Supreme Court New South Wales Medium Neutral Citation: In the matter of Sirrah Pty Ltd (in prov liq) [2021] NSWSC 413 Hearing dates: 23, 25-26, 30-31 March, 1 April 2021 Date of orders: 23 April 2021 Decision date: 23 April 2021 Jurisdiction: Equity - Corporations List Before: Black J Decision: Judgment for the First Defendant, in derivative proceedings brought by the Plaintiffs on its behalf, in respect of certain claims. First Defendant to be wound up on the just and equitable ground. Parties afforded an opportunity to make further submissions as to proposed orders. Catchwords: PROCEDURE — Application to have hearing dates vacated — whether principles in ss 56–58 of the Civil Procedure Act 2005 (NSW) support the vacation of hearing dates. CORPORATIONS — Winding up on the just and equitable ground. CORPORATIONS — Directors and officers — Directors' duties — Duty of care and diligence — Duty to act in good faith in the best interests of company and for proper purpose — Director's involvement in transactions with companies he controls. EQUITY — Fiduciary duties — Conflict of interest and duty — Informed consent — Director's involvement in transactions with companies he controls. Legislation Cited: - Civil Procedure Act 2005 (NSW), ss 56, 57, 58 - Corporations Act 2001 (Cth), ss 180, 181, 182, 233, 259B, 259F, 461, 1305, 1317E, 1317H, 1317K, 1318 - Evidence Act 1995 (Cth), s 136 - Limitation Act 1969 (NSW), ss 14, 15, 48 - Personal Property Securities Act 2009 (Cth) Cases Cited: - Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325; [2008] VSCA 86 - Adler v Australian Securities and Investments Commission (ASIC) (2003) 46 ACSR 504; [2003] NSWCA 131 - Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd (2016) 340 ALR 580; (2016) 116 ACSR 566; [2016] NSWCA 347 - Australian Securities and Investments Commission v Adler (2002) 41 ACSR 72; [2002] NSWSC 171 - Australian Securities and Investments Commission v Cassimatis (No 8) (2016) 336 ALR 209; [2016] FCA 1023 - Australian Securities and Investments Commission v Macdonald (No 11) (2009) 256 ALR 199; (2009) 71 ACSR 368; [2009] NSWSC 287 - Australian Securities and Investments Commission v Vines (2005) 55 ACSR 617; [2005] NSWSC 738 - Australian Worldwide Pty Ltd (In Liq) v AW Exports Pty Ltd [2019] NSWSC 1475 - Barnes v Addy (1874) LR 9 Ch App 244 - Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59 - BCI Finances Pty Ltd (In Liq) v Binetter (No 4) (2016) 348 ALR 227; (2016) 117 ACSR 18; [2016] FCA 1351 - Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356 - Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; (1975) 5 ALR 231 - Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37 - Diamond Hill Mining Pty Ltd v Huang Jin Mining Pty Ltd (2011) 84 ACSR 616; [2011] VSC 288 - EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd (No 3) [2013] WASC 183 - Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 - Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 - Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 - Gordon in His Capacity as Liquidator of Lyon Form Pty Ltd (in liq) v Leon Plant Hire Pty Ltd (in liq) [2015] NSWSC 397 - Grimaldi Chameleon Mining NL (No 2) (2012) 87 ACSR 260; [2012] FCAFC 6 - Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198; [2000] WASCA 29 - Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 - Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; (2014) 101 ACSR 167; [2014] NSWCA 266 - Hylepin Pty Ltd v Doshay Pty Ltd (2020) 148 ACSR 30; [2020] FCA 1370 - John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd; Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 - JR Consulting & Drafting Pty Ltd v Cummings (2016) 329 ALR 625; [2016] FCAFC 20 - Kalls Enterprises Pty Ltd (in liq) v Baloglow (2006) 58 ACSR 63; (2006) 24 ACLC 920; [2006] NSWSC 617 - Kalls Enterprises Pty Ltd (in liq) v Baloglow (2007) 63 ACSR 557; [2007] NSWCA 191 - KQ International Trading Pty Ltd v Yang [2016] VSC 146 - Lewis Securities Ltd (in Liq) v Carter (2017) 120 ACSR 327; [2017] NSWSC 412 - Linton v Telnet Pty Ltd (1999) 30 ACSR 465; [1999] NSWCA 33 - Morley v Australian Securities and Investments Commission (ASIC) (2010) 274 ALR 205; (2010) 247 FLR 140; (2010) 81 ACSR 285; [2010] NSWCA 331 - Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 - One.Tel Ltd (in liq) v Rich [2005] NSWSC 226 - Parker v Tucker (2010) 77 ACSR 525; [2010] FCA 263 - Paul A Davies (Aust) Pty Ltd (in liq) v Davies (No 2) [1983] 1 NSWLR 440 - Primacy Underwriting Agency Pty Ltd v Kilborn (2007) 25 ACLC 160; [2007] NSWSC 158 - Ramsay v BigTinCan Pty Ltd (2014) 101 ACSR 415; [2014] NSWCA 324; BC201407664 - Re AJ Roberts Removals & Storage Pty Ltd [2017] NSWSC 1054 - Re Bluemine Pty Ltd (In Liq) [2019] NSWSC 1807 - Re Central Management (NSW) Pty Ltd (in liq) [2017] NSWSC 1258 - Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 - Re Elsmore Resources Ltd [2016] NSWSC 884 - Re FAL Healthy Beverages Pty Ltd and FAL Retail Pty Ltd [2017] NSWSC 476 - Re Felan's Fisheries Pty Ltd [2017] NSWSC 1502 - Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 - Re Mudgee Dolomite & Lime Pty Ltd v Murdoch [2020] NSWSC 1510 - Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914 - Shot One Pty Ltd (in liq) v Yeo in his capacity as liquidator of Shot One Pty Ltd (in liq) [2017] VSC 741 - Taxa Australia Pty Ltd v Wang (2018) 130 ACSR 531; [2018] NSWSC 1412 - Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 - Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) (2020) 147 ACSR 389; [2020] NSWSC 1159 - UBS AG v Tyne (2018) 265 CLR 77; (2018) 360 ALR 184; [2018] HCA 45 - Vrisakis v Australian Securities Commission (1993) 9 WAR 395; (1993) 11 ACSR 162 - Watson v Foxman (1995) 49 NSWLR 315 - Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 89 ACSR 1; [2012] WASCA 157 Category: Principal judgment Parties: Gregory Thomas Harris (First Plaintiff) Monica Mary Brown (Second Plaintiff) Sirrah Pty Limited (First Defendant) William Francis Harris (Second Defendant) Michelle Joy Harris (Third Defendant) Harris Health Care Pty Limited (Fourth Defendant) Representation: Counsel: S A Wells/J Anderson (Plaintiffs) J S Tobin (First Defendant) A F Fernon SC/E A Walker (Second - Fourth Defendants) Solicitors: Lloyd & Lloyd (Plaintiffs) Watson Mangioni (First Defendant) Yates Beaggi (Second - Fourth Defendants) File Number(s): 2017/383731 Judgment Nature of the application and background facts 1. By Amended Statement of Claim filed on 1 June 2020, the Plaintiffs, Mr Gregory Harris and others, brought a derivative claim on behalf of the First Defendant, Sirrah Pty Ltd ("Sirrah") and also sought relief in their personal capacity. I return to the nature of the relief sought below. A number of matters are common ground between the parties and others are established by documentary evidence, so that there is ultimately no real dispute about them. 2. The Plaintiffs are the executors of the estate of the late Mrs Aileen Harris, and hold, in that capacity, approximately 47% of shares in Sirrah. The Second Defendant, Mr William Harris ("WH") was appointed a director of Sirrah on 30 October 2002 and a challenge to the validity of that appointment is no longer pressed by the Plaintiffs. The Third Defendant, WH's daughter, Ms Michelle Harris ("MH"), was appointed a director of Sirrah on 9 November 2017. The claim against her is no longer pressed by the Plaintiffs and was dismissed in the course of the hearing. The Fourth Defendant, Harris Health Care Pty Ltd ("HHC"), is the holder of the majority of shares in Sirrah and WH and MH are its directors. 3. Prior to 15 December 2017, Sirrah carried on business as a provider of aged care services from premises at Westmead in New South Wales (FASOC [26A], AD [26A]). On 16 November 2017, Sirrah entered a contract for the sale of its assets and undertaking to a third party (FASOC [26B], AD [26B]), which paid a deposit of $2,250,000 into the trust account of Sirrah's solicitors at about the time of entry into that contract and Sirrah received that deposit on 18 December 2017. Completion of the contract took place on 15 December 2017 and Sirrah received, in addition to the deposit, net cash consideration in the amount of $25,065,478.30, after discharging its liabilities on the property (FASOC [26D], AD [26D]). Sirrah has had no ongoing trading operations since about 15 December 2017 (FASOC [26E], AD [26E]). I note that WH sought to contend to the contrary in his cross-examination. 4. At its highest point, Sirrah held unencumbered funds in excess of $27.6m in its bank accounts following the sale. From 15 December 2017 until a provisional liquidator was appointed to Sirrah on 14 October 2019, its funds held in those accounts were reduced by approximately $19 million to $8,519,664.71, which it held in cash in its operating account with the National Australia Bank ("NAB 6400 Account"). That reduction partly resulted from the payment of a tax liability of $5,272,271.40 as to which there is no contest in these proceedings. It also resulted from other transactions which are in issue in these proceedings, comprising payment of monthly "management fees" by Sirrah to HHC and further advances made to HHC quantified by the Plaintiffs as $6,556,623.16; further advances being made to WH of $745,000, which included payments by Sirrah including to purchase and renovate a villa in Bali, to purchase a motor vehicle in Bali and make a loan to a third party for a development in Fiji; and payments made in respect of a business credit card by WH (referred to in the proceedings as the "Disputed Expenses") which the Plaintiffs quantify as at least $1,847,166.53, and which are now, other than for three transactions, conceded to have comprised WH's personal expenses. 5. By way of derivative claims, the Plaintiffs now seek orders that an account be taken of any money received by WH and/or HHC pursuant to any management contract (or other arrangement between HHC and Sirrah) and that an account also be taken of any loans made by, or forgiven, as between Sirrah as lender and WH or HHC as borrowers. They also seek a declaration that any money paid by HHC under any management contract or other arrangement is held on constructive trust for Sirrah. They also seek declarations, on Sirrah's behalf, under s 1317E of the Corporations Act 2001 (Cth) ("Act") or the general law that, by engaging in specified conduct, WH and MH breached their duties owed to Sirrah and that any money paid to WH or HHC pursuant to any loan arrangements between them and Sirrah was held on constructive trust for Sirrah. The Plaintiffs seek an order that an account be taken of Disputed Expenses (as defined) and a declaration that WH is liable to account or make equitable compensation to Sirrah in respect of amounts found on the taking of an account of Disputed Expenses that are found not to be proper expenses of Sirrah. The Plaintiffs bring claims against HHC that are broadly in the nature of claims for accessorial liability for the transactions alleged against WH. The Plaintiffs also seek, in their personal capacity, an order that Sirrah be wound up on the just and equitable ground under s 461(1)(k) of the Corporations Act or alternatively for oppression under s 233 of the Act. Mr Fernon, who appeared for the Second and Fourth Defendants until the proceedings against the Third Defendant were dismissed, and then for the Second and Fourth Defendants, indicates that the application for a winding up order is now not contested. 6. These and associated proceedings have a long history. By Originating Process filed in July 2017 in proceedings 2017/205481, the Plaintiffs sought an order under s 247A of the Corporations Act authorising them, or their solicitor, to inspect books of Sirrah. They were successful in obtaining that order, after a contested hearing, for the reasons set out in my judgment delivered on 5 December 2017 ([2017] NSWSC 1683). On 21 December 2017, the Defendants, or some of them, gave an undertaking not to deplete the cash balance held by Sirrah below $13,341,794 without first giving the Plaintiffs seven days' written notice of doing so. The Plaintiffs subsequently sought leave to bring derivative proceedings in the name of Sirrah which they obtained, again after a contested hearing, by my judgment delivered on 13 November 2018 ([2018] NSWSC 1802). On 14 October 2019, I made orders that Mr Hayes be appointed as provisional liquidator of Sirrah, where an undertaking to retain the cash balance held by Sirrah had been breached by many transactions over a long period, and that the cash which had previously been held by Sirrah had been paid out for WH's and HHC's benefit and replaced by liabilities of WH and HHC to Sirrah. In February 2021, the Plaintiffs also obtained leave to proceed on behalf of the Company in the inherent jurisdiction of the Court and to proceed against the Company in provisional liquidation under s 471B of the Corporations Act. 7. By an Interlocutory Process filed on 10 August 2020, the Second-Fourth Defendants sought orders granting leave to withdraw admissions in several paragraphs of their Defence, including paragraphs 45-47 of that Defence. They relied, inter alia, on affidavits of WH dated 9 August 2020, MH dated 13 August 2020 and Mr Madders dated 14 August 2020 in support of that application. They then consented to the dismissal of that application, while foreshadowing that they would or might bring a further application for leave to withdraw those admissions at a later stage. In my ex tempore judgment delivered on 17 August 2020 recording that outcome, I observed that any further application would need to be considered on its merits at a later stage, having regard to the stage which the proceedings had then reached and that: "I should note that the approach now taken by the Second – Fourth Defendants appears to reflect a recognition by them of a difficulty in the form of the application, which is implicit in Mr Lipp's observation that further work would need to be done before the application was brought again. In particular, the Second – Fourth Defendants submit that they wish to establish that there were errors in respect of admissions earlier made, because there are or may be inaccuracies in the accounts of [HHC]. Obviously, that proposition faces some challenges, where [WH] was a director of that company, who is subject to a statutory duty, inter alia by reason of s 344 of the Corporations Act, to cause true and fair accounts of that company to be maintained, and by the company's accountant, who would need to impugn the accounts that he had prepared or reviewed in order to make it good. There is, however, a further difficulty with the application in its present form, which was put, repeatedly, by Mr Lipp on the basis that the Second – Fourth Defendants sought to withdraw the admission in order to contest the Plaintiff's case as to the transactions recorded in [Sirrah's] accounts and, in effect, put the true position before the Court. It is apparent the Second – Fourth Defendants' proposed pleading would not have that result because their position is that they did not know what the true position of [Sirrah] was, or indeed, implicitly, whether it is any different from the position for which the Plaintiffs contend, but simply wish to investigate that matter because they believe it might be different from the position for which the Plaintiffs contend and which, apparently, [Sirrah's] accounts recorded. Second, their proposed Defence did not, in fact, put any alternative position before the Court, reflecting any true position for which they contended, but simply did not admit, and put the Plaintiffs to proof, of the position for which the Plaintiffs contended and which the Second - Fourth Defendants had previously, relevantly, admitted. I record these matters so that the background of the orders made today is clear. I express no view as to the merits of the application, which does not need to be decided today, and which may present differently if, in a future application, the Second to Fourth Defendants seek to withdraw factual admissions because they then have an identified basis for contending that the position for which the Plaintiffs contend is wrong, and some other position is correct." 1. By a further judgment delivered on 22 October 2020, I made orders allowing the Second-Fourth Defendants a further eight weeks for their lay evidence, and a consequential extension for their expert evidence, and confirmed the hearing dates allocated for these proceedings commencing 23 March 2021. The hearing dates for the proceedings were also confirmed on 23 October 2020. 2. By a further Interlocutory Process filed on 17 February 2021, the Second-Fourth Defendants sought leave to rely on several affidavits which had been served out of time, leave to withdraw several admissions and an order that the hearing of the proceedings commencing 23 March 2021 be vacated. The Second-Fourth Defendants did not press their application to vacate the hearing date. By my ex tempore judgment delivered on that date ([2021] NSWSC 140), I granted leave to the Second-Fourth Defendants to rely on several affidavits which had been served out of time, excluding parts of those affidavits which they had indicated would not be read. The Second-Fourth Defendants' further application to vacate the hearing date 1. On 22 March 2021, the afternoon before the hearing of the proceedings were due to commence, the Second-Fourth Defendants filed an Interlocutory Process which sought orders that the hearing due to commence on 23 March 2021 be vacated to a date to be fixed, and that costs thrown away be paid by the provisional liquidator and not from Sirrah's assets. The second of those orders was not pressed. Because of the lateness of that application, and because of difficulties with the admissibility of the evidence on which the Second-Fourth Defendants relied, it was adjourned to be heard on 26 March 2021. The affidavits in the substantive hearing were read in the interim, but cross-examination of witnesses was deferred, by the parties' agreement, until after the application to vacate the hearing date was determined. I dismissed the application to vacate the hearing date, and indicated that I would set out my reasons for doing so in this judgment, and I now do so. 2. The Second-Fourth Defendants' application to vacate the hearing date was partly directed to a foreshadowed future application to withdraw admissions made by them in respect of paragraphs 45-47 of the Further Amended Statement of Claim. Paragraph 45 pleads that, during the period from about 2012 to 2019, Sirrah lent monies to HHC and WH in particularised amounts, totalling over $11 million in respect of HHC and further amounts in respect of WH. Paragraph 46 pleads that WH caused Sirrah to lend those monies to HHC and himself in specified circumstances. Paragraph 46 of the Amended Defence not only admits that the specified loans from Sirrah to HHC and from Sirrah to WH were made in those circumstances, but adds an affirmative defence that: "[T]he making of the Loans, and each of them, resulted in the discharge, forgiveness, extinguishment or other reduction of debts owed to Sirrah by either or both of [WH] and [HHC], in return for debts from either or both of [WH] and [HHC] which were unsecured and undocumented insofar as the terms of the Loans were documented in the financial reports and accounts of Sirrah"; and otherwise den[ies] the paragraph." Paragraph 47 pleads that the loans to HHC and WH have not been repaid, and the corresponding paragraph of the Defence admits that the loans have not been repaid, and otherwise denies the paragraph. The Application to vacate the hearing date also addressed to the Second-Fourth Defendants' late discovery of the possibility that WH may be able to rely on professional indemnity insurance, a matter to which I return below. Evidence in the further application to vacate the hearing date 1. The Second-Fourth Defendants relied, in support of the application to vacate the hearing date, on WH's affidavit dated 9 August 2020. Significant parts of that affidavit and other affidavit evidence on which the Second-Fourth Defendants relied in the application were not admissible and were, predictably enough, not admitted over objection. WH there referred to the fact that he had engaged a previous firm of solicitors who had carriage of the proceedings, until his current solicitor, Mr Amirbeaggi of Yates Beaggi Lawyers, assumed carriage of the proceedings on 17 June 2020, nearly nine months before the commencement of the hearing. 2. By her affidavit dated 13 August 2020, read without objection, Ms Michelle Harris indicated that she was not provided with the pleadings in the proceedings by her former solicitors, and they were first provided to her after Mr Amirbeaggi was engaged, now some nine months ago. In the event, as I noted above, the proceedings have now been dismissed by consent as against MH, reserving the question of costs. By an affidavit dated 14 August 2020, Mr Madders, who is an accountant with a firm of accountants that had previously provided services to Sirrah, referred to an engagement of that firm to undertake certain work after the sale of Sirrah's business and to the extent of work involved in that process. By a further affidavit dated 8 February 2021, Mr Madders referred to having continued attempts to properly characterise transaction records for Sirrah and HHC, but to difficulties resulting from a lack of information and access to records and to difficulties with access to records previously held on a cloud system operated by a third party on Sirrah's behalf. 3. By an affidavit dated 12 February 2021, Mr Saccaro, who is assisting Mr Madders, referred to the circumstances of his inspection of a hard drive containing a copy of Sirrah's server at the offices of the provisional liquidator on 11 February 2021. Mr Saccaro fairly accepts that there was over a week's delay in his seeking to access Sirrah's financial records, after an agreement was reached with the provisional liquidator for him to do so on or about 3 February 2021, which he attributes to pressures of work. I give little weight to that matter as an explanation for delay, where parties to proceedings which have been set down for hearing need to make appropriate arrangements to ensure that the experts they retain to provide assistance give sufficient priority to that work. Mr Saccaro refers to information he was then provided by the provisional liquidator's staff as to the difficulties that had been experienced in obtaining live access to the server. Mr Saccaro's evidence is that he opened the main file on the hard drive and noted that it contained a large number of sub-files which related to the period from 2000 to 2019 and he refers to the fact that the records previously contained on the server had been assembled in a structure which would have allowed documents more easily to be searched. Mr Saccaro also referred to the provisional liquidator's advice to him, at that time, that he was dealing with a third party which maintained the cloud server and was trying to obtain access to that server for the Second-Fourth Defendants. Mr Saccaro's evidence makes clear that, at least from 12 February 2021, the Second-Fourth Defendants have had access to the documentation comprising the accounting files of Sirrah, in substantial volume, although I recognise his evidence that that hard drive contained information in a less convenient form to navigate than server access. The Second-Fourth Defendants, then and later, appear to have made no serious attempt to access the documents held on the hard drive, whether by a sampling or other process. 4. By a further affidavit dated 19 February 2021, WH refers to difficulties which he claims to have had in obtaining access to Sirrah's server despite making requests to the provisional liquidator's office for access since December 2019. There are several difficulties with that evidence. The first is that proceedings relating to this matter have been on foot, in various iterations, since at least 2017; for a significant part of that period, until a provisional liquidator was appointed in 2019, Sirrah was under WH's control, and there is no suggestion that he did not have full and free access to its server and financial records throughout that period. The second is that his Amended Defence, in its present form, was filed by Mr Amirbeaggi's firm in August 2020 and the lack of evidence to support a denial of paragraphs 45-47 of the Amended Statement of Claim has been apparent since at least that date. WH refers to communication with the provisional liquidator prior to that time, relating to the provisional liquidator's requirement that he provide information in the provisional liquidation. However, it appears that WH did not instruct his new solicitor to seek access to Sirrah's records for the purposes of these proceedings until mid-November 2020. WH's evidence (WH 19.2.21 [13]) is that his solicitors were then given a drive containing copies of relevant documents on 20 November 2020, but that drive was not examined until several months later in January 2021. This is an extraordinary lack of expedition. WH does not explain why it is (or at least previously was) suggested that the provisional liquidator is at fault for any delay in providing access to Sirrah's financial records in the form they were held on a cloud server, when that server was maintained by a third party provider and access to the documents held on it depended on the cooperation of that third party provider. 5. By an affidavit dated 5 March 2021, Mr Odgers, who is a solicitor acting for the Second–Fourth Defendants, referred to an application for leave for short service of a subpoena on the provisional liquidator, first made on that date, about three weeks before these proceedings were listed to commence. 6. By a further affidavit dated 22 March 2021, WH referred to evidence which had been led in respect of the earlier applications to withdraw admissions and again referred to correspondence with the provisional liquidator from mid-November 2020 and to the application to vacate the hearing dates filed in February 2021. WH referred to the fact that the application to vacate the hearing date had been withdrawn and attributed that decision to advice given by Senior Counsel, Mr Sirtes, then acting for the Second-Fourth Defendants, in evidence which was not in an admissible form and was not admitted, with leave granted to lead further evidence by affidavit in admissible form. WH also there referred to his discovery, in February 2021, several years after these proceedings had commenced and solicitors had been retained for the Second-Fourth Defendants, and eight months after Mr Amirbeaggi had commenced acting for the Second-Fourth Defendants, that the Defendants (or at least Sirrah) held a directors and officers liability policy. He exhibited the form of policy wording, an email dated 2 March 2021 comprising a claim under that policy, and a copy of the 2017 schedule and policy wording, to his affidavit. Neither WH nor his solicitors sought to give any explanation as to inquiries that had been made as to the existence of that policy prior to that date. 7. WH also referred to the service of a subpoena for production of financial records upon the provisional liquidator in early March 2021 and to subsequent steps in respect of that subpoena. WH observed, in evidence admitted with a limiting order under s 136 of the Evidence Act as a submission only and not as proof of the relevant facts that: "Without access to the financial books and records of [Sirrah] and [HHC] I am not able to address the withdrawal of admissions and am bound to an admission to paragraph 45 of the Amended Statement of Claim that the payments made by [Sirrah] to various parties including me and [HHC] totalling approximately $12 mil are a loan account. Without being able to address that matter, the Plaintiff is entitled to judgment against me for the full sum pleaded. The lack of access to financial books and records of [Sirrah] and [HHC] has prevented me from properly preparing for and defending the Plaintiffs' claim." 1. I pause to note that it is not clear why the appointment of a provisional liquidator to Sirrah has prevented WH obtaining access to the financial records of the Fourth Defendant, HHC; it may be suggested that those records were maintained in the same form as Sirrah's financial records, but it is not apparent why it is the responsibility of Sirrah's provisional liquidator to provide WH with access to financial records of HHC which is not under provisional liquidation and remains under WH's control. 2. By a further affidavit dated 24 March 2021, Mr Saccaro referred to his having spent all of one hour in reviewing documents produced by the provisional liquidator on USB on that date; he noted that the folders contained on that USB appeared to respond to the categories of documents sought in the schedule to the subpoena issued by the Second-Fourth Defendants, but he could not determine the extent to which all documents sought had been provided in the time available to him; and the USB contained a substantial amount of data and permitted a search of file names only, or at least his firm only had the technical capacity to undertake a search based on text or characters contained in the document or file name, as distinct from a search of key words within the body of the document. Mr Saccaro there estimated that, without the benefit of a forensic search capacity (which, implicitly, his firm lacked), it would take several weeks to review the documents contained on the USB. That proposition highlighted, of course, the difficulties which arose from the Second-Fourth Defendants' failure to undertake review of the documents while Sirrah was under WH's control prior to the provisional liquidator's appointment; or when a hard drive containing them was originally provided to WH in November 2020, and again in February 2021; the further delay in issuing a subpoena to the provisional liquidator, and the fact that the subpoena that was issued required production of a wide range of documents, rather than focussing more narrowly on the matters relevant to the paragraphs of the Defence which the Second-Fourth defendants wish to withdraw. 3. By a further affidavit dated 25 March 2021, Mr Madders referred to a letter dated 1 June 2016 from his firm to the provisional liquidator, which referred to the net asset value of Sirrah as at 30 June 2015 under the audited financial report and to management accounts for the period 1 July 2015 to 31 March 2016. The relevance of this evidence is unclear. By an affidavit dated 25 March 2021, Mr Saccaro noted that the subfiles to which he had referred in his earlier affidavit were ordered in folders according to document type, and he would have needed to open documents in order to identify their content, and that searches on the USB according to key search terms only identified files which contained the search terms in the file name. 4. By a further affidavit dated 25 March 2021, addressing difficulties in the admissibility of his earlier evidence, WH led evidence of a conversation with his former solicitors, at the time the Amended Defence was filed in February 2020, in which he agreed the amounts that had been paid out of Sirrah in 2018-2019; he says he does not recall whether he agreed that such amounts were paid as loans to HHC, in evidence that does not amount to a denial that he had previously agreed that matter; and he says that he had not "read the amendments made" to the Amended Defence at the time he signed the Amended Defence, and did not read or understand that paragraph 45 of the Amended Defence admitted to loans being made from Sirrah to HHC until 2019, or that paragraph 46 of the Amended Defence admitted to loans being made from Sirrah to HHC that totalled over $11 million; and did not become aware that the Amended Defence admitted that HHC was indebted to Sirrah for over that amount until he first retained Mr Amirbeaggi to represent him and became aware of that admission in July or August 2020. WH there contends that he did not give instructions to his former solicitor that the amount alleged in the Amended Statement of Claim constituted loans from Sirrah to HHC, although that contention is not wholly consistent with his evidence of his lack of recollection as to that matter, and that he understood that the Amended Defence only admitted that relevant payments were made to HHC by Sirrah. WH could not have had that understanding, had he read the Amended Defence before he verified it. 5. WH also referred to the manner in which Sirrah and HHC maintained a QuickBooks accounting system; to his having told Sirrah's and HHC's bookkeeper to make payments from Sirrah to HHC in the 2018-2020 financial years that represent the funds referred to in paragraph 45 of the Amended Statement of Claim; and to a practice of recording payments, where the bookkeeper did not know what they were for, against his loan account. This evidence could, subject to leave so far as it was not included in earlier evidence and to admissibility, be given by affidavit in the substantive proceedings. WH also referred to his review of documents on the server maintained by the third party for Sirrah with Mr Saccaro at the provisional liquidator's premises on 24 February and 1 March 2021 and contended (in evidence admitted with a limiting order under s 136 of the Evidence Act) that those documents referred to Scooti Pty Ltd ("Scooti") and Total Scooter Holdings Pty Ltd ("TSH") as "subsidiaries" or "investments" of Sirrah. His evidence is that he does not now agree that all payments recorded in paragraph 45 of the Amended Statement of Claim for the 2018-2020 financial years are loans by Sirrah to HHC, and, to the extent that such payments were made as management fees, he denies that such payments were loans to him. WH also refers to a conversation with Mr Amirbeaggi on 22 February 2021, leading to the decision not to press the application to vacate the hearing date or the withdrawal of the admissions in paragraphs 45 and 46 of the Amended Defence on that date, in the light of arrangements which had then been made with the provisional liquidator for access to the server. 6. The Second-Fourth Defendants also tendered, on leave to reopen granted during their submissions, company searches of TSH and Scooti which indicated that there was only one issue of shares in those companies, when they were incorporated, and that no shares were subsequently issued to reflect any investment by Sirrah in those companies by way of equity. WH also relies on a letter dated 10 September 2019 from Scooti to the Australian Small Business and Family Enterprise Ombudsman, complaining of difficulties in Victoria and New South Wales in respect of the Scooti business and apparently contending that Scooti was one of the family's businesses. This letter appears to be relied on to support a proposition that the Harris family had an interest in Scooti, but it does not indicate that Sirrah had that interest, rather than HHC and members of WH's family (as distinct from the Plaintiffs) having that interest. 7. The provisional liquidator, Mr Hayes, in turn relies on his affidavit dated 5 February 2021 and the affidavit of his solicitor, Mr Mattiussi, dated 24 March 2021. Those affidavits respond to criticism of the provisional liquidator's conduct which were implicit in the evidence on which the Second-Fourth Defendants relied, much of which was not admissible and not admitted, and were largely not pressed in submissions by Mr Fernon to support the application to vacate the hearing date. The only criticism which was advanced by Mr Fernon of the provisional liquidator's conduct was a suggested delay in production between the issue of a subpoena directed to the provisional liquidator on 5 March 2021 and the production of the USB on 24 March 2021. There seems to me to be no substance in that criticism, given the attempts that were made by the provisional liquidator in the intervening period to resolve the difficulties as to the volume of documents that the Second-Fourth Defendants sought to have produced, to which the Second-Fourth Defendants did not respond in any, or any constructive manner. It is otherwise preferable that I do not address Mr Hayes' and Mr Mattiussi's evidence, where it is not necessary to do so to determine this application, but may be necessary to reach findings in respect of that evidence in order to address an application which has also been brought by the Second-Fourth Defendants to replace Mr Hayes as provisional liquidator of Sirrah. The parties' submissions in the further application to vacate the hearing date 1. Mr Fernon, who appears for the Second-Fourth Defendants, submits that the basis for their again seeking to vacate the hearings is their "inability" to access financial and transactional documents held by the provisional liquidator relating to the financial affairs of Sirrah and HHC. That submission is imprecise, since relevant documents were originally provided to WH in November 2020, and again in February 2021, on a hard drive; those documents were also located on a server controlled by a third party, access to which was under WH's control throughout the large part of the proceedings, until the provisional liquidator was appointed, and was again made available to him by the provisional liquidator from March 2021; access to documents was again made available on the USB produced in response to the subpoena on 24 March 2021; and HHC's financial records are not under the provisional liquidator's control. Mr Fernon submitted that these financial documents were sought to assist the Second-Fourth Defendants to establish defences to the claims made against them, "including a possible application to withdraw admissions made in their Defences concerning loans alleged to have been made by Sirrah to HHC and [WH]". As matters developed, no aspect of those defences other than the foreshadowed further application to withdraw the admissions in paragraphs 45-47 of the Amended Defence was advanced. 2. Mr Fernon submitted that the issue of access to the server and Sirrah records was first raised by WH shortly after the provisional liquidator was appointed in 2019, although I have noted above that that occurred in respect of the provisional liquidator's requirement that he provide information, not in respect of the proceedings; that WH raised the issue of access to documents in his affidavit of August 2020 and further requests for documents have been made since November 2020. I have referred above to the fact that Sirrah was under WH's control for a substantial period prior to the provisional liquidator's appointment, and he had full access to its cloud server in that period; there is no evidence that the provisional liquidator has not taken reasonable steps to seek to obtain access to that server since requests were made by WH, where that server is not under his control; and WH has had access to the relevant documents since at least February 2020, on a hard drive although in a form that his advisers regard as difficult to access, and although he and his representatives have not devoted any significant time to reviewing them. 3. Mr Fernon submitted that the Further Amended Statement of Claim brings claims against WH including for loans exceeding $12 million and alleging breaches of directors' duties and accessorial liability. That, of course, has been the position since that Amended Statement of Claim was filed. Mr Fernon noted, correctly, that an application was made to withdraw the admissions in paragraphs 45-47 of the Amended Defence in August 2020, and was not pressed. Mr Fernon also referred to evidence originally led by WH that the admissions were not relevantly explained to him by his then solicitors and necessary instructions were not obtained from him; WH's further evidence, to which I have referred above, indicates that the he did not read the amendments to the Amended Defence, before he verified them, and there seems to me to be no complexity in those amendments and his reading them would have made clear that, not only did the Amended Defence accept the position that loans were made by Sirrah to WH and HHC, but it also advanced an affirmative claim that those loans were to be set off against other loans made by WH to Sirrah. Importantly, WH had verified both that the allegations of fact as set out in the amendments to the Amended Defence were true; and that the allegations of fact as set out in those amendments that were denied were untrue and that, "after reasonable inquiry, he did not know whether or not allegations of fact that were not admitted were true". I bear in mind that he had sought to qualify the verification of paragraphs 45-46, but not paragraph 47 of the Amended Defence, as being true, and indicated they would be "the subject of further application for leave to withdraw the pleading in the future conduct of the litigation". I have pointed above to the absence of any evidence of any substantial further investigation of those matters by WH or his advisers in the period from 21 August 2020 when that statement was made, largely continuing up to the commencement of the hearing. 4. Mr Fernon referred to "unsuccessful attempts" by the Second-Fourth Defendants to obtain records to use in the preparation of evidence, but that proposition is also not supported by the evidence, where the records were available on hard disk to WH and his advisers from at least February 2021. It does not seem to me that it was then open to WH, or his advisers, simply to choose not to access those documents on the basis that he or his advisers hoped they could in future be made available in a more convenient form, where any reasonable litigant and his legal representatives would consider that steps at least ought to have been taken, at that time, to undertake at least a sampling-based review of the documents available on hard disk, in order to seek to identify evidence that might support the proposed application to withdraw the admissions and WH's and HHC's substantive defence. 5. Mr Fernon also referred to evidence, which was not in admissible form and was not admitted, that WH had observed records at the provisional liquidator's office "relating to the relationship" between Sirrah, Scooti, TSH and HHC "that record the basis on which such payments were made". When WH led evidence in admissible form, in the last of his affidavits, that amounted to no more than a suggestion that there were references to Scooti and TSH as "subsidiaries" or "investments" of HHC, which was not inconsistent with a characterisation of the transactions as loans, nor supported by the shareholdings in Scooti and TSH as notified to the Australian Securities & Investments Commission, which do not record the issue of further shares to reflect any investment in those companies, by HHC or Sirrah, beyond the initial issue of shares. 6. In any event, Mr Fernon went no further in submissions than to identify the possibility that, at some time in the future, an application might be made to withdraw the admissions and develop an affirmative defence as follows: "If the documents sought support the contentions of [WH], then the Second-Fourth Defendants may be able to assert that the monies paid to Scooti and TSH or to HHC for those companies were paid pursuant to a resulting trust in favour of Sirrah and not pursuant to a loan arrangement." 1. Mr Fernon also noted that the Second-Fourth Defendants' Defence seeks to rely on ss 1317 and 1318 of the Corporations Act to excuse any breach found, and that establishing honesty on the part of WH and MH in their actions is an essential part of any reliance on those provisions. While that proposition is correct, the case law also establishes that, not surprisingly, the material facts relied on for such a defence must be pleaded, and neither WH's evidence nor Mr Fernon's submissions identify any pleaded material facts, or any potential further amendment of the Amended Defence, that depend upon further access to Sirrah's financial records. The Second-Fourth Defendants identify no more than a hope that, if wider access to records of Sirrah and HHC may be obtained, after those records were under WH's control for a long period, then something might turn up to assist WH in that respect. 2. Mr Fernon also submitted that the question of breach of duties, and in particular a breach of s 182 of the Act, is relevant to any claim which WH and HHC may have in respect of policies of directors and officers liability insurance, where liability arising from a breach of s 182 of the Act is excluded from cover under the terms of the policy. I give little weight to this matter. Mr Fernon did not seek to contend that the findings in these proceedings will bind WH or Sirrah or the directors and officers liability insurer, AIG, in any dispute in respect of the policies, where AIG is not party to these proceedings. There is also no reasonable explanation of the Second-Fourth Defendants' failure to identify any potential claim under the policies during the several years in which these proceedings have been on foot, and it does not seem to me that the Court could accept any general proposition that proceedings involving a company or its directors should be vacated, at the latest possible date, because either or both of them have failed to remember or make inquiries as to the availability of their own directors and officers liability insurance at an earlier date. 3. Mr Fernon also submitted and I recognise that this application must be determined in accordance with the dictates of justice, having regard to the just, quick and cheap determination of the real issues in dispute in the proceedings, under s 56-58 of the Civil Procedure Act 2005 (NSW), and I will return to those principles below. Mr Fernon submitted that the dictates of justice cannot countenance the Second-Fourth Defendants being unable to assert defences because of their inability to obtain records, and that they have acted with due dispatch and have withdrawn earlier applications to vacate the hearing date in anticipation that documents would be produced, that has not occurred. I do not accept this submission, where it seems to me the Second-Fourth Defendants have not been unable to obtain such records, not least where Sirrah was under WH's control and those records were in its possession for the substantial part of the period in which these proceedings have continued, prior to the appointment of the provisional liquidator; they have not acted with due dispatch; and the documents were in fact made available to them, at least on hard disk, from February 2021 and they have not made any reasonable efforts to review them in that form. 4. As I have noted above, Mr Fernon also referred to the adverse impact upon the Second-Fourth Defendants of declining to vacate the hearing date, so far as it will shut them out of a future application to withdraw the admission(s), and submits that will affect the Court's ability to undertake a just determination of the proceedings. I bear that in mind, although the existence of evidence to support that future application remains speculative, since only WH and not his legal advisers have undertaken even a brief review of the documents held on Sirrah's server. I also bear in mind the several years which WH has previously had to address this issue, and the several months his present solicitors have had to do so. 5. In oral submissions, Mr Fernon again points to the significance of the claims brought against HHC and WH and to WH's evidence as to the circumstances in which the Amended Defence was finalised. Mr Fernon directs attention to those matters, so far as the application to vacate the hearing date is supported by a contention that there are significant prospects of being permitted to withdraw the admission made by the Second-Fourth Defendants (T92-93). Mr Fernon draws attention to a potential claim that shares in Scooti were held on trust for Sirrah, because it was the source of the monies that were ultimately invested into Scooti. However, that claim is not a new development, where that allegation is already made in paragraph 59S of the Defence to Further Amended Statement of Claim filed in August 2020, nor does it support a characterisation of the relevant transactions as anything other than loans, where no further capital was issued by TSH or Scooti when monies were advanced, so that those advances were not treated as in the nature of a further equity investment by HHC or WH (whether in their own right or on trust for Sirrah) in TSH or Scooti. 6. Mr Fernon also draws attention, in oral submissions, to Sloss J's observations in Shot One Pty Ltd (in liq) v Yeo in his capacity as liquidator of Shot One Pty Ltd (in liq) [2017] VSC 741 at [237]ff to the potential difficulties with reliance on entries in a company's general ledger and financial accounts. I have had regard to those observations, but the question here is one of characterisation of the relevant transactions, and both the financial accounts of Sirrah and the shareholdings in THC and Scooti do not reflect such a further investment. In oral submissions, Mr Fernon identifies the ultimate argument that is to be put as being that WH made a further capital contribution to TSH and Scooti, implicitly on trust for Sirrah, rather than making loans to those entities, but that is again inconsistent with the share records of TSH and Scooti. 7. Mr Fernon also put a submission, which I found difficult to follow as I noted in the course of his oral submissions (T98-99), that: "Simply put, the proposition, your Honour, that as a shareholder or as a beneficial owner of the company that the company made a beneficial payment; made a payment of capital, hence the capital account, is simply against the fact that he already owned 50% of the shares in relation to it and there'll be an equalisation – will have to at some stage be an equalisation of the capital account with the other shareholder." I find it difficult to see how further payments in substantial amounts can have been made to TSH or Scooti on capital account, by way of equity investments as WH seeks to contend, without having been reflected in the issue of shares by either TSH or Scooti after the point of their initial incorporation. 1. I recognise that Mr Fernon retreated somewhat from that proposition, putting what may be an alternative argument (T99) as follows: "I can't put the proposition any further other than to say that the shares that [WH] owns he says he owns on trust for Sirrah, and that this was a payment being made by the shareholder – the beneficial shareholder into that company, and if there needs to be an equalisation of the capital accounts between that and the other shareholders, having regard to the fact that [WH] is already a principal shareholder in relation to that company, that what would need to happen, your Honour. I can't put it in any other position." 1. However, this contention has the difficulty that it implicitly accepts that no further capital contribution was in fact made by WH or Sirrah to Scooti or THC, with the implication that the payment would stand as a loan until capitalised; and the proposition that shares would be issued in the future faces the formidable difficulty that THC and Scooti are now in liquidation. Mr Fernon also points to WH's evidence of his subjective intention that there not be a loan, and that the payments be made as a capital investment with him holding the shares on trust for Sirrah (T102). Plainly, WH can seek to give evidence of subjective intention, although it is not apparent to me that such evidence, or any corroboration of it, can assist where any such intention was not implemented by the issue of equity in THC or Scooti to capitalise any investment in them. 2. Mr Wells, with whom Mr Anderson appears for the Plaintiffs, responds by referring to the two previous applications made by the Second-Fourth Defendants to withdraw the admissions in paragraphs 45-47 of the Defence, by the Interlocutory Process which was dismissed by consent on 17 August 2020, and by the second Interlocutory Process filed on 9 February 2021, which was not pursued. Mr Wells notes that this application to vacate the hearing date is premised on the possibility of a third application to withdraw those admissions, and submits that possibility is itself speculative, referring to Mr Fernon's submission, as I noted above, that "if" the documents support WH's contention, then the Second-Fourth Defendants "may" be able to assert the relevant matters. Mr Wells also submits, and I accept, that, for the purposes of the factors specified in s 56-58 of the Civil Procedure Act, the Second-Fourth Defendants have not acted with the degree of expedition which might be expected of them. 3. Mr Wells submits that the evidence led by the provisional liquidator demonstrates that he has not been the cause of any delay, and it is apparent that he and his staff and solicitors have responded with expedition to the requests of the Second-Fourth Defendants. As I have observed above, Mr Fernon did not contend to the contrary, other than to refer to the delay between the issue of the subpoena on 5 March 2021 and the production of documents at the commencement of the hearing. Mr Wells also points out that, although access to records had been sought for the completion of the Second-Fourth Defendants' expert evidence, no such evidence was led and an application to rely on an expert report was abandoned. 4. Mr Wells also submits that the vacation of the balance of the hearing would be against the public interest in the proper and efficient administration of justice, where other members of the community would be deprived of their opportunity to have matters heard on the dates allocated to these proceedings, referring to my judgment in Re Felan's Fisheries Pty Ltd [2017] NSWSC 1502 at [25]. He also points out, and I accept, that the Plaintiffs would be prejudiced by increased costs and further delay by the loss of the hearing dates, and I note that there is no certainty that the Second-Fourth Defendants could pay the costs thrown away in that respect, in addition to any damages awarded against them if they are unsuccessful in their defence of the proceedings. Finally, Mr Wells points to the breadth of the subpoena issued by the Second-Fourth Defendants on 5 March 2021, to the lack of any obvious relationship between the categories of documents which it seeks and the matters as to which the Second-Fourth Defendants seek to withdraw admissions, and I referred above to the provisional liquidator's sensible, but unsuccessful attempts to negotiate a narrowing of the subpoena in a manner that may have expedited production. 5. Mr Tobin, who appeared for the provisional liquidator, noted that the provisional liquidator was not a party to the proceedings and was not a respondent to this application; that the provisional liquidator took an impartial stance in the proceedings and neither pressed for nor resisted the application to vacate the hearing date, other than in relation to costs; and responded only to the complaints foreshadowed, but largely not pressed, in respect of the provisional liquidator's conduct. 6. Mr Tobin pointed to the difficulties which the provisional liquidator had faced in obtaining access to Sirrah's books and records, to the extent that they were held on a cloud server maintained by a third party. It is not necessary to address that matter, where Mr Fernon does not criticise the efforts made by the provisional liquidator in that respect. Mr Tobin refers to public examinations undertaken by the provisional liquidator to seek to obtain further information, but it is also not necessary to address that question, where no criticism is advanced of the provisional liquidator's conduct in that respect. Mr Tobin refers to the provisional liquidator and Mr Mattiussi's evidence as to the steps taken to subsequently develop an inspection regime, and no criticism is made of the provisional liquidator in that respect, other than for the suggested delay in production of documents after the subpoena was issued on 5 March 2021. Mr Tobin points out that the provisional liquidator, constructively, consented to short service of that subpoena; advised the Second-Fourth Defendants of the difficulties in responding to the subpoena by 10 March 2021, which were not surprising given its width; then identified difficulties which arose from the scope and wording of the subpoena, which he sought to address by identifying a range of documents (identified as the "initial documents") which had been produced as most likely to assist the Second-Fourth Defendants; and to the fact that the Plaintiffs engaged, but the Second-Fourth Defendants did not, in respect of amendments to the subpoena which might have facilitated an earlier response to it. Mr Tobin also points out that, notwithstanding the criticisms that are now made of the provisional liquidator's delay in responding to the subpoena, the Second-Fourth Defendants have never responded to the provisional liquidator's attempt to resolve, by discussion, the difficulties with the form of that subpoena. 7. Mr Tobin submits, with substantial force, that: "[The provisional liquidator] confronted a documentary situation not of his making in taking the appointment of provisional liquidator of Sirrah and discovering the poor state of the books and records, including the concomitant cloud server issue. He has sought to be impartial in his requests that the parties subpoena him for Sirrah's records. He has been mindful of the concerns of the parties and of the Court in light of the hearing. With respect to the Subpoena, he offered alternatives as to how production could be given and sought the [Second-Fourth] Defendants' engagement on the issue but this was not taken up. He was not asked to provide any part production, or to limit the scope of the documents sought, or anything else, in answer to his suggestions. Despite the [Second-Fourth] Defendants reluctance to engage, he has provided informal production of what he considers to be an expedient outcome – and this has been taken up by the [Second-Fourth] Defendants." 1. Mr Tobin also, rightly, points out that it has always been open to the Second-Fourth Defendants to seek orders from the Court in respect of these issues, but they did not do so prior to the application for short service in respect of the subpoena, in early March. Mr Tobin also points to an aspect of WH's evidence that may cast light on the Second-Fourth Defendants' approach, namely that WH's evidence is that, throughout the period in which the provisional liquidator was seeking to expedite the production of documents, WH was planning an application to vacate the hearing dates. In these circumstances, there may have been little perceived advantage to WH and his advisers in devoting significant efforts to expediting the production, or review, of the relevant documents. The applicable principles and determination of the further application to vacate the hearing date 1. The manner in which this application was framed raised issues, first, as to the circumstances in which the Court would grant leave to the Second-Fourth Defendants to withdraw the admissions in paragraphs 45-47 of the Amended Defence, since the application was partly directed to seeking further time (beyond the several years the proceedings are on foot) for WH to locate evidence that might support a further application for that leave. It also raised issues as to the principles applicable to vacating a hearing date. 2. In my earlier ex tempore judgment dealing with the Second-Fourth Defendants' earlier application to withdraw several admissions, which was ultimately not pressed, I referred to the summary of the applicable principles in my judgment in Re Bluemine Pty Ltd (in liq) [2019] NSWSC 1807 (at [4], [6]-[7]) as follows: "In written submissions, [the relevant defendant] acknowledges that, by reason of r 12.6 of the Uniform Civil Procedure Rules 2005 (NSW), an admission made in a defence cannot be withdrawn except by consent or by leave of the Court. He also points to the fact that, unless and until leave is given to withdraw an admission, no evidence may be led which is contrary to the admission and no submissions can be made which are contrary to the admission: Nominal Defendant v Gabriel [2007] NSWCA 52 at [110]; (2007) 71 NSWLR 150. He acknowledges that a defendant, in seeking to withdraw an admission, must adduce clear evidence of how it was that the admission was made and why it should be permitted to be withdrawn: Rigato Farms Pty Ltd v Ridolfi [2000] QCA 292; [2001] 2 Qd R 455 at 459-460. [Counsel who appears for the relevant defendant] also submits that it may be appropriate to grant leave to withdraw an admission where it was made in circumstances where it was contrary to the actual facts or without due consideration of the relevant matters, and refers to the decision in Drabsch v Switzerland General Insurance Co Ltd (unreported, Supreme Court of New South Wales, Santow J, 16 October 1996) to which I will refer further below. He emphasises that the Court will have regard to all the relevant circumstances, with the overall question being the need for each party to receive a fair trial. … In submissions in response, the Plaintiffs in turn refer to the case law applicable to the withdrawal of an admission. The relevant principles are set out in the judgment of Santow J in Drabsch v Switzerland General Insurance Co Ltd above, to which reference has been made in many of the subsequent cases. Those principles were in turn applied by Brereton J in Re Dymocks Book Arcade Pty Limited [2013] NSWSC 298, which quoted those principles at length, and noted the several cases which subsequently applied them. Those principles in turn have been summarised by White J (as his Honour then was) in SLE Worldwide Australia Pty Limited v Wyatt Gallagher Bassett Pty Limited [2005] NSWSC 816 at [56], where his Honour observed that: "It is legitimate and it may be necessary to consider whether the party making the admission did so deliberately, or whether he did so in error, whether the significance of the admission has changed since it was made, for example by reason of other amendments … or whether new evidence has come to light. … Where a party, who is legally advised and does not suffer any disability, deliberately and without mistake, admits liability in whole or in part, and there are no relevant changes of circumstance, prima facie, justice or fairness to both parties does not require it be allowed to change its mind. That is why admissions made with deliberateness and formality are not ordinarily permitted to be withdrawn." [citation omitted] In that case, his Honour also held that the existence of the reasonable argument against liability, in that case, did not provide sufficient basis to permit withdrawal of the admission. Equally, as the Full Court of the Federal Court observed in Jeans v Commonwealth Bank of Australia Limited (2003) 204 ALR 327 at [18] … the question is one of the attainment of justice rather than trying to apply an artificial approach and, as the case law has also noted, the Court is "after the truth" so that, in principle, an erroneous admission should be able to be withdrawn unless other factors outweigh that factor." 1. Mr Sirtes, who appeared for the Second-Fourth Defendants in that application, did not contest the accuracy of that summary. I also there observed, citing Bluemine (at [10]), that: "… there exists a prejudice to the public interest, where a serious admission is made as to a significant matter, namely the appointment of a liquidator; that admission is verified, on oath, by affidavit; and it is then sought to be withdrawn, with the only justification given that the party who made it did not, on his solicitor's account, pay any particular attention to the proceedings at the time the admission was made. That approach, it seems to me, would fundamentally undermine the requirement for verification of Defences, if it were generally used to explain an admission wrongly made by reason of a lack of attention to the Defence at the time it was verified." 1. I now turn to the principles applicable to a late application to vacate a hearing date, and I have drawn on my observations in Re Elsmore Resources Ltd [2016] NSWSC 884 and Re Felan's Fisheries Pty Ltd above in this regard. The Court must act in accordance with ss 56–58 of the Civil Procedure Act 2005 (NSW). Section 56 of the Civil Procedure Act provides that the overriding purpose of the Civil Procedure Act and the rules of Court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in dispute in the proceedings. The Court is required to give effect to that overriding purpose when it exercises any power given by the Civil Procedure Act which would include, in this case, making an order to vacate the hearing date. Section 57 requires the Court to manage proceedings having regard to specified objects, including the just determination of the proceedings, the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings and all other proceedings in the Court at a cost affordable by the respective parties. 2. The Court must, in dealing with this application, also have regard to the efficient disposal of the business of the Court and the efficient use of judicial and administrative resources. Plainly, the Court will not be able to use the dates lost to this case, even in a busy list. As I observed in Re Felan's Fisheries Pty Ltd above: "… however busy a list may be, and however many parties are in fact waiting for hearing dates, few of them are able to be ready for hearing when told, shortly before, that a hearing date has just become available. That is, of course, why the Court's usual practice is to allocate hearing dates in advance so that parties may arrange their affairs accordingly." 1. Section 57 also refers to the timely disposal of the proceedings, and all other proceedings in the Court, at a cost affordable by the respective parties. I will refer to the significance of that matter below. Section 58 in turn refers to other matters that are relevant, requiring the Court to have regard to the provisions of ss 56–57, and indicating that the Court may have regard to other matters to the extent to which it considers them relevant. I proceed on the basis that the case has a degree of difficulty or complexity. The Civil Procedure Act also draws attention to the relevance of the degree of expedition with which the parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, and the degree and the use which a party has made of any opportunity made available to it in the course of the proceedings. There were plainly steps available to the Second-Fourth Defendants, including earlier preparation work while documents were under WH's control and the issue of an earlier or narrower subpoena to the provisional liquidator of Sirrah that, if they had been taken, would likely have avoided the difficulties they now face. 2. The Civil Procedure Act also requires me to have regard to the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, and I have regard, on the one hand, to the probability that the Second-Fourth defendants will be shut out of a further opportunity to seek to withdraw the relevant admissions if the hearing is not vacated and on the other, the injustice which the Plaintiffs will suffer, if the hearing of a matter which has already taken some time to reach a hearing is now vacated, and the risk that there would now be a substantial deferral of that hearing. I also have regard to the Court of Appeal's important judgment in Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 (at [36]), where Allsop ACJ observed that the provisions of the Civil Procedure Act to which I have referred above are intended to bring about: "[A] new statutory balance among various factors in litigation including court and party efficiency and delivery of individual justice. Delay and case backlog are not merely factors affecting the public cost of delivering just, they corrode the ability of the courts to provide individual justice...The reforms that have taken place under the Civil Procedure Act...can thus be seen not really to reflect worthy governmental and judicial efforts for efficiency, but also to be vital for the provision of timely individual justice. To these salutary ends significant powers of case management have been placed in the hands of judicial officers which, if exercised, can often be seen to have sharp, and sometimes detrimental effects on the claims of parties." 1. In UBS AG v Tyne (as trustee of the Argot Trust) (2018) 265 CLR 77; (2018) 360 ALR 184; [2018] HCA 45, in dealing with a question of overlapping successive proceedings, a plurality of the High Court again referred to Aon and noted (at [38]) that its effect was that: "The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. These wider interests are reflected in s 37M(2) of the F[ederal] C[ourt] A[ct] [corresponding to s 56 of the Civil Procedure Act]. As the joint reasons in Aon explain, the "just resolution" of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the F[ederal] C[ourt] A[ct]. Integral to a "just resolution" is the minimisation of delay and expense. These considerations inform the rejection in Aon of the claimed "right" of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate." 1. In Re Elsmore Resources Ltd above at [13], I in turn noted that one of the matters to which s 57 referred was the efficient disposal of the Court's business and the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings and all proceedings in the Court at a cost affordable by the respective parties. I do not, in that respect, treat the Court's convenience, for the Court's sake, as a matter of any significance. It is, however, of great significance, as I noted in Re Elsmore Resources Ltd above at [13] and again in Re Felan's Fisheries Pty Ltd above at [25], that "the community both funds the justice system and depends upon access to the justice system" and that vacating a hearing of some length, shortly before it is due to commence, and where the practical likelihood is that other litigants could not be ready for hearing in sufficient time to have their cases listed over that period, "would be significantly disadvantageous to the public interest in the proper administration of justice." Here, the hearing time that would be lost would be the several days that remain to complete the hearing, but the lateness of the application would exacerbate the detriment arising from that loss. 2. For these reasons, I was satisfied that the Second-Fourth Defendants have not established that the hearing date should be vacated, against the contingency that there might in future emerge grounds to support a withdrawal of the admissions. Affidavit evidence and credit in the substantive proceedings 1. I now turn to the affidavit evidence in the substantive proceedings. I bear in mind the fallibility of human memory, particularly when disputes intervene, in assessing the affidavit evidence led in the proceedings: Watson v Foxman (1995) 49 NSWLR 315 at 319. I summarised the applicable principles in Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7], as follows: "It is important in this context to have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319 per McLelland CJ in Eq; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41] per Rares J; Varma v Varma [2010] NSWSC 786 at [424]-[425] per Ward J. To the extent that credit issues need to be determined in respect of particular conversations, I have also had regard to the fact that objective evidence is likely to be the most reliable basis for determining them. I summarised the relevant principles in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10], where I noted that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, by paying particular regard to the witness's motives and the overall probabilities: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34]; Craig v Silverbrook [2013] NSWSC 1687 at [141]; State of New South Wales v Hunt [2014] NSWCA 47 at [56]." 1. The Plaintiffs rely on an affidavit dated 14 March 2018 of their solicitor, Mr See, which referred to an undertaking given by WH not to reduce the cash assets of the Plaintiffs below $13,341,794, which was breached prior to the appointment of the provisional liquidator to Sirrah. The Plaintiffs rely on the affidavit of Ms Monica Brown dated 6 August 2018 which responds to WH's earlier affidavit of WH dated 18 June 2018. Significant parts of that affidavit were not relevant, or were not in proper form and were not admitted. 2. The Plaintiffs also rely on several affidavits of Mr Gregory Harris. In his affidavit dated 31 July 2018, significant parts of which were also not read or were rejected, Mr Gregory Harris refers to the transfer of shares to HHC which are no longer in issue and to loans made by Sirrah to HHC. In his affidavit dated 8 March 2019, Mr Gregory Harris set out the history of Sirrah, referred to correspondence between the parties anterior to the commencement of these proceedings, and exhibited copies of the financial reports of Sirrah for the financial years ending 30 June 2012 – 30 June 2017. By a further affidavit dated 27 September 2019, Mr Gregory Harris exhibited a bundle of documents produced by the Defendants. Significant parts of that affidavit dealt with matters which are not in issue in the proceedings and were not read or not admitted. Mr Gregory Harris also there referred to the expenditure of funds received by Sirrah following the sale of the Cabrini nursing home in December 2017, including in loans relating to WH's purchase of a Bali property, which I address below, and travel expenses incurred by WH which WH now concedes were in the nature of personal expenses. By his further affidavit dated 10 October 2019, Mr Gregory Harris again referred to the undertaking provided by WH to retain the specified amount in Sirrah, and to issues as to production of bank records of Sirrah. By his affidavit dated 22 September 2020, Mr Gregory Harris exhibited further documents including bank records of Sirrah, financial reports, tax returns and Sirrah's general ledger, on which the Plaintiffs rely to establish expenditures made by Sirrah under WH's control. 3. By her affidavit dated 17 March 2020, Ms Robyn Reid responded to WH's affidavit dated 21 January 2021. Significant parts of that affidavit were not relevant and were not read, and other parts were not admissible by reason of their form. Ms Reid also led some evidence relating to WH's role in the management of the Cabrini facility. The Plaintiffs also read the affidavit dated 19 March 2021 of Mr James Harris, which exhibited posts by WH on his Facebook page, between 2011 and 2020. That evidence was directed to the significant amount of travel undertaken by WH during that period, but it is not necessary to address that evidence where WH now accepts that the Disputed Expenses to which I refer below were personal expenses. The Plaintiffs also relied on the expert report dated October 2020 of Ms Lockyer, which I address below in dealing with the Plaintiffs' claims in respect of management fees paid by Sirrah to HHC. None of the witnesses called by the Plaintiffs were cross-examined, and the Plaintiffs are correct in characterising their case as essentially a documentary case. 4. I now turn to the evidence on which WH relied, noting that the claim against MH was not pressed and was dismissed in the course of the hearing. WH relied on his affidavit dated 18 June 2018, as to which several paragraphs were not read. WH there refers to Sirrah's history and to the directors and shareholdings in Sirrah, to the circumstances in which he became a director of Sirrah in 2002, a matter which is no longer contested, and to the issue of shares to HHC in 2003 and the transfer of further shares to HHC in 2009. WH's evidence (WH 18.6.18 [58]) is that: "I took over the management of Sirrah in about 2002 or 2003 after agreeing on a succession plan with my parents and after [HHC] entered a management agreement with Sirrah. I have provided management services to Sirrah under that agreement, and [HHC] has charged Sirrah for those services under that agreement. My parents had agreed to this arrangement in 2002 or 2003, and they knew that I would provide those services to Sirrah through [HHC]." 1. WH also refers to the entry into a new management agreement with Sirrah on 1 December 2016 ("2016 Service Agreement"). His evidence (WH 8.6.18 [60]) is that he continued to provide management services to Sirrah under the 2016 Service Agreement and HHC continued to charge Sirrah for the provision of those services pursuant to that 2016 Service Agreement. WH also refers to HHC's debt to Sirrah under loan arrangements which he contends were made between HHC and Sirrah in about 2014 or 2015, as part of arrangements in respect of his divorce (WH 18.6.18 [63]-[64]). WH also refers to the circumstances of the sale of Sirrah's business of operating the Cabrini nursing home in 2017 and acknowledges having given an undertaking not to pay the amount of $13,341,794 out of Sirrah's account, being the amount calculated by a valuer as their entitlement out of the proceeds of the sale of Sirrah's business and assets (WH 18.6.18 [81]-[82]). As I will observe below, WH sought to resile from that evidence in cross-examination, and to treat the giving of that undertaking as a matter undertaken by his former solicitors without his instructions. WH also referred to the circumstances of the commencement of proceedings by the Plaintiffs, in 2017, initially seeking access to several categories of Sirrah's books under s 247A of the Act. 2. WH also relied on his further affidavit dated 21 January 2021, although significant parts of that affidavit were not relevant and were not read. WH there led evidence, generally by way of assertion and admitted subject to relevance, as to the steps he took in respect of the management of the Cabrini nursing home from at least 2000 and 2001, and to the work involved in obtaining development consent for and expanding the nursing home to a 120 bed nursing home. He also referred to the circumstances in which shares in Sirrah were transferred to HHC, a matter that is no longer in dispute. He also referred to statements that he made at various times as to his commitment to developing a family business (WH 21.1.21 [203]) and to his use of consultants to provide advisory services in respect of the Cabrini nursing home and steps taken to establish a "proper and professional management system and team" and to ensure "consistent delivery of services" and growth (WH 21.1.21 [217]). WH also referred to steps taken to investigate opportunities for Sirrah to expand the Cabrini facility, including at locations other than Westmead, although it appears that no other facilities were ultimately developed. 3. WH refers to his decision made in 2016 that he would sell the business, in the context of conflict within the wider family (WH 21.1.21 [257]). He also refers to the entry into the 2016 Service Agreement in December 2016, apparently well after he had made his decision to sell the nursing home business (WH 21.1.21 [275]) and I will note below the significance of the fact that, on WH's case, the obligation to pay substantial service fees to HHC under that Agreement would continue even after the business was sold. He also refers to negotiations to buy out his siblings from Sirrah (WH 21.1.21 [277]) although it is apparent, not least from the fact of these proceedings, that those negotiations were not successful. He also refers, in evidence admitted, by reason of difficulties with its form, with a limiting order under s 136 of the Evidence Act 1995 (Cth) as submission only and not as proof of the fact, to works undertaken in respect of aspects of the sale of the business, which he claims continued through to the end of 2019, and to his pursuit of investments in Scooti and other opportunities, which he characterises as investments of Sirrah although Sirrah had no equity interest in them (WH 21.1.21 [303]). WH also claims, in evidence also admitted, again by reason of difficulties with its form, with a limiting order under s 136 of the Evidence Act so that it was not proof of the fact, that he was engaged on a full-time basis addressing those matters and had engaged other persons to do so who were paid out of HHC. 4. WH refers to advice provided by Sirrah's accountant in January 2018 concerning Sirrah's substantial taxation liabilities in respect of the sale (WH 21.1.21 [306]) although he sought to resile from that evidence in cross-examination. WH also referred (WH 21.1.21 [319]), in evidence again admitted with a limiting order under s 136 of the Evidence Act as a submission and not as proof of the fact, to suggested inaccuracies in the financial accounts for Sirrah for the years 2017 to 2019 and to the need for those accounts to be reconciled, which he contends had not occurred before the provisional liquidator was appointed. His evidence, also admitted with a limiting order under s 136 of the Evidence Act by way of submission, where it was no more than a bare assertion, was that "numerous payments" had been "labelled as payments to HHC when they were for expenses of Sirrah" (WH 21.1.21 [320]). 5. WH was the only witness who was cross-examined in respect of affidavit evidence. The Plaintiffs submit that WH was an unsatisfactory witness. Mr Fernon submitted that it is not necessary for the Court to reach findings as to WH's evidence, so far as the Plaintiffs' case is documentary in character and no disputed issue will turn on WH's evidence. I am inclined to think that Mr Fernon is correct, although WH read several of his affidavits and he was cross-examined at some length. However, I consider that I should reach findings of credit as to WH in case the matter proceeds on appeal, and an appellate Court reaches different views from those which I have reached. I recognise that, as Mr Fernon submits, WH on several occasions made concessions in cross-examination which were against his interest, including abandoning any justification that several transactions were made for Sirrah's benefit, although he also there appeared to seek to raise the possibility that other unidentified transactions were made for Sirrah's benefit. However, several other aspects of WH's evidence seemed to me to be unconvincing and unlikely. First, WH's affidavit evidence (WH 18.6.18 [105]) was that the only activity of Sirrah after finalising the sale under the Business Sale Agreement would be to hold and distribute the proceeds of sale which, after discharging its liabilities, "will be distributed to Sirrah's members in accordance with their proportionate shareholdings" and Sirrah would then be deregistered. WH reversed that evidence in cross-examination and contended that he never intended that Sirrah be wound up and the proceeds of sale distributed to shareholders, but instead that they would be retained for new business activities. He sought to justify that change in position as arising from his confusion between the position of Sirrah as a company and the Cabrini nursing home as its business when he swore his first affidavit. I am unable to accept that explanation, since the language of distribution of Sirrah's assets after payment of its liabilities and the reference to Sirrah ceasing to trade and being deregistered, could only have been directed to Sirrah as company and not to Cabrini's business, particularly where the Cabrini business had been sold and was continuing in its purchaser's hands. 6. Second, WH reversed evidence which he had given on oath in an examination conducted by the provisional liquidator in the Federal Court of Australia that an interest in a property in Bali, Indonesia, was held on trust for Sirrah. WH's evidence in cross-examination in this Court was that the property was not held on trust for Sirrah. I do not accept his explanation that he was "flustered" in giving evidence in the Federal Court of Australia (T220) and the change in his evidence seems to me likely to reflect a change in his assessment of the position that will advance his interests. Third, WH repeatedly denied having given instructions to his former solicitors in respect of significant matters, including the giving of an undertaking that Sirrah would not deplete its cash balance below $13,341,794 without giving 7 days written notice. The proposition that Sirrah's former solicitors would give an undertaking of that character without instructions is not credible and I do not accept WH's evidence in that respect. It seems to me that WH was not a credible witness, and I would not accept his evidence except where it is, rarely, corroborated by documents or, more commonly, against interest. 7. WH also relied on the affidavit dated 18 December 2020 of Mr Greg Anderson, who is a director of a boutique consulting and advisory business that assists health, aged care and disability organisations and had provided services to Sirrah. A significant part of that affidavit was not relevant to the matters in issue and was not admitted. Mr Anderson led evidence of WH's contributions to the preparation of an information memorandum in respect of the sale of the Cabrini business (Anderson 18.12.20 [21]) and claimed that: "In or around 2016, [his firm] also researched the market in relation to management fees and gave advice to [WH] as to the market rates that would be appropriate for Cabrini to pay to WH's management company, described as [HHC]." 1. Mr Anderson's evidence was that the advice given was based on comparable sized aged care businesses, and he referred to a proposal document "of the type provided to [WH] in relation to management fees" (Ex J1, 3264), acknowledging that document was dated December 2019 but contending that the information contained in it was from an older document first prepared in 2016 (Anderson 18.12.20 [25]-[26]). That document did not constitute advice as to the market rates that would be appropriate for Cabrini (or Sirrah) to pay to HHC, but appeared to be a proposal for Mr Anderson's firm to provide services. The document does not make clear, and Mr Anderson's evidence does not explain, the extent to which its content had changed between 2016 and 2019, given the inevitability of price movements between the date of preparation of any "older document" in 2016 and March 2019, when that older document was prepared. It seems to me that that document, and Mr Anderson's evidence in respect of it, can be given little weight. 2. WH also relied on MH's affidavit dated 21 December 2020, parts of which were again not relevant and were not read. MH gave evidence of an increase in WH's work commitments at the Cabrini nursing home in 2003, and that he spent time in the office in respect of wages and "management" type work, and characterised his role at Cabrini from 2009-2012 as "running the facility", and referred to her observation that he was then "extremely busy, always attending meetings and doing banking and other business activities" and appeared to be "very stressed, but also to be enjoying himself" (MH 21.12.20 [29]). MH also referred to her limited role as a director of Sirrah, but nothing turns on that evidence where the Plaintiffs no longer pursue a claim against her. 3. WH also relies on the affidavit dated 8 February 2021 of Mr Raymond Whitten, a solicitor who had previously provided services to WH and Sirrah. Significant parts of Mr Whitten's affidavit were also not relevant and were not read or were not admitted. Mr Whitten referred to WH's activities in acquiring parcels of land surrounding the Cabrini facility with plans to develop them and to a possible plan for redevelopment of the facility under a joint venture agreement with third parties, which did not proceed. Mr Whitten also referred, in evidence admitted with a limiting order under s 136 of the Evidence Act as submission, and not proof of the fact, to WH's concept for a "two-wheel scooter Uber style business" (the reference being to the business conducted by Scooti or TSH under the "Scooti" name) which Mr Whitten contended was pursued as an opportunity for Sirrah and Cabrini. I find below that the evidence does not establish that proposition. 4. Mr Whitten contended, in evidence admitted as submission only, that this litigation prevented further capital being raised for the Scooti business and caused its failure and also thwarted any chance of the redevelopment of Cabrini, although he also referred to a conversation with WH which suggested that WH chose not to pursue the development while the litigation was on foot. Neither proposition was established by admissible evidence. Mr Whitten also referred, in evidence which was also admitted, again by reason of difficulties with its form, with a limiting order under s 136 of the Evidence Act as submission only and not as proof of the fact, to the significant amount of work that was necessary after the sale of the Cabrini business, continuing to the end of 2019. Mr Whitten and WH's evidence in this respect was identical, other than for cosmetic changes (inserting the words "with respect to the undertakings of Cabrini" in Mr Whitten's affidavit and replacing the word "travelled" with the word "continued") suggesting that either Mr Whitten had copied WH's evidence in this respect, or WH had copied Mr Whitten's evidence, or the solicitors had copied that part of Mr Whitten's affidavit from WH's affidavit or vice versa. 5. WH also relied on the affidavit dated 14 August 2020 of Mr Shaun Madders, a director of a firm of accountants which had acted for Sirrah for some eight years prior to the appointment of the provisional liquidator. That affidavit referred to the engagement of that firm to undertake specified work following the sale of the Cabrini business by Sirrah, and characterised those attendances as "complex, detailed, concerned significant sums, concerned voluminous records, and were time consuming". Other parts of that affidavit were not relevant or were not in proper form and were rejected. 6. The Plaintiffs also relied on the fact that the Defendants did not read affidavit evidence of Ms Rebollido, the former bookkeeper of Sirrah and HHC. There is force in Mr Fernon's submission that little remained in issue as to which Ms Rebollido could have given useful evidence, and there is an entirely plausible explanation by way of efficiency in the conduct of the proceedings and costs savings for a decision not to read her evidence. I do not draw any inference from this matter that Ms Rebollido's evidence would not have assisted the Defendants (putting aside its likely lack of relevance). The pleaded duties 1. The Plaintiffs plead (FASOC [27]) that WH owed certain duties to Sirrah since October 2002, being the duties owed by a director at general law in respect of the no conflict and no profit rules and the statutory duties under ss 180, 181 and 182 of the Corporations Act. The Defendants admit the existence of those duties although not necessarily their content (AD [27]). It will be convenient to address the legal content of those duties at this point and then return to their application below. 2. Mr Wells and Mr Anderson note that the Plaintiffs invoke the statutory directors' duties of care and diligence under s 180(1) of the Corporations Act, the good faith duty under s 181(1) and the use of position duty under s 182(1) and corresponding duties in equity. They point out that s 180(1) requires a director to exercise his or her powers and discharge his or her duties with the degree of care and diligence that a reasonable person would exercise if they were a director of a corporation in the corporation's circumstances and occupied the office held by, and had the same responsibilities as, the director. They also rightly submit that that duty "adopts an objective standard of care, measured by reference to what a reasonable person of ordinary prudence would do, enhanced where an appointment to the board of directors is based on the appointee having some special skill, by an objective standard of skill referable to the circumstances": Australian Securities and Investments Commission v Vines (2005) 55 ACSR 617; [2005] NSWSC 738 at [1058]. They also refer to my observation in Re Central Management (NSW) Pty Ltd (in liq) [2017] NSWSC 1258 at [20], referring to Vrisakis v Australian Securities Commission (1993) 9 WAR 395 at 450; 11 ACSR 162 and Australian Securities and Investments Commission v Cassimatis (No 8) (2016) 336 ALR 209; [2016] FCA 1023 at [479] that "[w]hether a breach of the duty of care and diligence is established is determined by reference to a balancing of the foreseeable risk of harm against the potential benefits that could reasonably have been expected to accrue to the company from the conduct in question." They also point out that, where a transaction has the potential for conflict between a director's interest and duty, the duty of care and diligence requires "special vigilance" and demands "scrupulous concern" on the part of those officers who become aware of that transaction to ensure that any necessary corporate approvals are obtained and safeguards put in place: Australian Securities and Investments Commission v Adler (2002) 41 ACSR 72; [2002] NSWSC 171 at [372]; Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476 at [55]. I will return to the significance of that principle in this case below. 3. Section 181 of the Corporations Act requires a director or officer of a corporation to exercise his or her powers and discharge his or her duties in good faith in the best interests of the corporation and for a proper purpose. There are differing views as to whether any part of that duty is to be assessed by a subjective standard, which it is not necessary to address in this case. Mr Wells and Mr Anderson also refer to my summary of the principles applicable to s 181(1) in Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [419]-[421], where I observed that: "In Chew v R (1991) 4 WAR 21; 5 ACSR 473 at 499, Malcolm CJ summarised the requirements of that duty as being that directors (1) must exercise their powers in the interests of the company, and must not misuse or abuse their power; (2) must avoid conflict between their personal interests and those of the company; (3) must not take advantage of their position to make secret profits; and (4) must not misappropriate the company's assets for themselves. The case law is divided as to whether a contravention of s 181(1)(a) of the Corporations Act requires that it be established that a director engaged deliberately in conduct which he or she knew was not in the company's best interests: for example, Forge v Australian Securities and Investments Commission (2004) 213 ALR 574; [2004] NSWCA 448 at [245] per McColl JA (with whom Handley and Santow JJA agreed); Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd above at [150], varied on appeal on another point in V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd above. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; 89 ACSR 1; [2012] WASCA 157, the Court of Appeal of the Supreme Court of Western Australia unanimously held that the corresponding general law duty to act in good faith in the company's best interests was subjective and would be complied with if directors honestly believed they acted in the company's best interests (at [923] per Lee AJA, at [1988] per Drummond AJA, at [2027], [2772], [2795] per Carr AJA). The alternative view is that a contravention of that limb of s 181 can be established if the law objectively considers that what the director did was improper, even if the director subjectively believed that he or she was acting in the company's best interests: see, for example, Australian Growth Resources Corporation Pty Ltd (recs and mgrs apptd) v Van Reesema (1988) 13 ACLR 261at 270–1; 6 ACLC 529 per King CJ; Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd (formerly known as Dollarforce Financial Services Pty Ltd) (2011) 86 ACSR 277; [2011] VSCA 392 at [32]–[33]. ... The section may be contravened if a director promotes his or her personal interest in a situation where there is a conflict or real or substantial possibility of a conflict between those interests and the company's interests: Australian Securities and Investments Commission v Adler above at [735]; Parker above at [72]. A contravention of s 181(1)(b) may also be established if a director does not exercise his or her powers for the purpose for which they were conferred or exercised them for an improper purpose, and the bulk of authority indicates that question is to be determined objectively: Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187; 14 ACSR 109 at 137 per Ipp J (with whom Malcolm CJ and Seaman J agreed); Australian Securities and Investments Commission v Adler above at [738]–[739]; Parker above at [73]. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) above, the majority held that whether a director acts for an improper purpose, for the purposes of the corresponding general law duty, is determined objectively involving an assessment by the Court of what was reasonable in the circumstances (at [933] per Lee AJA, at [1988], [2027], [2073] per Drummond AJA). By contrast, Carr AJA held that the test whether directors had acted for an improper purpose was primarily subjective, although a decision would be voidable if directors acted in good faith for a purpose that was beyond their powers or for a collateral purpose (at [2923])." 1. Section 182 of the Corporations Act prohibits a director, secretary, officer or employee of a corporation from improperly using his or her position to gain an advantage for himself or herself or someone else, or cause detriment to the corporation. I also summarised the principles applicable in respect of s 182(1) in Re Colorado Products Pty Ltd (in prov liq) above at [432]–[433] as follows: "An objective standard is to be applied in determining what amounts to an improper" use of position, and impropriety is established by a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case": R v Byrnes above at 514–15 per Brennan, Deane, Toohey and Gaudron JJ; R v Towey (1996) 21 ACSR 46 at 57; 132 FLR 434 per Gleeson CJ (with whom Allen and James JJ agreed). In Doyle v Australian Securities and Investments Commission (2005) 227 CLR 18; 223 ALR 218; 56 ACSR 159; [2005] HCA 78, the High Court observed (at [35]) that the relevant conduct would be improper if it amounted to: "a breach of the standards of conduct that would be expected of a person in [the director's] position by reasonable persons with knowledge of the duties, powers and authority of his position as director, and the circumstances of the case, including the commercial context." It is not necessary that the relevant director gain an advantage for himself or herself or cause a detriment to the company in order to establish a contravention of the section: Chew v R (1992) 173 CLR 626 at 633; 107 ALR 171 at 174; 7 ACSR 481 at 484 per Mason CJ, Brennan, Gaudron and McHugh JJ. An objective test was also applied to determine whether this section was contravened in Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd above and, in Hydrocool Pty Ltd v Hepburn (No 4) (2011) 279 ALR 646; 83 ACSR 652; [2011] FCA 495, Siopsis J followed R v Byrnes, above, in holding that impropriety for the purposes of this section was objective and did not require subjective knowledge of impropriety and followed Chew v R, above, in holding that a contravention could be established although the desired object was not achieved. …" 1. The Plaintiffs also rely on general law principles. A director of a company is a recognised category of fiduciary and the "no conflict" and "no profit" rules apply to a director as a status-based fiduciary. The "no conflict" rule has a strict application when it applies in the sense that, if a transaction has occurred in conflict of interest, a company director cannot avoid a breach of that rule by asserting the fairness of the transaction or that it was in the company's best interests or that the director was not acting with subjective dishonesty. I observed (by reference to authority) in Re Colorado Products Pty Ltd (in prov liq) above at [351]: "Broadly, the no conflict rule prohibits conduct where a fiduciary has a personal interest or duty owed to a third party which gives rise to a real and sensible possibility of a conflict. That rule and the no profit rule, which provides that a fiduciary cannot obtain a profit from its fiduciary position without the principal's consent, may overlap." 1. In Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37, Payne JA (with whom Gleeson and Leeming JJA agreed) summarised the no conflict and no profit rules as follows (at [105]) as follows: "A fiduciary is under an obligation, without informed consent, not to promote the personal interests of the fiduciary by making or pursuing a gain in circumstances in which there is a conflict, or a real or substantial possibility of a conflict, between the personal interest of the fiduciary and those to whom the duty is owed … A conflict arises if there is a real and sensible possibility that the personal interests of the fiduciary divide the loyalty of the fiduciary with the result that he or she could not properly discharge their duties to the beneficiary. …:" [citations omitted] Claims in respect of management fees 1. The Plaintiffs bring several claims in respect of management fees paid by Sirrah to HHC. The Plaintiffs rely on a Service Agreement entered into in 1997 ("1997 Service Agreement") between Sirrah and HHC, pursuant to which remuneration was payable to HHC on a monthly basis at a specified rate. It is common ground that the terms of that agreement included provision for HHC to be paid remuneration of $8,080 per month (or at the rate the parties otherwise agreed) together with a yearly increase commencing on the first anniversary of that agreement equal to the percentage rate of increase in the Consumer Price Index ("CPI"); that agreement was for a term of five years; and HHC had an option to renew that agreement or a period of five years (FASOC [29], AD [29]). The Plaintiffs contend that the terms of the 1997 Service Agreement were not varied and that Agreement was not renewed, and no other agreement in relation to the provision of management services by HHC to Sirrah was entered into from June 1997 to 30 November 2016 (FASOC [30]). The Defendants respond that, during that period, WH was employed by Sirrah as its chief executive officer; he provided services to Sirrah in that role, by himself or through HHC; and either or both WH and HHC were entitled to reasonable remuneration for those services, or would be entitled to an allowance for such remuneration in respect of any remedies to which Sirrah might otherwise be entitled (AD [30]). 2. It is common ground that, from 2007 to 1 December 2016, Sirrah paid a total amount of $3,796,547 to HHC by way of management fees, as recorded in its financial statements (FASOC [31], AD [31]). The Plaintiffs plead that those payments substantially exceeded the remuneration payable to HHC pursuant to the 1997 Service Agreement (FASOC [32]). The Defendants admit that the amount of management fees paid by Sirrah substantially exceeded what would have been payable under the 1997 Service Agreement, but otherwise deny that allegation (AD [32]). The Plaintiffs allege, and the Defendants deny, that these payments constituted a breach of WH's statutory and fiduciary duties owed to Sirrah and that Sirrah has suffered loss and damage in the relevant circumstances (FASOC [33]-[34]; AD [33]-[34]). The alleged breaches are particularised, rather than pleaded as they should have been, as breach of ss 180-182 of the Corporations Act and breach of the no conflict rule and no unauthorised profits rule giving rise to a breach of fiduciary duty. The Plaintiffs plead claims for equitable compensation and compensation under s 1317H of the Act or for an accounting of monies received by WH from Sirrah in respect of management fees (FASOC [35]-[36]), although those fees appear to have been received by HHC rather than by WH personally. They contend that the amount paid in that period exceeded the amount which would properly have been payable, as quantified by expert evidence and by reference to the 1997 Service Agreement, although I will address below an issue raised by Mr Fernon as to the scope of their pleaded case in this respect. 3. Schedule 1 to the Plaintiffs' closing submissions provided evidentiary references for the management fees paid by Sirrah in the period from 2001 to the completion of the sale of the Cabrini business on 15 December 2017 and Schedule 2 provided evidentiary references for payments made after that date. As I will note below, the claim for the period prior to January 2012 was subject to a limitations defence and is no longer pressed, and the parties have agreed an apportionment and amount for management fees for the period January – July 2012 as I note below. The management fees paid for the period from January 2012 up to the entry into the 2016 Service Agreement and until the end of FY2017 are evidenced by Sirrah's financial statements. Management fees paid from 1 July 2017 until the sale of the Cabrini business and after the sale of that business in December 2017 are evidenced by Sirrah's banking records. I address an email dated 8 April 2021 dealing with quantification of this claim, sent by Mr Wells with Mr Fernon's agreement, below. 4. The Plaintiffs no longer press a claim relating to fees paid more than 6 years prior to commencement of this proceeding, for the period prior to 19 December 2011, which they accept are statute barred by analogy with s 1317K of the Corporations Act or under ss 14-15 and 48 of the Limitation Act 1969 (NSW). They identify this claim as relating to the particulars to FASOC [31] for FY2010 ($303,142), FY2011 ($438,783) and the first half of FY2012 ($270,416.50). A question then arises as to how much of the management fees paid in FY2012 of $540,833 would not be recoverable. By an email dated 8 April 2021, sent with Mr Fernon's agreement, Mr Wells indicated that the Second-Fourth Defendants agreed that management fees for FY2012 should be split 50/50 over the relevant half-year periods in relation to address the period defence, so that $270,416.50 would be recoverable. 5. The Plaintiffs maintain a claim for the period from 9 December 2011 (although the calculation is done from 1 January 2012 on the basis noted above) to 1 December 2016 when the 2016 Service Agreement was entered into. They quantify this claim as $1,601,519.83, being the difference between the amounts actually paid by Sirrah to HHC for the period and the CPI adjusted fee under the 1997 Service Agreement, which (as I noted above) had expired by this time but had not been replaced by any other agreement. They rely, in support of this claim, on the expert report dated October 2020 of Ms Lockyer, who was engaged to provide an expert opinion as to the management fees paid to WH and HHC and confirmed that she had prepared her report in accordance with the Expert Code of Conduct. 6. Ms Lockyer referred to her calculation of the CPI-adjusted management fees payable under the 1997 Service Agreement, which she continued beyond the expiry of that Agreement up to the financial year 2017-2018. On her calculation, adjustments of that fee in accordance with the CPI would have brought about a significant increase in the amount of the management fee payable by Sirrah to HHC from $96,960 for the financial year 1997-1998 to $159,585 for the financial year 2017-2018. Ms Lockyer noted the difference between the actual management fees paid by Sirrah to HHC between 2006 and 2018 and the management fees which would have been paid if the 1997 Service Agreement had continued in effect, noting significant differences between the amount which would have been payable on that basis and the amount that was actually paid, with that difference being particularly large in the financial years 2016-2017 and 2017-2018. Ms Lockyer also noted that the management fees paid to HHC had, on average, increased more than 20%, presumably per annum, although some downward adjustments were made in 2012-2013 and 2015-2016, and they had increased by 107% in FY2014-2015 and by 76% in 2016-2017, admittedly after decreases in the previous periods. Ms Lockyer's evidence was that the increases in the management fees paid to HHC did not align with market practice and that, on average, executive salaries had been increasing by about the CPI rate during this period. 7. Ms Lockyer fairly acknowledged that large adjustments to remuneration could take place if a position's accountabilities had grown significantly as a result of changes to the position design or business driven accountabilities or organisational changes, but indicated that she had not noted any information that indicated a significant change to WH's accountabilities until the Cabrini business was sold in December 2017. Notwithstanding WH's evidence in general terms as to the scope of his work, it does not seem to me that WH has established any significant increase in the scope of his or HHC's responsibilities in that period, still less one that would justify the very significant increase in the amount of management fees in particular years, and especially the 2014-2015 and 2016-2017 financial years. Ms Lockyer also points to the significant increase in the monthly management fees payable under the 2016 Service Agreement, which I address below, by contrast with the 1997 Service Agreement. 8. Ms Lockyer also undertook a market-based remuneration analysis, having regard to the range of Sirrah's annual revenue, its average revenue, and its average total assets over the relevant period. She assessed the remuneration level that was appropriate for WH using market data for managing director positions of ASX listed companies of comparable size, and also reviewing the annual reports of large listed aged care operators, and comparing the management fees payable to HHC to the remuneration arrangements of the managing directors and chief executive officers of comparable companies. Ms Lockyer's analysis indicates that the management fees payable to HHC were significantly higher than the remuneration levels payable in respect of comparable organisations. She concluded, by reference to that analysis, that: "In my view, the remuneration level established by the 1997 Service Agreement is more relevant for the size, scale and ownership structure of Sirrah and therefore represents an appropriate basis for establishing the management fees. Market based comparisons provided in the previous section of this report also confirm that the remuneration level set by the 1997 Service Agreement was also broadly aligned with the remuneration levels of managing directors from companies of similar size." 1. Ms Lockyer calculated, on that basis, that management fees paid to HHC during the period 2006-2019 had been overpaid by a total of $5,273,340, although I have noted above that the Plaintiffs now press this claim over the lesser period from December 2011. I note that that Ms Lockyer did not, in taking this approach, incorrectly assume the continuation of the 1997 Service Agreement, which she rightly recognised had ceased to have effect from 2002. Rather, she concluded that the remuneration that would have been paid under that Agreement, had it continued, reflected appropriate remuneration for the services provided by HHC, having regard to the comparison with ASX listed companies of similar size and other companies providing such services in the health sector. Mr Fernon did not seek to cross-examine Ms Lockyer and no evidence of any substance was led to contradict her report, beyond WH's generalised assertions that he had worked hard and the scale of the Cabrini business had increased during the relevant period; and it did not seem to me that there was ultimately any real challenge to Ms Lockyer's evidence that the amounts paid to HHC, during the period that no agreement was in place from 2002 to 2016, and after the 2016 Service Agreement was introduced, were excessive. 2. Mr Fernon responds that the Plaintiffs are limited, by paragraph 33 of the Further Amended Statement of Claim, to a contention that the management payments were made in breach of WH's statutory and fiduciary duties by reason of three pleaded matters, namely that Sirrah had incurred substantial losses in at least the financial years ending 2013-2016; the payments were made without HHC supplying a tax invoice to Sirrah in respect of such management services; and the total payments substantially exceeded the remuneration payable to HHC pursuant to the 1997 Service Agreement. I do not accept that submission, which seems to me to be an unduly technical reading of the pleading. The substance of the Plaintiffs' pleaded case, at least in respect of the third of those contentions, seems to me to advance the proposition that the payment substantially exceeded the remuneration payable to HHC pursuant to the 1997 Service Agreement in support of the somewhat wider contention that the payments made were unreasonable in amount. 3. I bear in mind, in this respect, that the purpose of pleadings is to give notice to the other party of the case it has to meet, but that pleadings are not an end in themselves, but a means to the ultimate attainment of justice between the parties to litigation, and Courts do not now take "an unduly technical or restrictive approach to pleadings such that, among other things, a party is strictly bound to the literal meaning of the case it has pleaded": Betfair Pty Ltd v Racing NSW (2010) 189 FCR 356 at 374-375; Thomson v SDX Pan Ocean Co Ltd [2012] FCAFC 15 at [13]; JR Consulting and Drafting Pty Ltd v Cummings (2016) 329 ALR 625; [2016] FCAFC 20 at [410]ff; Taxa Australia Pty Ltd v Wang (2018) 130 ACSR 531; [2018] NSWSC 1412. It seems to me that the parties here treated the reasonableness of the amounts paid by Sirrah to HHC after the 1997 Service Agreement had ceased to have effect and prior to the entry into a further Service Agreement on 1 December 2016 as being in issue. That matter is raised by the Amended Defence, which (as I noted above) pleads that, from the expiry of the 1997 Service Agreement to 30 November 2016, WH and HHC were entitled to reasonable remuneration for the services provided to Sirrah; it was addressed in Ms Lockyer's evidence; and it was addressed in WH's evidence, which sought to establish that he had worked hard and carried significant responsibility in order to justify the amounts paid by Sirrah to HHC in that period. 4. Mr Fernon submits that, during the period 2013 to 2016, Sirrah's business and assets were substantially developed and had grown by expanding an existing 60 bed facility to a 120 bed facility, ongoing financial expenses were incurred and Sirrah's asset position was substantially enhanced. He points out that, in 2011, Sirrah's property plant and equipment ("PPE") was approximately $19 million; in 2012, Sirrah's PPE was valued at approximately $34 million; in 2013, Sirrah's PPE was valued at approximately $41 million and remained constant in 2014; in 2015, Sirrah's PPE was valued at approximately $58 million and remained constant in 2016. He submits that the annual losses were connected to the additional finance costs associated with the expansion of the business and the construction of the expanded facility and not due to a poor trading performance, and did not deprive WH of his "entitlement" to receive management fees. I am not persuaded that the fact that Sirrah had incurred losses, or substantial losses, in those years was inconsistent with the payment of a management fee to HHC, where it is not self-evident that the price reasonably paid for the provision of management services should be reduced when a company is making lesser profits, particularly where, as here, its capital value appears to have significantly increased during this period. Mr Fernon also submits that the absence of a tax invoice is irrelevant to an issue of a breach of duty and I am also not persuaded that the failure to issue tax invoices in that period, without more, establishes a breach of duty on WH's behalf. 5. However, as to the third of the Plaintiffs' claims, relating to payment of management fees in excess of those that would have been payable under the 1997 Service Agreement, Mr Wells and Mr Anderson submit that, where WH had been working full-time from about 1998 on and managing Sirrah's business from that time, and where there was little admissible evidence led by the Defendants which would allow the Court to conclude that the services provided by HHC substantially increased in 2002, when the 1997 Service Agreement expired, "the best yardstick to determine reasonable remuneration for the services of [HHC and WH] completely managing [Sirrah's] business on a full-time basis is the quantum of remuneration stated in the 1997 Service Agreement, adjusted for CPI, which is supported by Ms Lockyer's unchallenged evidence." Mr Fernon responds that the 1997 Service Agreement is irrelevant, where its operation terminated in 2002, long before the relevant period, and he again addresses WH's role in Sirrah's expansion. He does not address Ms Lockyer's expert evidence led by the Plaintiffs in that respect, to which I have referred above. Mr Fernon also submits that WH worked long hours and performed numerous tasks on behalf of Sirrah, as set out in his affidavits, although the evidence in this respect largely does not go far beyond bare assertions to that effect by WH and his immediate family. 6. I accept Ms Lockyer's evidence that the amounts paid to HHC in that period were not reasonably based and that fees payable under the 1997 Service Agreement, as escalated by a CPI increase, provide a proper basis for assessing reasonable remuneration in that period. I do not neglect the fact that, as Mr Fernon points out, the nursing home operated by Cabrini had substantially expanded in size during that period, but it is not self-evident that the fee payable to a provider of management and other services to a company operating a nursing home should substantially increase simply because the physical capacity of the nursing home increases, and the Defendants did not lead their own expert evidence, or seek to cross-examine Ms Lockyer to obtain any concession from her, to support that proposition. 7. It seems to me that WH caused Sirrah to pay above market management fees to HHC, a related entity, in the period up to the entry into the 2016 Service Agreement and that conduct breached WH's duty of care and diligence, at general law and under s 180 of the Corporations Act. I am also satisfied that WH breached the "no conflict" rule in respect of the determination of the amount of and payment of management fees to HHC in this period since there was a real and sensible conflict of interest between his duties owed to Sirrah and his economic interest in HHC and the payment of excessive fees had the obvious capacity to shift economic value from Sirrah to HHC. There is no suggestion those fees were approved by a board resolution so as to have the benefit of any constitutional restriction of the no conflict rule and WH did not seek consent from Sirrah's shareholders to give rise to any unanimous consent to, or ratification of, that conflict. It is not necessary to determine whether that conduct also amounted to a breach of WH's statutory duties under ss 181 or 182 of the Act where I have found that a breach of fiduciary duty is established at general law and breach of the statutory provisions would not give rise to different relief. The loss suffered by Sirrah is the amount by which the fees paid exceed the reasonable fees as calculated by Ms Lockyer. 8. It is common ground that, on 1 December 2016, Sirrah and HHC entered into the 2016 Service Agreement (FASOC [37], AD [37]) which provided for a substantial increase in monthly management fees by Sirrah to $70,000 plus GST per month; that Sirrah agreed to pay the "Service Fee" (as defined) in consideration for HHC providing or procuring the provision of the "Services" (as defined) to Sirrah, under cl 4.1 of that Agreement; that HHC was required to invoice Sirrah for the Service Fee monthly or as otherwise agreed between the parties under cl 4.2 of that Agreement; and a provision of that Agreement could not be waived or varied other than in writing, signed by the relevant parties under cl 15(f) of that Agreement. 9. The Plaintiffs plead that, since December 2016, WH caused Sirrah to pay the Service Fee to HHC each month, and the Defendants deny that proposition (FASOC [39], AD [39]). The Plaintiffs plead, and the Defendants deny, that the Service Fee was excessive in specified circumstances (FASOC [40], AD [40]). They again relied on losses suffered by Sirrah in the 2013-2016 year and the failure to supply tax invoices to Sirrah, but also plead that total payments exceeded the remuneration payable to HHC under the 1997 Service Agreement and, since 15 December 2017, Sirrah had no ongoing trading operations and no "Services" (as defined) were required to be provided after that date by HHC to Sirrah. The Plaintiffs plead that, on that basis, WH's causing Sirrah to enter into the 2016 Service Agreement and make monthly payments under that Agreement preferred his own interests, or alternatively HHC's interests to Sirrah's detriment and thereby breached his statutory and fiduciary duties owed to Sirrah (FASOC [41], AD [41]). The alleged breaches are again particularised, rather than pleaded as they should have been, as breach of s 180-182 of the Corporations Act and breach of the no conflict rule and no profit rules giving rise to a breach of fiduciary duty. The Plaintiffs again seek equitable compensation and compensation under s 1317H of the Act or an order for an account and the Defendants deny their entitlement to such relief. 10. The Plaintiffs first pursue a claim in respect of fees paid under the 2016 Service Agreement from 1 December 2016 until the sale of Sirrah's business on 15 December 2017, which they contend were excessive, again by reference to Ms Lockyer's evidence that the remuneration paid to HHC under that agreement was significantly above the market rate and did not correspond to remuneration levels of companies of comparable size and scale to Sirrah. Ms Lockyer again expressed the view that the remuneration level established by the 1997 Service Agreement would provide an appropriate basis for remuneration for a company of the size, scale and ownership structure of Sirrah over the period of that Agreement. Mr Wells and Mr Anderson submit, in closing submissions, that: "The terms in the 2016 Service Agreement requiring the issuance of a tax invoice each month for Harris Health Care's services, which would trigger an obligation in the Company to pay the monthly fees, were never complied with. Further, Ms Lockyer's unchallenged opinion is that the amount of remuneration payable under that agreement was 'significantly above the market rate and do not relate to the remuneration levels of companies of comparable size and scale' to the Company. Ms Lockyer went on to express the view that 'the remuneration level established by the 1997 Service Agreement is more relevant for the size, scale and ownership structure of Sirrah and therefore represents [an] appropriate basis for establishing the management fees'. As at December 2016, the monthly rate payable under the 1997 Service Agreement adjusted for CPI was $13,775.25. At that monthly rate, reasonable remuneration from 1 December 2016 up to the time of sale on 15 December 2017 would equate to $172,190.62 (being $13,775.25 x 12.5), whereas the sum approximately $851,437 was paid over that period." The amount claimed, by way of the difference between the amount paid and the amount alleged to constitute reasonable payments, is $679,246.38. I do not understand the quantification of this claim to be in dispute, if the claim is otherwise established. 1. Mr Fernon again takes a pleading point in respect of this allegation, which seems to me to give too little weight to the pleading in paragraph 40 of the Amended Statement of Claim (to which I referred above) that the Service Fee payable under the 2016 Service Agreement was excessive in the pleaded circumstances, including that the management services provided by HHC did not substantially change from the management services provided under the 1997 Service Agreement and that, under the 2016 Service Agreement, HHC did not assume any liabilities on behalf of Sirrah that were payable in the ordinary course of Sirrah's business. Mr Fernon also submits that the 2016 Service Agreement was entered into on or about 1 December 2016 with the benefit of, and consistent with advice from, Mr Greg Anderson; however, neither Mr Anderson's affidavit evidence nor the document to which he refers, which was a proposal by his company to provide services, go that far. 2. It seems to me that WH again caused Sirrah to pay above market management fees to HHC by the entry into the 2016 Service Agreement and that conduct again breached WH's duty of care and diligence, at general law and under s 180 of the Corporations Act. I am again satisfied that WH breached the "no conflict" rule in this respect since there was a real and sensible conflict of interest between his duties owed to Sirrah and his economic interest in HHC and the payment of excessive fees under the 2016 Service Agreement again had the obvious capacity to shift economic value from Sirrah to HHC. There is no suggestion those fees were approved by a board resolution so as to have the benefit of any constitutional restriction of the no conflict rule and WH again did not seek consent from Sirrah's shareholders that would give rise to any unanimous consent to or ratification of that conflict. It is again not necessary to determine whether that conduct also amounted to a breach of statutory duties under ss 181 or 182 of the Act where I have found that a breach of fiduciary duty is also established at general law and breach of the statutory provisions would not support different relief. The loss suffered by Sirrah for the period from the entry into the 2016 Service Agreement until the sale of the Sirrah business is the amount by which the management fees paid under that Agreement exceeded reasonable fees as quantified by Ms Lockyer. 3. An issue arose as to the quantification of those fees for the period from 1 July 2016 until the entry into the 2016 Service Agreement on 1 December 2016. By an email dated 8 April 2021, sent with Mr Fernon's agreement, Mr Wells provided a further schedule which indicates (with the Second-Fourth Defendants' agreement) that the amount of management fees paid in for five months up to 1 December 2016 totalled $353,800 and the management fees paid for the period from 2 December 2016 to 30 June 2017 totalled $435,000. It is not necessary to distinguish between those periods where I have concluded above, by reference to the expert evidence led by the Plaintiffs, that the fees payable under the 2016 Service Agreement were excessive and the fees properly payable are quantified on the same basis as those conceded by the Plaintiffs for the period prior to the entry into that Agreement. 4. Next, the Plaintiffs pursue a claim for management fees paid by Sirrah to HHC in the period after the sale of Sirrah's business on 15 December 2017, which they contend total $1,540,000 and were made by the Company to HHC after the "Services" (as defined) to be provided by HHC to Sirrah under the 2016 Service Agreement came to an end. Mr Wells and Mr Anderson point out that the 2016 Service Agreement required the provision of the "Services" during the Term (of 4 years) to Sirrah under cl. 3.1(a), and the term "Services" was defined as: "… the services set out in Schedule 1 and any services that are incidental or related to the provision of those services that are required for the operation of the Business." There is an ambiguity in that provision, not addressed by Counsel, as to whether the phrase "that are required for the operation of the Business" attaches to both limbs of that definition or only to the reference to the "services that are incidental or related to the provision of those services", I am inclined to think it applies to both limbs, understood in its commercial context, rather than fixing a substantial fee for monthly management services without any identification of the business to which they related. However, it is not necessary to reach a final view as to that matter for the reasons noted below. The term "Business" is in turn defined as "the business of operating the Cabrini Nursing Home in Westmead conducted by the Company." WH accepted, at least at one point in his evidence, that the conduct of that "Business" ceased on 15 December 2017 (T169), although he elsewhere emphasises his intention that Sirrah take up other business activities, and other entities under his control, Scooti and TSH, did so as I will note below. 1. Mr Fernon responds that Sirrah's financial and business affairs required ongoing attention by WH after the sale, including as to taxation issues pertaining to the sale, and that WH continued to provide management services for Sirrah on an ongoing basis; he submits that the definition of "Services" under the agreement is expressed in broad terms, including financial and advisory services, and is not dependent on the "business" of Cabrini continuing; and that the 2016 Service Agreement was a fixed term contract and "[t]hat [WH's] duties had been to a certain extent made redundant by the sale of the business, did not mean that Sirrah's obligation to pay HHC was not ongoing." That submission highlights a difficulty with entry into an agreement in those terms, when WH was in a position of conflict in doing so, to which I return below. Mr Fernon also submits that the management fees paid under the 2016 Service Agreement included allowance for HHC incurring and paying expenses on behalf of Sirrah in carrying out its operations and that HHC employed several staff and was entitled to be compensated for that cost. He also submits that cl 4.1 of the agreement required Sirrah to pay the service fee and that was not dependent on the issue of a tax invoice. Mr Fernon also contends that WH was the only decision-maker for the arrangements between himself, HHC and Sirrah. 2. It is not necessary to determine whether Mr Fernon's submission that the 2016 Service Agreement created an unconditional obligation for Sirrah to pay the amount of $70,000 plus GST per month, irrespective of whether Services were provided for the purposes of that Agreement, is correct. It seems to me to be at least strongly arguable that it is not and that the words "that are required for the operation of the Business" in the definition of "Services" qualifies the services set out in Schedule 1, as well as the reference to incidental services, and that the obligation to pay for the "Services" did not apply when services were not required for the operation of the "Business". Alternatively, it may be arguable that there was a term implied in fact in the 2016 Service Agreement that payment for the "Services" (as defined) was only required when such Services were provided. If either of those positions were correct, then it seems to me that WH would have breached his duty of care by causing payments to be made when, whatever else occurred, any "Services" that were provided were no longer required for the operation of the "Business", because Sirrah was no longer operating the business. However, if, as Mr Fernon also contends, the 2016 Service Agreement created an unconditional obligation that required Sirrah to pay HHC for the "Services" even if they were not provided, or were not provided in respect of the operation of the "Business", then it seems to me that WH's causing Sirrah to enter into that Agreement amounted to a breach of his duties of care and diligence as a director, and occurred in circumstances where he faced a material conflict of interest. 3. On that basis, a breach of WH's duty of care and diligence in respect of the payment of management fees after the sale of the Cabrini business is established either because of the payment of a substantial monthly amount for "Services" to HHC, where that payment was not required by the 2016 Service Agreement after the "Business" was sold, or by WH's causing the entry into an agreement that required the continued payment of a substantial amount for services even after that business was sold, and the result is the same whichever position is established. Both are sufficient to establish a breach of the duty of care and diligence by WH in respect of the management fees payable after the sale of the Cabrini business on 15 December 2017. 4. It therefore seems to me that WH's causing the payment of continuing management fees to HHC under the 2016 Service Agreement after the sale of the Cabrini business again amounted to a breach of his duty of care and diligence, at general law and under s 180 of the Corporations Act. I am also satisfied that WH breached the "no conflict" rule and breached his fiduciary duties as a director of Sirrah in respect of the payment of management fees to HHC after the sale of the Cabrini business, since there remained a real and sensible conflict of interest between his duties owed to Sirrah and his economic interest in HHC in that respect. There is again no suggestion that the continuing payment of those fees after that business was sold was approved by a board resolution so as to have the benefit of any constitutional limitation of the no conflict rule and WH did not seek consent from Sirrah's shareholders that would give rise to any unanimous consent to or ratification of that conflict. It is again not necessary to determine whether that conduct also amounted to a breach of statutory duties under ss 181 or 182 of the Act where I have found that a breach of fiduciary duty is established at general law and a breach of the statutory duties would not give rise to a different remedy. 5. The loss suffered is by Sirrah in this period is the amount of management fees paid to HHC in the period after the sale of the Cabrini business. The Plaintiffs quantify this claim in closing submissions and their supplementary submissions as to orders as $3,754,902.58, being the total of amounts of $1,601,519.83 for the period 1 December 2012 to 1 December 2016 (see [86] above); $613,382.75 for the period 2 December 2016 to 15 December 2017; and $1,540,000.00 for the period 16 December 2017 to 14 October 2019. I did not understand the Second and Fourth Defendants to contest the calculation of this amount, as distinct from their liability for it, in submissions. Loans by Sirrah to WH and HHC 1. The Plaintiffs also plead the making of loans in substantial amounts by Sirrah to WH and HHC over the relevant period, and an occasion on which an amount of indebtedness was written off. That conduct is also alleged to amount to a breach of fiduciary and statutory duties owed by WH to Sirrah, so far as the transactions benefitted either WH or HHC. 2. It is common ground that, from 2012 to 2019, Sirrah lent substantial amounts to HHC and WH; WH caused Sirrah to lend those funds to HHC and himself in specified circumstances; and that, during the year ended 30 June 2016, Sirrah recorded a provision for impairment in the amount of $250,000 in respect of the loans. The Plaintiffs submit that, as at 30 September 2019, the running balance of the loan to HHC was recorded in Sirrah's financial records as $11,044,660.24; the running balance of the loan to WH was recorded in Sirrah's books as $764,244; and they contend those amounts are admitted in paragraph 46 of the Amended Defence. In closing submissions, Mr Fernon takes a different view and submits that the loans admitted on the Amended Defence are, as against HHC, $11,044,660.24 and, as against WH, $269,244.00. However, little turns on the difference where Mr Fernon accepts that additional loans totalling $745,000 are also owed by WH to Sirrah, increasing the amount of his debt to Sirrah to $1,014,244.00. The difference in these figures may reflect a reallocation of amounts previously recorded in the accounts of Sirrah as owing by WH so that they were treated as owing by HHC rather than WH. 3. Schedule 3 to the Plaintiff's submissions in turn sets out evidentiary references for some of the amounts lent, totalling $6,566,623.16. Schedule 4 to those submissions sets out evidentiary references for payments made by Sirrah to fund the Second-Fourth Defendants' legal costs of the proceedings, prior to the provisional liquidator's appointment, and Schedule 5 contains evidentiary references, including to WH's cross-examination, in relation to several further payments made by Sirrah to WH after the sale of the Cabrini business. It is largely not necessary to address the particular transactions where the fact of the loans is admitted by WH and HHC, the parties have not identified any issue of quantification that remains in dispute in this respect, and the determination of the question whether the loans amounted to a breach of duty is not significantly advanced by an inquiry into the purpose for WH or HHC as borrower expended the funds. 4. The Plaintiffs plead (FASOC [46(d)] that the loans were not documented, and the Second–Fourth Defendants admitted, in their Defence, that those loans were undocumented except, in substance, for the line items in the Company's accounts (AD [46(a)(v)]) and did not seek to withdraw that admission. Despite the admission, Mr Wells recognised in opening and Mr Fernon points out that the loan to WH (but not HHC) is the subject of a loan agreement (Ex J1, 2996) which was not executed by Sirrah but was recognised in note 19(d)(iii) to the accounts of Sirrah at 30 June 2016 (Ex J1, 1779). That Loan Agreement provided for WH (but again not HHC) to pay interest on loans to him (but not to HHC) at the benchmark interest rate set out in s 109N(2) of the Income Tax Assessment Act 1936 ("ITAA"). The Second–Fourth Defendants also rely on a "Specific Security Agreement (Marketable Securities)" (Ex J1, 6963) between HHC and Sirrah which treated HHC's shares in Sirrah as security. There is no loan agreement between Sirrah and HHC underlying that security; the unexecuted Loan Agreement between Sirrah and WH, to which I referred above, did not extend to loans to HHC; and there is no evidence that this security was registered under the Personal Property Securities Act 2009 (Cth) ("PPSA"). Mr Wells and Mr Anderson also rightly submit that Sirrah taking security over shares in itself contravened the prohibition in s 259B(1) of the Corporations Act on a company taking security over its own shares, although that did not invalidate the security by reason of s 259F of the Act. 5. Mr Fernon also refers to a later letter referring to WH's intention to pay the monies using the benefits to be received from Sirrah pursuant to such shareholding (WH 18.6.18 [68]), although that reference is potentially inconsistent with his evidence in cross-examination that Sirrah was not to be wound up, which would have been necessary to realise the capital value of those shares. Mr Fernon also observed that WH accepted responsibility to repay the loans, including for expenses paid for his personal benefit, in his oral evidence although I note that he has made only a partial repayment of those personal expenses in the several years that these proceedings have been on foot. 6. Mr Fernon draws attention to the facts pleaded by the Plaintiffs to support the allegations of breach of statutory and general law duties in respect of the loans, and responds to each of those facts. First, the Plaintiffs plead that WH was a director of Sirrah and HHC (FASOC [46(a)]), and no longer contest the validity of that appointment. As I will note below, that is sufficient to give rise to an issue of conflict of interest in the other pleaded circumstances of the transaction. Second, the Plaintiffs plead that WH received a benefit from the loans (FASOC [46(b)]). The Second–Fourth Defendants admit in the Amended Defence that WH would benefit from the making of the loans, and would benefit indirectly from the making of the loans to HHC, but also plead that: "The making of the Loans, and each of them, resulted in the discharge, forgiveness, extinguishment or other reduction of debts owed to Sirrah by either or both of [WH] and [HHC], in return for debts from either or both of [WH] and [HHC] which were unsecured and undocumented save insofar as the terms of the loans were documented in the financial reports and accounts of Sirrah." In closing submissions, Mr Fernon accepts that WH or HHC (and, I interpolate, in fact both) received a benefit from the loans, but submits that security was provided and an obligation to pay interest, at least in relation to WH's loans, was provided. The limitation to WH's loan here is significant and I return to that matter below. 1. Third, the Plaintiffs plead that the loans were not on commercial terms, particularising a matter of evidence, namely a reference to that matter in note 19(d)(iii) contained in Sirrah's 2016 financial statements (Ex J1, 1779) (FASOC [46©]). Mr Fernon points to the content of that note, which recorded that: "Loan to [WH] The loans to [WH] and [HHC] are secured by the shares held in Sirrah Pty Ltd through [HHC]. The value of shares is assessed as in excess of the loan amounts and the loans are deemed recoverable. The loan to [WH] is repayable over seven years (7) with minimum principal and interest amounts in accordance with Division 7A of the Income Tax Act 1997. In accordance with the impairment accounting policies outlined in Note 1(a) Financial Instruments, an impairment allowance has been recognised to account for possible "loss events" on loans made which are not on normal commercial terms. The loan repayment and interest requirements of Division 7A ITAA 97 are not generally recognised as being on normal commercial terms." 1. Mr Fernon submits that the Plaintiffs have led no evidence of what "normal commercial terms" are and that the loan agreement signed by WH (but, I interpolate, not HHC) requires the loans to be repaid in accordance with the term specified by s 109N of the ITAA, namely 7 years, and otherwise requires payment within one month of receipt of a demand for repayment. Mr Fernon also refers to note 19(d) contained in Sirrah's signed and audited 2017 accounts (Ex J1, 2436) which records, in different terms to the earlier note, that: "Transactions between related parties are on normal commercial terms and conditions no more favourable that those available to other parties unless otherwise stated." 1. Mr Fernon submits that it is not otherwise stated that any loans were not on normal commercial terms and the note to the final set of Sirrah accounts is contrary to the Plaintiffs' case that the loan was not on commercial terms. It seems to me that the note in the 2017 accounts, and Mr Fernon's submission, at least requires a qualification that normal commercial practices would require Sirrah's execution of a loan agreement between Sirrah as lender and WH as borrower, documentation of the loan by Sirrah to HHC, an agreement to pay interest by HHC and registration of the security, none of which occurred here. I return to those matters below. 2. Mr Fernon also contends that the $250,000 loan impairment recorded in the year ended 30 June 2016 was an accounting provision which did not have the effect of decreasing the indebtedness under any of the loans. I accept that submission and can see no basis on which the mere writing down of a loan in a lender's financial accounts, for accounting purposes, extinguishes the borrrower's liability to repay that loan resulting from the legal relationship between the lender and borrower. 3. Fourth, the Plaintiffs plead that the loans were not documented (FASOC [46(d)]). Although that was admitted, I have referred above to the evidence of the loan agreement between Sirrah and WH, recognised in the note to Sirrah's accounts, and the fact the loan to HHC was not documented, other than for the reference to the fact of it in financial statements. Fifth, the Plaintiffs plead that the loans were unsecured (FASOC [46(e)]). Mr Fernon refers to the Plaintiffs' acknowledgement in opening of the security that at least attached to the loan to WH (Ex J1, 2996) and submits that this contention ignores the loan and security documents referred to above, and ignores the accounts, including general ledgers and Sirrah's practice of recording loans (and other unallocated payments) to WH's loan account. It seems to me that the loan from Sirrah to WH cannot be characterised as "unsecured", although a contest could arise from Sirrah's failure to execute the loan agreement with WH and the security taken could be more difficult to enforce (although it was not avoided by) the limitations under ss 259B–259F of the Act and was at risk, at least in respect of priority, because it was not registered under the PPSA. It seems to me that the loan to Sirrah to HHC was, in substance, unsecured, because there was no loan agreement between Sirrah and HHC which recorded any obligation to repay that loan at any particular time or defined any event of default that could allow enforcement of any security over Sirrah's shares under the "Specific Security Agreement (Marketable Securities)" (Ex J1, 6963). Sixth, the Plaintiffs plead that part of the loan funds were used by HHC for transactions in Fiji and Bali. (FASOC [46(g)-(h)]). Mr Fernon submits that these transactions do not advance or support a proposition that the loans were made contrary to WH's duties; there is no evidence of a Fiji property; and there is no evidence that the Bali purchase was an improper purchase. 4. The Plaintiffs then plead and the Defendants deny that WH preferred his own interests or the interests of HHC to Sirrah's detriment and breached his statutory and fiduciary duties to Sirrah, and that Sirrah is entitled to equitable compensation, compensation under s 1317H of the Act, or to an account in respect of those matters (FASOC [49]). The alleged breaches are again particularised, rather than pleaded as they should have been, as breach of s 180-182 of the Corporations Act and breach of the no conflict rule and no profit rules giving rise to a breach of fiduciary duty. The Plaintiffs again seek equitable compensation and compensation under s 1317H of the Act or an order for an account and the Defendants deny their entitlement to such relief. The Defendants pleaded a limitation point in respect of any loss or damage which accrued on or before 14 November 2012 or alternatively before 18 December 2011 (AD [51]-[53]). It is not apparent that any loss claimed falls within the earlier period to which a limitations defence could attach. 5. Mr Fernon submits, uncontroversially, that the making of loans to a director for personal purposes does not of itself constitute improper conduct by the director or a breach of his statutory or fiduciary duties. He refers to Hamilton J's observation in Kalls Enterprises Pty Ltd (In liq) v Baloglow (2006) 58 ACSR 63; [2006] NSWSC 617 at [60], to which reference was made without disapproval by the Court of Appeal in Kalls Enterprises Pty Ltd (in Liq) v Baloglow (2007) 63 ACSR 557; [2007] NSWCA 191 at [88], that: "I bear in mind in assessing the relevant material that it is not uncommon for proprietary companies to pay sums, sometimes large sums, on behalf of directors or to advance to directors funds to meet private obligations or for private purposes. This is illustrated by the facts in Hancock. Occasionally, the taking of these sums constitutes bald misappropriation of company funds by a director. But generally the takings are part of perfectly proper transactions under which the funds are debited to the director's loan account with the company, or there are other arrangements between the company and the director for the due repayment of these funds to the company." 1. Mr Fernon also refers to observations of Rein J in Lewis Securities Ltd (in liq) v Carter (2017) 120 ACSR 327; [2017] NSWSC 412, where his Honour considered an alleged breach of a director's statutory and fiduciary duties arising from the making of loans without a loan agreement or security, which were recorded as loans in the company's accounts. His Honour there observed (at [85]) that the question whether a director of a company can lend money to himself or his family, and the process by which that can be achieved, is not without its complications; that there is no (statutory) prohibition on the making of loans to directors of a proprietary company without shareholder approval, although I interpolate that statutory and general law directors' duties apply to such loans; and there is a statutory requirement of notice to directors of a director's interest in a loan that materially benefits a director or his family under s 191 of the Act. His Honour also noted that, if a lending company is in financial difficulties and not all shareholders have given consent, that would be a relevant factor in assessing whether a breach of director's duties has occurred, and the financial strength of the lender and the borrower are also relevant matters to whether a breach of fiduciary or other duties arises: Paul A Davies (Australia) Pty Ltd (in liq) v Davies (No. 2) [1983] 1 NSWLR 440; Linton v Telnet Pty Ltd (1999) 30 ACSR 465; [1999] NSWCA 33. I generally accept these propositions, but note that they take as their starting point that the making of the loan was authorised by the company, albeit possibly informally, and was not made in breach of the fiduciary rule against conflict of interest, typically because there is unanimous shareholder consent to a practice of making loans to directors. 2. Mr Fernon then addresses the factors noted by Rein J in Lewis Securities Ltd (in liq) v Carter above in his submissions. He submits that there is no suggestion that notice of the transaction was not given to WH's late son Matthew or his daughter MH, who were directors of Sirrah with WH, for the purposes of s 191 of the Act. That proposition does not assist WH so far as the rule against conflict of interest is concerned, where he bears the onus of establishing directors' consent to the transactions in accordance with Sirrah's constitution or shareholder ratification and the absence of evidence does not do so. Second, he submits that Sirrah was solvent at the time the loans were made and continues to be solvent. He also submits that the loans were made primarily after the sale of the Cabrini business so that Sirrah was not otherwise trading as a retirement village, and the making of the loans did not interfere with its obligations or activities at the times the loans were made. He also submits that there is no evidence that the making of these loans impacted on the ability of Sirrah to meet its legal and financial obligations. I accept that these are relevant matters, with the qualification that contributories' rather than creditors' rights are here exposed to risk by the loans. Mr Fernon did not press a submission that there is no evidence that the loans will not be, or cannot be, repaid by HHC and WH. He did submit that WH has at all times recognised his obligation to repay the loans, although that the recognition of an obligation to repay is of less practical utility to a lender than repayment and that the loans have largely not been repaid in the long period since these proceedings commenced. 3. Mr Fernon rightly submits that, so far the Plaintiffs allege that the making of the loans constituted a breach of s 180(1) of the Act, they must establish that, in making the loans, WH acted without the degree of care and diligence which a reasonable person would exercise if he or she was a director with WH's obligations in Sirrah's circumstances. I here have regard to the observations of Santow J in Australian Securities and Investments Commission v Adler above at [372], where his Honour noted that, in determining whether a director has exercised reasonable care and diligence at general law and under s 180 of the Act, the test is what an ordinary person, with the director's knowledge and experience, might be expected to have done in the circumstances if he or she was acting on his or her own behalf; and that the duty of care and diligence will require special vigilance in a situation of potential conflict, requiring scrupulous concern on the part of those officers who become aware of a transaction in that situation to ensure that any necessary corporate approvals are obtained and safeguards put in place. His Honour there found a breach of s 180, where a reasonably careful and diligent director or officer of the company would not have caused or procured a substantial payment to be applied to purchasing HIH shares, and that decision was upheld by the Court of Appeal in Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504; [2003] NSWCA 131. His Honour's formulation of this duty has since been cited with approval on many occasions, including in Australian Securities and Investments Commission v Macdonald (No 11) (2009) 256 ALR 199; 71 ACSR 368; [2009] NSWSC 287 at [239] and on appeal as Morley v Australian Securities and Investments Commission (2010) 274 ALR 205; 81 ACSR 285; [2010] NSWCA 331 at [807], in Parker v Tucker (2010) 77 ACSR 525; [2010] FCA 263 and in Diamond Hill Mining Pty Ltd v Huang Jim Mining Pty Ltd (2011) 84 ACSR 616; [2011] VSC 288 at [90]. 4. Mr Fernon submits that the matters alleged by the Plaintiffs to assert a breach of duty do not, of themselves, amount to an absence of care and diligence on WH's part. He submits that formal loan and security documents were implemented, with the benefit of professional legal and/or accounting assistance. That submission omits reference to the fact that the loan agreement relating to the loan to WH was not signed by Sirrah, no loan agreement was executed for the substantial loan to HHC and the security over Sirrah's shares contravened s 259B of the Act and was not registered under the PPSA. Mr Fernon also submits, and I accept, that Sirrah's circumstances, including its solvency and the fact that it was not then operating the nursing home is a matter of significant relevance to the alleged breach of duty, but I also recognise that the risk of the loans being unrecoverable and the interests of contributories are also relevant matters. 5. Mr Fernon submits that, so far as the Plaintiffs allege that the making of the loans constituted a breach of s 181(1) of the Act, they must establish that WH did not exercise his duties in good faith in the best interests of Sirrah and for a proper purpose. Mr Fernon fairly accepts that, as I noted in Re Colorado Products Pty Ltd (in prov liq) above, the distinction between whether a subjective breach of the good faith obligation is required to be established, or whether an objective consideration of the director's actions will suffice to show a breach of the good faith obligations, is generally not material where the director promotes his own interest in a real or substantial conflict to those of the company. Mr Fernon submits that the loans to WH and HHC were provided with security over the shares in Sirrah, which had real value and Sirrah was thereby protected, and no valuation evidence has been tendered by the Plaintiffs to show that such security is not sufficient to meet the loan obligations. I have addressed the difficulties with the security taken above. 6. Mr Fernon rightly also points out that, in respect of s 182(1) of the Act, the Plaintiffs must establish that WH improperly used his position to gain an advantage for himself (or another) or to cause detriment to Sirrah. He again submits that HHC provided security for the loans; interest is payable by WH (but, I interpolate, not HHC) in respect of the loans; and he submits that Sirrah was thereby protected in relation to the loans in circumstances where it was solvent, conducting no trading operation but was otherwise able to meet its ongoing obligations. 7. I am not persuaded that the pleaded claim for breach of the duty of care and diligence is established in respect of the loan to WH, which was documented by a loan agreement (albeit Sirrah had not executed it) and secured by the security agreement, albeit that security had the difficulty under s 259B of the Act to which I referred above and was not registered under the PPSA. The latter difficulty could still be rectified by an application by Sirrah for an extension of time to register it, at least prior to any bankruptcy of WH. I am satisfied that the pleaded claim for breach of the duty of care and diligence is established in respect of the loan to HHC. It seems to me that the loan to HHC was at least made in breach of WH's duty of care and diligence where there was no loan agreement for that loan, no agreed interest obligation or repayment date, no identified events of default to which the security could apply, and the significance of those deficiencies was exacerbated by the substantial size of the loan and the extent to which it increased over time, and by the reallocation of a debt previously owed by WH to HHC despite those deficiencies. 8. I am also satisfied that the loans made both to WH and HHC breached the "no conflict" rule since there was a real and sensible conflict of interest between WH's duties owed to Sirrah and his economic interest in himself and HHC receiving those loans. There is again no suggestion those loans were approved by a board resolution to have the benefit of any constitutional limitation of the no conflict rule and WH again did not seek consent from Sirrah's shareholders so as to obtain unanimous consent to or ratification of that conflict. It is not necessary to determine whether that conduct also amounted to a breach of statutory duties under ss 181 or 182 of the Act where I have found that a breach of fiduciary duty is established at general law and that finding would not add to the available relief. 9. The loss suffered by Sirrah is the amount of the loans made, where they have not been repaid by either WH or HHC on demand. It is now common ground that the amount due by WH in that respect is $1,014,244 and the amount due by HHC in that respect is $11,044,660.24, in each case exclusive of pre-judgment interest. "Reimbursements" to HHC 1. The Plaintiffs plead that WH caused Sirrah to pay HHC the amount of $875,173 during the financial year ended 30 June 2014, being a "purported reimbursement" for payment of employee entitlements made to employees of HHC, and contend that Sirrah was not under an obligation to make that payment and that no documentation or evidence of the incurring of such expenses by HHC was produced to Sirrah to justify that payment; the Defendants do not admit the payment of that amount and otherwise deny the relevant allegations. The Plaintiffs again contend, and the Defendants deny, that WH preferred his own interests or HHC's interests; that WH breached his general law and statutory duties and that WH is liable to pay equitable compensation to Sirrah, compensation under s 1317H of the Act, or to account to Sirrah the monies paid or benefits received by him (FASOC [56]-[59]). The Defendants again rely on a limitations defence in this respect, and otherwise deny the claim. 2. Mr Wells and Mr Anderson submit that this payment occurred in circumstances where there was no obligation on Sirrah to make the payment, nor was any evidence ever provided to Sirrah to substantiate the purported expense. They submit that no agreement was in place between HHC and Sirrah at that time (or at any other time) which permitted HHC to require that payment to be made, or which required HHC to make the payment. They point out that the Defendants were ordered to provide discovery of documents in relation to this aspect of the claim; that no relevant documents were produced and that it is open to the Court to draw the inference that there are no such documents to support the transaction, where WH also gave no evidence in chief to explain it. 3. Mr Fernon characterised this claim as depending on a proposition that the record of that amount in the financial statements of Sirrah was false. It does not depend on that proposition, since the Plaintiffs do not dispute either the fact that that amount was paid, as recorded in the financial accounts, or that it was recorded as a reimbursement for the payment of employee entitlements. Instead, they contend that, even if the payment had that character, there was no obligation on Sirrah to reimburse that amount; no evidence was provided to Sirrah to substantiate the purported expense; and there was no agreement in place between HHC and Sirrah which permitted HHC to require that payment. The Plaintiffs rely, in this respect, on the Defendants' failure to produce, on discovery, any documents which would support the basis of that payment. 4. Mr Fernon emphasises that this payment is recorded in Sirrah's FY2014 financial statements (Ex J1, 1181) which were signed by WH as director as providing a "true and fair" view of Sirrah's financial position and of its performance during the year (Ex J1, 1214) and were audited. Mr Fernon submits that the accounts constitute prima facie evidence of the matters contained within them under s 1305 of the Act. However, the question in contest here is not whether that amount was paid but whether it was properly paid. Mr Fernon submits that "the Plaintiffs contend, without justification or proof, that Sirrah was under no obligation to pay such amount." He submits that the Second and Fourth Defendants' non-production of documents as to this issue on discovery does not establish that the transactions did not occur in 2014. He again refers to the signed and audited accounts, but they establish the fact of the payment and its description, not that HHC incurred the relevant expenses or that Sirrah was under any obligation to reimburse them. Mr Fernon submits that the Plaintiffs bear the onus of establishing the absence of such an obligation and they have failed to satisfy that onus. 5. I recognise that, where the Plaintiffs have the legal onus of proving this claim, then they must do so to the reasonable satisfaction of the Court. However, where relevant facts are peculiarly within the knowledge of a defendant or where the defendant has greater means to produce evidence relating to those facts, then, provided the claimant provides sufficient evidence from which the matter can be inferred, the defendant comes under an evidential burden, or an onus of adducing evidence, and "[w]here a fact is peculiarly within the knowledge of a party to litigation, slight evidence of that fact may suffice to prove the fact unless that evidence is explained away by the party with the knowledge of the fact": BCI Finances Pty Ltd (in liq) v Binetter (No 4) (2016) 348 ALR 227; (2016) 117 ACSR 18; [2016] FCA 1351 at [122]-[123]; Re FAL Healthy Beverages Pty Ltd and FAL Retail Pty Ltd [2017] NSWSC 476 at [41]. 6. In KQ International Trading Pty Ltd v Yang [2016] VSC 146, where a company brought proceedings against its former director for breach of his fiduciary and statutory duties arising out of the defendant's alleged misappropriation of substantial funds from the company, Sifris J observed (at [118]–[119]) that the defendant produced no documents supporting his version of events and gave no acceptable explanation for the impugned transactions. His Honour noted (at [132]) that: "All of the transactions called for an explanation. The very person able to give the explanation failed miserably at all levels. He did not produce any relevant document, itself a startling feature of the case and in particular a case of this kind. Further, his recollection and oral evidence lacked coherence and credibility." His Honour inferred (at [91], [115]) that there was no credible explanation or justification for the transactions entered into by the defendant and the company succeeded in establishing that the defendant breached his directors' duties under ss 181 and 182 of the Corporations Act. 1. Assuming the transactions were a payment of expenses, I can more readily draw the inference that that "reimbursement" was not justified where WH gives no evidence of substance to justify it. I am satisfied that the pleaded claim for breach of the duty of care and diligence is established in respect of that "reimbursement". I am also satisfied that the "reimbursement" of expenses to HHC breached the "no conflict" rule since there was a real and sensible conflict of interest between WH's duties owed to Sirrah and his economic interest in HHC receiving the payment. There is again no suggestion that that payment was approved by a board resolution to have the benefit of any constitutional limitation of the no conflict rule and WH did not seek consent from the shareholders of Sirrah that would give rise to any consent to or ratification of that conflict. It is again not necessary to determine whether that conduct also amounted to a breach of statutory duties under ss 181 or 182 of the Act where I have found that a breach of fiduciary duty is established at general law and a finding of breach of the statutory duties would add nothing to the available relief. The loss suffered by Sirrah is the amount of that reimbursement, $875,173, as recorded in Sirrah's financial statements. Disputed expenses 1. It is common ground (FASOC [59A], AD [59A]) that Sirrah maintained a business credit card facility, that WH had the use of that business card and that Sirrah paid all liabilities associated with that business credit card. The Plaintiffs contend that, from 15 December 2017 to at least 30 September 2019, WH incurred personal expenses which were accounted for in Sirrah's records as business expenses; that there was no legitimate business purpose to incur those expenses; that each of those expenses was properly characterised as a personal expense of WH and not a business expense of Sirrah; and again plead a breach of statutory and general law duties in that respect and seek equitable and statutory compensation or an accounting (FASOC [59E]-[59H]). 2. In paragraph 59B of the Amended Defence, the Defendants admit that WH incurred personal expenses which were accounted for as business expenses during the relevant period, but deny, ambiguously, that "all of the expenses" identified by the Plaintiffs within this category were "Disputed Expenses" as defined. They also admit that there was no legitimate business purpose of Sirrah for the incurring of any of the Disputed Expenses and that any Disputed Expenses are properly characterised as personal expenses of WH and not business expenses of Sirrah and that, by causing the disputed expenses to be incurred, WH preferred his own interests to those of Sirrah and that Sirrah had suffered some detriment by reason of the disputed expenses having been incurred and had suffered some loss or damage in that respect. They contend that, from time to time, WH incurred debts to Sirrah by way of loans in amounts corresponding to the amounts of the disputed expenses, and do not admit the claims for compensation or an accounting. In substance, the Defendants' response to these allegations appeared to put in contest which expenses fall within the category of "Disputed Expenses" as defined. 3. WH accepted in cross-examination (albeit with a possible qualification by reference to other expenses which he might have wished to put in issue on further review) that only three of the eleven amounts that his solicitors had identified (in Ex P6) as having a proper business purpose for Sirrah had that character. Those three amounts are described as payments to "AirBNB Australia" and total $10,738.52. WH's evidence is that they were proper company expenses because they relate to TSH. Mr Wells and Mr Anderson submit even if that evidence were to be accepted, that expenditure does not amount to a legitimate company expense of Sirrah where it has never had any interest in TSH. Mr Fernon did not seek to support this proposition in submissions, and it seems to me that amounts expended to advance the business of TSH were not proper expenses of Sirrah, where Sirrah then had no equity or other interest in the business of TSH. 4. The Plaintiffs accept that, to the extent that the Disputed Expenses are subsumed in any judgment in favour of Sirrah pursuant to the loans to WH and HHC, they do not seek double recovery, but they rely on these matters to contend for breach by WH of his statutory and fiduciary duties owed to Sirrah and to seek an order for compensation against him. Mr Wells and Mr Anderson submit that WH breached his statutory and general law duties by the use of a company credit card to pay the personal expenses in circumstances where much of that expenditure was recorded as "loans" which were then re-allocated to HHC so as to avoid personal liability of WH in circumstances where there was no loan documentation in relation to such unsecured loans. It seems to me that the question whether the disputed expenses amount to a breach of WH's directors' duties ultimately depends upon whether the incurring of personal expenses of this magnitude, even if recorded in Sirrah's loan account amounts to a breach of those duties. 5. I am not satisfied that these payments breached the duty of care and diligence at general law and under s 180 of the Act, where those payments appear to have been treated as loans to WH, for the same reasons as I have found above that WH's causing Sirrah to make loans to WH did not breach that duty. However, I am again satisfied that the payment of the "Disputed Expenses" breached the "no conflict" rule since there was a real and sensible conflict of interest between WH's duties owed to Sirrah and his personal interest in receiving the payment. There is again no suggestion that these payments were approved by a board resolution so as to have the benefit of any constitutional limitation of the no conflict rule and WH did not seek consent from Sirrah's shareholders that would give rise to any unanimous consent to or ratification of that conflict. 6. The loss suffered by Sirrah is the amount of the Disputed Expenses, $1,847,166.53 (Ex D6), but no separate money judgment should be ordered for that amount where it is already included in the judgment amount reflecting the loan owed by WH to Sirrah. Loans to TSH and Scooti 1. I have referred to aspects of the transactions involving TSH and Scooti above, in dealing with the Defendants' application to vacate the hearing date. It is common ground (FASOC [59O]-[59P], AD [59O]-[59P]) that WH was a director of TSH from 3 December 2018 to 30 December 2019 and a director of Scooti at all times from 21 May 2018, and that Harris Health Care No 2 Pty Ltd ("HHC2") was controlled by WH and was the owner of 49 out of 100 ordinary fully paid shares in TSH. The Plaintiffs allege (FASOC [59S]) that WH caused Sirrah to lend monies to TSH totalling $221,500 and to Scooti totalling $6,715 in specified circumstances. The Defendants deny that allegation and say that the funds were provided by Sirrah to HHC and HHC2 for the purpose of investment in TSH and Scooti; those funds were held on trust for the purpose of contributing those funds as a capital investment in TSH and Scooti, to establish an "international scooter ride share delivery platform and/or business"; and that Sirrah was to be the ultimate beneficiary of shares in TSH and Scooti; and the documentation of the share structure and contributions were interrupted by the appointment of a provisional liquidator to Sirrah, and Sirrah is the ultimate beneficiary of the shares in TSH and Scooti. The Plaintiffs contend, and the Defendants deny, that these matters gave rise to breaches of WH's statutory and fiduciary duties and that the Plaintiffs are entitled to equitable compensation and compensation under s 1317H of the Act. 2. Mr Wells and Mr Anderson submit that WH breached his statutory and general law duties by the payments made to TSH and Scooti, where he was a director of both of those entities, those advances were not documented, were unsecured, and Sirrah derived no benefit from them, and that the use of Sirrah's funds for those purposes was clearly to its detriment and for the benefit of WH and speculative ventures by his related entities. Mr Fernon responds that the Second and Fourth Defendants contend that such monies were paid as an "investment" on behalf of Sirrah in such companies and refers to affidavit evidence of WH, MH and Mr Whitten to that effect (WH 21.1.21 [283]; MH 21.12.20 [52]; Whitten 8.2.21 [87]). I cannot accept that submission. I am not persuaded by the evidence of WH, MH and Mr Whitten asserting, in general terms, a future intention that the funds paid for the benefit of HHC, HHC2, TSH and Scooti would at some time be treated as a future capital investment in TSH and Scooti, still less that there existed any intention to create a "trust" rather than a debt until that occurred, and I have referred to the fact that no further equity was issued by TSH or Scooti in dealing with the application to vacate the hearing date above. 3. It seems to me that WH's causing these payments to be made for the benefit of HHC, HHC2, TSH and Scooti was in breach of his duty of care and diligence where there was no loan agreement in place, no documentation of any asserted trust and no equity was issued to Sirrah, and he took no adequate steps to address the conflict of interest which affected him in the transactions. I am also satisfied that WH breached the "no conflict" rule in respect of these payments since there was a real and sensible conflict of interest between his duties owed to Sirrah and his and HHC's, HHC2's, TSH's and Scooti's economic interest in the transactions and the loans made to them had the obvious capacity to generate economic value for him and his associated companies at Sirrah's risk. There is again no suggestion that these payments were approved by a board resolution to have the benefit of any constitutional limitation of the no conflict rule and WH again did not seek consent from Sirrah's shareholders that would give rise to any unanimous consent to or ratification of that conflict. It is again not necessary to determine whether that conduct also amounted to a breach of statutory duties under ss 181 or 182 of the Act where I have found that a breach of fiduciary duty is also established at general law and a finding of breach of the statutory duties would not add to the available remedies. 4. Perhaps rightly anticipating that the Court would not accept his submissions as to this issue, Mr Fernon also pointed out that Sirrah, through its provisional liquidator, has claimed recovery of those amounts in the insolvency of Scooti and TSH and the provisional liquidator "may succeed" in the recovery of such amounts and submitted that no loss or damage is established by the Plaintiffs. I do not accept that submission. Sirrah's loss is the amount paid out by Sirrah for the benefit of HHC, HHC2, TSH and Scooti, although it cannot recover it twice and must allow credit for any amounts that are recovered from Scooti and TSH. Liability of Sirrah to "Trustee of the Imagineer Trust" 1. Paragraphs 59X and following of the Further Amended Statement of Claim pleaded that, on or about 30 June 2018, Sirrah incurred a purported liability for unpaid commissions to the Imagineer Trust in the amount of $1 million; that Imagineer Collective Pty Ltd is the trustee of that Trust; and Ms Maryanne Harris was the sole director and shareholder of that entity, and a niece of WH and the cousin of MH; and the Defendants admitted each of those matters. The Plaintiffs contended that the purported liability was incurred at a time when Sirrah had no ongoing trading operations (FASOC [59AA]); that these matters gave rise to a breach of duty by WH and Ms Harris; and that Sirrah has suffered loss and damage and claim equitable compensation and compensation under s 1317H of the Act. 2. This claim had fundamental difficulties, since a liquidator has not yet been appointed to Sirrah and has not yet admitted a proof of debt by Imagineer Collective or the Imagineer Trust in the liquidation; so far as the liability was incurred in the circumstances for which the Plaintiffs contend, the liquidator may reject that proof of debt; and the Plaintiffs had made no serious attempt to quantify what, if any loss, Sirrah could incur by the admission and rejection of a proof of debt in these circumstances. Sirrah did not press this claim, which was the only claim made against Ms Harris, and the proceedings against her were dismissed in consequence. Claims for accessorial liability 1. The Plaintiffs also advance claims by Sirrah for accessorial liability, and specifically for knowing involvement or knowing receipt at general law or for knowing involvement for the purposes of s 79 of the Corporations Act, against HHC, and contend that WH's knowledge is attributed to HHC so far as he is a director of that company. Mr Fernon responds that accessorial liability is dependent upon the Plaintiffs establishing primary liability on WH's part for a breach of his directors' duties to Sirrah; that no breach of directors' duties can be established; and that, although significant loan monies are to be repaid by HHC and WH, the making of such loans does not establish a breach of duty. This claim extends to a claim for knowing participation, knowing receipt or knowing involvement in the breach of WH's statutory duties within the meaning of s 79 of the Corporations Act in respect of HHC's receipt of management fees beyond the amount payable under the 1997 Service Agreement, as adjusted for CPI (FASOC [63]ff) and several alternative formulations of this claim; to the same claims in respect of loans made to HHC (FASOC [69]ff); and to the same claims in respect of the amount of the "reimbursement" of expenses paid to HHC (FASOC [72]ff). 2. There is, of course, a considerable body of authority as to the circumstances in which liability for knowing receipt may arise, and it is not necessary to undertake a full review of that authority, particularly where it was not addressed by Counsel. Broadly, under the first limb of the rule in Barnes v Addy (1874) LR 9 Ch App 244, a person who receives company property from a director will hold it on trust for the company if he or she knows, or the circumstances are such that he or she ought to know, that the director is acting in breach of duty in respect of the relevant transaction. In Kalls Enterprises Pty Ltd (in liq) v Baloglow above at [152]–[159], the Court of Appeal examined the case law in which the first limb of Barnes v Addy above had been applied to breach of fiduciary duty by a company director. In order to succeed in a claim for knowing receipt, the Plaintiffs must establish the relevant breach of fiduciary duty by WH and that HHC received the relevant property by reason of the breach of duty and, at the time of receiving that property, knew of the relevant duty and of the misapplication of the relevant property: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22; Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; 89 ACSR 1; [2012] WASCA 157; Grimaldi v Chameleon Mining NL (No 2) (2012) 87 ACSR 260; [2012] FCAFC 6. I have drawn on my summary of the relevant principles in Gordon in His Capacity as Liquidator of Lyon Form Pty Ltd (in liq) v Leon Plant Hire Pty Ltd (in liq) [2015] NSWSC 397 at [61] in this respect. 3. A third party may be held liable under the second limb of the rule in Barnes v Addy above if he or she knowingly assists a director in a transaction which is in breach of duty to the company. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd above, the High Court emphasised (at [179], [183]) that its earlier decision in Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; 5 ALR 231 established a requirement that any breach of trust or breach of fiduciary duty relied on to establish liability for knowing assistance must be dishonest and fraudulent, so that the impugned conduct must involve circumstances attracting a degree of opprobrium beyond an innocent breach of trust or duty. In Ramsay v BigTinCan Pty Ltd (2014) 101 ACSR 415; [2014] NSWCA 324 at [30], Macfarlan JA (with whom McColl and Gleeson JJA generally agreed) referred, without disapproval, to the trial judge's treatment of Farah Constructions Pty Ltd above as authority that the elements of a knowing assistance claim were (1) a dishonest and fraudulent breach of duty by the fiduciary; (2) knowledge of that dishonest and fraudulent breach by a third party; and (3) assistance in that breach by that third party, and also referred to Consul Developments above as authority that conduct may be "dishonest and fraudulent" for the purposes of liability for knowing assistance where it can be described, in ordinary language, as morally reprehensible. In Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; 101 ACSR 167; [2014] NSWCA 266 at [124], Leeming JA held (Barrett and Gleeson JJA agreeing) that, in order to establish knowing assistance, a breach of trust must be dishonest as well as fraudulent, with dishonesty amounting to "a transgression of ordinary standards of honest behaviour", although it is not necessary to demonstrate that the relevant individual "thought about what those standards were". I have drawn on my summary of the relevant principles in Australian Worldwide Pty Ltd (In Liq) v AW Exports Pty Ltd [2019] NSWSC 1475 at [87] for this summary. 4. In Grimaldi v Chameleon Mining NL (No 2) above at [242]-[243], the Full Court of the Federal Court of Australia also dealt with the issue which arise here, of the imposition of liability on a company that is an alter ego of a director, as follows: "It is accepted in this country that Lord Selborne's ex tempore observations in Barnes v Addy did not provide an exhaustive statement of the circumstances in which, and the bases on which, a third party's participation in another's breach of fiduciary duty or breach of trust, could render that person accountable in equity as a "constructive trustee" (to use the commonly adopted but often unhelpful formula): Farah Constructions, at [161]. The fact findings made in this case reveal, potentially, four quite different manifestations of such participation. Each type warrants present note. The first, is where the third party is the corporate creature, vehicle, or alter ego of wrongdoing fiduciaries who use it to secure the profits of, or to inflict the losses by, their breach of fiduciary duty: see eg Cook v Deeks [1916] AC 554 ("Cook") at 565; Queensland Mines Ltd v Hudson (1975–1976) ACLC 28 at 658 at 27,709, revsd on other grounds (1978) 18 ALR 1; Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 488 (Timber Engineering) at (11); Green & Clara Pty Ltd v Bestobell Industries Pty Ltd (No 2) [1984] WAR 32 (Green v Bestobell); Gencor ACP Ltd v Dalby [2000] 2 BCLC 734 at [26]; CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704 ("CMS Dolphin") at [97]–[105]. In these cases the corporate vehicle is fully liable for the profits made from, and the losses inflicted by, the fiduciary's wrong. The liability itself is explained commonly on the basis that "company had full knowledge of all of the facts": Cook, at 565; it is the alter ego of the fiduciary with a "transmitted fiduciary obligation": Timber Engineering, at (11); or that it "jointly participated" in the breach: CMS Dolphin at [103]. Liability does not turn on the need to show "dishonesty", although it often provides the reason for the interposition of the company. Proof of a breach of fiduciary duty will suffice; Green v Bestobell, at 40. And, as was said in CMS Dolphin (at [104]), it is "rather artificial" to use Barnes v Addy to explain this liability." 1. The authorities have also been reviewed by Beech J in EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd (No 3) [2013] WASC 183 at [406]ff. The observations in Grimaldi v Chameleon Mining NL (No 2) above were also applied by the Court of Appeal in Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd (2016) ACSR 566; (2020) 147 ACSR 389; [2016] NSWCA 347 at [178], by Ball J in Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) [2020] NSWSC 1159 at [138] and in my judgment in Re Mudgee Dolomite & Lime Pty Ltd [2020] NSWSC 1510 at [162]ff. 2. I am satisfied that, here, HHC is liable for the monies it has received on the basis of knowing assistance and knowing receipt principles, and would also be held liable on the basis that it is WH's alter ego and, in the language quoted in Grimaldi, it had full knowledge of all of the facts of WH's breach of duty from which it profited and has a "transmitted fiduciary obligation" as WH's alter ego. I did not understand Mr Fernon to contend to the contrary, if the breaches of duty alleged against WH were established. It is not necessary to determine whether HHC could also be held liable for knowing involvement in a breach of statutory duty for the purposes of s 79 of the Corporations Act, where that would add nothing to the relief to which Sirrah is entitled at general law. I address the amount of the judgment to be ordered against HHC below. The relief sought in respect of the derivative claims 1. The Plaintiffs originally sought, on Sirrah's behalf, orders for an accounting in several respects. It is not necessary to make such orders where the evidence has sufficiently identified the relevant transactions, and it is not necessary to decide whether the Court would have had power to make them. 2. The Plaintiffs sought an order that monies paid to HHC under a management contract or other arrangement and to WH or HHC under any loan arrangement are held on constructive trust for Sirrah. A constructive trust would not ordinarily be imposed where a relationship of creditor and debtor is already in place and any loan agreement has not been rescinded. A constructive trust is also not necessarily imposed as a remedy for breach of fiduciary duty, and the court will generally only impose a constructive trust if no other appropriate remedy is available which is capable of doing full justice: Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59 at [42]; Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [10]. In John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [128]–[129], in a case of alleged breach of fiduciary duty, the High Court observed that a constructive trust "ought not to be imposed if there are other orders capable of doing full justice" and that: "[I]t is not a complete answer to … reliance on Giumelli that remedies other than a constructive trust may lack practical utility because of the impecuniosity of those against whom they are sought. One point made in the Giumelli line of cases is that care must be taken to avoid granting equitable relief which goes beyond the necessities of the case. Another point in those cases is that third party interests must be borne in mind in deciding whether a constructive trust should be granted …" I am not persuaded that, assuming that a breach of fiduciary duty by WH and accessorial liability on the part of HHC were established, it would have been appropriate to make that order where it would have had the result that Sirrah would stand in priority to other third party creditors of HHC, which will have had no opportunity to be heard as to that result. 1. The Plaintiffs seek declarations under s 1317E of the Corporations Act and the general law that WH breached his duties to Sirrah in specified respects. No declaration of a contravention should be made under s 1317E of the Act, since the balance of authority indicates that that section only applies to proceedings in which relief is sought by the Australian Securities and Investments Commission: One.Tel Ltd (in liq) v Rich (2005) 190 FLR 443; 53 ACSR 623; [2005] NSWSC 226 at [69]–[70]; Primacy Underwriting Agency Pty Ltd v Kilborn (2007) 25 ACLC 160; [2007] NSWSC 158 at [6]–[8]. I do not consider that such a declaration should be made in respect of any breach of fiduciary duty where it would be merely anterior to the other relief that I have ordered. 2. The Plaintiffs seek judgment against WH and HHC in respect of unpaid loan balances owed to Sirrah. The Plaintiffs also seek damages, equitable compensation and compensation for loss and damage under s 1317H of the Act, which allows the Court to order a person to compensate a corporation for damage suffered by it, if that person has contravened a civil penalty provision in relation to the corporation and the damage resulted from the contravention. The words "resulted from" in this section refer to damage which, as a matter of fact, was caused by the contravention and require a causal connection between the damage and the contravening conduct. There is no suggestion that the amounts ordered would differ on these bases. The Plaintiffs seek an order for compound interest or alternatively interest. They made no submissions to support the former and the latter follows from the orders that I will make below. 3. The Plaintiffs also sought an order that WH and HHC restore, or transfer, to Sirrah properties referred to in paragraphs 46(g) and (h) of the Further Amended Statement of Claim. The former claim relates to a loan made by WH or HHC to a third party to develop a shopping centre in Fiji and WH and HHC has no interest in that property to transfer to Sirrah. The latter claim relates to a property in Bali where WH holds a sublease, which he now denies is held on trust for Sirrah as I noted above. Mr Fernon submits that the Plaintiffs did not plead a claim for an equitable interest in the Bali or Fiji properties, and the only pleaded claim in respect of the loan funds is that a constructive trust (FASOC [70]) exists in respect of those monies in the hands of HHC, and there is no basis to now claim such an interest. He also submits, rightly, that there is no evidence that a relevant interest in a Fiji property exists. He submits that the monies advanced in respect of the Fiji Shopping Centre and the Bali property are also the subject of the claim made in respect of the loans made to HHC and WH and that, as loan funds, no basis exists to make an equitable claim in respect of such monies or assets acquired by WH and/or HHC with such monies. 4. There is a degree of complexity in the legal principles that apply where a loan is made or received in breach of duty and a constructive trust is claimed while that loan subsists. The relevant issues were helpfully summarised by O'Bryan J in Hylepin Pty Ltd v Doshay Pty Ltd (2020) 148 ACSR 30; [2020] FCA 1370 at [41] as follows: "In reliance on Paul A Davies (Aust) Pty Ltd (in liq) v Davies [1983] 1 NSWLR 440; (1982) 8 ACLR 1 (Davies), Hylepin advanced a broader contention that, where a director has used company monies in breach of fiduciary duty, the monies so used are held on a constructive trust in favour of the company. Ultimately, it has not become necessary to determine whether that contention is correct or is stated too broadly. However, it appears to be in conflict with the decision of the High Court in Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371; 65 ALR 193 (Daly), where the majority concluded that monies received as a loan in circumstances of a breach of fiduciary duty (by failing to make full disclosure) were not the subject of a constructive trust and the recipient was bound to repay the monies as a debt. In Hancock Family Memorial Foundation Ltd v Porteous (2000) 22 WAR 198; [2000] WASCA 29, the Court of Appeal of the Supreme Court of Western Australia observed (at [204]) that, in Davies, it was not clear from the trial judge's findings whether the directors had obtained the company's money by way of contracts of loan (in which case, the High Court's decision in Daly applied) or had misappropriated the money (in which case the monies belonged to the company)." 1. I doubt that the relief claimed by the Plaintiffs is available, where it is here common ground that WH had obtained Sirrah's money which was applied to acquire the interest in the Bali property by way of a contract of loan, and I should follow the appellate authority of Daly and Hancock Family Memorial Foundation Ltd v Porteous (2002) 22 WAR 198; [2000] WASCA 29 in treating such relief as not available where that loan subsists. It is not necessary to reach a final conclusion as to that matter, since I am not persuaded that the order sought by the Plaintiffs should be made, even if it were available in law, where no factual basis for that order was pleaded; WH's evidence in cross-examination was that a foreign company could not hold a trust interest over Indonesia property under Indonesian law and that evidence was not rebutted by any evidence led by the Plaintiffs; and the form of order sought would allow the Plaintiffs priority over other creditors of WH, so far as that asset would otherwise be available to meet their claims. 2. In supplementary submissions as to orders, the Plaintiffs sought an order that WH "take all steps as may be reasonably required to preserve and sell, at market value" his interest in the Bali property, and remit the proceeds of sale to the liquidator of the First Defendant in satisfaction or part satisfaction of the judgments in respect of the loan accounts. Mr Fernon responds that: "… the Plaintiffs now seek an order that the Bali property be sold by Mr Harris and he remit the proceeds (not even the net proceeds) of sale to the liquidator of the [Company]. This order is not sought in the Further Amended Statement of Claim. The Plaintiffs do not identify the basis for this order, other than it is to satisfy in whole or in part, proposed orders [as to the loan amounts due by WH and HHC to the Company]. This suggested justification infers the order is sought as security to enforce the potential judgment orders. It does not suggest that the Plaintiffs maintain a claim that [the Company] has an interest in the Bali property. As outlined in the Closing Submissions, the Further Amended Statement of Claim did not assert an interest in the Bali Property but nevertheless sought to have the property transferred to the [Company]. There is no basis to now seek [this order]. It is not part of the Plaintiffs' claim. The Plaintiffs are not otherwise entitled to security for other orders they seek. They are not entitled to override the interests of others (including security holders) in the Bali property." 1. I accept Mr Fernon's submissions in part. It does not seem to me that the Court can or should make such an order, outside any bankruptcy of WH, where it would not be consistent with the relationship of creditor and debtor between the Company and WH and would again prefer the Company to WH's other creditors, including a third party identified in the course of the hearing who claims to have a security interest over the Bali property. The Court has accepted WH's undertaking given to the Court not to deal with that property without further order, and might well make a freezing order over that property pending the satisfaction or enforcement of this judgment if asked to do so. It would, of course, be necessary to allow an opportunity to be heard to third parties, including any secured creditor, which may be affected by such an order. Winding up application 1. Finally, the Plaintiffs bring claims in respect of oppression and relief is sought by way of an order to wind up the Company. Mr Fernon submits that , where WH consents to the winding up of Sirrah, no findings of oppression are required and such findings should not be made 2. At least where a company was established on the basis of relationships of mutual confidence, a winding up order may be made on the just and equitable basis under s 461(1)(k) of the Corporations Act where irreconcilable differences emerge between its members, and the Court may make a winding up order on that basis in circumstances that do not amount to oppression: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 at [89]; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 at [96]–[98], [117]. I summarised the applicable principles in Re AJ Roberts Removals and Storage Pty Ltd [2017] NSWSC 1054 and Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914. There is no absolute rule that the Court will not wind up a solvent company, while accepting that winding up is a last resort: Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325; [2008] VSCA 86 at [119]; Re Pure Nature Sydney Pty Ltd above at [76]. 3. On the first day of the hearing, the Defendants indicated that they consent to Sirrah being wound up. The Plaintiffs submit that the Court would be comfortably satisfied that, in all the circumstances, a winding up order should be made, and Mr Hayes appointed as Sirrah's liquidator under s 461(1)(k) of the Corporations Act, notwithstanding the extant application to remove and replace him as provisional liquidator made by the Second, Third and Fourth Defendants. The matters set out above, and the history of litigation between the parties, are sufficient to warrant a winding up order on the just and equitable grounds. Mr Hayes should be appointed liquidator, given his familiarity with Sirrah's affairs and the additional costs which would arise from now appointing a different liquidator, and where no findings have been made at this point that are adverse to his conduct of the provisional liquidation. The Second-Fourth Defendants may, of course, amend and pursue their application for his removal, to address his position as liquidator rather than provisional liquidator, if so advised. Orders and costs 1. After I had reserved judgment, I requested further submissions as to the orders that the Plaintiffs sought, if they were successful in whole or in part, and as to the basis on which any money amounts contained in those orders are calculated. I have had regard to the Plaintiffs' proposed orders and the parties' further submissions in formulating proposed orders as set out below. 2. I should first address several issues that arise in respect of those orders. As I noted above, it is now common ground that a winding up order should be made, and I will appoint the existing provisional liquidator as Sirrah's liquidator. In doing so, I recognise that the Second and Fourth Defendants have brought an application to replace him as provisional liquidator, but they have not complied with the directions made to progress that application and it has not been determined. I do not propose to make declarations in the form sought by the Plaintiffs in orders 7, 9, 11-12, 14, 16 and 18 for the reasons noted in paragraph 158 above. 3. The Plaintiffs' proposed orders, and in particular orders 3, 8, 13, 15 and 19 against WH and orders 5, 10 and 17 against HHC include overlapping money judgments against WH in respect of the separate heads of liability, for example, in respect of loan balances and disputed expenses, and seek to address that overlap by a qualification that the amount payable would not exceed the total amount of the liability of WH and HHC in respect of the loan balances. I do not consider that is an appropriate form of order, where it would leave at least WH to engage in further calculations to seek to work out what he had to pay to meet any judgment, and it does not expose or resolve any dispute between the parties in that respect. I have reformulated the orders that I propose to make to quantify the total amounts payable by each of WH and HHC, in respect of all heads of liability, and I will allow the parties the opportunity to make further submissions as to that matter. The judgment against WH comprises the amount of his loan account ($1,014,244); the amount of HHC's loan account ($11,044,660.24) where I have found that loan was made in breach of his fiduciary duty; a portion of the management fees paid to HHC ($3,754,902.58), which I have held was paid in breach of that duty; and the amount of the "reimbursement" to HHC ($875,173) which I have held was also paid in breach of that duty. The judgment against HHC comprises the amount of its loan account ($11,044,660.24), that part of the management fees which it received ($3,754,902.58) and the "reimbursement" to it ($875,173). The judgments against WH and HHC do not include any additional amount in respect of the "disputed expenses" where it appears they are already reflected, wholly or partly, in WH's loan account and the Plaintiffs have not quantified the amount of any overlap. The Plaintiffs rightly accept that they cannot recover more than their total loss against WH (under paragraphs 3 and 4) and HHC (under paragraphs 5 and 6) under these judgments. 4. There was no dispute between the parties as to the quantification of pre-judgment interest in respect of the loan amounts, but the Plaintiffs did not calculate interest in respect of the other heads of claim and will need to do so and address any overlap in that respect if they seek interest in respect of those claims, in the further submissions which they will have the opportunity to make. I have not made any additional order in respect of Bali property where the loan in respect of that property is included in the loan account and for the reasons noted above. 5. In the ordinary course, costs would follow the event, and my preliminary view is that WH and HHC should be ordered to pay the Plaintiffs' costs of and incidental to the proceedings against them, but not the claim against Ms Harris which was not pressed and as to which costs have been reserved. 6. On that basis, the orders that I propose to make, subject to the opportunity for further submissions reserved below, are that: 1. Pursuant to section 461(1)(k) of the Corporations Act 2001 (Cth), the First Defendant, Sirrah Pty Ltd (in prov liq) be wound up. 2. Alan John Hayes be appointed as liquidator of the First Defendant. 3. Judgment for the First Defendant against the Second Defendant in the sum of $16,699,979.82. 4. The Second Defendant pay pre-judgment interest on the sum of $1,014,244.00 for the period 25 January 2019 to 13 April 2021 in the amount of $108,199.03 and pre-judgment interest on the sum of $11,044,660.24 for the period 30 September 2019 to 13 April 2021 in the amount of $772,385.28 and continuing thereafter up until judgment. 5. Judgment for the First Defendant against the Fourth Defendant in the sum of $15,674,735.82. 6. The Fourth Defendant pay pre-judgment interest on the sum of $11,044,660.24 for the period 30 September 2019 to 13 April 2021 in the amount of $772,385.28 and continuing thereafter up until judgment. 1. I direct the parties to make any further submissions within 7 days as to the form of orders that I propose to give effect to this judgment, and as to costs, not exceeding 10 pages in one and a half spacing. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 April 2021