointed in his place on 10 April 2013. 106 The act of bankruptcy was committed within six months before the date of presentation of the creditor's petition, and by operation of s 115 of the Act the bankruptcy is taken to have relation back to, and to have commenced, on 20 July 2009. The relevant events all take place after the date of commencement of Alex's bankruptcy. The Global business 107 The evidence is that McHugh has worked in the labour hire industry in Queensland for some 30 years and from about 1995 he operated a labour hire business in Queensland as a manager and then part-owner, supplying contract skilled and unskilled labour in the construction and mining industries. 108 That business was, in commercial if not legal terms, the predecessor to the Global business. I use the description "the Global business" to refer to the labour hire business that is the central in the proceeding, notwithstanding that the business had different owners and was run through different companies over the years. 109 In the relevant period the Global business comprised: (a) the three Operating Companies, Civil Pacific Services Group, Global HR Group and Global Civils Group; (b) the Parent Company, Global Human Resources Group, which held the shares in the Operating Companies; and (c) GHR No 3, which held the shares in the Parent Company. Shortly before the trial, on 7 March 2014, Russo and McHugh registered GHR Custodian. On 11 March 2014 Global Human Resources Group transferred all of the shares it held in the Operating Companies to GHR Custodian, and it became the New Parent Company. Russo was the sole director of Global Human Resources Group at the time. 110 As at May 2013 the business employed between 100 and 200 full-time and part-time employees. 111 It is uncontentious that: (a) from about 1995 Mr Michael Stefanovski ("Stefanovski") was the owner of the labour hire business, which operated under the name of All Trades Pty Ltd and then under the business name Workforce One. McHugh managed the business; (b) in 2001 Stefanovski sold the business to Mr Michael Byrne ("Byrne") for $3.2 million. McHugh continued to manage the business; (c) in 2005 Byrne sold the labour hire business to Zenith Workforce Pty Ltd ("Zenith") for $3 million, the sole shareholder of which was Mr Dennis Xenos ("Xenos"). Zenith was backed by a small group of investors which included, amongst others, the Bankrupt, Xenos and the well-known former boxer Mr Jeff Fenech ("Fenech"). McHugh continued to manage the business; (d) in about May 2006 McHugh caused Civil Pacific (Qld) Pty Ltd ("Civil Pacific Qld"), a company which he controlled, to license the Global business from Zenith; (e) in about late 2007, a dispute arose between the investors in Zenith. At around the same time McHugh concluded that the licence fee was too high for him to generate an operating profit and he informed Xenos that he would not continue to operate the business under the licence agreement; (f) in late 2007/early 2008 McHugh reached an agreement for Stefanovski and Mr Gary Samuel to invest in the Global business pursuant to which Stefanovski would contribute the necessary monies and McHugh would manage the business. In February 2008 Zenith agreed to transfer the Global business to McHugh, Stefanovski and Samuel for $500,000. Those monies were paid to Fenech. The gist of Byrnes' evidence was that the Bankrupt was aggrieved by the fact that he was not paid any of those monies. That may or may not be so. In my view it is unnecessary to decide. (g) The Bankrupt (and each of the other Zenith investors) executed a "Deed of Recognition of No Legal Interest and Release" dated 26 February 2008 ("Deed of No Legal Interest"), in which he declared that he had no legal or equitable interest in the business and providing a broad release and discharge from all claims or demands which he may have had against the companies conducting the Global business; (h) from February 2008 until May 2011 McHugh was the day-to-day manager of the Global business, Stefanovski was responsible for arranging finance to support the business and Samuel was responsible for the preparation of accounts and the provision of accounting advice. In this period the business expanded by commencing to also provide labour hire in the mining industry. The Bankrupt acquires the Global business in May 2011 112 The costs submissions filed on McHugh's behalf state: [McHugh] has for many years operated a labour force hire business in Queensland and New South Wales. In about 2005, and up until 2008, George Alex became and was an investor in the business. In about mid 2011 George Alex reinserted himself into [McHugh's] business and shortly thereafter introduced the first defendant Joseph Antoun into the business. The manner and circumstances in which George Alex became re-involved and Joseph Antoun became involved in [McHugh's] business were matters of dispute in the proceedings. 113 McHugh said that in mid-May 2011 he was required by the Bankrupt to attend a meeting with the Bankrupt, Xenos and Mr Mick Gatto ("Gatto") at the Oasis Hotel on the Gold Coast. McHugh's evidence is the only evidence of the meeting. He said that at the meeting the Bankrupt and Xenos each said that he owned the Global business. McHugh denied this and said that he and Stefanovski had purchased the Global business from Zenith in 2008 and that the former investors in Zenith had each signed a Deed of No Legal Interest. The Bankrupt made statements such as "Kevin, forget about all that, we own the company. We're here to sort it out" and "we don't care, we're here to take the company back." During these exchanges Gatto listened. 114 McHugh's evidence is that Gatto then announced: "From what I've heard, the businesses are owned by George Alex. I don't give a fuck what you say, I've listened to everyone's story, and I've made a decision." McHugh said he then sat in silence for a few minutes and Gatto said: "Kevin, you've heard what I've had to say. We're here to sort this out. The business is going back to George Alex. That's the way it is." 115 McHugh said that at that time the Global business had a tax debt of about $2.4 million for which McHugh was personally liable, a debt factoring facility with Westpac Bank ("Westpac") secured by his personal guarantee, and that he had a loan from the company for about $800,000. He said that he explained this to the Bankrupt and Gatto and said that he was "tied up in the company" and that he couldn't just be "kicked out". The Bankrupt responded by saying: "Hang on Kevin, we're not kicking you out. We need you to stay on and manage the business. We know that if you go, the business will fail. We know you have the contacts." The Bankrupt also said: "Don't worry Kevin, we know you have to stay. We know you've got the contacts. We want you to manage the business. We'll make arrangements for the finance. Don't worry about that. Leave it to us. We'll also pay the tax." 116 McHugh said he left the meeting shortly afterwards saying "there's really nothing more to say". The Bankrupt said that he would be back in touch after getting some documents drawn. 117 In written submissions the respondents argued that Gatto announced that the business was owned by Xenos and the Bankrupt. That is not my view of the evidence. The essence of McHugh's evidence is that Gatto purported to announce that McHugh was to transfer the Global business to the Bankrupt. McHugh said that he accepted that, as he said he had no choice. 118 McHugh said he then telephoned Stefanovski and told him what had happened. Stefanovski said that he had also had a "visit" (I infer from the Bankrupt) and that he had told the Bankrupt that he would be happy if he got back the $500,000 that he paid for the business in 2008. McHugh's alleged fear of the Bankrupt and Gatto 119 McHugh said that he had heard stories and read press reports that Gatto was a standover man and a gangster, and that he was aware that Gatto was closely associated with a number of violent and dangerous criminals in Melbourne. He also said that he was aware that the Bankrupt was closely associated with violent criminals in Sydney, and members of bikie gangs. It is unnecessary to decide whether McHugh's views regarding Gatto are correct. I have no difficulty in accepting that McHugh thought the Bankrupt and Gatto had criminal associations and a propensity for violence. 120 The thrust of McHugh's evidence is that he agreed to do as the Bankrupt and Gatto said because he had no choice. In his view the Bankrupt had no legitimate interest in the Global business but he feared that he might be physically hurt or even killed if he did not do what he was told. 121 Obviously, on McHugh's account the issue of duress can be said to arise. However, as I later explain (at [286]-[293]) the respondents expressly disavowed any allegation that McHugh suffered actual duress. Further, as I explain (at [298]) there are reasons to doubt McHugh's account in relation to duress. 122 Putting to one side the question of duress, on my view of the evidence McHugh agreed to transfer the Global business to the Bankrupt in about May 2011. The evidence tends to show an agreement at that time between McHugh and Stefanovski on the one hand, and the Bankrupt on the other, in which they agreed to transfer their interest in the business to the Bankrupt in return for his paying the taxation liabilities of the business for which McHugh was personally liable, refinancing the business so as to cover McHugh's loan account, repaying Stefanovski the $500,000 he had paid in 2008, and paying McHugh to manage the business. McHugh was paid $250,000 per annum to manage the business. 123 There is nothing in McHugh's evidence to suggest that Antoun was involved in any way at this point. I note that the costs submissions state that it was the Bankrupt who "reinserted" himself into the Global business, and they made no mention of Antoun. Antoun indicates an intention to acquire an interest in the business - June 2011 124 About one month later (I infer in June 2011) the Bankrupt arranged to meet McHugh at Coolangatta Airport the following day , and said: I've arranged a meeting with a bloke who is going to sort out the tax and the refinancing. Remember we spoke about it at the last meeting. I infer that at the May meeting the Bankrupt indicated that he intended to involve another person in the business. 125 When McHugh met the Bankrupt at the airport he was introduced to Antoun and another man. They went to a nearby cafe and the Bankrupt said: Joe [Antoun] is going to invest in the business so that we can pay the tax, and arrange new finance. He's a developer and and he is in the process of completion and 11 units townhouse development in Marrickville. The development is almost complete, and Joe is going to refinance it so that we have money to pay the tax. Antoun said: I'm going to buy into George's business. I should have my Marrickville development completed soon, and I have money coming from that. Kevin, tell me how the business is going. (Emphasis added in italics.) 126 McHugh's evidence was that the Bankrupt informed him of the business arrangements the Bankrupt intended, rather than seeking his agreement. The Bankrupt said that Antoun was going to invest so that "we" can pay the tax and arrange to refinance the business, and that Antoun said that he was buying "into George's business". McHugh did not say that he disagreed with Antoun's statement that it was the Bankrupt's business nor did he say that the Bankrupt disagreed. This strongly points away from the respondents' contention that the Global business was transferred to Antoun, alone. McHugh's alleged fear of Antoun 127 McHugh said that he subsequently made inquiries about Antoun and was told that Antoun was involved in organised crime in Sydney, provided security and protection for a number of Kings Cross nightclubs, was paid protection money and had been jailed on several occasions including following a conviction for armed robbery. He said that he performed a Google search of Antoun which revealed that he and his brother had been charged and convicted of demanding money with menaces. Again, it is unnecessary to decide whether McHugh's view of Antoun is correct. I have no difficulty in accepting that McHugh thought that Antoun had criminal associations and a propensity for violence. Gatto telephones McHugh in late June/early July 2011 128 McHugh said that he was telephoned by Gatto two weeks later (I infer in late June/early July 2011). I accept that Gatto was with the Bankrupt and Antoun. Gatto said that the agreement was that Antoun would pay the tax debts of the business, pay off McHugh's $800,000 loan, arrange refinance of the business, and pay Stefanovski $500,000. After a conversation between Gatto, the Bankrupt and Antoun, Gatto then said that Antoun would also pay McHugh a profit share. 129 The respondents relied on this telephone conversation to support their submission that the business was transferred to Antoun, alone. However, that submission is against the evidence. It is worth noting that the next paragraph of McHugh's affidavit indicates that the payment obligations were joint. He deposed that "Joseph Antoun or George Alex were to have repaid to Michael Stefanovski the sum of $500,000". That the obligations were joint is apparent at various points in McHugh's affidavit and in a raft of other evidence. 130 On my view of the evidence by this time the Bankrupt was effectively running the Global business. He invited Antoun to invest in the business in order that "we" (meaning the Bankrupt and Antoun) could make the relevant payments. Apart from the decision to provide McHugh a profit share (to which the Bankrupt was a party) there was no material change in the agreement from the position reached in May. In my view the telephone conversation between McHugh and Gatto in late June/early July 2011 (with Antoun and the Bankrupt in the background) when weighed against the other evidence is insufficient to support the inference that McHugh agreed to transfer his interest to Antoun, alone. The Bankrupt introduces Byrnes into the Global business - September 2011 131 In September 2011 the Bankrupt introduced Byrnes, the sixth respondent, to McHugh. The bankrupt said that Byrnes was to assist in arranging to refinance and restructure the Global business. 132 In his public examination Byrnes said that at the time he was introduced to the Global business he understood that the Bankrupt and Antoun were jointly obliged to make the relevant payments to McHugh. He said that: …the original agreement…which was subsequently overtaken by further admissions by Mr McHugh, was that there was an agreement for Mr Antoun and Mr Alex to pay $1.8 million to the Australian Tax Office, pay a gentleman in Queensland, who was the investor who paid out Jeff Fenech $500,000, and to pay out Mr McHugh an intercompany loan of $800,000 and they were entitled to take 100 per cent of the shares of the company....as I understood it, they had an agreement to buy on those terms. While that agreement pre-dated Byrnes' involvement in the business his evidence was not merely based on what he was told. 133 In his public examination (when describing the breakdown of the agreement between the parties) Byrnes said that the obligations of the Bankrupt and Antoun were "to pay the balance of the tax money, to pay the money to Mr McHugh that he was owed and to pay Mr Stefanovski, the original $500,000 investor." 134 Byrnes repeated that view in an email he sent to Cavric on 12 January 2013. In it he referred to the plural "purchasers" rather than in the singular, which can only have been a reference to the Bankrupt and Antoun. He said: … It has always been my understanding that the purchasers had four obligations 1 pay the tax debt (2.4m) 2 pay 500,000 to a shareholder Michael Steffanoski [sic] 3 pay Kevin [McHugh] $800,000 being a loan from him to the company and agreed to be paid out in consideration for the purchase of the mining civil company he owned beneficially 4 for the purchasers to arrange their own finance so that a change of control could be effected without causing a default. 135 Subsequently, in his first affidavit filed shortly before the hearing Byrnes sought to move away from his earlier evidence. He deposed that the Bankrupt had agreed with him "that there is a deal where Joe [Antoun] will buy the Global companies from Kevin [McHugh]". He also said that statements by the Bankrupt that he was entitled to a share of the Global business were based in a view that he had been insufficiently remunerated when the business was sold by Zenith. I see Byrnes' evidence in this regard as inconsistent with his evidence in his public examination, inconsistent with his January 2013 email above and inconsistent with a raft of other evidence which I prefer. I see that evidence as a self-serving and implausible attempt to bolster the respondents' contention that McHugh transferred the Global business to Antoun, alone. Antoun conducts due diligence - October 2011 136 On 13 October 2011 the Bankrupt arranged a meeting at the offices of the Global business between McHugh, the Bankrupt, Antoun and Antoun's accountant, Mr Tony Khoury ("Khoury"). McHugh said that he was informed by the Bankrupt that Khoury was present in order to conduct a "due diligence" of the business. McHugh asked the financial controller to locate and photocopy the required financial records and provide them to Khoury. After about an hour the Bankrupt told him Khoury had the necessary information and that they were going back to Sydney. 137 I infer that this due diligence investigation preceded Antoun investing in the business, and that he took up an interest in the business in about October 2011. This conclusion is consistent with the evidence given by Cavric in his public examination. Cavric acted for Antoun and he testified that Antoun acquired an interest in the Global business in about October 2011 following the due diligence by Mr Khoury. McHugh signs undated share transfers 138 McHugh said that he drove the Bankrupt, Antoun and Khoury to Coolangatta airport and on the way they stopped to allow the Bankrupt to collect some documents. He said that after the Bankrupt had left the car, Antoun requested him to sign some documents in relation to shares in the business. Antoun said: "There are a lot of George's debts which need to be fixed up. I need the shares signed over" and "Kevin you've got to sign these papers. I'm paying a lot of George's debts and that is my security." 139 McHugh objected to doing so and said: "Joe, this is not the arrangement. You're meant to pay off the tax debts, repay the company's loan to me and arrange the refinance. That was the arrangement." Antoun responded by saying: "You will sign the fucking transfers. They will be signed now. Tony, give Kevin the papers to sign." 140 McHugh informed Antoun that the documents could not be lodged with ASIC before the company was refinanced because the company's finance facility with Westpac was arranged and guaranteed by McHugh, and Westpac would withdraw the facility if he was not the shareholder. Antoun accepted that he was just holding the share transfers as security. McHugh signed the documents where Khoury indicated and handed them back. 141 McHugh said he did not read the documents he was provided and did not know what documents he signed. To the extent that he sought to suggest that he did not know that he signed share transfer documents I do not accept his evidence. On his own account he understood what the documents were. He only provided them as security and they were not intended to be lodged with ASIC. The October 2011 Share Transfers 142 It is common ground between the parties that on 26 October 2011 Antoun was issued the following shares in the Operating Companies: (a) 2,400 shares in Global Civils Group; (b) 2,400 shares in Global HR Group; and (c) 20 shares in Civil Pacific Services Group; ("the 2011 Share Transfers"). 143 McHugh was the other shareholder in the Operating Companies. He held 120 shares in Global Civils Group, 120 shares in Global HR Group and one share in Civil Pacific Services Group. The Bankrupt directs a debt arrangement with Elite Cranes - late 2011/early 2012 144 From about mid-2011 the Global business provided labour hire services to Elite Cranes in Victoria through an associate of Gatto, Mr Matt Thomas ("Thomas"). Over a period of four to five months in the second half of 2011 Thomas came to owe the business about $570,000 and McHugh was unable to recover those monies. 145 McHugh said that in late 2011/early 2012 the Bankrupt contacted him about the debt and said that it was to be offset against the $500,000 "that we owe to Michael [Stefanovski]". The Bankrupt said: "it's better to offset that with Michael. Let Michael chase Thomas for the money. It solves two problems." McHugh objected to this course because he said the sum of $500,000 was supposed to be paid by Antoun to Stefanovski rather than coming out of the Global business. However, the Bankrupt said that the course he proposed was better. McHugh said that the result was that the Global business paid the monies owed to Stefanovski, as opposed to the Bankrupt or Antoun meeting their obligations under the agreement. 146 In my view McHugh's evidence that the Bankrupt or Antoun were obliged to pay Stefanovski points away from the respondents' contention that in the conversation with Gatto in late June/early July 2011 McHugh agreed to transfer the Global business to Antoun, alone. Byrnes introduces Russo to the business - early 2012 147 McHugh said that in early 2012 Byrnes introduced him to Russo, an accountant. Russo became responsible for discussions with Westpac to extend its loan arrangements and the debt factoring facility, pending a refinancing of the business. Difficulties with Westpac - March 2012 148 In late 2011/early 2012 the Bankrupt and Antoun unsuccessfully attempted to refinance the Global business. 149 In March 2012 McHugh was telephoned by Mr Kelvin Cheong ("Cheong"), the Westpac relationship manager for the Global business, who advised him that the 2011 Share Transfers was a breach of loan facility with Westpac. Cheong said that McHugh must have the shares transferred back to him or arrange refinance. Construction Financial Management puts money into the Global business - March 2012 150 Byrnes gave evidence in his public examination that when he was introduced to the Global business he undertook some due diligence and made some recommendations which were adopted and which successfully improved the cash flow of the business. Following that (I infer in about February 2012) he said that the Bankrupt and Antoun invited him: …to acquire a third interest in the company in consideration for me paying a third of the obligations that they were obligated to pay. Subsequently, I accepted, and I put in my third share… This also points away from the respondents' submission that Antoun, alone, acquired the Global business from McHugh. It tends to show that at that time the Bankrupt and Antoun each had a 50% beneficial interest in the business. 151 Although Byrnes said in his public examination that he acquired a one third interest in the business, before me he gave different evidence. In his second affidavit Byrnes said only that between March and October 2012, Construction Financial Management, which he controlled, "caused funds to be transferred" to Antoun in the sum of $3,421,810.79. Before me he did not say (and there was no pleading to the effect) that he transferred those monies to purchase an interest in the Global business. He did not say who acquired an interest and he did not describe the nature of any interest acquired. He did not say whether the monies were paid to acquire an interest, loaned, or advanced on some other commercial basis. In their submissions the respondents made no reference to Byrnes' evidence in his public examination. The 2012 Share Transfers – July 2102 152 On or about 1 July 2012 the shares in the Operating Companies owned by Antoun and McHugh were transferred to Global Human Resources Group ("the 2012 Share Transfers"). 153 The respondents submitted that the evidence suggests that the 2012 Share Transfers were made without Antoun's consent. There is some evidence pointing that way but McHugh did not refer to these transfers in his evidence and I can draw no firm conclusion. Nothing appears to turn on it. The dispute with the Bankrupt and Antoun - November 2012 154 McHugh said that in around November 2012 the business relationship between Byrnes and McHugh on the one hand and the Bankrupt and Antoun on the other substantially deteriorated. He said that: Notwithstanding that I had been forced to sign Share Transfers which transferred my shareholding in the companies that operate the work force business, and forced to sign documents acknowledging the transfer, neither George Alex nor Joseph Antoun paid any of the tax liability for which I was personally liable, arranged the refinance of the company's loan and factoring facilities such that I could be released from my personal guarantees, or repaid the company loans to me such that I could repay the mortgage on my house. They did not honour any of those obligations. 155 McHugh's statement that the parties fell out because the Bankrupt and Antoun did not honour their obligations again points away from the respondents' submission that Antoun, alone, acquired the business from McHugh. 156 Byrnes' evidence in his public examination confirmed that the business relationship between the Bankrupt and Antoun with the respondents came to an end because the Bankrupt and Antoun failed to make the payments that were due. He said: … I put in my third share and it became apparent that they [Alex and Antoun] were not putting in any money - in fact, quite the opposite - and I then had to protect my interest, and side with Mr McHugh and encourage them as robustly, but politely, as I could to meet their obligations. That was to pay the balance of the tax money, to pay the money to Mr McHugh that he was owed and to pave Mr Stefanovski, the original $500,000 investor. That went on, and on and on, those continued requests, and request for payment, request for payment, request for payment and, notwithstanding the fact that I knew first hand that they were both in receipt of many millions of dollars, none of it was being paid as it was supposed to be and therefore it culminated on 22 November 2012 me having a rather…heated argument with the gentlemen telling them that they had not met their obligations and any interest or entitlement they may have thought that they would have, or any agreement they had, was now repudiated and a new investors would put the balance of the money into meet the obligations to the Tax Department and to the outgoing investors. (Emphasis added.) The January 2013 Deed of Trust 157 McHugh said that on 4 January 2013 the Bankrupt requested that he attend a breakfast meeting at the Mirage Resort the following morning. When the Bankrupt arrived for the meeting the following morning he was accompanied by Antoun, and they all went to the resort breakfast room. 158 At the meeting Antoun asked McHugh to sign some more documents. McHugh said that he objected because Antoun had not paid the tax obligations of the business, had not refinanced the business, and not repaid his loan so that he could repay his mortgage. He said that, at that point, Antoun spoke in a raised voice and an aggressive manner and said: "You'll fucking sign them Kevin" and smashed his fist on the table disturbing the plates and food. McHugh said that the Bankrupt suggested to Antoun that he calm down. After Antoun walked away, McHugh said the Bankrupt told him that he should do what Antoun requested because: "You don't know what he is going to do." 159 In the resort foyer the Bankrupt presented a document to McHugh which he signed. McHugh said that he did not read the document and was not provided with a copy. In my view his evidence that he signed without reading it is implausible when Byrnes and McHugh were in dispute with the Bankrupt and Antoun at that time. I do not accept his evidence. Having subsequently been shown a document titled "Deed of Acknowledgement of Trust" McHugh said, and I accept, that was the document he signed on 5 January 2013. 160 Importantly, the deed states: Mr McHugh hereby declares and acknowledges that he holds two (2) ordinary shares in Global Human Resources Group Ltd…registered in his name as well as any additional share capital that may be allotted or transferred to him upon trust for Mr Joseph Antoun absolutely. I call this "the January 2013 Deed of Trust." 161 In closing submissions the respondents submitted that McHugh was coerced by the Bankrupt and Antoun to sign the January 2013 Deed of Trust. I do not accept this submission when the respondents disavowed any allegation of duress and, as I explain, if it were necessary to decide there are good reasons to doubt Mr McHugh's account in relation to duress. The January 2013 Statutory Declaration 162 McHugh deposed that on 10 January 2013 the Bankrupt telephoned him and said there was a problem with the document he had signed the previous week, and that it was necessary for his signature to be witnessed by a Justice of the Peace. McHugh agreed to meet Antoun that afternoon and after some unsuccessful attempts he was able to sign the document provided by Antoun before a JP in a chemist shop. 163 McHugh again said that he did not read the document, was not provided with a copy, but assumed that the document he signed was the same document that he had signed in the foyer of the Mirage Resort (the January 2013 Deed of Trust). In my view his evidence that he signed the document without reading it is quite implausible when he and Byrnes were in dispute with the Bankrupt and Antoun at the time and when, even at a glance, the two documents are very different. 164 McHugh said he was subsequently shown a copy of a Statutory Declaration. It is dated 10 January 2013 and was made before Ms Hilda Reaburn JP at Mermaid Beach, Queensland ("the January 2013 Statutory Declaration"). In the declaration McHugh states: 1. From approximately 17 September 2008, I was the owner of all share capital in Civil Pacific Services Pty Ltd ACN 118 756 960 ("CPS"), Global HR Pty Ltd ACN 129 542 114 ("GHR") and Global Civils (NSW) Pty Ltd ACN 130 003 744 ("GC") together the "Companies". The Companies own and conduct labour hire businesses primarily operating in Queensland and New South Wales. 2. On or about October 2011, I decided to sell my ownership of the Companies as they were facing difficult trading conditions and I was concerned about their solvency, particularly as a result of debts owed to the Australian Taxation Office. 3. On or about mid to late October 2011, I agreed to sell my ownership of the Companies to Mr Joseph Antoun. Once we agreed to the terms of sale, we signed a Term Sheet on or about mid to late 2011 to effect the sale of the Companies. 4. It was agreed that Mr Antoun would be issued with ordinary shares in each of the Companies such that his ownership of each of the Companies would be approximately 95% of the issued share capital. It was also agreed that I would retain approximately a 4.7% interest of the Companies. Amongst other things, Mr Antoun agreed to assume my liability in respect of all claims and actions against me personally resulting from my ownership and directorship of the Companies. 5. I agreed to stay on as Director of each of the Companies and agreed to continue managing the Companies and the labour hire businesses. It was agreed that I would be paid $250,000 annually for my services. 6. I obviously agreed to act in the best interests of Mr Antoun and at his direction and believe that I always have. 7. However, from a review of the current organisational extract of the Companies from ASIC, it appears that the ownership of the Companies was incorrectly altered on or about 11 July 2012. From the extract, the current ownership of the entire share capital of each of the Companies is held by Global Human Resources Group Pty Limited ACN 156 139 276. 8. It is my understanding that Mr Antoun did not sign any documents relating to a transfer of shares in the Companies or authorise any change of ownership of the Companies. 9. It is also my understanding that Mr Antoun did not receive any consideration in respect of this purported transfer of ownership of the Companies. 10. This purported transfer of ownership of the Companies to Global Human Resources Group Pty Limited is obviously an error. It may have arisen as a result of the appointment of a new accountant for the Companies and a possible misunderstanding around the timing of a new business and ownership structure which was being planned as a part of a proposed trade sale or initial public offering of shares in the Companies. 11. In any event, I will ensure that this incorrect recording of the purported transfer of ownership of the Companies is corrected on the ASIC register as soon as possible. 12. I have also made an undertaking to Mr Antoun to increase my vigilance in relation to any changes the Companies details or information as registered on the ASIC register. 13. I also note that I am listed on the current organisational extract in respect to Global Human Resources Group Pty Limited from ASIC register as a shareholder. These shares are recorded as not being beneficially owned by me. I acknowledge that I hold this shareholding on trust for Mr Antoun and will deal with the shareholdings and any rights associated with such ownership as directed by Mr Antoun. I will also account to Mr Antoun for any dividends or profits derived therefrom until this error is corrected. 165 The contents of McHugh's January 2013 Statutory Declaration are materially inconsistent with the sworn account he gave in his first affidavit. The gist of his affidavit is that he was coerced by the Bankrupt and Gatto into transferring his interest in the Global business in about May 2011. He said that he transferred his whole interest in the business and did not state that he continued to hold an interest in the business thereafter. In his statutory declaration he said that he sold his interest in the Global business to Antoun in October 2011 because of difficult trading conditions and a concern about the outstanding taxation liabilities of the business. He declared that Antoun owned 85% of the business and he retained 4.7% for himself. The significant differences in his sworn accounts affected my view of the reliability of his evidence. Antoun threatens legal proceedings - 10 January 2013 166 In January 2013 Antoun's lawyers, NSW Compensation Lawyers, sent a letter of demand which threatened legal proceedings against Russo and Global Human Resources Group if they continued to claim an interest in the shares in the Operating Companies. Attached to the letter of demand was a draft Interlocutory Process in the NSW Supreme Court naming Antoun and McHugh as plaintiffs and Russo and Global Human Resources as defendants. The draft proceeding sought, amongst other things, a declaration that the 2012 Share Transfers be declared invalid. The proceeding was not issued. The March Deeds 167 In his first affidavit McHugh said that in February 2013 there were negotiations to resolve the dispute between Byrnes, the Bankrupt and Antoun, predominantly between their respective lawyers. 168 He said that in March 2013 Byrnes came to him asking him to sign agreements that had been drafted as a result of these negotiations. He tried to paint a picture of minimal involvement but in cross-examination he accepted that he authorised Byrnes to negotiate the agreements on his behalf, that he had read and understood the deeds of agreement, including by receiving legal advice from Byrnes' solicitors, Moloney Lawyers. 169 McHugh said that Byrnes told him: Kevin as you know, we have been negotiating with George [Alex] and Joe [Antoun] earlier this year. We have finally reached a form of agreement. The agreement lets us buy out their interest in the business. …We've reached a final agreement which would take them out altogether. The documents have been prepared by the lawyers. I need you to sign three agreements. …It's an agreement to buy out George and Joe once and for all. We'll pay them out over a period of time…There are two other agreements, which just relate to how the monies are apportioned as between George and Joe. They don't have much to do with us. It's just what their lawyer has requested. It's better for them for tax. (Emphasis added.) To the extent that McHugh sought to suggest that he did not understand that the March Deeds mischaracterised the substance of the agreement with the Bankrupt I do not accept his evidence. He must have known that there was no basis upon which the Bankrupt could be entitled to a payment of $6.2 million for defamatory statements by him or the other respondents. 170 The costs submissions on McHugh's behalf state: In late 2012 a dispute arose between George Alex and Joseph Antoun, on one side, and [McHugh], James Byrnes and Angelo Russo on the other, as to the structure and future operation of the business. After negotiations in early 2013 an agreement was reached that George Alex and Joseph Antoun would relinquish any interest and involvement they claimed in the business in return for certain scheduled payments to be made or organised by [McHugh], James Byrnes and Angelo Russo. The agreement was embodied in four documents prepared for George Alex and Joseph Antoun by their then solicitors Colin Biggers & Paisley. 171 It is common ground that on 11 March 2013 the parties executed the following deeds: (a) a Deed of Settlement and Release ("Settlement Deed"); (b) a Defamation Settlement Deed ("Defamation Deed"); (c) a Share Transfer Deed (to which McHugh was not a party) ("Share Transfer Deed"); and (d) a General Security Deed ("General Security Deed"). These are the documents I have described as the "March Deeds". The Settlement Deed 172 One set of parties to the Settlement Deed were: (a) the Bankrupt; (b) Antoun (as trustee of the purported trust); and (c) Active Labourforce Pty Ltd, ACN 158 827 993 and Active Labour Pty Ltd ("the Active companies") which are companies associated with the Bankrupt and Antoun. 173 The other parties were: (a) McHugh, Byrnes and Russo; (b) the Operating Companies - Civil Pacific Services Group, Global HR Group, Global Civils Group; (c) the Parent Company - Global Human Resources Group; (d) GHR No 3, which held the shares in the Parent Company; and (e) Byrnes' company, Construction Financial Management, which had transferred monies to the Global business; 174 Under the Settlement Deed, McHugh, Byrnes, Russo, the three Operating Companies, Global Human Resources Group, and GHR No 3 ("the March Deed Payers") agreed to pay $12 million to the Bankrupt and Antoun (as trustee of the purported trust) by way of 12 unequal instalments. 175 The recitals to the Settlement Deed state, amongst other things, that: (a) Antoun (as trustee of the purported trust) acquired the majority shareholding in the Operating Companies in November 2011 on behalf of the trust; (b) the Bankrupt is one of the beneficiaries of the JA Trust. (c) various dispute had arisen between the parties to the deed with respect to the Global business, the Operating Companies and the agreements, arrangements, negotiations and discussions relating to the Global business and the Operating Companies; (d) there "have been allegations by the parties against some or all of the other parties with respect to alleged wrongdoings, fraud and improper conduct" with regards to the Operating Companies and the Global business; and (e) the parties agree to resolve the disputes on the terms and conditions set out in the Settlement Deed, having simultaneously entered into the Share Transfer Deed and the Defamation Deed. 176 The instalments and the parties responsible for the payment may be summarised as follows: Payment Date Amount Parties responsible for payment of instalment Date of deed: 11 March 2013 $500,000 Operating Companies, Parent Company, GHR No 3, McHugh, Byrnes and Russo 14 March 2013 $1,000,000 Operating Companies, Parent Company, GHR No 3, McHugh, Byrnes and Russo 30 April 2013 $1,166,666 Operating Companies, Parent Company, GHR No 3, McHugh, Byrnes and Russo 31 May 2013 $1,166,666 Operating Companies, Parent Company, GHR No 3, McHugh, Byrnes and Russo 28 June 2013 $1,166,668 Operating Companies, Parent Company, GHR No 3, McHugh, Byrnes and Russo 31 July 2013 $1,000,000 Operating Companies, Parent Company, GHR No 3 30 August 2013 $1,000,000 Operating Companies, Parent Company, GHR No 3 30 September 2013 $1,000,000 Operating Companies, Parent Company, GHR No 3 31 October 2013 $1,000,000 Operating Companies, Parent Company, GHR No 3 29 November 2013 $1,000,000 Operating Companies, Parent Company, GHR No 3 28 February 2014 $500,000 McHugh 30 June 2014 $1,500,000 McHugh Total $11,999,998 177 Under the Settlement Deed: (a) the Bankrupt and Antoun acknowledged that the instalment payments of $12 million would first be paid to Antoun in satisfaction of $5.65 million due pursuant to the Share Transfer Deed, with the payments thereafter being applied between the Bankrupt and Antoun in accordance with the Defamation Deed; (b) the Bankrupt and Antoun covenanted and agreed with the March Deed Payers not to compete with the Operating Companies and the businesses in the Queensland for five years from the date of the Deed; (c) the Operating Companies, the Parent Company and GHR No 3 agreed to provide appropriate documents capable of creating security interests in favour of the Bankrupt and Antoun; (d) McHugh, Byrnes, Russo, the Bankrupt and Antoun each represented and warranted to the other parties, amongst other things, that each had read and understood the contents of the Deed, had obtained legal advice about the subject matter of the Deed, and acknowledged that he entered into the deed voluntarily upon his own information and investigations, of his own free will and without compulsion; (e) the Operating Companies accepted various restrictions until such time as $12 million was paid in full, including a restriction on paying dividends to its members, paying more than $50,000 per annum to Russo for directors fees, paying more than $150,000 per annum to Russo for accountancy fees, paying more than $100,000 per annum to Byrnes for consultancy fees, and paying more than $250,000 in salary to McHugh; (f) each party was prohibited, except by consent of the other parties, from making any disclosure of the terms of the Settlement Deed to Westpac. It provided a mechanism whereby, if the Bankrupt or Antoun were alleged on reasonable grounds to have made contact with Westpac, then they were required to pay $250,000 into the trust account of the legal firm, Colin Biggers & Paisley subject to the conclusion of an investigation into the alleged disclosure by a person nominated by the President of the Law Society of New South Wales. I infer that the March Deeds were intended to be kept secret from Westpac; (g) each party provided comprehensive releases, subject to the rights and obligations set out in the Settlement Deed. The Defamation Deed 178 The Bankrupt and Antoun (as trustee of the purported trust) constituted one group of parties to the Defamation Deed. The other group was comprised of Byrnes, McHugh, Civil Pacific Services Group and Global Civils Group. 179 The parties agreed that $6.35 million of the monies to be paid pursuant to the Settlement Deed would be made as payments for defamation, apportioned as follows: (a) $6,2000,000 to the Bankrupt; and (b) $150,000 to Antoun. 180 The Defamation Deed provided only a broad description of the alleged defamatory statements and did not identify which of the March Deed Payers made the statements. It only stated that the payments were to be made in relation to unidentified: …comments, imputations and allegations relating to Alex and Antoun with respect to their collective and individual relationships with the Payers and each of them, their dealings and association with an involvement in the Companies and the Businesses and their alleged involvement in criminal and other illegal activities. The Share Transfer Deed 181 Under the Share Transfer Deed, Antoun (as trustee of the purported trust), and described as the vendor, agreed to transfer his beneficial interest in: (a) 2,400 shares in Global Civils Group; (b) 2,400 shares in Global HR Group; and (c) 20 shares in Civil Pacific Services Group to Global Human Resources Group, as purchaser, in consideration of $5.65 million to be paid under the Settlement Deed. 182 The Share Transfer Deed relevantly provided: 2 Sale of Shares (a) On the date of this document the Vendor as beneficial owner shall transfer to the Purchaser the Shares. (b) The Price will be paid in accordance with the Deed of Settlement. (c) The Purchaser acknowledges that, since being acquired by the Vendor, the full beneficial ownership in the Shares have remained with Antoun as trustee for the Trust to the date of this document and that the Shares have not, prior to the date of this document, been effectively transferred or assigned for the benefit of or vested in the Purchaser at law, in equity or otherwise. (d) For the avoidance of doubt the parties acknowledge and agree that the Price does not constitute an amount payable in addition to the Consideration as defined in accordance with the Deed of Settlement, and the provisions of this document do not give rise to any obligation to pay an amount over or in addition to the Consideration payable pursuant to the Settlement Deed. 3 Acknowledgements The Purchaser and the Vendor acknowledge, each to the other, the following: (a) On 1 July 2012, the Shares were inadvertently and incorrectly transferred into the name of the Purchaser. (b) From 1 July 2012, the Purchaser has held the Shares on constructive trusts for the Vendor. The General Security Deed 183 The General Security Deed operated to secure the rights and interests of the Bankrupt and Antoun (as purported trustee) in the payment of $12 million, including the payment of $6.2 million to the Bankrupt for defamation pursuant to the Defamation Deed. 184 Under the General Security Deed, the Operating Companies, the Parent Company and GHR No 3 ("the Grantors") agreed to provide security to the Bankrupt and Antoun for the payment of the monies due under the Settlement Deed. The Grantors granted the Bankrupt and Antoun (as trustee of the purported trust) a PPSA Security interest over all of their "PPSA Personal Property" and a fixed charge over all of their "Other Property". "PPSA Personal Property" and "Other Property" are defined to cover all of the Grantors' present and after-acquired property including property in which they may in future have rights, or the power to transfer rights, proceeds and PPSA retention of title property (as that term is defined in the Corporations Act). The effect of the March Deeds 185 The March Deeds provided that: (a) the Settlement Deed, Defamation Deed and Share Transfer Deed were entered into simultaneously; (b) the Settlement Deed, Defamation Deed and Share Transfer Deed were mutually interdependent such that if one Deed is rescinded, terminated or comes to an end for any reason, the other Deeds were also rescinded or terminated; (c) for $5.65 million to be paid to Antoun (as trustee of the purported trust) for the shares the subject of the Share Transfer Deed, and $150,000 to be paid to him in settlement of a claim to defamation; (d) that the consideration provided for by the Settlement Deed would be paid, first, to Antoun in satisfaction of the monies due under the Share Transfer Deed. The consideration payable to the Bankrupt pursuant to the Defamation Deed would only be paid after the consideration due to Antoun under the Share Transfer Deed had been paid; (e) that the consideration due under the Share Transfer Deed would be paid by the Operating Companies, Global Human Resources Group, GHR No 3, McHugh, Byrnes and Russo; (f) for $6.2 million to be paid to the Bankrupt in settlement of a claim of defamation; and (g) that the parties released Antoun from the obligation to repay the sums "advanced or loaned or provided" by Construction Financial Management or Byrnes to Global Human Resources Group, the Operating Companies, the Active companies, the Bankrupt and/or Antoun. Did the parties to the March Deeds falsely characterise $6.35 million as being for defamation? 186 I have no doubt that the characterisation of the payment of $6.2 million to the Bankrupt and $150,000 to Antoun as being for defamation was false. In their Further Amended Defence, filed a few days before the trial, the respondents admitted that the amounts payable to the Bankrupt and Antoun under the Defamation Deed were not in respect of any defamation. That is plain when: (a) the Defamation Deed provided only a generic description of the nature of the alleged defamatory statements or imputations and did not even identify which of the parties allegedly made them. Byrnes said in his public examination, and I accept, that at the time the Defamation Deed was drafted Cavric was unable to tell him what the alleged defamatory imputations were or what damage might have been suffered by them. Byrnes also said that he informed Cavric that in his view the defamation payment was a sham; (b) Byrnes' evidence in his public examination and McHugh's evidence in his affidavits shows that they did not consider the Bankrupt and/or Antoun to be men of good character and reputation. McHugh said that the Bankrupt was regularly accompanied by "bikies" and/or criminals who he used for protection and to enforce his will, and that Antoun was involved in organised crime in Sydney and had convictions for extortion involving threats of violence. Byrnes described Antoun as "a murderous thug", and said that the Bankrupt: …surrounded himself with evil people who were standover men, and the majority of his work and business interests resulted in having people like Mr Antoun and others basically steal people's companies or businesses. He was a…notorious standover man. He also said that: Mr Antoun and Mr Alex and another associate were also running a fairly big drug ring in Sydney and one of their runners had recently been beaten to death…he [Alex] had this sycophant-type relationship with having to surround himself with horrible individual such as, you know, a convicted terrorist, large gun runners, big [drug] dealers, Comancheros, Hells Angels, Rebels. People who subsequently have now - some of which have fled the country, are now fighting as freedom fighters in Syria, and that's quite - been well reported in the press... Mr Alex is being pursued by a number of criminal organisations in Sydney for large amounts of money that he owes them, that they've earlier invested or engaged in various financial transactions with him which haven't proved to be too successful. I make no finding that McHugh's and Byrnes' views about the Bankrupt and Antoun are correct. Having said that, I have no difficulty in finding that the Bankrupt did not have a reputation which could possibly justify a payment of $6.2 million for defamation, absent any evidence of economic loss. Given his bankruptcy, it is hard to see how the Bankrupt could have claimed to have suffered economic loss. Little turns on it but I have a broadly similar view in relation to the smaller payment to be made to Antoun; (c) section 34 of the Defamation Act 2005 (NSW) ("Defamation Act") provides: In determining the amount of damages to be awarded in any defamation proceedings, the court is to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded. The amount of $6.2 million is far greater than any possible non-economic loss that could have been sustained by the Bankrupt (assuming he suffered any reputational harm). It also stands in stark contrast to the maximum amount of damages for non-economic loss that may be awarded in defamation proceedings pursuant to s 35 of the Defamation Act. The maximum damages for such loss at the time of the March Deeds was $339,000: NSW Gazette No 60, 8 June 2012, p 2369; (d) Byrnes testified in his public examination that "any person of any reasonable sense would probably realise it [the defamation payment] was a sham". I put McHugh, Byrnes and Russo in that category; (e) McHugh (with Byrnes' concurrence) alleged in the Supreme Court proceeding that the Defamation Deed was intended to disguise the payments to be made to the Bankrupt as payments in respect of defamation rather than in respect of property divisible amongst his creditors. He further alleged that the Defamation Deed had the illegal purpose of defrauding the Australian Taxation Commissioner or the Bankrupt's creditors; and (f) Rumore, the partner of Colin Biggers & Paisley who drafted the March Deeds, testified that the figure of $12 million was first agreed between the parties and later, following accountant's advice, he was instructed as to the apportionment for the payment for defamation. In cross examination he accepted that the figure of $6.35 million was not referable to defamation and that "it was just the most tax advantageous way of characterising that payment". 187 I infer that the Bankrupt and Antoun characterised the $6.2 million payable to the Bankrupt as being for defamation in order that the amount be treated as exempt under s 116(2)(g) of the Act and not vested in the Trustees. It is likely that their primary aim was to avoid the Bankrupt's creditors, although it may be that they were also interested in tax minimisation as Rumore said. It should be kept in mind that McHugh, Byrnes and Russo went along with this mischaracterisation, but I make no finding that they were aware at the time that Alex was a bankrupt. The capacity in which Antoun executed the Deeds 188 The March Deeds provide that Antoun entered the deeds as trustee of the JA Investments Trust. However, as I explain at [299]-[307] below, there is no evidence that this trust ever came into effect. In my view Antoun did not execute the March Deeds in that capacity. Did Cavric act for the Bankrupt? 189 It is uncontentious that in negotiating and drafting the March Deeds: (a) Cavric, a Practice Director of NSW Compensation Lawyers; and (b) Rumore, a partner with Colin Biggers & Paisley; acted for Antoun. In their public examinations each accepted that he did so. 190 However, Cavric and Rumore each said that he did not act for the Bankrupt, but their evidence on that issue was inconsistent. Cavric said that he considered Rumore acted for the Bankrupt and he described his role as acting as a conduit conveying instructions from the Bankrupt to Rumore. Rumore denied acting for the Bankrupt. On his account nobody did so. There is no evidence that the Bankrupt received legal assistance in relation to the drafting of the deeds from other lawyers. 191 The Trustees alleged that Cavric acted for the Bankrupt as well as Antoun, and the respondents put in issue whether Cavric acted for the Bankrupt. For the reasons I explain I consider Cavric acted for the Bankrupt. It does not appear to be in issue, but in my view Rumore did so too. 192 Cavric held a law degree and he was employed as the Practice Director of NSW Compensation Lawyers, but he did not hold a practising certificate. In support of their contention that Cavric did not act for the Bankrupt the respondents sought to rely on the fact that he was not at the time a practising solicitor. However that is not really to the point. Cavric requested Rumore to act in the matter because of the complex commercial transactions involved in the March Deeds. The evidence shows that Cavric performed substantial legal work in relation to the matter and I infer that he did so under the practising certificate and supervision of the partners or directors of NSW Compensation Lawyers. 193 I consider the evidence of Cavric and Rumore that Cavric did not act for the Bankrupt to be implausible. The evidence in support of the conclusion that both acted for the Bankrupt includes the following: (a) on 1 February 2013 Cavric sent an email to Rumore, which he copied to "George@activelabour.net.au" (which I infer was an email address maintained by the Bankrupt) which said: The parties have finally agreed to the sale of shares. It needs to be documented urgently for execution on Wednesday. I will work in a draft to capture as much information as possible. … Is CBP in a position to work on this ASAP and meet the Wednesday deadline? I obviously hope so. In his public examination Cavric offered no cogent explanation as to why he would have copied that email to the Bankrupt unless he was a client. Rumore responded to the email on 3 February 2013 and included the Bankrupt in his reply. He said that he did not know whose email address that was and that he just hit "reply all", but I doubt that evidence in all the circumstances; (b) the Bankrupt and Antoun were friends, they were partners or co-investors in a number of businesses, and they worked closely together in the Global business. Each stood to receive substantial payments through the March Deeds, and the Settlement Deed referred to the Bankrupt as a beneficiary of the JA Investments Trust. As I have said the evidence strongly supports the conclusion that each had a proprietary interest in the Global business. That points to the likelihood that they jointly retained NSW Compensation Lawyers (through Cavric) to act for them. Looked at another way, I see it as unlikely that in circumstances where the Bankrupt stood to receive $6.2 million under the March Deeds the Bankrupt would have left the negotiation and drafting to lawyers for the other parties; (c) Rumore agreed to Cavric's request to act in the matter. He opened a file for the clients "Joseph Antoun and NSW Compensation Lawyers" in relation to "Advice with respect to companies in Global Group and Security Interests." Although Rumore described his second client as "NSW Compensation Lawyers" it is plain on the evidence that the legal work was for the benefit of the Bankrupt and Antoun and not for that legal firm. Neither Rumore or Cavric provided a cogent explanation as to how, in reality, NSW Compensation Lawyers were clients of Colin Biggers & Paisley in the relevant matter; (d) on 4 February 2013 Rumore sent an email to Moloney Lawyers, the lawyers for Byrnes, in which he said: We advise that we today have been instructed to act in relation to this matter on behalf of Mr Antoun and interests associated with him. Rumore testified that by "interests" associated with Antoun he meant the companies in the Global business and the JA Investments Trust, and he denied that he meant the Bankrupt as well. In the circumstances I see that evidence as improbable. (e) Cavric's testified that he advised the Bankrupt to seek legal advice in relation to the March Deeds and that the Bankrupt went to Colin Biggers & Paisley. He considered the Bankrupt was a client of Rumore. For his part, Rumore denied that he acted for the Bankrupt and also denied that Cavric did. Rumore described Cavric's role as being to negotiate the commercial transaction and discuss it with both sides, and he said that the Bankrupt "was just one of the people that he was discussing things with." On Rumore's account nobody acted for the Bankrupt, and he managed to draft deeds in relation the complex commercial issues involved and to protect the Bankrupt's interests through the "discussions" that Rumore requested Cavric to have with the Bankrupt. In light of the emails between Cavric and Rumore, Rumore's acceptance that he received instructions almost exclusively through Cavric, and the fact that the Bankrupt was to receive $6.2 million under the deeds, I do not accept that it is appropriate to characterise the meetings and conversations Cavric had with the Bankrupt as just "discussions", as distinct from him obtaining instructions from the Bankrupt; (f) at 6:09 pm on 5 February 2013 Rumore sent an email to Cavric asking a number of questions. The questions are redacted and are not in evidence. Cavric replied to the email and said that I am meeting with Joe [Antoun] and George [Alex] tonight and will draft a response to the issues raised last evening. I infer that Cavric attended the meeting and drafted the requested response. It is likely that in meeting with the Bankrupt, receiving his instructions as to issues associated with the drafting of legal documents, and drafting a response to Rumore, that Cavric was acting for the Bankrupt; (g) on 8 February 2013 Cavric sent an email to Rumore in which he said: I'm getting significant pressure from the clients. Cavric denied that he was referring to the Bankrupt and Antoun, but I doubt that evidence. He referred to "clients" rather than to a "client" and on his account he only had one client who was a natural person capable of giving instructions. It is likely that he was referring to the Bankrupt and Antoun; (h) on 8 February 2013 at 4.24pm, Rumore emailed Cavric, copying patty@activelabour.net.au and said: We refer to the conference with your [sic] yesterday afternoon… [redacted]… Can you please check all of these with Mr Alex… [redacted]… This puts our respective clients (Alex, Antoun and the three Active companies)… [redacted] (Emphasis added.) Rumore was unable to explain why he said this. Cavric accepted that the reference to the "Active companies" was a reference to companies associated with the Bankrupt, but denied that the email shows that NSW Compensation Lawyers acted for him. Again, Cavric said that he was just a conduit to Rumore. This email strongly supports inference that Cavric and Rumore acted for the Bankrupt. (i) on 11 February 2013 Rumore sent an email to Cavric in relation to a conference that morning about the March Deeds. It is largely redacted, but in relation to one matter Rumore asked Cavric: Is this an issue from the perspective of yourself, Mr Antoun and Mr Alex, or do you not particularly care? Rumore said that he sent this email to Cavric because Cavric was having "discussions" with the Bankrupt and he denied that he understood that Cavric was acting for him. Cavric accepted that he conveyed instructions from the Bankrupt to Rumore but argued, again, that he was no more than a conduit. In all the circumstances that evidence is improbable. In my view Cavric was acting for the Bankrupt when he repeatedly conferred with him to obtain instructions and then conveyed those instructions to Rumore. Rumore continued to receive instructions from him courtesy of the "discussions" that Cavric had at his request; (j) on 11 February 2013 Rumore sent an email to Cavric in which he said: We also note that we still need from you the various addresses relating to Mr Alex and his companies… as well as the details of the of the trust on behalf of which Mr Antoun originally brought the shares in the three companies. (k) on 11 February 2013 at 3.52pm, Rumore emailed Moloney copying Cavric, Byrnes and "patty@activelabour.net.au" regarding "Global\Antoun & Alex matter" (emphasis added) attaching a draft General Security Deed but stating "It has not been approved and vetted as yet by our client or Ned Cavric"; (l) on 13 February 2013 Rumore sent an email to Cavric in which he said: Ned – [Redacted] Let me know your thoughts and those of Messrs Antoun and Alex on this, and you may want to raise this with Mr Moloney when you are speaking to him this morning. (Emphasis added.) This email shows that Rumore asked Cavric for his views on an issue related to the Bankrupt's interests, asked Cavric to discuss the issue with the opposing lawyers and (as I infer) report back to him. It is likely that Cavric undertook the legal work asked of him and in doing so he acted as more than just a conduit to Rumore. Rumore denied that he was asking Cavric to obtain instructions from the Bankrupt but I find that evidence improbable; (m) on 13 February 2013 at 4.27 pm Rumore sent an email to Cavric in which he said: Please go through the re-drafted documents, both yourself and with our mutual clients. The reference to "our mutual clients" is most likely a reference to the Bankrupt and Antoun. Cavric denied that but I find that improbable when on his account he only had one client that was a natural person capable of giving instructions. It is likely that Cavric undertook the work requested of him which, again, shows that he was more than just a conduit to Rumore; (n) on 13 February 2013 Moloney Lawyers paid $500,000 into the trust account of Colin Biggers & Paisley. On the same day Moloney sent a letter to Rumore which relevantly stated: … We have just recently finished discussing with Mr Cavric of New South Wales Compensation Lawyers the balance of changes and alterations to the deed of settlement…[and] the defamation settlement deed. … We assume that Mr Cavric will provide you with instructions with respect to those matters. … Mr Cavric has advised us that his clients require the transfer of the 500,000 presently held in our firm's trust account, being the first payment of the consideration pursuant to the deed of settlement and release. (Emphasis added.) This email shows Cavric's role in redrafting the Defamation Deed which was primarily for the benefit of the Bankrupt. The use of the word "clients" points to the inference that Cavric acted for both the Bankrupt and Antoun in drafting that deed; (o) on 14 February 2013 Rumore sent an email to Cavric noting that Moloney stated that the funds held in trust were not to be released until all parties had executed the document. Amongst other things the email said: This is obviously unacceptable to Messrs. Antoun and Alex. Rumore can only have known that if he had received instructions to that effect from the Bankrupt, likely conveyed through Cavric; (p) on 15 February 2013 at 8.04 am Rumore emailed Cavric attaching a payment authority for execution by the Bankrupt and Antoun to authorise disbursement of lawyers' and counsel's fees from the monies held in trust. On 15 February 2013 at 8.51 am Rumore sent an email to Cavric in which he said: can you please confirm that you will be able to get signed by Messrs Alex and Antoun and sent through to us the payment authority form which we sent to you earlier today. It is likely that Cavric undertook the work requested and that, through him, NSW Compensation Lawyers acted for the Bankrupt in obtaining this authority; (q) a short time later at 9.35 am the same day Rumore attached a warranty for Cavric to sign which provided: I Ned Cavric hereby warrant to you that I have the authority of Jospeh Antoun, George Alex, Active Labourforce Pty Limited, Active Labour Pty Limited and ACN 158 827 993 (my clients) to take the execution pages from the Documents which they executed last night and to insert them into the final form of Documents sent through to Moloney Lawyers with the email from Colin Biggers & Paisley of 8:45 am today. I am authorised by each of my clients to initial each page of the Documents in which their execution pages have been inserted; (Emphasis added.) I infer that Cavric signed the warranty. In doing so Cavric warranted that he had the authority of the Bankrupt. It is noteworthy that the warranty described the Bankrupt as one of Cavric's clients; (r) on 18 February 2013, after the March Deeds had been finalised, Rumore sent an email to Cavric in which he said: Please also provide from Mr Alex and Mr Antoun an authority as to who the whole one million amount is to be disbursed once received. Again, this tends to show that Cavric acted for the Bankrupt. (s) on 18 February 2013, after the March Deeds had been finalised and the first instalment released, Rumore sent an email to Cavric, copying "patty@activelabour", in which he said: Thank you for all of your additional assistance and attendances….to effectively get this matter "over the line" to have the $500,00 amount released. The situation is that, in accordance with verbal instructions received from both Mr Alex and Mr Antoun, we have attended to payment of the tax invoices of Munro Lawyers and David Weinberger. We note that they changed the previous directions, after payment of those two amounts and our fees, was to be paid to Elite Group by to Active Labour…… (Emphasis added.) In saying this Rumore confirmed that he had received instructions from the Bankrupt; (t) on 26 February 2013 at 9.36 am Rumore emailed Cavric and asked him to: Please go through the changes to the two documents and confirm the same are acceptable to your clients. Obviously, we need to get the three parties on our side to execute the documentation once finalised. … Would you please verify that you are to get all of the documents re-executed by Messrs Antoun and Alex and the three Action [sic] companies… … Please come back to us with your further comments and instructions. (Emphasis added.) (u) at 3.54 pm on 26 February 2013, Rumore emailed Cavric and, in reference to an issue that has been redacted, said "this may not be a major issue from the perspective of our clients". At 5.20 pm that day, Cavric emailed Rumore and asked, "Can you send me a full set of the documents now so that I can get them re-executed tonight by the clients." (Emphasis added.); (v) on 5 March 2013 Rumore sent an email to Cavric in which he asked "what our mutual clients wish to do in this matter"; (w) on 8 March 2013 Rumore sent an email to Cavric in which he requested Cavric to arrange for the execution of the attached documents by the Bankrupt and Antoun; and (x) the deed were executed on or about 11 March 2013. Clause 10(h) of the Settlement Deed provides in part: A copy of the Financial Reports [of the Global business] shall be provided to the nominated legal representative of Antoun and Alex. For the purpose of this clause, Antoun and Alex nominate Ned Cavric as their initial nominated legal representative … (Emphasis added.) (y) pursuant to the executed deeds, on 17 May 2013 Colin Biggers & Paisley created a "Secured Party Group" on the Personal Property Securities Register and recorded the Bankrupt as a "secured party" and his mailing address as care of Colin Biggers & Paisley; 194 The events that followed the execution of the March Deeds also tend to show that Cavric (and Rumore) acted for the Bankrupt. Amongst other things: (a) on 14 March 2013 Rumore sent a notice of default to Moloney Lawyers on behalf of both the Bankrupt and Antoun (as purported trustee). The notice stated that the March Deed Payers had failed to pay $1 million by the due date of 14 March 2013. On 18 March 2013 Rumore sent a second notice of default on behalf of the Bankrupt and Antoun. The Bankrupt and Antoun each signed the Notices; (b) on 18 March 2013 Rumore sent an email to Cavric in which he requested: …from Mr Alex and Mr Antoun, an authority as to who the whole $1M amount is to be disbursed. After a redacted section in the email, Rumore requested: Would you please come back to us with the instructions of Messrs. Alex and Antoun in this matter urgently. (Emphasis added.) Cavric replied by stating: "I am meeting with them tonight and will get instructions." I infer that obtained instructions and authority from the Bankrupt as requested, and in doing so he acted as more than just a conduit; (c) on 21 March 2013 Rumore sent an email to Cavric in which he sought "instructions of Alex and Antoun with regard to the dispersal of the $1 M" which GHR No 3 had paid into the trust account of Colin Biggers & Paisley; (d) on 26 March 2013 Cavric sent an email to Rumore in which he said: Alex and Antoun are completing a business acquisition today at 3 pm. They are about $15,000 short. They need to use the funds in your trust account. Would you please get your accounts department to get a bank cheque made payable to Westpac Banking Corporation. The Settlement Deed provided that until Antoun had been paid $5.65 million the monies received were his, but this email indicates that was not what occurred. The email shows that Cavric treated the monies as jointly owned by the Bankrupt and Antoun. It also shows Cavric acting for both the Bankrupt and Antoun in another matter. (e) on 29 April 2013 Rumore sent an email to Cavric with the subject "URGENT Global Human Resources Group" in which he said: Would you please obtain instructions from your clients to ascertain whether or not these payments are to be made… and please ensure that we receive instructions from Mr Alex, as well as Mr Antoun, in relation to these payments. (Emphasis added.) Given its date the email most likely relates to the dispute regarding the respondents' failure to pay an instalment. I infer that Cavric took the steps requested which shows that he received instructions from the Bankrupt in relation to the enforcement of the March Deeds. It is noteworthy that Rumore requested that "we" receive instructions from the Bankrupt; (f) on 30 April 2013 Rumore sent an email to Moloney in which he alleged that Moloney's clients were in default "pursuant to the agreement entered into by our respective clients in that the share transfers had not been delivered", and that "[o]ur clients' reserve there rights by virtue of your clients default". The references to "our respective clients" and "clients" in plural most likely refers to the Bankrupt and Antoun. (g) on 1 May 2013 Rumore sent two notices of default to Moloney which stated that the respondents had failed to provide undated share transfers and had failed to pay $1,166,666 by the due date of 30 April 2013. The notices were signed by each of the Bankrupt and Antoun; (h) on 13 May 2013 Rumore emailed Cavric and said: We are arranging a conference with you, the writer and [redacted]… to discuss the various options available to Messrs Alex and Antoun. I infer that Cavric attended the conference and in doing so acted as more than just a conduit for instructions from the Bankrupt to Rumore. It is likely that he played a part in deciding the legal strategy to respond to the respondents' alleged breaches; and (i) on 17 May 2013 Rumore sent a notice of termination to Moloney, which stated that the March Deed Payers had failed to pay the instalment of $1,166,666 by the due date of 30 April 2013. The Bankrupt and Antoun signed the Notice. 195 While there are a few emails that point the other way, overall they strongly support the inference that Cavric acted for the Bankrupt and Antoun in negotiating and drafting the March Deeds. 196 While there was no written retainer between the Bankrupt and NSW Compensation Lawyers (or between him and Colin Biggers & Paisley) it is not necessary for a written retainer to exist in order for a solicitor-client relationship to arise: see Hawksford v Hawksford [2008] NSWSC 31 at [17]-[20] (White J). As Barrett J said in Apple Computer Australia Pty Ltd v Wily [2002] NSWSC 855 at [7]: a "client" vis-à-vis a lawyer is a person for whom the lawyer performs legal services. Whether a relationship of that kind exists is to be determined by reference to the intentions of the parties objectively ascertained. 197 Notwithstanding Cavric's denial, in my view the objective evidence shows that the Bankrupt and Cavric intended a solicitor-client relationship. Throughout the process of negotiation and drafting the March Deeds, and then in relation their performance and enforcement, the Bankrupt regularly provided instructions to Cavric in relation to his legal interests. Cavric both transmitted those instructions to Rumore who was drafting the deeds and also undertook various types of legal work pursuant to those instructions. That legal work included negotiating with the opposing lawyers to re-draft the Defamation Deed which was to benefit the Bankrupt and conferring with Rumore to determine the legal strategy to deal with the respondents' alleged breaches on behalf of the Bankrupt and Antoun. He warranted that he had the authority of "each of my clients" and he included the Bankrupt within that description and the Settlement Deed included a clause in which he was nominated as a legal representative of the Bankrupt and Antoun. In my view his role went well beyond being just a conduit from the Bankrupt to Rumore. 198 The objective evidence also shows that the Bankrupt and Rumore intended a solicitor-client relationship. Cavric testified that he understood that Rumore acted for the Bankrupt and he said that the Bankrupt and Antoun had conferred directly with Rumore. The emails show that on numerous occasions Rumore requested Cavric to obtain instructions from the Bankrupt and to convey them back to Rumore. Rumore played a central role in drafting the Defamation Deed which was for the Bankrupt's benefit and he acted to protect his interests when the alleged breaches occurred. I infer that Cavric attended to or supervised the PPSR registration of the Bankrupt's interest and recorded his address as "c/o Colin Biggers & Paisley." PPSR registration of the Bankrupt's interest – 17 May 2013 199 As I have said, on 17 May 2013: (a) the Bankrupt was registered on the Personal Property Securities Register as a Secured Party; (b) "Trustee for JA Investment Trust (Verified)" was registered on the Personal Property Securities Register as the secured organisation. In each case the "Collateral Type of property" was described as "Commercial property" and the "Collateral Class of property" was described as "All present and after-acquired property- No exceptions". The Bankrupt's address was specified as "c/o Colin Biggers & Paisley." Part payment of the monies due under the March Deeds 200 The Settlement Deed requires each instalment payment to be made into Colin Biggers & Paisley's trust account and the following amounts were so paid: (a) $500,000 from Moloney Lawyers on 15 February 2013; and (b) $1 million received from GHR No 3 on 20 March 2013. In his public examination Byrnes said that these were the only payments made pursuant to the March Deeds. McHugh said the same in the Commercial List Statement in the Supreme Court proceeding. I accept this evidence. 201 The Trustees therefore contended that the various March Deed Payers have outstanding payment obligations under the March Deeds which I summarise as follows: Parties Unpaid instalments Amount Due Civil Pacific Services Group, Global HR Group, Global Civils Group, Global Human Resources Group (now in liquidation) and GHR No 3 (now in liquidation) 30/4/13, 31/5/13, 28/6/13, 31 7/13, 30/8/13, 30/9/13, 31/10/13, 29/11/13 $8,499,998 Russo and Byrnes 30/4/13, 31/5/13, 28/6/13 $3,499,998 McHugh 30/4/13, 31/5/13, 28/6/13, 28/2/14, 30/6/14 $5,499,998 202 However, as I will explain, upon the making of orders by consent in the Supreme Court proceeding on 22 October 2013 the March Deeds were void, unenforceable and of no effect. I consider the respondents had no outstanding obligation under those Deeds. The Supreme Court proceeding 203 McHugh commenced the Supreme Court proceeding on 22 May 2013. McHugh and Byrnes both said that the proceeding was commenced at Byrnes' suggestion and funded by him and I infer that both of them approved the allegations made in the proceeding. 204 McHugh was represented by solicitors, Moloney Lawyers (who had been Byrnes' solicitors in negotiating and drafting the March Deeds), and in the relevant hearings by Mr Bernard Coles QC and junior counsel. The proceeding was brought against: (a) the first to fifth defendants, being Antoun, the Bankrupt and the three Active companies, represented by solicitors, Bartier Perry and in the relevant hearings by Mr Robert Newlinds SC and junior counsel; ; (b) the sixth to thirteenth defendants, being GHR No 3, the Parent Company, the Operating Companies, Construction Financial Management, Russo and Byrnes, represented by solicitors, Whittens Lawyers and in the relevant hearings by Mr Mark Ashhurst SC and junior counsel, 205 In his public examination Byrnes said that the proceeding was commenced because the Bankrupt and Antoun failed to meet their end of the agreement. In the Commercial List Statement McHugh (with Byrnes' support) alleged that: (a) in May 2011 the Bankrupt and shortly thereafter Antoun claimed "falsely and without any basis" to have an interest in the Operating Companies and the Global business; (b) as a result of actual duress or unconscionable conduct by the Bankrupt and subsequently Antoun, they purported to acquire, on the basis of an agreement to which McHugh did not consent, an interest in each of the Operating Companies; (c) in late 2012 there was a dispute between Byrnes and Russo on the one hand, and the Bankrupt and Antoun on the other, as to the existence of the Bankrupt's and Antoun's interest in each of the companies; (d) that dispute was purportedly resolved in a settlement embodied in the March Deeds which provides for the payment of $12 million arising from the Defamation Deed and the Share Transfer Deed; (e) the March Deeds were expressed to include consideration of $6.35 million to purportedly settle a defamation dispute "between Mr McHugh and Mr Antoun and Mr Alex"; (f) the Defamation Deed was not based upon the commission of any defamation by McHugh and it was intended to disguise the payments to the Bankrupt and Antoun for the purpose of defrauding the Deputy Commissioner of Taxation in respect of capital gains tax; (g) the shares in the Operating Companies which were to be transferred under the Share Transfer Deed were never owned legally or beneficially by the Bankrupt or Antoun, and any legal or beneficial interest they had was only the result of their misleading or deceptive conduct, duress or unconscionable conduct; (h) the March Deeds would not have been executed by McHugh but for duress, unconscionable conduct in misleading or deceptive conduct; (i) instalments of $1.5 million had been paid under the Settlement Deed and a further instalment of $1.66 million had been due on 30 April 2013 and was not paid. 206 The Summons sought relief by way of declarations or orders that: (a) the Settlement Deed, Defamation Deed and Share Transfer Deed are void, unenforceable and of no effect; (b) the General Security Deed securing purported rights under the other March Deeds is void, unenforceable and of no effect; (c) the Bankrupt, Antoun and/or the JA Trust have no interest claim or right in any shares in the Operating Companies and GHR No 3; (d) the Bankrupt and Antoun deliver up to McHugh any securities held by them by way of charge or any share transfers or other documents of title in respect of the Operating Companies and GHR No 3; (e) restraining the Bankrupt and Antoun from registering, acting upon, seeking to enforce, or in any way dealing with any security interest in the Operating companies and GHR No 3; and (f) restraining the Bankrupt or Antoun, whether personally or as trustee, from registering any charge of security or appointing a receiver to any of the property of the Operating Companies or GHR No 3. The mediation - 15 October 2013 207 The trial of the Supreme Court proceeding was listed to commence on 28 October 2013. A formal mediation of the proceeding in which the Honourable Ian Callinan QC acted as mediator took place on 15 October 2013. The costs submissions filed on McHugh's behalf state: Towards the end of the mediation, when the parties were reasonably close to reaching a final settlement, it was discovered that George Alex was an undischarged bankrupt, a fact which his legal representatives were until then unaware. This raised some serious issues including regarding George Alex's legal capacity to enter into a settlement, the potential participation in the proceedings by his trustees in bankruptcy and the need for all parties to amend their claims in the proceedings. As a consequence the mediation was adjourned to a further date. (Emphasis added.) 208 Byrnes confirmed this in his public examination. He said that: Mr Alex basically thumped the table and said "This is my company and you guys have stolen my company. You've taken this - this is my business", to which I replied, "Well, that's your opinion." But at a later stage in the mediation when there was a discussion of settlement that's when I said, "Well, even if we were to pay you, George," I said, "how would we pay you, because you're an undischarged bankrupt." At which stage the solicitors all became…rather frantic because at that stage none of them knew that their client was an undischarged bankrupt. (Emphasis added.) 209 Importantly, Byrnes testified that in answer to Byrnes' question the Bankrupt said: Well, you will just pay…Joe and we'll sort it out between us. And also: You pay Joe and he will pay me. 210 Byrnes confirmed this evidence in his 16 March 2014 email to various parties (including the solicitor for the Trustees) in which he set out the following exchange between him and the Bankrupt at the mediation: I later said to G Alex, "George even if we wanted to pay you, how would we because you're a bankrupt". GA "just pay Joe [Antoun] and we will work it out between us. 211 The mediation was adjourned without a settlement being reached but, as I will explain, the negotiations to settle the proceedings continued. Byrnes and Antoun meet in the MLC Centre - 16-21 October 2013 212 In the continuing negotiations Byrnes met with Antoun at a cafe in the MLC Centre in Sydney. The precise date of the meeting is not clear on the evidence and I infer only that it occurred between the mediation on 15 October and the settlement of the Supreme Court proceeding on 22 October. 213 Byrnes testified in his public examination was accompanied at the meeting by Anthony Thomas Vincent ("Vincent") who he described as "respected" by certain elements in Sydney. He also described Vincent as his "safety net". I take Byrnes to have meant that Vincent was respected in the criminal underworld and that he took him to the meeting so that he was protected from physical harm. 214 Byrnes testified that Mr Antoun said: I want - I've got to keep this away from the trustee. Got to keep George's trustee…" And that Antoun expressed: …great concern about George's affairs and about this bankruptcy trustee and how his lawyer had said he has nothing to worry about. And I said, "Well, that's a matter for you." And he said, "Look, you will be just paid. Don't worry about George. Leave George out of this." He said, "I will sort George out. I will pay George." And I said, "That's a matter for you." And also that Antoun said: …any payment would be… paid to him….And he would look after and he would pay George his half. (Emphasis added.) 215 Byrnes directly stated that he understood that the consideration payable for any settlement reached at that time was half for the Bankrupt and half for Antoun. When asked why Antoun had an interest in the business Byrnes said, in effect, that the Bankrupt brought him in to the business to use as a standover man. 216 Byrnes' evidence of the Bankrupt's statements at the mediation and his evidence of Antoun's statements in the meeting at the MLC Centre are significant to my view that Antoun entered into the October Deed as trustee for the Bankrupt on a bare trust in respect to half of the $5 million to be paid under the deed. The Trustees are informed about the Supreme Court proceeding - 16 October 2013 217 On the morning of 16 October 2013 Byrnes telephoned Rambaldi and informed him of the existence of the Supreme Court proceeding. Byrnes told Rambaldi that the Bankrupt was actively involved in the proceeding, was represented by solicitors, Bartier Perry, that the proceeding was listed for trial on 28 October 2013, and that the Bankrupt's bankruptcy had just come to light at the mediation. Byrnes purported to outline the substantive issues in the proceeding to Rambaldi and later that morning he sent a copy of the first McHugh affidavit to Rambaldi, minus the exhibits. 218 Later that day Rambaldi telephoned Mr Mark Tierney ("Tierney") of Bartier Perry. Tierney confirmed the existence of the proceeding, and said that he acted as the solicitor for the Bankrupt, Antoun and the three Active companies in the proceeding. He said that he was not aware that Alex was an undischarged bankrupt until 15 October 2013 when he performed various searches in anticipation of the mediation. Tierney said that a directions hearing was listed for 18 October 2013 and that he would provide Rambaldi with copies of material documents in the proceeding by express post. 219 On 17 October 2013 Rambaldi received a letter from Bartier Perry dated 16 October 2013 which attached a series of documents from the proceeding. The directions hearing - 18 October 2013 220 On Friday, 18 October 2013 the Supreme Court proceeding was listed for a directions hearing before Hammerschlag J. At that point the Trustees had not been served with any document in relation to the proceeding, were not parties, and had a limited understanding of the issues involved in the proceeding. They engaged a solicitor, Ms Sally Nash of Sally Nash & Co, to assist them in relation to the proceeding in the event that they were required to take any steps, but they did not attend the hearing. 221 At the hearing Mr Newlinds SC announced an appearance for the Bankrupt, Antoun and the three Active companies. The transcript shows that he did so subject to a qualification he expressed as follows: Mr Newlinds: On our instructions the second defendant, Mr Alex, has the capacity to retain us in relation to this case. That's because the fund of money, which the deed that he is a party to which is the subject of an application to be set aside, is on his case the proceeds of a settlement of a defamation dispute and therefore would fall outside the scope of his bankruptcy. But I need to tell your Honour that on the plaintiff's case either there was no defamation or the deed in some way is deliberately disguised to look like it's a settlement of a defamation case which it is not. His Honour: You take it out of the bankruptcy. Mr Newlinds: Perhaps that's part of their case. So depending on the outcome, the determination of an issue in this case, there is a question as to whether, firstly, the money is in or out of the bankruptcy and, more importantly, as to whether Mr Alex is entitled to retain lawyers in respect of the claim. His Honour: So you can be retained just on this argument. Mr Newlinds: And the position I've taken is I am appearing today, but yesterday we told the trustee, and my solicitor had a conversation with a solicitor apparently acting for the trustee and we thought they were going to be represented today. Obviously at some point the trustee will have to be involved and the court will have to at least understand what the trustee's position is, regardless of who in the end actually appears to Mr Alex. Your Honour probably didn't need to hear all that but is wanted to make it clear. His Honour: There is no challenge to your retainer today. Mr Newlinds: Not today, as I understand. (Emphasis added.) 222 Mr Coles QC appeared for McHugh and he applied for leave to add the Trustees as defendants. In relation to that application the following exchange took place: Mr Coles: …the second application is primarily…to add…the trustees in bankruptcy of the second defendant [Alex], so that they will be bound by the outcome of the proceedings… … What happened was, as it turned out unbeknownst even to his own solicitors, the second defendant was bankrupt not only when the case commenced but when the transaction or transactions which the proceeding seeks to impugn were actually purportedly entered into or the relevant documents were executed. … His Honour: So your first order of business is to join a trustee. 223 Hammerschlag J enquired whether the Bankrupt was at the mediation and his Honour, Mr Coles and Mr Newlinds had the following exchange: Mr Coles: Yes. Mr Newlinds: I was acting for him. His Honour: So it became apparent at the mediation that he was bankrupt. Mr Coles: Indeed even his own counsel and solicitor were unaware of that state of affairs, indeed as we suppose must have been the other firm of well-known commercial lawyers who drafted the extraordinary set of documentation to some of which reference has been made. 224 His Honour ordered that the Trustees be joined as defendants in the proceeding in their capacity as trustees in bankruptcy of the Bankrupt. The orders abridged the time for service on the Trustees and service was to be validly effected by delivery, fax or email to the offices of Sally Nash & Co. 225 However, as will be seen, the desire of the respondents and their legal representatives to join the Trustees and parties to the proceedings and to bind them into the outcome was short lived. Service on the Trustees – 18 October 2013 226 On the afternoon of Friday, 18 October 2013 Moloney Lawyers served the following documents on Ms Nash's office: (a) an Amended Summons dated 18 October 2013; (b) an Amended Commercial List Statement; and (c) the orders of Hammerschlag J made 18 October 2013. Ms Nash provided the documents to the Trustees on the morning of Monday, 21 October 2013. The matter was listed for a directions hearing before Hammerschlag J on Tuesday, 22 October 2013. 227 The amended pleadings named the Trustees as fourteenth and fifteenth defendants and the Amended Commercial List Statement included allegations that the Defamation Deed: (a) was intended or had the effect of disguising the payments to be made to the Bankrupt under the Defamation Deed as payments in respect of defamation rather than in respect of property divisible amongst the Bankrupt's creditors; (b) was void as against public policy or by reason of the illegal purpose of defrauding the Australian Taxation Commissioner or the Bankrupt's creditors; (c) was designed to provide the appearance of a payment in respect of a defamation of the Bankrupt as a means of transferring the consideration and disguising it as a defamation payment rather than what in truth was consideration for the transfer of property: (i) which the Bankrupt had represented was his; and (ii) which, if such property existed, vested in the Bankrupt's trustee in bankruptcy and should have been available for division amongst his creditors; and (d) was entered into by the Bankrupt to defraud the trustee in bankruptcy and creditors. 228 Paragraphs 59A and 59B of the Amended Commercial List Statement alleged: By reason of [the Bankrupt's] claims and conduct the trustees may now or at some later time seek to claim that [McHugh] holds on trust some interest in the shares of the Operating Companies; or Global Human Resources Pty Ltd or GHR (No 3) Pty Ltd on behalf of the creditors of [the Bankrupt's] estate. [McHugh] seeks hereby to bind the Trustees in respect of the determination by the Court that [the Bankrupt] has no interest that he purports or claims to have in the shares, the proceeds or consideration payable for the transfer of those shares or any entitlement under the Deeds or Securities. 229 On the morning of 22 October 2013, shortly prior to the hearing, Ms Nash's office was served with a Notice of Motion from the solicitors for the eighth to thirteenth defendants, in which they sought leave to file and serve an Amended Cross Summons. The proposed Amended Cross Summons included a claim for a declaration that the March Deeds are void and unenforceable by the Trustees. The 22 October 2013 Orders 230 On the morning of 22 October 2013 a settlement was reached in the Supreme Court proceeding which involved McHugh, Byrnes and Russo and their associated companies on one side, and Antoun (and I infer the Bankrupt) on the other. The costs submissions filed on McHugh's behalf (I infer with Byrnes' agreement) state: On the morning of 22 October 2013, before the matter came to Court, the original parties to the proceedings reached a settlement agreement. The [Trustees] did not participate in the negotiation of that settlement agreement and at the time it was being negotiated it was unclear as to what action, if any, the [Trustees] were proposing to take in respect of the proceedings. The Trustees were not informed of or involved in the negotiations to settle the proceedings. They only become aware of a settlement through the provision of proposed consent orders and they were not informed of the existence of the October Deed. 231 At the directions hearing on 22 October 2013: (a) McHugh continued to be represented by Moloney Lawyers and Mr Coles; (b) the first to fifth defendants, Antoun, the Bankrupt and the Active companies, were represented by a new solicitor, Ms Ljupka Subeska ("Subeska") of Astoria Lawyers, who had replaced Bartier Perry; (c) the sixth to thirteenth defendants continued to be represented by Whittens Lawyers and Mr Ashhurst. Ms Nash appeared for the Trustees. 232 Rambaldi said, and I accept, that Mr Coles applied to discontinue the claim against the Trustees without proffering a reason for the discontinuance, and Mr Ashhurst withdrew the application by the eighth to thirteenth defendants to join the Trustees as respondents to their Cross-Claim. Mr Coles handed up signed short minutes of order to be made by consent of the parties, other than the Trustees. The consent orders were signed by Ms Subeska of Astoria Lawyers on behalf of the first to fifth defendants, which included the Bankrupt. I infer that she had instructions from the Bankrupt to do so. 233 His Honour then made orders in the form of the short minutes handed up. The orders, which I shall call "the 22 October 2013 Orders", relevantly provide: The first, second, third, fourth and fifth defendants granted leave to file in Court an Appearance. In so far as is necessary I give the plaintiff leave to discontinue these proceedings as against the trustees in bankruptcy of George Alex. I make the orders in the document entitled Short Minutes of Order which I've initialled, dated today's date and placed with the papers. These orders shall in addition stand as Notice of Discontinuance against the trustee earlier described without the necessity to file any further Notice of Discontinuance. By consent the Court orders and declares: 1 Declare that the Defamation Settlement Deed, Share Transfer Deed and the Deed of Settlement and Release each dated 11 March 2013 between the parties herein (the "Deeds") are void, unenforceable and of no effect. 2 Declare that the General Security Deed dated 11 March 2013 (the "General Security Deed") securing purported rights under the Deeds between the parties herein is void, unenforceable and of no effect. 3 Order that pursuant to the Australian Securities and Investments Commission Act 2001 or the Competition and Consumer Act 2010 (Australian Consumer Law) the Deeds and the General Security Deed be set aside. 4 Declare that the first and second defendants and/or the JA Investment Trust have no interest claim or right in any shares in GHR No 3 Pty Ltd, Global Human Resources Group Pty Ltd, Global Civils Group (NSW) Pty Ltd, Civil Pacific Services Group Pty Ltd and Global HR Group Pty Ltd. 5 Order that the first and second defendants deliver up to the plaintiff any securities held by them by way of charge or any share transfers or other documents of title in respect of GHR No 3 Pty Ltd, Global Human Resources Group Pty Ltd, Global Civils Group (NSW) Pty Ltd, Civil Pacific Services Group Pty Ltd and Global HR Group Pty Ltd. 6 Order that within three business days of the making of these orders, the first and second defendants shall sign all necessary documents and do all necessary things so as to cause to be discharged and remove the security interests bearing [various registration numbers] in the Personal Property Securities Register. 7 Direct that in default of Order 6 above for a period of 14 days or more that the Registrar of this Court be authorised to sign any discharge or release of the General Security Deed and/or any other document that may be required so as to remove the security interests in the Personal Property Securities Register. … 10 The proceedings be otherwise dismissed. 11 The Court notes the agreement between the plaintiff and the first to thirteenth defendants that there be no order as to costs in these proceedings. (Emphasis added.) 234 The orders provided as a first step that the Trustees were removed as defendants. The October Deed 235 As I have said, the parties to the Supreme Court proceeding did not inform the Trustees of the negotiations to resolve the proceeding, and did not inform the Trustees of the existence of the October Deed at the time they sought the 22 October 2013 Orders. 236 The October Deed is dated 22 October 2013, the same day as the orders. I infer from the timing of the October Deed and the terms of the orders that the orders were subsequent to the agreement embodied in the deed and that the parties intended the October Deed to supersede the March Deeds. The persons and entities who are parties to the October Deed are as follows: (a) on the one side, Antoun (as trustee of the purported trust); and (b) on the other side, McHugh, Byrnes, Russo, the three Operating Companies, Global Human Resources Group (now in liquidation) and GHR No 3 (now in liquidation) ("the October Deed Payers"). There is no mention of the Bankrupt in the deed. 237 Pursuant to the deed the October Deed Payers agreed to pay $5 million to Antoun (as trustee of the purported trust), by way of five instalments as follows: (a) $1 million on 22 October 2013; (b) $350,000 on or before 12 November 2013; (c) $1.15 million on or before 31 March 2014; (d) $1.25 million on or before 30 June 2014; and (e) $1.25 million on or before 1 September 2014. 238 The deed provided for Global Human Resources Group, GHR No 3 and McHugh to provide to Antoun (as trustee of the purported trust) signed but undated share transfers relating to the shares held: (a) by GHR No 3 and McHugh in Global Human Resources Group; and (b) by Global Human Resources Group in the Operating Companies. I call these undated share transfers "the October Deed Securities". Antoun was to hold the undated share transfers in escrow and not use them unless entitled to do so under the deed, and to return them to the October Deed Payers when they had paid the consideration in full in accordance with the deed. . 239 Each of McHugh, Byrnes, Russo and Antoun warranted that he had read and understood the contents of the Deed, had obtained legal advice regarding the subject matter of the Deed, and entered the Deed voluntarily upon his own information and investigations of his own free will and without compulsion. 240 The Deed did not describe the $5 million payment as being in consideration for the transfer of the Global business. Instead the recitals state: A Antoun has further claims for damages against the Payers which are not part of the current proceedings before the Supreme Court of NSW. B The Parties have agreed to settle these further claims in accordance with the provisions of this Deed. 241 The respondents put on no evidence, and I could see nothing in the evidence, to show that Antoun had any claim for damages against McHugh, Byrnes, Russo and the Global companies other than the claims in the Supreme Court proceeding regarding the disputed ownership of the Global business. In all the circumstances I infer that the deed was in settlement of the Supreme Court proceeding and that the recitals falsely characterised the substance of the agreement. I am satisfied that, in reality, the October Deed involved the payment of $5 million by McHugh, Byrnes and Russo and their associated entities for the transfer to the respondents of all legal and beneficial interests in the companies in the Global business. 242 I infer that Antoun and the Bankrupt sought to characterise the substance of the agreement in this way to assist the Bankrupt to avoid the Trustees' claims. Byrnes McHugh and Russo went along with the mischaracterisation. Byrnes, McHugh and Russo must have been in contact about the settlement of the Supreme Court proceeding as it unfolded, and by the time they entered the October Deed they would all have been aware that Alex was a bankrupt, and that Antoun was to pay the Bankrupt half of the settlement monies. The discharge of the Bankrupt's registered security interest 243 On 31 October 2013 the "ALLPAAP" (all present and after-acquired property) registration securing the Bankrupt's entitlement to payment under the March Deeds was discharged. It is likely that occurred through steps taken by the respondents under the 22 October 2013 Orders, which provide that the General Security Deed is void, unenforceable and of no effect. 244 Upon cancellation of the ALLPAAP registration the respondents no longer required the Trustees' consent to the release of the Bankrupt's security. The 7 November 2013 hearing 245 On 4 November 2013 the Trustees filed a notice of motion in the Supreme Court proceeding seeking: (a) to be joined as defendants to the proceeding; (b) to set aside the orders made on 22 October 2013; (c) to cross vest the proceeding to the Federal Court; and (d) to adjourn the hearing of the above applications for a period of not less than six months to permit the Trustees sufficient time to investigate the transactions, allegations and events which were the subject of the proceeding. Pending hearing and determination of the application the Trustees sought orders staying the operation of the 22 October 2013 Orders and restraining the defendants from dealing with interests in the Global business and under the March Deeds. 246 Mr Rambaldi deposed, and I accept, that the Trustees were unaware of the October Deed at this time. I infer that the respondents, the Bankrupt and Antoun kept that information from the Trustees. 247 The application was listed for hearing on 7 November 2013 before Hammerschlag J. The Trustees' motion was opposed by the plaintiff, McHugh, and the eighth to thirteenth defendants, being Byrnes, Russo and the Global companies. The first to fifth defendants, being Antoun, the Bankrupt and the Active companies, did not enter an appearance. 248 Mr Ashhurst SC, who represented the eighth to thirteenth defendants, made the following submissions ("senior counsel's statements"): Mr Ashhurst: We oppose the orders that are sought. Let's just step back a moment and re-acquaint ourselves with what was happening here. The plaintiff was alleging that certain settlement deeds were void and unenforceable. The declarations had been made to that effect. Those declarations obviously can't bind the Trustee in Bankruptcy so if the Trustee in Bankruptcy seeks to agitate and claim that the deeds are valid and enforceable they can do that tomorrow and there's absolutely nothing stopping them. That's why there doesn't seem to be any prejudice to the Trustee in Bankruptcy. Then look at what's sought against my clients. … Mr Ashhurst: ...(not transcribable)... problem your Honour, we just don't see that there's any basis for final relief that could possibly support the interlocutory relief that's sought in respect of the assets and as far as the staying the orders that were made, the declaratory orders, for reasons I've just given they don't bind the Trustee anyway. It just seems this case is ill considered. 249 The defendants did not inform the Court that the Trustees' interests had already been prejudiced by the cancellation of the ALLPAAP registration which had secured the Bankrupt's right to $6.2 million under the March Deeds. 250 Later in the hearing, responding to the submissions of Mr Fary of counsel for the Trustees, Hammerschlag J relied on senior counsel's statements. His Honour said : These bodies agree here, all of them all agree in open court and they've in fact put it that the orders that were made at the time though the declarations do not bind your client, they so agree. Formally it's on the record. 251 His Honour dismissed the Trustees' application and refused to grant the injunction. His Honour delivered short ex tempore reasons in which he said that the Trustees were not bound by the 22 October 2013 Orders and said: I am not satisfied that the trustees have standing to set aside the declarations and orders made on 22 October 2013. The trustees were not parties to the proceedings at the time of the declarations made on 22 October 2013. They are not bound by them and they cannot affect their substantive rights. There would be no inconsistency as against the trustees and any other party were any rights the subject of or dealt with in accordance with those declarations and orders determined to fall within the bankrupt's estate. (Emphasis added.) The reasons for judgment show that, as well as concluding that the Trustees were not bound by the orders of 22 October 2013, his Honour was concerned about the Trustees' standing to make an application for a stay on the rights of parties to deal with property that was not the Bankrupt's property until the Trustees had investigated whether they had a claim. 252 Before me the respondents did not, in terms, depart from what was said by Mr Ashhurst SC on 7 November 2013. They accepted there is nothing in the nature of a res judicata or an estoppel preventing the Trustees from arguing that the March Deeds are valid but they said that the deeds were at an end and of no effect. Antoun's death 253 Antoun was shot and killed in his driveway on 16 December 2013. Part payment of the monies due under the October Deed 254 The October Deed was part performed by the October Deed Payers (in other words, the respondents). On 22 October, 23 October, 1 November and 11 November 2013 a total of $1.35 million was deposited into Construction Financial Management's "Custodial Account 1" with Westpac Bank. That account could only be accessed by Byrnes and Antoun. I am satisfied that those monies were paid by the October Deed Payers to meet their obligations under the deed. 255 Between 22 October 2013 and 10 February 2014 there were 16 withdrawals from the custodial account, in a total of $1.35 million. I accept the accuracy of the transaction summary which Mr Rambaldi prepared from Westpac Bank records. It provides as follows: Account Number: 032053 378070 – Construction Financial Management Custodial Account 1 Date Description Debit Credit Details of Remitter / Destination 22/10/2013 Transfer Deposit $1,000,000.00 Repurchase of Bank Cheque 002105, payee was Joe ANTOUN 22/10/2013 Withdrawal Cash $20,000.00 Local Telegraphic Transfer to "Norma AFIF" 013375 77330147 22/10/2013 Withdrawal Cash $25,000.00 Local Telegraphic Transfer to "The Transformer Group" 062000 12796217 22/10/2013 Withdrawal Cash $25,000.00 Cash by Joseph ANTOUN 23/10/2013 Transfer Deposit $100,000.00 Transfer from 032053 344495 24/10/2013 Withdrawal Cash $15,000.00 Cash by Joseph ANTOUN 24/10/2013 Withdrawal Cash $450,000.00 Local TT 2062621 to AGON Enterprises Pty Ltd 28/10/2013 Withdrawal Cash $20,000.00 Cash by Joseph ANTOUN 29/10/2013 Withdrawal Cash $10,000.00 Cash by Joseph ANTOUN 1/11/2013 Transfer Deposit $100,000.00 Transfer from 032053 34495 1/11/2013 Withdrawal Cash $105,000.00 Local TT 2062642 to City Nominees P/L 4/11/2013 Withdrawal Cash $10,000.00 Cash by Joseph ANTOUN 4/11/2013 Withdrawal Cash $10,000.00 Cash by Joseph ANTOUN 5/11/2013 Withdrawal Cash $25,000.00 Cash by Joseph ANTOUN 5/11/2013 Withdrawal Cash $480,000.00 Local TT 2062654 to Teagan Maree Mullens 11/11/2013 Deposit $150,000.00 Bank cheque 002144 27/11/2013 Withdrawal Cash $30,000.00 Cash by Joseph ANTOUN 27/11/2013 Withdrawal Cash $15,000.00 Cash by Joseph ANTOUN 6/12/2013 Withdrawal Cash $33,000.00 Cash by Joseph ANTOUN 10/02/2014 Withdrawal Cash $53,832.00 Transferred to 032053 344495 – CONSTRUCTION FINANCIAL MANAGEMENT PTY LTD – Office Account 256 Antoun made 11 cash withdrawals and one transfer was made to the account of Mullins, his defacto wife. One transfer was made to The Transformer Group Pty Ltd ("Transformer Group"). Antoun was the sole director and shareholder of Transformer Group from November 2006 to February 2008 and his brother Nemer Antoun became the sole director from February 2008 until June 2013 and the sole shareholder from February 2008 until April 2014. Another of Antoun's brothers, Antoine Antoun, became sole director from June 2013 until the company was wound up in January 2015. I infer that these withdrawals were made at Antoun's direction and were to his benefit. 257 The evidence is not clear as to who received the benefit of the transfer of $20,000 made to "Norma AFIF" or the transfer of $450,000 to Agon Enterprises Pty Ltd. However, those payments can only have been made at Antoun's direction because he was the only signatory (other than Byrnes) and in my view it is more likely than not that they were to Antoun's benefit. 258 However, the transfer of $105,000 to City Nominees Pty Ltd ("City Nominees") on 1 November 2013 is likely to have been to the Bankrupt's benefit. I say this because the evidence is that City Nominees was the trustee of City Nominees No 1 Trust which is a trust associated with the family of the Bankrupt. The Bankrupt's wife, Tasia Alex, was a director of City Nominees from 1994 to 2003, the Bankrupt was a director from April 2008 to December 2009, and the Bankrupt's sister, Athina Alex, a director from December 2009 to December 2014. Thereafter Mandy Alex has been the sole director and shareholder. A CBP file note dated 14 March 2013 records Athina Alex as stating that "City Nominees is George Alex's company". 259 The last relevant withdrawal on the account took place on 10 February 2014 when $53,832 was transferred back to Construction Financial Management. . This transaction was after Antoun's death and can only have been at the Byrnes' direction. Byrnes did not mention this transaction when he set out the transactions in Custodial Account 1 for the solicitors for the Trustees. I infer that after Antoun's death Byrnes took steps to transfer these monies back to Construction Financial Management, so as to recover the remaining amount in the custodial account. The outstanding payment obligations under the October Deed 260 The Trustees alleged that the October Deed Payers have outstanding payment obligations under the October Deeds which, taking into account the $53,832 repaid to Byrnes on 10 February 2014, total $3,703,832. The outstanding instalment payments are summarised as follows: Unpaid instalments Amount Due 31 March 2014 $1,150,000 30 June 2014 $1,250,000 1 September 2014 $1,250,000 Subtotal $3,650,000 Plus repayment to CFM on 10 February 2014 $53,832 Total $3,703,832 261 The respondents denied any outstanding obligations under the October Deed. In cross-examination Russo said that the respondents' outstanding obligations under the October Deed were satisfied through by payments made pursuant to the earlier March Deeds. As I explain in dealing with the respondents' set-off claims I do not accept this. 262 I am satisfied on the evidence that the October Deed Payers have outstanding obligations totalling $3,703,832 pursuant to the October Deed. The liquidation of GHR No 3 and Global Human Resources Group 263 On 3 and 5 March 2014 the Trustees issued examination summonses pursuant to s 81 of the Act in Federal Court of Australia proceeding VID 1282 of 2013 directed to, amongst others, the Bankrupt, Byrnes and, McHugh. I infer that the Trustees served the summonses shortly thereafter. On 14 and 17-21 March 2014 the Trustees conducted six days of public examinations. 264 Between 7 and 19 March 2014 Russo and McHugh the evidence shows that Russo and/or McHugh took the following steps: (a) on 7 March 2014 Russo and McHugh registered, GHR Custodian as the New Parent Company to own the shares in the Operating Companies. It had no outstanding payment obligations under the October Deed and/or the March Deeds. I infer that Russo and McHugh caused this to occur as they are the directors of the New Parent Company and directors of its sole shareholder, AR & KH Pty Ltd. The registered office of the company is Wentworth Williams & Associates, the accounting and auditing firm in which Russo was a director; (b) on 7 March 2014 Russo and McHugh registered a new company, AR & KH Pty Ltd, to be the sole shareholder in the New Parent Company. It had no outstanding payment obligations under the October Deed and/or the March Deeds. I infer that Russo and McHugh caused this to occur as they are the directors and shareholders of the company. The registered office of the company is, again, Wentworth Williams & Associates; (c) on 11 March 2014 Russo resolved, as a director of the existing Parent Company Global Human Resources Group, to transfer the shares that it held in the Operating Companies to the New Parent Company. I infer this step was taken by Russo as he was the director of Global Human Resources Group at the time. Russo, through GHR No 3 was also the controlling shareholder; (d) on 17 March 2014 Russo, in his capacity as a director, made a Form 520 Declaration of Solvency in which he wrongly declared that Global Human Resources Group had no liabilities. On 19 March 2014, Russo (having a controlling interest via GHR No 3) resolved as a member to put Global Human Resources Group, which had outstanding payment obligations under the October Deed and/or the March Deeds, into members' voluntary liquidation, with Kyriacou as liquidator; and (e) on 17 March 2014 Russo, in his capacity as a director, made a Form 520 Declaration of Solvency in which he wrongly declared that GHR No 3 had no liabilities. On 19 March 2014, Russo, in his capacity as a member, resolved to put GHR No 3, which had outstanding payment obligations under the October Deed and/or the March Deeds, into members' voluntary liquidation with Kyriacou as liquidator. 265 Russo described himself as a director of Wentworth Williams' auditing arm and described Kyriacou as a director of Wentworth Williams' accounting arm. In their evidence both Russo and Kyriacou sought to suggest that the two arms were somehow separate. However, the evidence shows that the accounting and auditing arms operated under the same banner, Wentworth Williams & Associates, and Kyriacou said that she was the person responsible for looking after the Global business and its directors. In the relevant period Russo was her fellow director in Wentworth Williams & Associates, a director of the Parent Company, and a director and shareholder of GHR No 3, the controlling shareholder of Global Human Resources Group. In the circumstances it is likely that Russo and Kyriacou worked closely together at Wentworth Williams & Associates in relation to matters concerning the Global business. 266 Kyriacou testified that her role within Wentworth Williams & Associates included renewal of company registrations. She said that she recommended to Russo that any company of which he was a director that was not a trading company, had not traded, had a zero BAS balance, nil company returns and no bank account should be placed into voluntary liquidation. She said that in about March 2014 her staff ascertained which companies met those parameters and then they performed the appropriate searches and published the appropriate notices for the voluntary liquidation of 29 companies. On her account GHR No 3 or Global Human Resources Group were caught up in this general administrative clean up. 267 Kyriacou said that she did not ask Russo whether GHR No 3 or Global Human Resources Group had any liabilities and said that she was unaware that they had liabilities under the October Deed. She said that she caused Form 520 Declarations of Solvency for 29 companies to be prepared and asked Russo to sign them which Russo did without reading them (including the declarations for GHR No 3 and Global Human Resources Group). 268 Russo essentially corroborated Kyriacou's evidence. The gist of his evidence was that in about March 2014 Kyriacou proposed that a number of companies of which he was a director should be placed into voluntary liquidation. On his account GHR No 3 and Global Human Resources Group were caught up in that administrative process. 269 In my view, notwithstanding its corroboration by Russo, Kyriacou's evidence that the liquidation of Global Human Resources Group and GHR No 3 occurred when those companies being caught up in the administrative process she described is improbable, and I do not accept it. As I have said, Kyriacou said that her role was "to protect the Global Group and to protect the directors of the Global Group". Russo's position as a director of Global Human Resources Group and GHR No 3 and a fellow director in Wentworth Williams & Associates meant that it is likely that they worked closely together on matters relating to the Global business. It is likely that before Kyriacou finalised the winding up process she knew of the steps taken by Russo and McHugh to register GHR Custodian as the New Parent Company, to register AR & KH Pty Ltd to own the shares in the New Parent Company, and to transfer ownership of the shares in the Operating Companies from Global Human Resources Group to the New Parent Company. 270 For similar reasons Kyriacou's evidence that she did not know of the October Deed is implausible, and I do not accept it. That deed embodied the settlement of significant Supreme Court proceedings brought against Russo, a director of companies in the Global business and a fellow partner in Wentworth Williams & Associates, and it involved companies in the Global business. 271 It is also improbable that Kyriacou could recall that Russo did not read the Form 520s that she had prepared, but not recall more intrinsically memorable matters which occurred around the same time. Tellingly, she was questioned on the circumstances in which Global Human Resources Group ceased to be the Parent Company and was replaced by GHR Custodian and she said that she could not remember something from 14 months ago. The Declarations of Solvency were false 272 Russo wrongly declared that each of GHR No 3 and Global Human Resources Group had no liabilities. In fact they had substantial outstanding payment obligations under the October Deed totalling about $3.7 million. The third instalment payment of $1.15 million was due to be paid by GHR No 3 and Global Human Resources Group and the other respondents on 31 March 2014, about two weeks after he made the declarations. 273 Russo's evidence regarding how he came to wrongly declare that the companies had no liabilities was somewhat confused. First, he said that at the time he signed the declarations he had not turned his mind to the October Deed. He said that if he had considered the October Deed he would not have made the Declarations of Solvency. In that regard he testified: If I would have considered the deed and that, I would have said, "Okay. Well, maybe I shouldn't do it. Well, I shouldn't do it." 274 He also said that (having turned his mind to the question on the first day of the trial) he considered that there were in fact no monies owing under the October Deed as any outstanding obligations had been met through the earlier payments made under the March Deeds. 275 In relation to this latter statement, as I explain in dealing with the respondents' set-off claim at [443] to [469], there is no substance in Russo's view that, at the time he made the Declarations of Solvency, the outstanding liabilities of GHR No 3 and Global Human Resources Group under the October Deed had been satisfied by earlier instalment payments made under the March Deeds. There is nothing in the terms of the October Deed to indicate that the payments made under the March Deeds were to be taken into account in satisfaction of the obligations of the October Deed Payers. It is more likely than not that the agreement embodied in the October Deed was reached having regard to the preceding events, including the payments earlier made by the respondents under the March Deeds. In any event, even if the $1.5 million paid by the respondents under the March Deeds could be put against their outstanding obligations under the October Deed, that payment fell well short of satisfying the $3.7 million that was outstanding. 276 I found Russo's testimony that at the time he made the Declarations of Solvency: (a) he "would have just forgotten" about the October Deed; (b) he gave no consideration to the obligations of GHR No 3 and Global Human Resources Group under the October Deed; and (c) the declarations were "just a mistake"; to be quite implausible. I do not accept it. 277 Under the October Deed Russo, Byrnes and McHugh (and their associated entities including Global Human Resources Group and GHR No 3) were obliged to make an instalment payment of $1.15 million by the end of that month, and two further instalment payments totalling $2.5 million over the next five months. Russo's evidence that he just forgot about the October Deed (and the liabilities of GHR No 3 and Global Human Resources Group) when these substantial payments were shortly due is far-fetched. 278 I also see his evidence as implausible when the liquidation of GHR No 3 and Global Human Resources Group was part of a series of concerted steps which followed the Trustees' issue of summonses for the public examinations and shortly preceded the Trustees' issue of this proceeding. The steps involved: (a) on 7 March 2014, Russo and McHugh causing the registration of AR & KH Pty Ltd to own the shares in the New Parent Company; (b) on 7 March 2014, Russo and McHugh causing the registration of the New Parent Company, GHR Custodian, which they controlled as directors and through their shareholding in AR & KH Pty Ltd; and (c) on 11 March 2014, Russo, as a director, resolving that Global Human Resources Group would transfer the shares it held in the Operating Companies to GHR Custodian; (d) on 17 March 2014, Russo, as a director, wrongly declaring that Global Human Resources and GHR No 3 had no liabilities; and (e) on 19 March 2014, Russo, as a member, resolving to put Global Human Resources Group and GHR No 3 into members' voluntary liquidation notwithstanding that they had outstanding payment obligations under the October Deed. 279 Russo's and Kyriacou's evidence is also implausible when it is understood that these concerted steps gave the October Deed Payers (in effect, the respondents) a substantial financial benefit. The October Deed Securities (signed but undated share transfers in shares held by GHR No 3 in Global Human Resources Group, and in shares held by Global Human Resources Group in the Operating Companies) secured Antoun's right to payment under the deed. By transferring the shares held by Global Human Resources Group in the Operating Companies to the New Parent Company and by registering AR & KH Pty Ltd to own the shares in the New Parent Company, the October Deed Securities were rendered valueless. Once the October Deed Securities were no longer good security the October Deed Payers then refused/failed to pay the $1.15 million instalment payment due on 31 March 2014 and refused/failed to pay further instalment payments of $2.5 million that were later due. 280 It is likely that these steps were part of a deliberate plan by the respondents rather than just a mistake made in an administrative clean up. It is likely that the steps taken by Russo (and to a lesser extent McHugh) were part of an attempt by the respondents to avoid their obligations to make the instalment payments due under the October Deed (and any outstanding obligations under the March Deeds) and to defeat the Trustees' claims. Consideration A The Trustees' case 281 The Trustees sought orders and declarations that: (a) the Bankrupt had a beneficial interest in the companies in the Global business; (b) the purported trust, the JA Investments Trust, did not come into existence; (c) in relation to the March Deeds: (i) the amounts payable to the Bankrupt and/or Antoun under the Defamation Deed were in respect of the Bankrupt's interest in the companies in the Global business, not in respect of any defamation of the Bankrupt or Antoun, and were not exempt property under s 116(2)(g) of the Act; and (ii) Antoun held his interest in the March Deeds, including monies paid to or at the direction of Antoun under the deeds and monies payable to Antoun under the deeds, as the Bankrupt's agent, or alternatively on a bare trust: (1) for the Bankrupt; further or alternatively; (2) for himself and the Bankrupt; (d) in relation to the October Deed, Antoun held his interest in the October Deed, including monies paid to or at the direction of Antoun under the deed and monies payable to Antoun under the deed, as the Bankrupt's agent, or alternatively on a bare trust: (i) for the Bankrupt; further or alternatively (ii) for himself and the Bankrupt; (e) the Bankrupt's interest in the Global business, under the March Deeds and under the October Deed, including in the bare trust, are vested in the Trustees; (f) the Trustees be paid: (i) the consideration payable under the March Deeds by the March Deed Payers; (ii) the consideration payable under the October Deed by the October Deed Payers; and further or alternatively (iii) $1.35 million by the estate of Antoun, which was paid to Antoun under the October Deed; (g) the fifth respondent, GHR Custodian, transfer to the Trustees all, alternatively some of the shares held by it in the Operating Companies; and (h) the respondents do all things and sign all documents necessary to give effect to the orders. 282 The Trustees contended that in respect of the March Deeds: (a) the Bankrupt was a party to the deeds in his own name and entitled to be paid $6.2 million. The Trustees sought to enforce his rights under the deeds to payment of this sum; and (b) in respect of $5.8 million payable in the name of Antoun, the Trustees contended that Antoun was trustee for the Bankrupt in respect of all or part of these monies too. 283 In respect of the October Deed the Trustees contended that Antoun was either the Bankrupt's agent or his trustee: (a) in respect of the whole of the $5 million payable in Antoun's name; or alternatively (b) in respect of part of the $5 million payable in Antoun's name, that proportion being either: (i) half of the $5 million payable under the deed (based on the evidence that Antoun would pay the Bankrupt "his half"); or (ii) in the ratio 5.65 (Antoun) to 6.35 (Bankrupt) which they (incorrectly) contended was the allocation of consideration between Antoun and the Bankrupt under the March Deeds. 284 The Trustees contended that they are entitled to: (a) assert the Bankrupt's interest in the Global business which has vested in them, and to orders tracing the Bankrupt's interest in the companies comprising the Global business at the relevant time through to the current companies in the group; (b) enforce the rights conferred on the Bankrupt in his own name under the March Deeds; and (c) enforce the rights in the name of Antoun under the October Deed and/or the March Deeds because they were entered into by Antoun either as agent or trustee for the Bankrupt. 285 For the reasons I explain, in broad summary I consider that: (a) in the relevant period the Bankrupt beneficially owned half of the shares in the companies in the Global business, including in GHR No 3 and Global Human Resources Group (now in liquidation). That interest vested in the Trustees and in my view it is traceable through to the shares held by AR & KH Pty Ltd in GHR Custodian and to the shares held by GHR Custodian in two of the Operating Companies. The Trustees are entitled to orders for the transfer to them of half (in number and value) of the shares; (b) the Bankrupt entered into the March Deeds in his own name and his rights to payment of $6.2 million by the March Deed Payers pursuant to the Defamation Deed vested in the Trustees. I do not, however, accept the Trustees' contention that $5.8 million that was payable to Antoun under the March Deeds (including amounts that were actually paid to or at the direction of Antoun) were held by Antoun on a bare trust for the Bankrupt. In my view the consideration payable to Antoun under the deeds most likely represented payment to him for his beneficial ownership of half of the companies in the Global business; (c) the amount of $6.2 million that was payable to the Bankrupt under the Defamation Deed was not in respect to defamation. In reality it consideration for the abandonment of any future claim by the Bankrupt to a beneficial interest in the Global business and for the transfer of his beneficial interest in half of the shares in the companies in the Global business to the March Deeds Payers; (d) the 22 October 2013 Orders meant that the March Deeds became void, unenforceable and of no effect. The Bankrupt has no subsisting contractual rights under the deeds and the Trustees are unable to enforce the deeds; (e) Antoun entered into the October Deed as the Bankrupt's agent in respect to half of the $5 million that was payable under the deed. The Bankrupt's right to payment of $2.5 million under the deed is vested in the Trustees. If I am wrong in my conclusion as to agency, it is open to infer that Antoun held half of the consideration payable under the deed on a bare trust for the Bankrupt; and (f) the Trustees are entitled to declarations and orders for payment of $2.395 million by those of the October Deed Payers who are respondents in the proceeding (being the second, third, fourth, sixth, seventh and eighth respondents). This amount represents the amount of $2.5 million that is payable to the Bankrupt, less $105,000 earlier paid to the Bankrupt's benefit. B Is there an issue of duress in the proceeding? 286 In my view it is not open to the respondents to claim that any agreement by McHugh to dispose of his interest in the Global business to the Bankrupt was vitiated by duress. 287 In his first affidavit, sworn on 20 May 2013 for the Supreme Court proceeding, McHugh essentially said that the Bankrupt and Gatto 'stood over' him in the meeting in May 2011 and that he was coerced to dispose of his interest in the Global business to the Bankrupt in return for the payments I have described. The thrust of his evidence is that he had no choice in that regard because he feared that the Bankrupt and/or Gatto would physically harm him or kill him if he did not agree to what the Bankrupt sought. Then, in June 2011, McHugh said that he was introduced to Antoun and informed of Antoun's potential investment in the business. Antoun said that he was going to "buy into George's business". The thrust of his evidence is that he also feared being harmed by Antoun. In late June/early July 2011, Gatto (who was with the Bankrupt and Antoun) telephoned McHugh and reiterated the terms of the agreement first described in May 2011, as well as agreeing that McHugh would receive a profit share. McHugh stated that Gatto said that Antoun would make the agreed payments, but McHugh's evidence overall makes it clear that he understood that the agreed payments were to be made by the Bankrupt and Antoun. 288 It is clear that McHugh's affidavit in the Supreme Court proceeding was aimed at establishing that he was forced by coercion to dispose of his interest in the Global business. However, duress is not an issue in the present case. 289 The respondents made no allegation of duress in their Defence. At the commencement of the trial Mr Fary of counsel for the Trustees sought to exclude the first McHugh affidavit on the basis that the respondents had not pleaded duress and that the critical subject matter of his evidence was the duress he alleged that he had suffered. Mr Ashhurst SC of senior counsel for the respondents opposed the exclusion of McHugh's evidence and summarised the respondents' position in the following terms: …it's not an issue in the proceedings as to whether Mr McHugh actually suffered physical duress…. It may be an issue in the proceedings as to whether or not he had a legitimate belief that he had been subject to such duress and that should, I expect, satisfy my learned friend that … he's not facing an actual duress claim from us. 290 Mr Fary accepted Mr Ashhurst's statement in satisfaction of the Trustees' concern. He said that he would proceed on that basis and he would not cross-examine McHugh on the question of duress. The Trustees did not cross-examine McHugh or Byrnes in relation to duress, and they gave no attention to the issue of duress in their submissions. To my mind no issue arose in the hearing as to whether or not McHugh had a legitimate belief that he had been subjected to duress. 291 After the close of evidence, the respondents filed written closing submissions in which they contended that McHugh had suffered duress. They sought findings of fact, based on what the submissions described as unchallenged evidence, that: (a) in May 2011, by utilising the services of Gatto, the Bankrupt coerced McHugh to transfer his shares in the business to Antoun; and (b) on 5 January 2013, the Bankrupt and Antoun coerced McHugh to sign the January 2013 Deed of Trust which stated that he held two ordinary shares in Global Human Resources Group on trust for Antoun absolutely. 292 The respondents submitted: Nowhere in the Gatto Agreement is there any reference to McHugh transferring his interest in the [Global business] to the Bankrupt. Even if there was such a reference, the mere fact that the Bankrupt could by threats coerce McHugh to agree to transfer the shares to the Bankrupt could not by itself create any proprietary interest in the shares in favour of the Bankrupt where none previously existed. It is apparent that by operation of the Gatto Agreement, the Bankrupt was, by threats, coercing McHugh to transfer his shares to Antoun. The terms of that agreement do not however somehow make the Bankrupt and equitable owner of the shares. Neither the Bankrupt nor Antoun had any interest in these shares simply because they could, by threats, force McHugh to transfer them. 293 It is wrong for the respondents to describe McHugh's evidence of duress as unchallenged when it was not confronted because the respondents disavowed any allegation of duress. When no allegation of duress was pleaded by the respondents and when they expressly disavowed that actual duress was an issue in the case it would be wrong to entertain these submissions. I approach the case on the basis that no allegation of duress is advanced by the respondents. Duress in relation to the transfer of the Global business in or about May 2011 294 However, against the possibility that my approach may be found to be wrong on appeal, I now give some attention to the evidence of duress. If it was necessary to decide, I would not be persuaded on the evidence that McHugh's agreement to transfer his interest in the Global business was the result of coercion. I say this essentially because: (a) from May 2011 until about March 2013 McHugh acquiesced in the takeover of the business. He sat back and allowed the Bankrupt and Antoun (and later Byrnes) to restructure and build up the business while he received a substantial salary of $250,000 per annum and a profit share. I doubt his allegation of coercion when he made no complaint throughout that period; (b) if the Bankrupt forced McHugh to give up his valuable interest in the Global business in the way he said I would have expected him to make a complaint to the police or to have brought civil proceedings at the time. He did not do so and he offered no cogent explanation in that regard. He did not even say that he did not go to the police because he was too frightened to do so. I would be disinclined to infer that McHugh was too frightened to go to the police when he said he did so in June 2013 after being assaulted (he said at Antoun's behest); (c) while I accept that men with reputations like those ascribed to Gatto, the Bankrupt and/or Antoun might not need to say much to get across an intimidating message and might intimidate through their presence and by unstated threats, it is relevant that McHugh did not say that in May 2011 the Bankrupt expressly threatened to physically harm him either directly or through Gatto. He said that: "George Alex had never threatened me or caused someone to threaten or assault me" and he did not say that Gatto threatened him; (d) in his January 2013 Statutory Declaration McHugh declared that he decided to sell the Global business to Antoun in mid to late October 2011 because the business was facing difficult trading conditions and he was concerned about its solvency. He said nothing of any coercion in this sworn declaration; (e) if McHugh's interest in the business had been taken from him by coercion I see it as unlikely that, together with Byrnes and Russo, he would have agreed in the March Deeds to pay $12 million to the Bankrupt and Antoun for the business. He did not commence Supreme Court proceedings alleging duress until after the settlement reached in March 2013 had collapsed; (f) McHugh sought to paint a picture of himself as an ordinary businessman innocently caught up in a world of "bikies" and associated criminals in which he said Gatto, the Bankrupt and Antoun operated. I doubt that he had no choice but to deal with the Bankrupt and Antoun. Nor do I accept that McHugh was as easily intimidated as he sought to portray. For more than 30 years McHugh worked successfully in the labour hire industry for major construction work. On his own account he was prepared to work with men who he described as violent and prepared to use criminal means to achieve their ends. The picture that McHugh painted that he was an ordinary businessman is implausible when: (i) he said that he was assaulted in 2004/2005 at the direction of his then employer, Michael Byrne, who McHugh said mistakenly believed he had stolen money from the business. McHugh did not complain to the police about the assault and he did not leave his job. Although he told Byrne he was no longer prepared to work for him because of the assault, he stayed on as manager until Byrne was able to sell the business about six months later. I do not see that as the reaction of a man unused to violence or threats of physical harm; (ii) McHugh did not say that he had difficulty in working with the Bankrupt in the period from 2005 to February 2008. He said that when he visited the Bankrupt in Sydney the Bankrupt was accompanied by "bikies" and/or criminals who were present for the Bankrupt's protection and to "persuade" people to do what he wanted. On his own account McHugh was in a business relationship for a lengthy period with a man who he said chose to use violent criminals for protection and enforcement, and he made no suggestion that was of concern to him at the time. I do not see that as the behaviour of a man unused to such men or such behaviour, or who is likely to have been easily intimidated; (iii) nor did McHugh express any difficulty in working with the Bankrupt and Antoun from May 2011 until about November 2012. Again, on his account, over this period he was in a business relationship with men who associated with "bikies" and criminals and used criminal means to achieve their ends. That business relationship did not break down until the Bankrupt and Antoun failed keep their end of the agreement made in May 2011. Again, that points away from McHugh having been easily intimidated or coerced; (iv) in May 2013 McHugh commenced Supreme Court proceeding against the Bankrupt and Antoun. His commencement of this proceeding tends to show that he was not so intimidated that he could not protect his own interests. Then, he said that he was seriously assaulted in June 2013. He took the assault as a warning not to pursue the proceeding and said he received threatening text messages from Antoun in that regard. He complained to the police about the assault and he was not intimidated out of continuing the Supreme Court proceeding. This also points away from McHugh having been easily intimidated and coerced; and (g) the evidence of duress is primarily based in McHugh's account, and I do not consider him a reliable witness. Duress in relation to the March Deeds 295 While this is not relevant to the transfer of the Global business in or about May 2011, it is worth noting that McHugh did not say that, in the period leading up to the execution of the March Deeds in March 2013, the Bankrupt, Antoun or Gatto threatened to physically harm him or have someone else do so. The highest his evidence rose was his statement regarding Antoun's angry outburst at the breakfast meeting on 4 January 2013 and the Bankrupt's warning that he should do what Antoun said because "you don't know what he is going to do". The evidence shows that the March Deeds were largely negotiated and drafted by lawyers which also points away from the existence of duress. 296 Byrnes also said nothing in his evidence about duress in the period leading up to the March Deeds. The evidence tends to show that Byrnes was used to dealing with men like the Bankrupt and Antoun and he was far from easily intimidated. It is improbable that he was coerced to sign the March Deeds. In his public examination Byrnes said that: (a) the Bankrupt and Antoun were drug dealers, Antoun was a "murderous thug" and the Bankrupt surrounded himself with "evil people who were standover men" including a convicted terrorist, gun runners, drug dealers, and members of the Comancheros, Hell's Angels and Rebels bikie gangs. Yet, on Byrnes' own account, from about September 2011 he was comfortable enough working for the Bankrupt and Antoun on restructuring the Global business, to the point that in about March 2012 he said that he accepted an invitation to take up a one third interest in their business. In his public examination he also referred to a number of other business dealings he had with the Bankrupt. This tends to show that Byrnes was not fearful of the Bankrupt or Antoun; (b) he had a heated argument with the Bankrupt and Antoun on 22 November 2012 because he considered they had not met their obligations under the agreement reached in May 2011. He repudiated the agreement which shows that he was prepared to stand up to them; and (c) he testified that he was "a lot harder target for Mr Alex to intimidate" than McHugh and Russo. If it were necessary to decide I would not be persuaded on the evidence that the March Deeds were the result of coercion. Nothing turns on this in any event because the March Deeds are void and unenforceable in my view. Duress in relation to the October Deed 297 There was evidence of duress in relation to the October Deed. In his second affidavit McHugh said that he was assaulted and threatened in June 2013 he said at Antoun's behest, and threatened by Antoun by text messages in July 2013. In his public examination Byrnes said that (I infer in the period between June and October 2013) his house was shot at in a drive-by shooting, his offices were smashed and his son was assaulted. 298 However, the respondents did not plead duress in relation to the October Deed, put no reliance on the evidence to which I have referred in their submissions, and did not argue that the October Deed was vitiated by duress. I make no finding regarding duress in relation to the October Deed. C Did the JA Investments Trust come into effect? 299 Another issue between the parties is whether Antoun entered the October Deed and/or the March Deeds as trustee for the JA Investments Trust as those deeds state, or whether he entered those deeds in another capacity. 300 The Trustees contended that the JA Investments Trust never came into existence and, in the alternative, that it was a sham. The respondents submitted that the Court should conclude that the JA Investments Trust was created in or about October 2011, and that Antoun entered the October Deed and the March Deeds in the capacity of trustee of that purported trust. 301 I start by noting that the primary evidence of the trust is a document bearing the title "JA Investments Trust" (which I have called "the purported trust deed"). However, that document is not executed either by the purported settlor or the purported trustee and it is undated and unstamped. No witness gave evidence that the trust had ever come into existence. 302 Although the March Deeds referred to the JA Investments Trust, Rumore (who primarily drafted those deeds) testified that he was not provided with an executed copy of the trust deed nor any account showing any assets held in the purported trust. While the recitals to the March Deeds describe the Bankrupt as a beneficiary of the JA Investments Trust the purported trust deed itself makes no reference to the Bankrupt, and its terms do not provide that the Bankrupt is a beneficiary. 303 Antoun's accountant, Mr Manny Papaklonaris ("Papaklonaris"), said in his public examination that Antoun asked him to set up the JA Investments Trust with Antoun as the beneficiary. In the examination the Registrar asked: "Do you have an executed version anywhere?" and Papaklonaris and said: "No. I gave that to…Antoun to sign and proceed for stamping." Papaklonaris also said that he was unaware whether the deed was ever executed and that he had never seen an executed copy. 304 The respondents objected to the admissibility of the transcript of Papaklonaris' evidence, arguing that it should be excluded because he was equivocal as to whether he had signed the deed as settlor. They submitted that without Papaklonaris being called so that his evidence could be tested, and his allegedly equivocal answer clarified, there was a real risk of unfairness to the respondents if the transcript of his evidence is admitted as proof that the purported trust deed was never executed. They also sought to rely on a letter from the solicitors for Mullins to the solicitors for the Trustees which suggested that an original signed and stamped deed might exist. 305 In my view there is little merit in the respondents' objection to the admissibility of this evidence. The transcript of Papaklonaris' evidence is hearsay which is admissible as evidence of the matters described by him pursuant to s 255 of the Act. I can see no proper basis for excluding it or limiting its use under s 255(2) or pursuant to ss 135 or 136 of the Evidence Act. Essentially I say this because: (a) the transcript records evidence by Papaklonaris, on oath, of what he did and said at the relevant time; (b) by the pleadings and written submissions alleging that the JA Investments Trust did not come into existence the respondents were on notice of the use to which the Trustees intended to put the transcript of Papaklonaris' evidence. They were also on notice that the Trustees did not intend to call him. It was open to the respondents to call Papaklonaris to make out their contention that the purported trust came into existence but they did not do so; (c) while Papaklonaris did not unambiguously state that he did not sign the deed as settlor I would infer from his evidence that he did not do so. He was asked several questions about the status of the purported trust deed and he said that he was unaware whether the deed was ever executed and that he had never seen an executed copy. In the circumstances I would have expected him to have clearly stated that he signed the deed as settlor if in fact he had done so; (d) there is no evidence that Antoun executed the JA Investments Trust deed as the deed provided; and (e) there is no substance to the respondents' contention regarding the letter from the solicitors for Mullins. In April 2014 the solicitors for Mullins wrote to the Trustees' solicitors stating that the original trust deed may have been confiscated by the NSW Police as part of the investigation into the death of Antoun. They said they were seeking a copy of the deed and would advise whether Mullins was able to obtain it. Since then, it appears neither Mullins nor her solicitors have made any further communication regarding the purported trust deed. I would expect Mullins or her lawyers to have advised the Trustees if they had been able to locate an executed trust deed or find evidence that it existed. I infer that that Mullins and her solicitors have not been able to confirm the existence of an executed trust deed. 306 It was the respondents who relied on the existence of the purported trust and the respondents had the onus of establishing that the trust came into effect. If they wanted to prove that Antoun entered the October Deed and/or the March Deeds as trustee of the purported trust they needed to put on evidence in that regard. However, in the finish there is no executed trust deed in evidence, no witness gave evidence in the public examinations or before me of the trust deed ever having been executed, and no witness gave evidence of having seen a signed copy of the trust deed. No witness even said that he or she was positively aware of the existence of an executed trust deed. 307 I am not satisfied that the JA Investments Trust deed was ever executed and not satisfied that a trust in those terms ever came into existence. The respondents did not establish that Antoun entered into the October Deed or the March Deeds as trustee of the purported trust. D Did the Bankrupt have a beneficial interest in the companies in the Global business? 308 In my view the evidence strongly supports the inference that the Bankrupt beneficially owned half of the shares in the companies comprising the Global business. I say this notwithstanding that there is no dispute between the parties that: (a) Antoun had legal title in the shares in the Operating Companies through the 2011 Share Transfers; (b) in the January 2013 Deed of Trust McHugh declared that he held two ordinary shares in the Parent Company, Global Human Resources Group, and any additional share capital allotted or transferred to him, on trust for Antoun, absolutely; and (c) apart from Cavric's email of 5 February 2013, no document was adduced in evidence that states that the Bankrupt had a beneficial interest in shares in the companies in the Global business. 309 I do not give much weight to the fact that the 2011 Share Transfers, the January 2013 Deed of Trust and the January 2013 Statutory Declaration indicate that Antoun had the legal and beneficial ownership of the shares in Global Human Resources Group and in the Operating Companies. It was not unusual for the Bankrupt and Antoun to lay down a false trail in documents prepared on their behalf and this is not a case in which Antoun's or the Bankrupt's recording of their own legal positions can be accepted at face value. It is worth reiterating that: (a) the January 2013 Statutory Declaration (which I infer was drawn by Antoun's lawyers) and which the Bankrupt and Antoun requested McHugh to make, is incompatible with McHugh's evidence before me; (b) in March 2013 the Bankrupt's and Antoun's lawyers drafted the March Deeds which falsely characterised the $6.2 million payment to be made to the Bankrupt as being for defamation. I have little doubt that the Bankrupt and Antoun took this course in an attempt to conceal from the Trustees that the monies were in payment for the Bankrupt's beneficial interest in the Global business; and (c) in October 2013, Antoun entered into the October Deed (I infer with the Bankrupt's agreement) which falsely characterised the $5 million payment under that deed as being in settlement of damages claims other than those made in the Supreme Court proceeding. It is likely that Antoun did so in an attempt to assist the Bankrupt to conceal from the Trustees that he was to receive substantial monies for his beneficial interest in the Global business. 310 McHugh made the January 2013 Statutory Declaration and now says it was false. McHugh, Byrnes and Russo cooperated in the mischaracterisation of the substance of the March and October Deeds. A judge is not required to check his or her common sense at the door of the Court. The real intentions of the Bankrupt and Antoun (and of the respondents) can be ascertained from their conduct, their statements and their evident aims and expectations: Branir v Owston Nominees (No 2) (2001) 117 FCR 424; [2001] FCA 1833 ("Branir") at [369] (Allsop J with Drummond and Mansfield JJ agreeing). In my view the conduct, statements and aims of the Bankrupt and Antoun reveal that the Bankrupt had beneficial ownership of half of the Global business. 311 In passing I note that while Byrnes said in his public examination that he acquired a one third share of the Global business in about February 2012, he did not refer to that in evidence before me, and the respondents made no submissions as to any conclusion I should reach in that regard. In his second affidavit Byrnes said only that between March and October 2012 Construction Financial Management "caused funds to be transferred" to Antoun in the sum of $3,421,810.79. He did not state the reason for that transfer and he did not say whether the monies were transferred to purchase an interest in the business, whether they were loaned, or whether they were advanced on some other commercial basis. The Defence does not illuminate the question. It is not clear to me on the evidence that Byrnes acquired a one third share of the Global business at that time. 312 Under the six headings which follow, I set out the evidence which has led me to the conclusion as to the Bankrupt's beneficial ownership of half of the shares in the companies in the Global business. McHugh transferred the Global business to the Bankrupt 313 In opposing a finding that the Bankrupt had a beneficial interest in the Global business the respondents contended that the evidence shows that McHugh disposed of his interest in the Global business to Antoun, rather than to the Bankrupt. They argued that in the May 2011 meeting and the subsequent telephone conversation with Gatto in late June/early July 2011, McHugh made no direct reference to disposing of his interest in the business to the Bankrupt and they relied on the fact that in October 2011 McHugh signed undated share transfers in favour of Antoun. 314 They contended that there was no factual or legal foundation for the Trustees' argument that the Bankrupt had a proprietary interest in shares in the Global business either before Antoun acquired them, or as a result of Antoun acquiring them. On their submissions, the only way the Bankrupt could have acquired a beneficial interest in shares in the companies in the Global business when they were transferred to Antoun in October 2011 was by an express agreement to that effect between the Bankrupt and Antoun, or by a subsequent unilateral declaration of trust by Antoun. 315 They further argued that if, contrary to their submissions, the evidence is taken to include a reference by McHugh to disposing of his shares to the Bankrupt, the mere fact that the Bankrupt by threats coerced McHugh to do so could not by itself create a proprietary interest in the shares in favour of the Bankrupt. I do not accept this submission when, as I have said, the respondents did not plead duress and senior counsel for the respondents expressly disavowed any claim of actual duress. I proceed on the basis that there is no allegation before me that McHugh was coerced into disposing of his interest in the Global business. 316 I can see little in the evidence to support the respondents' contention that McHugh disposed of his interest in the Global business to Antoun, alone. In my view the gist of McHugh's evidence is that he agreed to transfer his interest in the Global business to the Bankrupt in May 2011. 317 Antoun was introduced into the business by the Bankrupt, as an investor, in June 2011. The Bankrupt did not introduce Antoun as a person who was to acquire the business from McHugh. On McHugh's evidence, the Bankrupt later said that he always intended to introduce someone else "who [was] going to sort out the tax and refinancing" but there is no evidence that the Bankrupt or Gatto even mentioned Antoun in the May 2011 meeting. 318 McHugh said that the Bankrupt introduced Antoun to him in June 2011 and described Antoun as a person who was "going to invest in the business so that we can pay the tax and arrange new finance" (emphasis added). I take the Bankrupt's use of the plural "we" to indicate that the Bankrupt and Antoun were to be jointly obliged to make the payments. It is noteworthy that Antoun said that he intended to "buy into George's business". McHugh did not say that he or the Bankrupt disagreed with Antoun's statement that the Global business was the Bankrupt's business. This evidence is essentially incompatible with the respondents' contention. 319 Then, McHugh said that Gatto telephoned him in late June/early July 2011, with the Bankrupt and Antoun in the background. Gatto said that Antoun would pay the tax debts of the business, arrange refinance of the business, pay off McHugh's loan, and repay Stefanovski $500,000. Notwithstanding that McHugh said that Gatto stated that Antoun would make the payments, it is clear enough from McHugh's evidence overall that the obligation to make those payments was jointly assumed by the Bankrupt and Antoun. This also points away from the respondents' contention. 320 On my view of the evidence, at the time of the May 2011 meeting at the Oasis Hotel, McHugh agreed to transfer the business to the Bankrupt and the Bankrupt agreed to keep McHugh on as the manager (which involved paying him a substantial salary), to pay the taxation obligations of the business (for which McHugh was personally liable), to make arrangements to refinance the business (which I infer included repaying McHugh's loan from the company), and to repay Stefanovski the $500,000 he had paid to acquire the business from Zenith. 321 McHugh accepted that outcome and accepted the Bankrupt as the owner of the business thereafter. At the end of the May 2011 meeting McHugh said that there was nothing more to say and the Bankrupt said he would have some documents drawn (I infer to record the agreement). The essential terms of the agreement remained unchanged from that point on. The Bankrupt effectively ran the Global business from May 2011 to early 2013 322 While control does not equate to ownership, the evidence that the Bankrupt effectively ran the Global business from May 2011 also points to his having a proprietary interest in the business. The evidence includes that: (a) in June 2011 - the Bankrupt made the decision to invite Antoun to invest in his business and Antoun said that he was buying into the Bankrupt's business; (b) in June 2011 - the Bankrupt called McHugh to a meeting as introduce him to Antoun; (c) in late June/early July 2011 - the Bankrupt was present in the telephone conversation with Gatto; (d) in September 2011 - the Bankrupt introduced McHugh to Byrnes and told him that Byrnes was to assist in arranging to refinance and restructure the business; (e) in October 2011 - the Bankrupt arranged the due diligence meeting for Antoun and his accountant; (f) in late 2011/early 2012 - the Bankrupt directed McHugh to offset the debt owed by Elite Cranes to the business against the monies owed to Stefanovski; (g) in late 2011/early 2012 - the Bankrupt and Antoun unsuccessfully attempted to refinance the business; (h) in February 2012 - Byrnes said that the Bankrupt and Antoun invited him to take up a one third share in the business; (i) on 5 January 2013 - the Bankrupt asked McHugh to attend a breakfast meeting with him and Antoun, the point of which was to have him sign the January 2013 Deed of Trust which provided that he held shares in the business on trust for Antoun; and (j) on 10 January 2013 - the Bankrupt asked McHugh to meet with Antoun to make the January 2013 Statutory Declaration which stated that he held shares in the business on trust for Antoun. It is difficult to see how or why the Bankrupt would (or could) have been involved in these meetings and decisions unless he controlled the Global business or jointly controlled it with Antoun. In my view the Bankrupt's control and direction of the Global business over this lengthy period supports the inference that I have drawn. Byrnes and McHugh acknowledged the Bankrupt's ownership/part ownership of the Global business 323 It is significant that Byrnes' and McHugh's evidence is largely contrary to the respondents' contention that Antoun, alone, owned the Global business. In the main it points to the conclusion that the Bankrupt and Antoun shared beneficial ownership of the companies in the Global business. Their evidence includes: (a) the cost submissions filed on McHugh's behalf (I infer with Byrnes' concurrence) in the Supreme Court proceedings which state that the Bankrupt "reinserted" himself into the business in mid-2011, not that Antoun did so; (b) McHugh's evidence in his first affidavit that, in September 2011, the taxation obligations of the business were supposed to have been met by the Bankrupt or Antoun; (c) Byrnes' testimony in his public examination that he understood that the original agreement for the transfer of the Global business required the Bankrupt and Antoun to buy the business from McHugh. He said that: …the original agreement… which was subsequently overtaken by further admissions by Mr McHugh that there was an agreement for Mr Antoun and Mr Alex to pay $1.8 million to the Australian Tax Office, pay a gentleman in Queensland, who was the investor who paid out Jeff Fenech $500,000, and to pay out Mr McHugh an intercompany loan of $800,000, and they were entitled to take 100% of the shares of the company... as I understood it, they had an agreement to buy on those terms. (Emphasis added.) (d) Byrnes' statement in his email to Cavric on 12 January 2013 when he used the plural "the purchasers" in describing the owners of the Global business. He said: … It has always been my understanding that the purchasers had four obligations 1 pay the tax debt (2.4m) 2 pay 500,000 to a shareholder Michael Steffanoski [sic] 3 pay Kevin [McHugh] $800,000 being a loan from him to the company and agreed to be paid out in consideration for the purchase of the mining civil company he owned beneficially 4 for the purchasers to arrange their own finance so that a change of control could be effected without causing a default. (e) McHugh's evidence in his first affidavit that the respondents fell out with the Bankrupt and Antoun in November 2012 because both of them failed to honour their obligation to make the agreed payments; (f) McHugh's evidence in his first affidavit that when Byrnes informed him of the March Deeds in March 2013 Byrnes said that he had been negotiating with the Bankrupt and Antoun, that the proposed agreements: (i) "lets us buy out their interest in the business"; (ii) "would take them out altogether"; (iii) would "buy out George and Joe once and for all"; and (iv) set out how "the monies are apportioned as between George and Joe". (Emphasis added in italics). This evidence strongly points away from the respondents' contention that the Bankrupt had no proprietary interest in the business; (g) Byrnes' evidence in his public examination that he repudiated the agreement with the Bankrupt and Antoun because they did not make the payments for which they were jointly liable. He did not say that the responsibility for the payments fell on Antoun alone; and (h) Byrnes' evidence in his public examination that, in about February 2012, the Bankrupt and Antoun invited him to acquire "a third interest in the company in consideration for me paying a third of the obligations that they were obligated to pay". Byrnes' reference to his acquiring a one third interest tends to show that, at that point, the Bankrupt and Antoun owned half of the business each, as does his statement that they had joint obligations. 324 In his first affidavit Byrnes then attempted to cut away his earlier testimony by deposing that the Bankrupt's assertions of ownership of the Global business were a reference to the fact that he was aggrieved because he had received no part of the $500,000 paid when Zenith sold the business to McHugh and Stefanovski. It may be the case that the Bankrupt became aggrieved at that time but this evidence falls well short of overcoming the raft of evidence that indicates that the Bankrupt beneficially owned half of the companies in the Global business. I see Byrnes' evidence in this regard as a self-serving, late and implausible attempt to assist his own case. The Bankrupt's assertions that he owned the Global business 325 The Bankrupt himself asserted that he was the owner of the Global business. Byrnes said in his public examination that, at the mediation on 15 October 2013, the Bankrupt strenuously asserted ownership of the business. Byrnes confirmed this evidence in his 16 March 2014 email. As I have said, in his first affidavit Byrnes tried to cut away the significance of the Bankrupt's assertions of ownership but I found that attempt self-serving and implausible. 326 There is also evidence that the Bankrupt informed others that he owned the Global business. As I set out in more detail later, Douglas Westaway ("Westaway"), a management consultant, gave evidence in his public examination that the Bankrupt told them that he had a labour hire company in Queensland. Dona gave evidence to the same effect. Also, on 5 February 2013 Cavric emailed Rumore and said: Yes, Mr Alex is a beneficial owner of the shares [in the Global business] held by Mr Antoun. I do not give this email much weight but the evidence overall supports an inference that the Bankrupt had beneficial ownership of at least part of the Global business. The Bankrupt was to be paid $6.2 million under the March Deeds 327 In my view the conclusion that the Bankrupt beneficially owned half of the Global Business is strongly supported by the fact that the March Deeds provided for the March Deed Payers to pay him $6.2 million. The respondents conceded that their agreement to pay $6.2 million to the Bankrupt was not for defamation, but they put on no evidence and provided no cogent explanation as to what it was for. I have little doubt that in reality the payment was in consideration for the Bankrupt's abandonment of any claim to the Global business and the transfer of the Bankrupt's beneficial interest in half of the shares in the Global business to the March Deed Payers. The March Deeds provided for the Bankrupt to be paid slightly more than half (51.66%) of the $12 million in total that the respondents agreed to pay for that transfer, which in my view reflected his beneficial ownership of half of the Global business. It is likely that the amount to be paid to the Bankrupt in excess of half of the consideration under the deeds was just a 'levelling up' between the Bankrupt and Antoun for some other undisclosed business reason. They had a number of business ventures together. Provisions in the Settlement Deed 328 Some clauses in the Settlement Deed support the inference that the Bankrupt had a proprietary interest in the Global business. For example: (a) clause 10(d), in which the March Deed Payers indemnified the Bankrupt and Antoun in respect to the personal liabilities of the Bankrupt and Antoun in connection with the activities and liabilities of the Global business from 1 November 2011. Insofar as the Bankrupt's interests are concerned, it is more likely than not that the requirement for this indemnity arose out of the fact that the Bankrupt might have personal liabilities arising out of his part ownership of the business; and (b) clause 10(f), in which the March Deed Payers warranted to the Bankrupt and Antoun that all creditors of the Global business would be duly paid within the terms of trade of the business. It is more likely than not that the requirement for this warranty arose out of the fact that, as a part owner of the business, the Bankrupt might have liabilities to the creditors. The respondents' alternative inference 329 The respondents submitted that the evidence before me allows only conflicting inferences of equal degrees of probability and that the Court should not draw the inferences which the Trustees seek. They argued that an equally probable inference is that: (a) Antoun and the Bankrupt entered into an agreement under which Antoun purchased the shares from McHugh in 2011; (b) Antoun agreed to repay debts then owing by the Bankrupt; and (c) the Bankrupt agreed to assist Antoun in operating the business for a share of the profits and the proceeds from any sale of the shares. They sought to rely on McHugh's statement that Antoun said he took the undated share transfers as "security" because he was paying the Bankrupt's debts. 330 I do not accept the respondents' submission. The evidence before the Court is largely circumstantial. As the High Court explained in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 (Dixon, Williams, Webb, Fullagar and Kitto JJ), the assessment of circumstantial evidence in civil proceedings requires: …only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise. (Citations omitted.) 331 In the present case the coincidence of circumstances confers greater significance on each individual circumstance than each fact might have had by itself: see Seeley International Pty Ltd v Jeffrey & Anor [2013] VSCA 288 at [45]-[46] (Warren CJ, Nettle and Whelan JJA) ("Seeley International"). As the High Court explained in Chamberlain v The Queen (No 2) (1985) 153 CLR 521; [1984] HCA 7 at 535-6 (Gibbs CJ and Mason J) a jury (or a court) should: …decide whether they accept the evidence of a particular fact, not by considering the evidence directly relating to that fact in isolation, but in the light of the whole evidence, and that they can draw an inference of guilt from a combination of facts, none of which viewed alone would support that inference. (Emphasis added.) Chamberlain concerned reasoning from circumstantial evidence in a criminal context, but this process of reasoning is the same in a civil case, albeit with a lower standard of proof. 332 To similar effect, in Belhaven and Stenton Peerage (1875) 1 App Cas 278, 279 (cited with approval in Seeley International) Lord Cairns LC said: [I]n dealing with circumstantial evidence, we have to consider the weight which is to be given to the united force of all the circumstances put together. You may have a ray of light so feeble that by itself it will do little to elucidate a dark corner. But on the other hand, you may have a number of rays, each of them insufficient, but all converging and brought to bear upon the same point, and, when united, producing a body of illumination which will clear away the darkness which you are endeavouring to dispel. (Emphasis added.) 333 In a criminal case it can be necessary for a judge to allow his or her "imagination to play upon the facts and find reasonable hypotheses consistent with innocence" (Insurance Commissioner v Joyce (1948) 77 CLR 39; [1948] HCA 17 at 49 (Rich J)), but in a civil case it is unnecessary to exclude all reasonable hypotheses consistent with the non-existence of a fact or inconsistent with its existence before the fact can be found. A finding on the balance of probabilities as to the existence of the fact in issue may be supported by a rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made: Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [54]-[55] (McDougall J with whom McColl and Bell JJA agreed). 334 The respondents did not properly articulate the evidentiary basis upon which the alternative inference might be drawn. I can see little in the evidence to support it and it is unnecessary to exclude the respondents' hypothesis. It is enough that, making an informed and qualitative assessment of the evidence (including by standing back to view it from a distance) I consider the evidence strongly supports the inference that the Bankrupt enjoyed beneficial ownership of half of the shares in the companies comprising the Global business. E The Trustees' entitlement in light of the Bankrupt's beneficial interest in the Global business 335 The precise date upon which the Bankrupt acquired beneficial ownership of half of the shares in the companies in the Global business is not clear on the evidence, but I conclude that from the point that Antoun invested in the business in October 2011 the Bankrupt and Antoun each had beneficial ownership of half of the shares in the companies. In my view that position continued thereafter. The Bankrupt's beneficial interest in the shares vested in the Trustees, at least, by October 2011. 336 The Trustees submitted that I should find that the shares held by AR & KH Pty Ltd in GHR Custodian and the shares held by GHR Custodian in the Operating Companies are the traceable proceeds of the Bankrupt's beneficial interest in the shares in the companies in the Global business. I accept that submission. 337 Tracing is not a right or remedy, but a process of demonstration or proof of what has happened to property: Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 at [89]; Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [466]. As I will explain, it is clear enough on the evidence what happened to the Bankrupt's beneficial half interest in: (a) the shares held by GHR No 3 in the Parent Company, Global Human Resources Group; and (b) the shares held by the Parent Company in the Operating Companies. 338 As I detailed (at [263] to [280] above), the evidence shows that between 7 and 19 March 2014: (a) on 7 March 2014 Russo and McHugh took steps to register GHR Custodian as the New Parent Company, with them as directors; (b) on 7 March 2014 Russo and McHugh took steps to register AR & KH Pty Ltd as the company holding the shares in the New Parent Company, with them as directors and shareholders; (c) on 11 March 2014 Russo, as a director of the existing Parent Company, resolved to transfer the shares it held in the Operating Companies to the New Parent Company; (d) on 17 March 2014 Russo wrongly made declarations of solvency in relation to Global Human Resources Group and GHR No 3; and (e) on 19 March 2014 Russo, as a member, resolved to put Global Human Resources Group and GHR No 3 into members' voluntary liquidation. 339 Dealing first with the change in the ownership of the Parent Company in the Global business, the following table shows the movement in the shares: Previous shareholders No of shares/No of shares issued New shareholders No of shares/No of shares issued Global Human Resources Group Kingsley Finance 1 / 3 Post 18/4/13 Post 18/4/13 McHugh 1 / 3 GHR No 3 PL 75/100 Transformer Group 1 / 3 McHugh 25/100 GHR Custodian AR & KH PL 100 / 100 (registered on 7/3/14) (from 7/3/14) 340 GHR No 3 was a shareholder of the existing Parent Company and the Bankrupt had beneficial ownership of half of the shares it and McHugh held in Global Human Resources Group. Russo put GHR No 3 into members' voluntary liquidation after he had, together with McHugh, registered AR & KH Pty Ltd to be the new corporate owner of the New Parent Company. In my view the Bankrupt's property in the shares held by GHR No 3 and McHugh in the former Parent Company can be traced into shares held by AR & KH Pty Ltd in the New Parent Company. 341 Dealing next with the change in ownership of the shares in the Operating Companies the table shows: Previous shareholders No of shares/No of shares issued New shareholders No of shares/No of shares issued Civil Pacific Services Group McHugh 1 / 1 From 1/7/12 From 11/7/12 From 26/10/11 From 26/10/11 Global Human Resources Group 21 / 21 McHugh 1 / 21 From 11/3/14 From 11/3/14 Antoun 20 / 21 GHR Custodian 21 / 21 Global HR Group (now incorporated as RK QLD Group PL) From 31/7/08 120 / 120 From 1/7/12 From 1/7/12 McHugh From 31/7/08 Global Human Resources Group 2520 / 2520 From 26/10/11 120/120 From 11/3/14 From 11/3/14 McHugh From 26/10/11 GHR Custodian 2520 / 2520 Antoun 120/2520 From 11/3/14 From 11/3/14 2400/ 2520 Katrina Reynolds 2520 / 2520 Global Civils Group McHugh 120 / 120 From 1/7/12 From 1/7/12 From 26/10/11 From 26/10/11 Global Human Resources Group 2520 / 2520 McHugh 120 / 2520 From 11/3/14 From 11/3/14 Antoun 2400 / 2520 GHR Custodian 2520 / 2520 342 On 11 March 2014 Russo resolved that Global Human Resources Group transfer the shares it held in the Operating Companies (Civil Pacific Services Group, Global HR Group and Global Civils Group) to GHR Custodian. The following shares were transferred: (a) all 21 shares in Civil Pacific Services Group; (b) all 2,520 shares in Global HR Group; and (c) all 2,520 shares in Global Civils Group. In my view the Bankrupt's property in the shares held by Global Human Resources Group in the Operating Companies can be traced into shares held by GHR Custodian in the Operating Companies. 343 The respondents plead by way of defence that GHR Custodian acquired its shares in the Operating Companies in good faith. I do not accept this for several reasons. 344 First, as the Trustees contended, s 126 of the Act is a statutory code concerning dealings with an undischarged bankrupt in respect of after-acquired property. Equitable principles in relation to third party purchasers or acquirers of property in good faith have no direct application. 345 Second, s 126 provides that for a transaction by a bankrupt with a person in respect to after-acquired property to be valid against a trustee in bankruptcy the person must be dealing in good faith and for valuable consideration. There is no evidence that GHR Custodian paid any consideration for the transfer to it of these valuable shares and I infer that no consideration was paid. The respondents also put on no evidence to show that the share transfers were in good faith. 346 In my view the evidence strongly points to an absence of good faith. It is likely that Russo (and McHugh to the extent of his involvement) took the steps I have outlined as part of a plan by the respondents to render the October Deed Securities valueless, to avoid their obligations to make the payments due under the October Deed (and any outstanding obligations under the March Deeds), and to defeat the Trustees' claims. 347 In these circumstances it is appropriate to trace the Trustees' interest (in right of the Bankrupt's beneficial interest) in half (in number and value) of the shares formerly held by: (a) GHR No 3 and McHugh in Global Human Resources Group into the shares held by AR & KH Pty Ltd in GHR Custodian; and (b) Global Human Resources Group in the Operating Companies into the shares held by GHR Custodian in the Operating Companies (except in relation to the shares previously held in Global HR Group). 348 I do not include the shares previously held in Global HR Group because Kyriacou's evidence is that it was sold to Mr Rocco Serafino ("Serafino"), another client of Wentworth Williams & Associates, for $15,000 in March 2014. ASIC records show that the company has changed its name to RK QLD Group Pty Ltd since then and has gone into liquidation. While I doubt Kyriacou's evidence as to the date upon which McHugh ceased to be a director of Global HR Group, and the company is no longer part of the Global business. It would be inappropriate to allow the Trustees to trace into the shares formerly held in Global HR Group. F Did Antoun enter into THE October Deed as the Bankrupt's agent? 349 Although the October Deed is the second deed in time, it is convenient that I deal with this deed before the March Deeds because those deeds involve some different issues. 350 The Trustees' primary submission was that Antoun was authorised by the Bankrupt to enter into the October Deed as the agent of the Bankrupt, or alternatively partly on his own behalf and partly as the Bankrupt's agent. 351 Agency connotes an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties: International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644; [1958] HCA 16 at 652. 352 In Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O'Donnell (2011) ASC 155-107; [2011] NSWCA 389 ("Tonto Home Loans") Allsop P (Bathurst CJ and Campbell JA agreeing) said at [177]: … the essential characteristic is that one party (A) acts on the other's (P's) behalf, and that this will generally be in circumstances of a requirement or duty not to act otherwise than in the interests of P in the performance of the consensual arrangement. 353 His Honour also said (at [175]): Recognising, at once, the wisdom of what the authors of Bowstead and Reynolds on Agency (19th Ed) say at 2 [1-003] as to the limited utility of reasoning from conceptual or presupposed definitions, it is to be borne in mind that the concept of agency is not merely functional, whereby something that is necessary to be done for P and that could be done by P itself is done by A under some arrangement; rather it is a consensual arrangement, a relationship, whereby A is to be taken as, or as representing, P. 354 The parties agreed that the applicable principles include those summarised in Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353; [2010] WASC 10 (Murphy J) at [279]-[280] where his Honour said: The relationship between principal and agent is established by the consent of the principal and agent. They will have consented if they have agreed to what amounts in law to such relationship, even if they did not recognise it themselves, and even if they had professed to disclaim it. The consent must, however, be given by both parties, either expressly or by implication from their words and conduct. Primarily, consideration is given to what they said and did at the time of the alleged creation of the agency, although earlier words and conduct, and even later words and conduct, may have some bearing… Whilst the substance of a relationship as a whole is looked at, if the parties have by agreement expressly designated their relationship as either one of agency, or not one of agency, that may be an important, although not determinative, consideration… (Citations omitted.) 355 The Trustees did not submit that the Bankrupt and Antoun expressly described their relationship as being one of agency, and the question is (whether or not they recognised it) they consented by their words and conduct to such a relationship. It is not necessary for parties to use the word "agent" for such a relationship to exist. Substance rather than form is what is critical, and parties cannot by merely labelling a relationship deny it a character that it possesses: South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611; [2000] FCA 1541 at [134]-[135] (Finn J). 356 Dal Pont notes in Law of Agency (3rd Ed, LexisNexis Butterworths, 2014) at 1.5 that use of language other than language indicating agency will not prevent the recognition of an agency relationship if the court considers that this best reflects the parties' intention in the circumstances, and that similarly (citing Tonto Home Loans at [182]), an express stipulation by parties that their arrangement is not to be construed as an agency, although a weighty consideration in the absence of evidence that the label is a sham, is not necessarily determinative. 357 The Trustees bear the burden of proving the existence of an agency relationship. In my view, they have discharged it. As I explain I consider the evidence strongly supports the inference that the Bankrupt and Antoun agreed that Antoun would enter into the October Deed as the Bankrupt's agent in respect to half of the $5 million payable under the deed, and that Antoun would pay the Bankrupt his half share on request. The respondents' contention that there was no point for the Bankrupt to authorise Antoun to enter the October Deed as his agent 358 The respondents submitted that I should not infer that the Bankrupt and Antoun entered into an agency relationship. They argued that there would be no point for the Bankrupt to authorise Antoun to enter into the October Deed as his agent as the effect of such an authorisation would only be to allow the Bankrupt to enforce the deed personally. Essentially they said that the Bankrupt is unlikely to have had any interest in personally enforcing the deed because doing so would have exposed to the Trustees that he was to receive $2.5 million through the settlement. 359 I accept that, because he was centrally concerned to conceal his beneficial interest in the Global business from the Trustees, the Bankrupt would have had no interest in personally enforcing the deed. In any event, if the October Deed Payers defaulted on their obligations under the October Deed there is unlikely to have been any need for the Bankrupt to personally sue. Antoun and the Bankrupt were friends who worked closely together in a number of businesses. If it were necessary to enforce the October Deed it is likely that Antoun would have enforced it (and paid the Bankrupt his half share) without any need for the Bankrupt to commence proceedings in his own name. 360 In my view the scope of the agency would have extended to Antoun commencing enforcement proceedings in his own name. This can readily be inferred as arising from the circumstances of the October Deed's creation and from the Bankrupt's and Antoun's words and conduct. The law recognises that an agent, as well as a principal, may sue on the contract, if the contractual arrangements confer such a right: Perpetual Trustee Company Limited v Nebo Road Pty Ltd & Ors [2011] QSC 283 (Daubney J) at [60]. Here, the terms of the October Deed (clauses 2(b) and (c)) conferred a right on Antoun to sue for the consideration as a debt due and payable upon default. 361 In my view there is no great significance in the fact that it is unlikely that the Bankrupt had any intention of personally suing on the October Deed. It is likely that the Bankrupt authorised Antoun to act as his agent so as to conceal from the Trustees that the Bankrupt was to receive half of the monies to be paid under the October Deed, just as, under the March Deeds, the Bankrupt sought to conceal from the Trustees that he was to be paid $6.2 million for his beneficial half interest in the Global business. 362 My view as to the existence of an agency relationship is based, first, on the Bankrupt's statements at the mediation on 15 October 2013 and Antoun's statements in his settlement meeting with Byrnes at the MLC Centre (between 16 and 21 October 2013) (set out at [207]-[216] above). 363 Byrnes' evidence in his public examination was that that during the mediation on 15 October 2013 the Bankrupt strenuously asserted that he owned the Global business and demanded a payment from the respondents for what he said was his business. Byrnes confirmed the Bankrupt's statements in this regard by his email of 16 March 2014. In this email (to the solicitor for the Trustees amongst others) he reiterated that at the mediation the Bankrupt, "in front of [the solicitor] and every other lawyer and myself and Russo said this is my company, I own it and you can't show me where you paid me for it." 364 Importantly, Byrnes also said that, when he confronted the Bankrupt with the fact that he could not be paid monies in any settlement of the proceeding because he was an undischarged bankrupt, the Bankrupt responded by stating: "Well, you will just pay…Joe [Antoun] and we'll sort it out between us" and "You pay Joe and he will pay me". Byrnes confirmed this evidence in his 16 March 2014 email. In his email he reiterated that at the mediation the Bankrupt said, "Just pay Joe [Antoun] and he will pay me" and "pay Joe and we will work it out between us". 365 Byrnes and Russo were present at the mediation, as were their lawyers including senior counsel. It is significant that they put on no evidence to contradict or qualify Byrnes' recounting of the Bankrupt's statements. On my view of the evidence the Bankrupt conveyed to Byrnes and Russo (and through them the respondents) that settlement of the Supreme Court proceeding could be achieved by the respondents paying any settlement monies to Antoun, and that Antoun would pay the Bankrupt his share. 366 A few days later at the settlement meeting at the MLC Centre, Antoun made statements to Byrnes which were more explicit. Byrnes said in his public examination that Antoun said that he wanted to keep the settlement away from the Trustees and said that "I will sort George out. I will pay George", and that "he would look after and he would pay George his half" (emphasis added in italics). It is telling that following this meeting Byrnes said that he understood that of the consideration payable under any settlement, half was payable to the Bankrupt and half was payable to Antoun. 367 Byrnes' evidence was as follows: Mr Fary: …So your understanding was that this - the consideration payable was half? Mr Byrnes: Correct. Mr Fary: …to Joe and half to George? Mr Byrnes: Correct. Mr Fary: Was there any suggestion it was all George's and Joe was just there as George's…? Mr Byrnes: No. 368 If more is needed, the import of the Bankrupt's and Antoun's statements is plain when their statements are considered in context. The surrounding circumstances include that: (a) the Bankrupt beneficially owned half of the shares in the companies in the Global business; (b) the Bankrupt had an obvious interest in concealing his beneficial ownership of half of the Global business from the Trustees, and in concealing from them his half share of the monies to be paid under the October Deed. The Bankrupt concealed his interests in various valuable assets from the Trustees and he used other people to "front" for him in order to do so; (c) it is improbable that the Bankrupt would have given up the PPSR registration securing his right to $6.2 million under the March Deeds unless he was to receive some payment under the October Deed for his beneficial half interest in the Global business; (d) the October Deed did not provide for any payment to the Bankrupt. It is improbable that the Bankrupt would have given up his beneficial half interest in the Global business unless he was to receive payment for doing so; and (e) Antoun could not have entered into the October Deed as trustee of the JA Investments Trust as the deed states, as that trust had not come into existence. I now go to the evidence relating to these circumstances. The Bankrupt beneficially owned half of the shares in the companies in the Global business 369 For the reasons I set out (at [308]-[334] above) I consider the Bankrupt had beneficial ownership of half of the shares in the companies in the Global business from October 2011. The Bankrupt's statements at the mediation and Antoun's statements in the meeting at the MLC Centre (including that he would pay the Bankrupt his "half") confirm my view in that regard. 370 I note, however, that the inference that Antoun entered into the October Deed as the Bankrupt's agent is supported by but does not depend upon my view that the Bankrupt beneficially owned half of the shares in the companies in the Global business. In my view the evidence, particularly the Bankrupt's and Antoun's statements, are sufficient to find that Antoun entered into the October Deed as the Bankrupt's agent even if I am wrong in concluding that the Bankrupt had a beneficial interest in the business. On my view of the evidence the parties to the deed entered into it on the basis that the Bankrupt and Antoun would each receive half of the consideration and on the promise that each of the Bankrupt and Antoun would no longer assert any claim to ownership of the Global business. The Bankrupt had an interest in concealing valuable property from the Trustees 371 The inference that Antoun agreed to act as the Bankrupt's agent in entering into the October Deed is also supported by evidence that that the Bankrupt and Antoun were close friends and partners or co-investors in a number of other valuable businesses which the Bankrupt kept hidden from the Trustees, and that the Bankrupt concealed valuable property from the Trustees. 372 Byrnes testified in his public examination that at the meeting at the MLC Centre Antoun said "I want - I've got to keep this away from the trustee. Got to keep George's trustee..." and also that Antoun "expressed great concern about George's affairs and about this bankruptcy trustee…" I see Antoun's statement that he would pay the Bankrupt "his half" as indicating that he was disposed to assist the Bankrupt to conceal from the Trustees that the Bankrupt was to be paid half of the settlement monies. 373 The Bankrupt was served with a bankruptcy notice by the Deputy Commissioner of Taxation ("Deputy Commissioner") on 29 June 2009. On 8 October 2009 the Deputy Commissioner filed a creditor's petition, and the Bankrupt instructed solicitors and filed a notice of appearance and an affidavit in the proceeding. The Bankrupt's solicitors were present when the Federal Magistrates Court made the sequestration order on 19 April 2011. In her public examination Athina Alex said that she became aware that her brother was bankrupt in mid-2011 when she was shown a letter in that regard. She said that the whole family was in shock. I infer that the Bankrupt was aware of the sequestration order from about the time that it was made. 374 The Bankrupt failed to comply with his obligations under the Act throughout the period from May 2011 to the hearing of this case. Amongst other things, he did not lodge a Statement of Affairs pursuant to s 54 of the Act, he did not furnish the Trustees with the details of his annual income, he did not deliver up his passport, he did not attend for an interview with the Trustees to discuss his bankrupt estate, he did not notify the Trustees of his residential address and he did not cooperate in the administration of his estate. 375 In my view the Bankrupt has acted to conceal his interest in valuable property from the Trustees. Following the sequestration order on 19 April 2011 the Bankrupt continued to hold and acquire property which he did not disclose to his trustees in bankruptcy. Some of the evidence is of limited weight but taken together it provides a compelling picture. Amongst other things: (a) Byrnes said in his public examination that the Bankrupt informed him that he co-invested with Antoun in a block of 11 townhouses in Marrickville, worth approximately $11 million (which were sold in about late 2011). It is likely that these were the townhouses that McHugh said Antoun proposed to use to fund his investment in the Global business; (b) Byrnes also said that from about mid-2012 the Bankrupt beneficially owned one sixth of the shares in a scaffolding company, Elite Highrise Services Pty Ltd ("Elite"). His evidence was corroborated by the evidence of Michael Cohen ("Cohen"), the director of Elite, in his public examination. Cohen said that, despite ASIC records stating that he held 100% of the legal and beneficial interests in the shares of Elite, the shares were beneficially owned by six persons including him, the Bankrupt and Antoun; (c) Cohen said that in late 2011 he, the Bankrupt and Antoun jointly purchased Hillsely Hire for $1.8-$2 million, which became the Elite business. He said that each of them initially had a one third share, but as the Bankrupt introduced other people into the business their shareholdings were reduced. At a meeting in July 2013 the Bankrupt, Antoun, Cohen and three co-investors agreed that they would each have one sixth beneficial ownership of the shares. This was not recorded in ASIC records and Cohen said that the Bankrupt's interest in Elite was deliberately kept "off the radar". Cohen estimated that the scaffolding assets of the Elite business had a value of around $3.5 million and he said that the Bankrupt or his wife, Nektaria, received payments of $5,000 a week from the business, which was later reduced to $2,500 per week; (d) Kendrovski said in his public examination that he provided $650,000 to the Bankrupt to acquire a one sixth interest in Elite. He also said that in around late 2010 he entered into a joint venture agreement with the Bankrupt and another party to develop a property at 1 Victoria Avenue, Penshurst, NSW, with each having a one third interest; (e) Byrnes said that at a meeting with the Bankrupt and Hermann Fieg ("Fieg") in early 2012 the Bankrupt informed him that he had agreed to pay Fieg $800,000 for a 50% share of a traffic control and security management business, Metropolis Traffic Control Pty Ltd ("Metropolis"). Byrnes said that he lent the Bankrupt most of the $380,000 deposit that he paid to acquire half of Metropolis, which was corroborated by Fieg in his public examination. Fieg said that in April 2012 the Bankrupt approached him to buy a 50% share of Metropolis for $800,000 and that he was paid a deposit of $380,000. Fieg said that the Bankrupt then quickly introduced Antoun as his partner and it was agreed that Antoun would have half of the Bankrupt's 50% interest. On ASIC records Fieg remained as the sole director and shareholder; (f) Westaway, a management consultant, testified in his public examination that the Bankrupt consulted him for business advice in 2013. He said that the Bankrupt informed him that he ran a large company providing labour hire for the construction industry which had arms in New South Wales and in Queensland. I infer that the Queensland arm to which the Bankrupt referred was the Global business. Westaway also said that the Bankrupt informed him that he had an interest in a scaffolding business (which I infer was a reference to the Elite business), a wholesale wine business, in property development, and in a traffic control business (which I infer was a reference to the Metropolis business); and (g) Dona gave evidence that the Bankrupt informed him that, together with Antoun, he had an interest in a labour hire business in Queensland. 376 It appears from the evidence that the Bankrupt used other people as a "front" to conceal his beneficial interests in valuable property. Some of the evidence which goes to the Bankrupt's practice is of limited weight, but when the evidence is considered together it has some probative value. Taken together with the matters in the preceding paragraph, that evidence includes: (a) Byrnes' evidence in his public examination that the Bankrupt used Hourani as a front for him, and that "George is an undischarged bankrupt, and can't be a director of any companies and he puts up a lot of people who aren't very smart to be directors on his behalf". While Byrnes did not state the basis for his evidence in this regard, it was open to him to put on evidence to contradict or qualify his earlier testimony and he did not do so; (b) Byrnes' statement in his 16 March 2014 email, in effect, that he believed that Antoun was just a front for the Bankrupt; (c) Cohen's evidence that he held one sixth of the shares in Elite as a front for the Bankrupt, and that Fieg acted as a front for the Bankrupt in Metropolis; and (d) Fieg's evidence that he was recorded as the sole shareholder of Metropolis when the Bankrupt and Antoun owned half of that company. 377 Taking the evidence overall I have no difficulty in concluding that the Bankrupt sought to conceal his beneficial interest in the Global business from the Trustees. At the time of the October Deed the Bankrupt knew that the Trustees had become aware of his proprietary interest in the Global business and that they had been joined as parties to the Supreme Court proceeding. In my view Antoun agreed to enter into the October Deed as the Bankrupt's agent in respect to his half of the consideration payable in order to assist the Bankrupt to conceal from the Trustees that the Bankrupt was to receive a substantial sum for the transfer of his beneficial interest in the Global business. It is improbable that the Bankrupt would give up his PPSR security unless he was to receive a payment pursuant to the October Deed 378 It is improbable that the Bankrupt would have given Ms Subeska instructions to consent to the 22 October 2013 Orders, which facilitated cancellation of the PPSR security interest securing his entitlement to payment of $6.2 million under the March Deeds, unless he stood to be paid monies through the October Deed. It is likely that the Bankrupt agreed to give up his PPSR security because the Antoun agreed to enter the October Deed as the Bankrupt's agent in respect to half of the consideration payable under the deed, and to pay the Bankrupt on his request. It is unlikely that the Bankrupt would give up his interest in the Global business without receiving any payment 379 The October Deed provided for the transfer of the Global business to the respondents and yet, on its face, it provided for no payment to the Bankrupt. The evidence (including the Bankrupt's statements at the mediation and Antoun's statements in the meeting at the MLC Centre) shows that the Bankrupt maintained his claim to ownership of the Global business. It is inherently unlikely that the Bankrupt would give up his claims to ownership of the Global business without receiving any payment. 380 The October Deed was a resettlement of the same dispute about the ownership of the Global business as the March Deeds and it was intended to supersede the March Deeds. It is improbable that the Bankrupt would receive no payment under that deed when through the March Deeds only five months earlier the respondents had agreed to pay him $6.2 million for his share of the Global business. I do not accept the respondents' contention that the reason the Bankrupt was to receive nothing was because the Supreme Court proceeding had been commenced and it had emerged during settlement discussions that he was an undischarged bankrupt. 381 Contrary to the respondents' submissions before me, Byrnes' evidence is that following the meeting at the MLC Centre he understood that half of any settlement monies paid by the respondents to Antoun would be paid by Antoun to the Bankrupt. It is highly unlikely that the respondents would have agreed to pay $5 million to Antoun (half of which was to go to the Bankrupt) unless it was agreed they would receive the Global business free of any claim by the Bankrupt. 382 Unless the Bankrupt agreed to abandon his interest in the business or his interest was to be transferred through the October Deed, it could be expected that the Bankrupt would continue to assert ownership of the business and continue the dispute. It is more likely than not that before the respondents agreed to pay $5 million to Antoun the Bankrupt (either directly or through Antoun as his agent) promised to make no further claim to ownership of the Global business. Some of the monies under the October Deed were paid to the benefit of the Bankrupt 383 As I said at [258], it is likely that $105,000 of the $1.35 million paid under the October Deed was paid to City Nominees to the benefit of the Bankrupt. This also points to the existence of an agency relationship. The JA Investments Trust did not come into existence 384 For the reasons I have explained, I am not satisfied that the JA Investments Trust ever came into existence and it follows that Antoun could not have entered into the October Deed as trustee of that purported trust. It is possible that the Bankrupt and Antoun thought that the Bankrupt was a beneficiary of the purported trust and that might explain the incorrect recital to the March Deeds. However, little turns on that and it is inappropriate to speculate. Conclusion regarding agency 385 Notwithstanding the parties' attempt to mislead in the recitals to the October Deed, I have little doubt that Antoun and the respondents entered into the deed in settlement of the Supreme Court proceeding. Less than two weeks earlier the Bankrupt invited the respondents to settle the proceeding by paying Antoun and said that he and Antoun would "work it out between us", and in the days after that Antoun said that the respondents should pay the settlement monies to him and he would pay the Bankrupt "his half". The overwhelming inference is that the Bankrupt and Antoun agreed that Antoun would enter into the deed as the Bankrupt's agent for the Bankrupt's half of the monies to be paid under the deed. G alternatively, Did Antoun enter into the October Deed as trustee for the Bankrupt? 386 In their alternative submission the Trustees contended that Antoun entered into the October Deed as trustee of an express bare trust for the Bankrupt, or alternatively partly on his own behalf and partly as the Bankrupt's trustee. They submitted that the declaration of trust was to be inferred from the evidence. 387 Although I have concluded that Antoun acted as the Bankrupt's agent, it is appropriate to deal with the Trustees' alternative submission. If I am wrong in concluding that Antoun acted as the Bankrupt's agent I consider it would be open to conclude that Antoun manifested an intention to create a bare trust in favour of the Bankrupt in respect to half of the monies to be paid under the October Deed. Relevant principles in relation to creation of an express trust 388 It is trite but necessary to observe that the three critical requirements for creation of an express trust are certainty of intention, certainty of subject matter, and certainty of object or beneficiary. 389 The question whether an express trust was created must be answered by reference to intention. It cannot be taken to have come into existence unless the person creating it can be taken to have so intended: Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491; [1991] FCA 344 at 502 (Gummow J); Garrett v L'Estrange (1911) 13 CLR 430; [1911] HCA 67 at 434 (Griffith CJ, with Barton and O'Connor JJ agreeing at 435). In the absence of an explicit declaration of trust the Court must decide whether it is appropriate to impute intention "by reference to the language of the documents or oral dealings having regard to the nature of the transactions and the circumstances attending the relationship between the parties": Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62; [2015] HCA 6 ("Korda") at [3] (French CJ); Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 ("Byrnes v Kendle") at [103] (Heydon and Crennan JJ). 390 In Jacobs' Law of Trusts in Australia (7th Ed, Butterworth Law, 2006) at 44 [306] the authors observed that the creator of an express or declared trust will have used language which expresses an intention to create a trust. They explained: The author of the trust has meant to create a trust, and has used language which explicitly or impliedly expresses that intention, either orally or in writing. The fact that a trust was intended may even be deduced from the conduct of the parties concerned but if there is any uncertainty as to intention, there will be no trust. (Footnote omitted.) 391 The search for "intention" is a search for the intention as revealed in the words the parties used in the circumstances of the facts known to the parties, and in contemplation of which the parties must be deemed to have used them. The Court must give effect to the intention of the parties as expressed, and it must ascertain the meaning of the words actually used rather than draw inferences based on any subjective intention or absence of intention which was not made manifest: Byrnes v Kendle at [105] citing Smith v Lucas (1881) 18 Ch D 531 at 542 (Sir George Jessel MR); Inland Revenue Commissioners v Raphael [1935] AC 96 at 142-143 (Lord Wright) and Gissing v Gissing [1971] AC 886 at 906 (Lord Diplock). 392 It is not necessary that the creator of the trust should know that the particular relationship intended to be created is, in law, a trust. As Pembroke J explained in Reitano v Reitano [2012] NSWSC 1127 at [26]: A trust will be created whether or not the creator is precisely aware of so doing, provided that, in substance, the creator intends that his or her actions should have the legal effect of creating the relationship which is known in law as the trust. If the language and conduct is such that an intention to create such a legal effect is manifested, then a trust will be created whether or not the words trust or trustee are used. 393 In Byrnes v Kendle the intention to create a trust was made clear in writing. Where the writing is not in clear terms the Court must ascertain the parties' intention by reference to other evidence. For example, in Re Armstrong (dec'd) [1960] VR 202 at 206 (Herring CJ) ("Re Armstrong") the issue was whether two fixed deposits with a bank in the names "George Armstrong in re William John Armstrong" and "George Armstrong in re Bernard Armstrong" indicated that the deceased George Armstrong intended to create a trust for his sons of those names. The Court held that the limited, informal written words used by the deceased, considered in light of the evidence of the bank manager that the deceased intended to create a fund for the benefit of his two sons, were sufficient to show an intention to create a trust for his sons. 394 In the present case there is no trust instrument in relation to the claimed trust and the question of intention must necessarily be resolved by resorting to other evidence. As von Doussa J said in Bulun Bulun & Anor v R & T Textiles Pty Ltd & Anor (1998) 157 ALR 193; [1998] FCA 1082 at [206]: The existence of an express trust depends on the intention of the creator. No formal or technical words constituting an expression of intention are necessary to create an express trust. Any apt expression of intention will suffice…What is important is that intention to create a trust be manifest in some form or another. There must be an intention on the part of the putative creator to divest himself or herself the beneficial interest, and to become a trustee of the property for another party… An intention to create a trust may be inferred even where the creator has not in words expressed such an intention… The intention to create a trust may be inferred from conduct… A trust created in such circumstances remains an express trust based on the actual intention of the creator as inferred from his or her conduct… (Citations omitted.) 395 In Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 at [14] Mason and Brennan JJ explained that "[t]he evidentiary material from which the court might have drawn an inference as to the intention of the parties included their acts and declarations before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction." 396 If I had not found an agency relationship, in my view it would be open to conclude that the putative trustee Antoun, and the Bankrupt who was to be the beneficiary of the trust, made statements indicative of an intention on Antoun's part to create a trust. I keep in mind that Antoun and the Bankrupt are laymen. A court may more readily find that an informal oral declaration of trust has passed an equitable interest to a beneficiary when it is dealing with simple people unaware of the subtleties of equity: Harpur & Ors v Levy & Ors (2007) 16 VR 587; [2007] VSCA 128 at [70] (Maxwell P, Neave and Redlich JA) citing Paul v Constance [1977] 1 All ER 195 at 197; [1976] EWCA Civ 2 (Scarman LJ, with Cairns LJ and Bridge LJ agreeing) ("Paul v Constance"). No precise formal or technical words are required and any apt expression of intention is sufficient: Re Armstrong at 205; J W Broomhead (Vic) Pty Ltd (in liq) v J W Broomhead Pty Ltd [1985] VR 891; Registrar, Accident Compensation Tribunal v FCT (1993) 178 CLR 145; [1993] HCA 1 at 165-166. 397 The decision in Paul v Constance is illustrative. In that case the deceased deposited a damages award for personal injuries he suffered into his personal bank account (along with some winnings from playing bingo which he and his de facto wife treated as a joint enterprise). The deceased's bank manager gave evidence that the deceased had wished to open a joint account with his de facto wife but the manager proposed that he be the sole signatory. There was evidence that when the couple discussed the damages, how to invest them or what to do with them, and when they discussed the bank account, the deceased had said "the money is as much yours as mine." Scarman LJ held that by the deceased making that statement in the circumstances he had declared himself trustee of the relevant property for his de facto wife. 398 The fact that, as in the present case, a proportion of a sum of money from which the subject of a trust is to be drawn is used for another purpose does not negate the existence of a trust: Korda at [37]; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In liq) (2000) 202 CLR 588; [2000] HCA 25 at 604 [30]-[31] (Gaudron, McHugh, Gummow and Hayne JJ). 399 The burden of showing that the parties intended to create a trust is on the Trustees. It is the outward manifestation of the intentions of the parties within the totality of the circumstances which is the determinant of whether the requisite intention exists: Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 at [119] (Bell, Gageler and Keane JJ); Byrnes v Kendle at 275 [59] (Gummow and Hayne JJ). Should the Court recognise the existence of an express trust? 400 There are, of course, some significant similarities between relationships of trust and agency. Both relationships involve acting for and on behalf of another: a trustee for the beneficiary and an agent for the principal. The trustee/beneficiary relationship is fiduciary and the agent/principal relationship often is. In the present case the facts which support the existence of an agency relationship between the Bankrupt and Antoun could, in the alternative, be considered to support a finding that an express bare trust was created. 401 It would be open to infer that Antoun manifested an intention to enter into the October Deed as trustee for the Bankrupt in respect to half of the $5 million payable under the deed. My view in this regard is based, first, in the Bankrupt's statements at the mediation and Antoun's statements in his meeting with Byrnes at the MLC Centre, seen in light of all the surrounding circumstances. 402 From the Bankrupt's statements at the mediation it may be inferred that the Bankrupt understood that Antoun would hold the Bankrupt's share of the settlement monies on trust for him. From Antoun's statements at the MLC Centre it may be inferred that Antoun manifested the intention to hold half of the monies paid in settlement of the Supreme Court proceeding on trust for the Bankrupt. That could be said to be the effect of Byrnes' evidence of his understanding following the meeting. 403 The surrounding circumstances include that the Bankrupt beneficially owned half of the shares in the companies in the Global business (as I explained at [308]-[334]) including that McHugh transferred the Global business to the Bankrupt not to Antoun, the Bankrupt effectively ran the Global business from May 2011 to early 2013, the Bankrupt himself asserted that he owned the Global business, Byrnes and McHugh acknowledged the Bankrupt's ownership/part ownership of the Global business, under the March Deeds the Bankrupt was to be paid $6.2 million for his half of the Global business, some provisions of the March Deeds point to the Bankrupt's proprietary interest in the business, and there is little basis in the evidence for the respondents' alternative inference. 404 The surrounding circumstances include the matters to which I referred (at [371]-[385]) which show that: (a) the Bankrupt had an interest in concealing valuable property from the Trustees, and that Antoun sought to assist the Bankrupt to conceal from the Trustees that the Bankrupt was to be paid a share of the settlement monies under the October Deed; (b) it is unlikely that the Bankrupt would have given up the PPSR registration securing his right to $6.2 million under the March Deeds unless he was to receive some payment under the October Deed for his half interest in the Global business; (c) it is unlikely that the Bankrupt would have given up his half interest in the Global business unless he was to receive payment for doing so; (d) some of the monies were paid to the benefit of the Bankrupt; and (e) Antoun could not have entered into the October Deed as trustee of the JA Investments Trust, as that trust had not come into effect. 405 While Antoun did not describe his intention to receive monies from the settlement of the Supreme Court proceeding on behalf of the Bankrupt and to pay the Bankrupt "his half" as constituting a trust, the law does not require that lay people use formal or technical words when expressing their intent to declare a trust. Any apt expression of intention is sufficient. Nor does it necessarily negate the existence of the trust for which the Trustees contended that the other half of the $5 million to be paid under the October Deed was for Antoun personally. 406 It could be inferred that Antoun's description of half of the monies payable under any settlement as the Bankrupt's "half" and his invitation to the respondents to pay the settlement monies to him on the basis that he would pay the Bankrupt "his half", manifested his intention to create a trust in favour of the Bankrupt in respect to half of the monies to be paid under the October Deed. 407 There would be no issue that the object or beneficiary of the putative trust was certain, and it could also be said that the subject of the trust was certain once the parties agreed the quantum payable under the October Deed at $5 million. On this alternative view, at the time Antoun entered into the October Deed, there would be seen to be certainty of intention, subject matter and beneficiary in relation to the express trust created. However, as I have said, I prefer the view that Antoun acted as the Bankrupt's agent in entering into the October Deed rather than as a trustee. Should the Court construe a constructive trust? 408 As a further alternative, the Trustees contended that the Court should construe a common intention constructive trust in favour of the Bankrupt in respect to half of the settlement monies payable under the October Deed. A common intention constructive trust may arise from inferred common intention of the parties as to their entitlements to the beneficial interest in property, and where there has been detrimental reliance on that common intention by the claimant such that it would be an equitable fraud on the claimant to deny his or her interest in the property: Sivritas v Sivritas & Anor [2008] VSC 374 (Kyrou J) at [134] and the cases there cited. The Bankrupt's release of his security over $6.2 million under the March Deeds could constitute detrimental reliance. 409 A constructive trust of this type might be construed from the matters I have already set out (absent the inference that Antoun declared an express trust in favour of the Bankrupt) on the basis of the Bankrupt's and Antoun's common intention that they each had a beneficial interest in half of the companies in the Global business, and the Bankrupt having acting to his detriment by allowing the cancellation of his PPSR security in reliance on the October Deed. The Bankrupt's rights under such a constructive trust would vest in the Trustees. Given my finding as to agency it is unnecessary to reach a view as to the existence of a constructive trust. H the Trustees' entitlement IN LIGHT OF the Bankrupt'S RIGHTS under the October Deed 410 It is uncontentious that the October Deed Payers (that is, the second, third, fourth, sixth, seventh and eighth respondents) paid $1.35 million pursuant to the October Deed by transferring that amount into Construction Financial Management Custodial Account 1. On 31 March 2014 they refused/failed to pay a $1.15 million instalment that was due and then refused/failed to make instalment payments totalling $2.5 million that fell due in June and September 2014. By that time the outstanding instalments under the deed totalled $3.65 million. Also, as I said (at [259]), in February 2014 Byrnes transferred $53,832 that was sitting in Custodial Account 1 back to Construction Financial Management. The respondents' outstanding payment obligations under the deed therefore total $3,703,832. 411 In my view the October Deed Payers took the benefit of the October Deed and obtained uncontested ownership and control of the Global business without paying $3,703,832 that was due. 412 I have concluded that Antoun entered into the October Deed as the Bankrupt's agent in respect to half of the monies payable under the deed. The Bankrupt's right as principal to enforce the deed against the October Deed Payers (in effect the respondents) in respect to $2.395 million (being half of the $5 million payable to him less $105,000 already paid to his benefit) has vested in the Trustees. 413 If I were wrong in my conclusion as to the agency relationship, and Antoun entered into the October Deed as trustee for the Bankrupt in respect to half of the monies payable under the deed, the Bankrupt would have an equitable chose in action against the October Deed Payers. That right would have vested in the Trustees. 414 Section 5 of the Act provides a broad definition of property which includes real or personal property of every description and any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property. It includes contractual and equitable rights that are enforceable by action: Citicorp Australia Ltd v Official Trustee in Bankruptcy (1996) 71 FCR 550; [1996] FCA 1115 at 558 (Foster, von Doussa and Sundberg JJ). Section 116 of the Act provides that all property that belongs to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge, is property divisible amongst the creditors of the bankrupt. 415 As I explain in more detail in dealing with the respondents' set-off claims, there is little in the evidence to support the conclusion that the Bankrupt's entitlement to payment of $2.395 million should be reduced having regard to other monies the respondents have paid. The Trustees are entitled to an order for $2.395 million in respect to the Bankrupt's rights which have vested in them. I In what capacity did Antoun enter into the March Deeds? 416 The Bankrupt entered into the March Deeds in his own name, and his right to payment of instalments totalling $6.2 million under the Defamation Deed was secured by a PPSR security in his own name. That amount was not payable for any defamation of the Bankrupt and in my view it was to be paid as consideration for the transfer of his beneficial interest in the companies in the Global business. The Bankrupt's rights to that amount were not exempt property under s 116(2)(g) of the Act and they vested in the Trustees. 417 The more difficult question is whether, as the Trustees' contended, I should infer that Antoun's rights to payment of $5.8 million under the March Deeds were held by him as trustee for the Bankrupt on a bare trust, or alternatively as agent for the Bankrupt, or alternatively partly for himself and partly for the Bankrupt in equal shares. 418 In support of an inference that Antoun entered the March Deeds as trustee for the Bankrupt or as his agent the Trustees relied on the same evidence to which I referred in relation to the October Deed. However, I do not consider this evidence supports the inference that the Trustees sought. 419 Principally I say this because the Bankrupt was a party to the March Deeds in his own name, and they provided that he was to be paid $6.2 million which was secured by the PPSR registration. That amount represented approximately half (51.66%) of the $12 million total payable under the deeds. On my view of the evidence that amount reflected his beneficial ownership of half of the companies in the Global business and it was being paid for the transfer of that beneficial interest. The amount that the Bankrupt was to be paid in excess of half of the consideration payable under the deeds was probably just an "evening up" between him and the Bankrupt in respect to some undisclosed business matter. 420 It is unlikely that Antoun acted as the agent of the Bankrupt or as his trustee when the Bankrupt was a party to the deeds in his own name and the deeds provided for the Bankrupt to receive payment in full for his stake in the Global business. In their evidence Byrnes and McHugh acknowledged Antoun's shared interest in the business. J The Trustees' ENTITLEMENTS IN LIGHT OF THE Bankrupt'S RIGHTS UNDER THE March Deeds 421 There is no question that upon their execution on 11 March 2013 the March Deeds were legally enforceable and no issue that they remained so until 22 October 2013. Upon their execution the Bankrupt's rights as a party to the deeds in his own name were vested in the Trustees. In my view, until 22 October 2013, the Trustees could have enforced the Bankrupt's rights. 422 The 22 October 2013 Orders declared the March Deeds to be void, unenforceable and of no effect. Although they are not parties to the orders, for the reasons I explain I consider the Trustees can no longer enforce rights under the deeds. The jurisdiction of the Supreme Court of NSW to make the 22 October 2013 Orders 423 The Trustees contended that the Supreme Court of New South Wales did not have jurisdiction to make the 22 October 2013 Orders because they operated to divest the Trustees of property which had vested in them. 424 Section 27 of the Act provides that the Federal Court and the Federal Circuit Court have exclusive jurisdiction in bankruptcy save for two exceptions that are not presently relevant. An application which has the effect of declaring for or against the title of the trustee in bankruptcy to any property involves the exercise of exclusive jurisdiction: Scott v Bagshaw (2000) 99 FCR 573; [2000] FCA 816 at [18]-[20] (Drummond, RD Nicholson and Katz JJ); Lauren Kay Cordes as Trustee for Alexander George v Dr Peter Ironside P/L & Ors [2010] 2 Qd R 235; [2009] QCA 302 at [30]-[31] (Holmes and Chesterman JJA). 425 Before the 22 October 2013 Orders the Bankrupt had contractual rights pursuant to the March Deeds to payment of $6.2 million, which rights had vested in the Trustees. Upon the making of the orders declaring the deeds to be void, unenforceable and of no effect there were no contractual rights for the Trustees to enforce. The respondents contended that the Trustees were not parties to the orders and therefore the orders cannot have declared against their title. I do not agree. In my view the effect of the orders was to declare against the title of the Trustees and in my respectful opinion the Supreme Court of NSW was outside jurisdiction in making the orders. 426 However, it is settled that a judicial order of a superior court that is in excess of jurisdiction is valid unless and until it is set aside by appeal to a higher court: Cameron v Cole (1944) 68 CLR 571 at 590 (Rich J with Latham J agreeing); Re Macks; Ex parte Saint (2000) 204 CLR 158; [2000] HCA 62 at 177 (Gleeson CJ); Attorney-General v Kowalski [2015] SASC 123 (Blue J) at [110]. In Papas v Grave [2013] NSWCA 308 at [68] (Emmett JA with Sackville AJA agreeing) said: The Supreme Court of New South Wales is a superior court of record. As such, the orders of the Court are valid until set aside, even if the orders were made in excess of jurisdiction. The roots of that principle lie in the nature of judicial power (see State of New South Wales v Kable [2013] HCA 26; (2013) 298 ALR 144 at [28] and [32])... 427 For the Trustees to overcome the effect of the 22 October 2013 Orders it was necessary for them to have the orders varied or set aside, or to successfully appeal against the orders. They failed in their interlocutory application on 7 November 2013 to set aside the orders before the Supreme Court of NSW, and they did not appeal. Senior Counsel's statements in the Supreme Court proceeding 428 Having failed to appeal the Supreme Court orders, before me the Trustees advanced a number of arguments in which they continued to assert claims based in the Bankrupt's rights under the March Deeds. Each of their contentions relied on the statements made by Mr Ashhurst SC, counsel for Byrnes, Russo and the Global companies, in the interlocutory hearing on 7 November 2013 (which I have called "senior counsel's statements"). 429 On that date Hammerschlag J heard an interlocutory application by the Trustees seeking that: (a) they be re-joined as defendants to the proceeding; (b) the 22 October 2013 Orders be set aside; (c) the proceeding be cross-vested to a Federal court; or (d) the orders be stayed for six months to allow an investigation by the Trustees. 430 I have previously set out senior counsel's statements and his Honour's reliance on the concession at [245]-[252], and I need not do so again. Senior counsel said that the 22 October 2013 Orders did not bind the Trustees, that there was nothing to stop the Trustees from seeking to agitate a claim that the March Deeds were valid and enforceable, and that there was no prejudice to the Trustees in their application being refused. In dismissing the Trustees' application his Honour noted senior counsel's statements and said (incorrectly in my respectful view) that the orders could not affect the Trustees' substantive rights. 431 First, the Trustees contended before me that the critical issue before his Honour was whether the 22 October 2013 Orders affected the substantive rights of the Trustees. They submitted that if those orders operated to divest the Trustees of substantive rights then his Honour was bound to accede to their application to set aside the orders and transfer the proceedings to a Federal court. They argued that, the respondents having conceded that the Trustees were not bound by the 22 October 2013 Orders, they are now precluded by issue estoppel from arguing that the Trustees have lost substantive rights. 432 Second, to similar effect, the Trustees relied on Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 to argue the respondents had unequivocally renounced their right in respect to the effect of the 22 October 2013 Orders. 433 Third, the Trustees argued that the broad circumstances including: (a) that at all material times the Trustees had an interest in the rights conferred on the Bankrupt under the March Deeds; (b) that on 17 May 2013 the Bankrupt's rights to payment of $6.2 million were secured by a PPSR registration over the property of the Global companies; (c) that on 22 October 2013 the respondents sought the 22 October 2013 Orders, and did not at that time inform the Trustees of the execution of the October Deed; (d) the steps subsequently taken by the respondents to discharge the Bankrupt's PPSR registration; (e) senior counsel's statements and Hammerschlag J's reliance on them in dismissing the Trustees' application; (f) the steps taken by Russo and McHugh to transfer the shares held by Global Human Resources Group in the Operating Companies to GHR Custodian; (g) Russo's false declarations of solvency in relation to Global Human Resources Group and GHR No 3, and his subsequent resolutions to put those companies into members' voluntary liquidation; (h) that the obligations of October Deed Payers under the October Deed were secured by the October Deed Securities (being undated share transfers in respect to shares held by GHR No 3 in Global Human Resources Group and in respect to shares held by Global Human Resources Group in the Operating Companies); and (i) that following the steps taken by Russo and McHugh the October Deed Securities were no longer good security, showed that the respondents' actions were intended to (and had the effect) of impeding the Trustees' enforcement of the October Deed Securities, and the 22 October 2013 Orders resulted in significant assets not being available to meet the claims of creditors of the Bankrupt. The Trustees submitted that such a defence constituted an abuse of the Court's procedures which would bring the administration of justice into disrepute amongst right-thinking people, referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529; [1981] 3 All ER 727 at 729 (Lord Diplock). 434 The respondents advanced various arguments in opposition to these contentions, but it is unnecessary to go to them. I accept that there is a contradiction between the position taken by Byrnes, Russo and their associated Global companies in the Supreme Court proceeding in opposing the Trustees' application to set aside the 22 October 2013 Orders, and the position which the respondents took before me. However, I do not consider the Trustees can obtain the relief they seek. 435 In my view the Bankrupt was not permitted to provide consent to the 22 October 2013 Orders as they dealt with his rights to property under the March Deeds and those rights had vested in the Trustees. In my view senior counsel's statements were essentially incorrect and, in my respectful view, his Honour was wrong in relying upon them. In practical terms the Trustees had lost substantive rights through the 22 October 2013 Orders. Had the March Deeds not been declared void, the Trustees would have had an entitlement to enforce the Bankrupt's rights to the $6.2 million and to rely on the PPSR security. They lost those rights upon the making of the declarations and orders. 436 However, any grant of relief under the March Deeds would be directly contrary to judicial orders of a superior court of record. Those orders stand and are to be observed until set aside, even if it is authoritatively determined that the orders should not have been made or were without jurisdiction: Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor (2008) 171 FCR 380; [2008] FCAFC 172 ("Meriton") at [30] (Branson J); Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129; [2006] FCAFC 118 at [27]-[30] (North, Goldberg and Weinberg JJ). The effect of the relief the Trustees seek is to avoid the operation of the 22 October 2013 Orders and in my view that should not be permitted. Amongst other things, I would not allow it as "a matter of common sense, practical convenience and federal comity": see Meriton at [31], citing Jarrett v Seymour (1993) 46 FCR 521 at 554. The power to supervise the Supreme Court of New South Wales is to be exercised by that State's Court of Appeal and the High Court, and the appropriate course for the Trustees was to appeal the orders. In my view the Trustees' collateral attack on the orders cannot be permitted. If they want the orders set aside they must appeal them. The interdependency argument 437 In passing I note an issue between the parties based in the interdependency of the March Deeds. 438 There is no question that the March Deeds were interdependent. Clause 5 of the Settlement Deed provided: The Defamation Agreement, the Share Transfer Agreement and this document are all interdependent. If any of the Share Transfer Agreement, the Defamation Agreement or this document are rescinded, terminated or come to an end for any reason whatsoever, then the others shall similarly be rescinded, terminated or come to an end. This clause was matched by corresponding provisions in the other deeds. 439 The Trustees contended that in order to terminate the Settlement Deed all parties needed to agree to do so. They argued that the termination of the Settlement Deed depended on the Bankrupt's consent to the 22 October 2013 Orders (through Ms Subeska). They said, and I accept, that the Bankrupt was not permitted to consent because his rights under the March Deeds had vested in the Trustees. 440 In response the respondents contended that the interdependency of the March Deeds meant that it was unnecessary for the Bankrupt to consent to their termination. They submitted that Antoun and Global Human Resources Group, who were the only parties to the Share Transfer Deed, could rescind or terminate that deed and by operation of cl 5 of the Settlement Deed the other deeds were then automatically rescinded or terminated. I accept this. There is, however, no direct evidence that Antoun and Global Human Resources Group did so agree. 441 From their consent to the 22 October 2013 Orders it would be open to infer that Antoun and Global Human Resources Group agreed to rescind the Share Transfer Deed but there is no evidence that they did so. In the finish, the 22 October 2013 Orders were made and the orders are valid unless or until they are set aside on an appeal. 442 I do not accept the Trustees' various contentions, which in my view constitute an impermissible attack on the validity of the 22 October 2013 Orders. K The ClaimS FOR set-off 443 It is convenient to now deal with the respondents' claims for set-off. The respondents contended that if the consideration payable under the October Deed is found to be payable to the Trustees the respondents are entitled to set-off against that amount: (a) the sum of $1,500,000 paid pursuant to the March Deeds; and (b) the sum of $3,421,810 "advanced" to Antoun by Byrnes, said to be "Payments" pursuant to clause 13(iv) of the Settlement Deed (in the March Deeds), being a total of $4,921,810. 444 The Trustees denied that any set-off was applicable. The relevant statutory provisions are as follows. Section 86 of the Act provides: (1) Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy: (a) an account shall be taken of what is due from the one party to the other in respect of those mutual dealings; (b) the sum due from the one party shall be set off against any sum due from the other party; and (c) only the balance of the account may be claimed in the bankruptcy, or is payable to the trustee in the bankruptcy, as the case may be. (2) A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person. 445 Section 126 of the Act provides: Dealings with undischarged bankrupt in respect of after-acquired property (1) A transaction by a bankrupt with a person dealing with him or her in good faith and for valuable consideration in respect of property acquired by the bankrupt on or after the day on which he or she became a bankrupt is, if completed before any intervention by the trustee, valid against the trustee, and any estate or interest in that property which, by virtue of this Act, is vested in the trustee shall determine and pass in such manner and to such extent as is necessary for giving effect to the transaction. … 446 Under the Act, a set-off is not available unless the claims sought to be set-off are "mutual and due in the same right": Re Anderson; Ex parte Alexander (1927) 27 SR (NSW) 296; James v Abrahams (1981) 51 FLR 16; [1981] FCA 49 at 27 (Fisher J). The requirement that the two claims be "in the same right" is directed to the capacities in which the respective claimants make their claim: Baker v Perpetual Trustee Company Limited [2012] FCA 553 (Katzmann J) at [89] and the cases there cited. 447 In broad terms the Trustees contended, and I accept, that: (a) section 86 of the Act has no application as the relevant transactions all took place after the commencement of the bankruptcy; (b) the respondents did not rely on s 126 of the Act and, in any event, an order under that section would be unavailable. I assume the Trustees did so on the basis that they contended that the respondents could not establish the necessary element of good faith; and (c) set-off at common law or in equity was not applicable in any case, including because of the vesting provisions of the Act. The $1,500,000 paid pursuant to the March Deeds 448 I deal first with the claimed set-off relating to $1.5 million paid by the March Deed Payers in March 2013 pursuant to the March Deeds. In my view there is no merit to the claim. 449 I say this, first, because the October Deed was a fresh settlement of the Supreme Court proceeding about the ownership of the Global business following the collapse of the settlement embodied in the March Deeds. There is nothing in the terms of the October Deed to indicate that payments made by the March Deed Payers (in effect the respondents) under the March Deeds were to be taken into account in satisfaction of the respondents' obligations under the October Deed. While the October Deed is silent in that respect, it is appropriate to infer from its timing and its contents that it was entered into taking account of the payments made under the March Deeds. At least in part, the lower amount the respondents paid for the transfer of the Global business under the October Deed is likely to reflect the $1.5 million they had earlier paid. 450 Second, the March Deeds provided that the consideration payable under the deeds would first be paid to Antoun in satisfaction of $5.65 million to be paid to him pursuant to the Share Transfer Agreement. It was only after all monies payable under the Share Transfer Agreement had been fully paid to Antoun that the Bankrupt was to be paid $6.2 million under the Defamation Deed. I infer that $1.5 million paid by the respondents was paid to Antoun rather than to the Bankrupt, and it would be inappropriate to set off that amount against monies due to the Trustees. 451 Third, I accept the Trustees' contention that s 86 of the Act does not apply because the respondents' payment of $1.5 million occurred after the Bankrupt's bankruptcy commenced. Even if that provision did apply I would not be persuaded that any amount paid to the Bankrupt pursuant to the March Deeds is mutual and due in the same right as the Trustees' entitlement in respect to the Bankrupt's rights through the October Deed. The claimed set-off of monies transferred to Antoun 452 Next I deal with claimed set-off of $3,421,810 paid by Construction Financial Management to Antoun between March and October 2012. In support of this claim the respondents relied on Byrnes' unchallenged evidence in his second affidavit that: Between about March 2012 and October 2012, I caused funds to be transferred from Construction Financial Management Pty Ltd to Joseph Antoun totalling approximately $3,421,810.79. These are the "Payments" referred to in clause 13(a)(iv) of the Deed of Settlement and Release dated 11 March 2013. 453 Byrnes annexed to his affidavit Westpac Bank account statements for "Construction Financial Management Pty Ltd Custodial Account 1", which show a series of credits into that account in the period nominated which total more than the set-off claimed. The account statements also show approximately 130 withdrawals by cash and by bank cheque by an unnamed person or persons at about six branches in New South Wales, in various amounts ranging between $255 and $140,000. Byrnes provided no explanation as to who withdrew the monies. 454 The release to which Byrnes referred in cl. 13 of the Settlement Deed states: Releases (a) Subject to the rights and obligations contained in this document, each of the parties hereby releases and discharges and forever holds harmless each other on and from any and all rights, demands, Claims, or other entitlements of whatsoever kind, whether in law or in equity whether present or future arising out of or in relation to or in connection with (whether directly or indirectly): (i) the Disputes (ii) the Companies (iii) the Businesses, and (iv) the Payments. … (c) Each party may assert and plead the releases contained in the clauses above as a complete defence and bar to any claim, demand or asserted right in respect of any matter which forms the subject matter of the release or releases. (d) for the avoidance of any doubt, the parties acknowledge and agree that the releases and discharges set out above, do not release or discharge any of the parties from complying with their respective obligations created by the terms of this document. (Emphasis added.) 455 The Settlement Deed provided a broad definition of "Payments" as follows: funds advanced or loaned or provided by CFM [Construction Financial Management], Byrnes or any Related Body Corporate of CFM or any person or corporation related to or associated with Byrnes on any basis whatsoever to the Parent Company, the Companies, Active, Alex and/or Antoun. (Emphasis added.) 456 It was for the respondents to make out their claimed set-off, which is for a substantial sum. The sufficiency of the evidence on which they rely must be weighed having regard to the substantial quantum of their claim. 457 In my view the respondents did not establish the set-off they claimed. I say this, first, because the October Deed is an agreement to settle the Supreme Court proceeding about ownership of the Global business, and there is nothing in the terms of the deed to indicate that payments earlier made by Construction Financial Management were to be taken into account in satisfaction of the October Deed Payers' obligations. It is more likely than not that the settlement in the October Deed was reached taking account of the earlier payments. I see it as inherently unlikely that under the deed Antoun (with the Bankrupt's agreement) agreed to transfer the Global business to the respondents for $5 million, while remaining liable to a claim by the respondents for $3.42 million in connection with the amounts paid to Antoun earlier. 458 The release in cl. 13 of the March Deeds provides that the respondents expressly released and discharged the Bankrupt and Antoun from: …any and all rights, demands, Claims or other entitlements of whatsoever kind, whether in law or in equity whether present or future arising out of or in relation to or in connection with (whether directly or indirectly)…the Payments. "Payments" was defined to include payments made by Construction Financial Management to the Bankrupt and/or Antoun. Under this release the respondents gave up any right they had to claim a set-off in relation to the monies loaned, advanced or provided by Construction Financial Management. Although there was no such release in the October Deed, this also points to the inherent unlikelihood that, under the October Deed, Antoun (with the Bankrupt's agreement) would have agreed to transfer the Global business to the respondents for $5 million while remaining liable to a $3.42 million set-off claim by the respondents. 459 Second, even though the proper characterisation of the $3.42 million said to have been transferred to Antoun by Construction Financial Management is significant to the claimed set-off, Byrnes said nothing to explain the nature or purpose of those transfers. The proper characterisation of the funds paid is important in deciding whether a set-off applies, and it is insufficient that Byrnes only said, in effect, that those funds were "advanced or loaned or provided" and adduced no evidence of any underpinning agreement. 460 If for example the respondents asserted the money was loaned I would expect such evidence to have included material going to any loan repayments that had been made and/or whether (and if so to what extent) the respondents had recouped the loan including through 'self-help' after the business was transferred to them in October 2013. Byrnes did not do so and he did not explain the various withdrawals, some parts of which may well have reverted to him or the other respondents by some route. If the respondents asserted that the monies were advanced on some other commercial basis then I would expect the evidence to include material establishing that basis, and evidence as to whether (and if so to what extent) those moneys had been recouped. Absent such evidence the Court is not in a position to allow the set-off claims. 461 Byrnes' failure to provide a complete picture to the Court supports the inference that the alleged transfer of $3.42 million to Antoun gives rise to more complex issues in relation to the claimed set-off than he was prepared to disclose. 462 Byrnes' evidence in his public examination was that he paid those monies to the Bankrupt and Antoun in order to obtain a one third interest in the Global business, but he put no reliance on that evidence before me. He did not depose that he had caused those monies to be paid in order to acquire such an interest and he said nothing other than that the monies had been transferred and (by reference to the March Deeds) that they had been "advanced or loaned or provided". It is unnecessary to decide, but even if I accept that Byrnes paid those monies to acquire a one third interest in the business there is no evidence as to the terms upon which he paid the monies or the nature of the interest he acquired. In my view the evidence is insufficient to establish that it is appropriate to set-off those amounts against the Trustees' claim. 463 Third, the evidence does not establish that $3.42 million that Byrnes caused to be transferred to Antoun between March and October 2012 (or some of it) was for the benefit of the Bankrupt, such that it was appropriate to be set-off against the Trustees' entitlement in right of the Bankrupt. The thrust of the respondents' case was that Antoun owned the companies in the Global business (not the Bankrupt) and Byrnes said the transfer was made to Antoun. He did not say that the Bankrupt received or took the benefit of those monies. 464 Fourth, Construction Financial Management is not a party to the proceeding, and it was not one of the October Deed Payers. The Trustees submitted that, if the evidence established a set-off, the person obliged to satisfy the set-off would be Antoun's estate or the Bankrupt but on no view the Trustees. They argued that there could be no claim against the Trustees because they did not incur the relevant obligation to Construction Financial Management. I am not satisfied that the claimed set-off is mutual and in the same right as the Trustees' entitlement to monies payable to the Bankrupt. While a set-off might be open against Antoun's estate the respondents did not make such a claim. 465 In the finish I am not persuaded that there is any amount to be set-off against the Trustees' claim. 466 The respondents did not plead or argue for an equitable set-off, but for completeness I note that such a claim would have failed on the evidence. In HP Mercantile Pty Ltd v Dierickx (2013) 306 ALR 53; [2013] NSWCA 479 Emmett JA (Beazley P and Meagher JA concurring) said (at [136]), referring to the decision of Gummow J in James v Commonwealth Bank of Australia (1992) 37 FCR 445; [1992] FCA 617: For there to be an equitable set-off, the set-off must essentially be bound up with and go to the root of, challenge, call in question, or impeach the title of the claimant. Equitable set-off is available where the party seeking it can show a recognised equitable ground for being, to the relevant extent, protected from its adversary's demand. The mere existence of a cross-claim is not sufficient. There must be some ground for equitable intervention beyond the mere existence of a cross-claim, such that it can be said that the equity of the defendant impeaches the claimant's title to the legal demand being enforced. 467 That passage was cited by Barrett JA in Hawes v Dean [2014] NSWCA 380 at [63]. At [74] his Honour stated the view that: While equity will sometimes countenance set-off otherwise than between the same parties, some particularly compelling factor making reliance on separate rights unconscionable must be found to justify set-off in circumstances of glaring lack of mutuality. 468 For the reasons I have already set out there is insufficient evidence to establish a claim of equitable set-off. However, if that view is put to one side, the lack of mutuality between Construction Financial Management's transfer to Antoun on the one hand and the Trustees' entitlement in right of the Bankrupt against the October Deed Payers on the other, the respondents have not pointed to any compelling factor that makes it unconscionable for the Trustees to rely on their separate right. The amounts paid pursuant to the October Deed 469 The respondents did not seek a set-off of the amounts totalling $1.35 million they paid under the October Deed and (as I explain at [254]-[262]) apart from an amount of $105,000 paid to City Nominees there is no evidence that any of these payments went to the benefit of the Bankrupt. L CONCLUSION 470 I have made orders that the second to eighth respondents: (a) within 21 days, transfer to the Trustees half (in number and value) of the shares held by: (i) AR & KH Pty Ltd in GHR Custodian; and (ii) GHR Custodian in Civil Pacific Services Group and Global Civils Group; ("the identified shares"); For the reasons I explained I have not made an order for the transfer of shares previously held by GHR Custodian in Global HR Group; (b) be restrained from transferring, selling, encumbering or otherwise dealing with any shares held by AR & KH Pty Ltd in GHR Custodian or by GHR Custodian in Civil Pacific Services Group and Global Civils Group until they have transferred the identified shares to the Trustees; (c) within 21 days, pay the Trustees $2.395 million (plus interest to be calculated) in respect to the Bankrupt's rights under the October Deed. 471 I am concerned that there may be some double recovery by the Trustees as the relief ordered includes half (in number and value) of the shares in the Operating Companies as well as payment of $2.395 million under the October Deed. I say this because, although the Bankrupt's beneficial ownership of half of the shares in the companies in the Global business vested in the Trustees, in my view the Bankrupt's rights to payment through the October Deed were based in a promise to abandon his claims to ownership and transfer his beneficial interest in the Global business to the October Deed Payers. The Trustees' submissions were not clear as to whether they intended to elect between these remedies, whether they were in the alternative, or whether they were cumulative. I will hear submissions from the parties in this regard and vary the orders or make further orders as appropriate. The parties must file written submissions in this regard within 14 days, and any submissions in response within seven days thereafter. 472 I am satisfied that the payments to be made to the Bankrupt under the Defamation Deed were not in respect to any defamation of him, and were payments for the transfer of his beneficial interest in the Global business. However, because the March Deeds are void and unenforceable by operation of the 22 October 2013 Orders, I can presently see no utility in a declaration in that regard. Nor can I see any utility in a declaration that the JA Investments Trust did not come into effect. If the Trustees seek such declarations they must file written submissions in this regard within 14 days, and the respondents must file any submissions in response within seven days thereafter. 473 I grant leave generally to the Trustees and the second to eighth respondents to file submissions seeking variation of the present orders or orders further to those made within 14 days, and any submissions in response within seven days thereafter. 474 I am aware of no reason why costs should not follow the event, and I presently propose to order that the second to eighth respondents pay the Trustees' costs of and incidental to the proceeding. I will allow the respondents 14 days to put on submissions if they oppose that course and I will allow the Trustees seven days thereafter to put on submissions in response. I certify that the preceding four hundred and seventy-four (474) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy. Associate: Dated: 22 August 2016 SCHEDULE OF PARTIES VID 193 of 2014 Respondents Fourth Respondent: GLOBAL CIVILS GROUP (NSW) PTY LTD Fifth Respondent: GHR CUSTODIAN PTY LTD Sixth Respondent: JAMES WARREN BYRNES Seventh Respondent: KEVIN JOHN MCHUGH Eighth Respondent: ANGELO PHILIP RUSSO Ninth Respondent: NSW TRUSTEE AND GUARDIAN