Supreme Court New South Wales Medium Neutral Citation: Salmon v Albarran [2023] NSWSC 1238 Hearing dates: 28 – 31 August 2023; 1 September 2023; 5 September 2023; 12 September 2023; 15 September 2023 Date of orders: 19 October 2023 Decision date: 19 October 2023 Jurisdiction: Equity Before: Nixon J Decision: (1) Orders that the Fourth Further Amended Statement of Claim be dismissed. (2) Directs that, by 4pm on 2 November 2023, the parties bring in short minutes of order that deal with costs, if they can be agreed. (3) Directs that, if the parties cannot agree on the form of orders in relation to costs: (a) the Defendants file and serve any written submission, limited to 5 pages, in respect of the terms of the order for costs, together with any affidavit in support, by 4pm on 2 November 2023; and (b) the Plaintiffs file and serve any written submission in response on costs, limited to 5 pages, together with any affidavit in support, by 4pm on 9 November 2023. Catchwords: EQUITY – Fiduciary duties – Fiduciary relationships – Solicitor and client – Retainers – Retainers may be express or implied from contemporaneous documentation – Solicitor disputed that he acted for each of the defendants in legal proceedings – Retainer established EQUITY – Fiduciary duties – Whether privately appointed receiver and manager owes fiduciary duties to appointor – Privately appointed receiver is in a fiduciary relationship with the appointor – No prescriptive duty is owed to keep appointor informed about progress of receivership EQUITY – Fiduciary duties – Breach – Whether solicitor or receiver acted in a position of conflict – Whether solicitor or receiver pursued an unauthorised benefit – Whether there was informed consent – Whether breach was dishonest – No dishonest breach of fiduciary duties established EQUITY – Rule in Barnes v Addy – Whether there was knowing assistance in dishonest breach of fiduciary duties – No liability established DEEDS – Whether receivers and managers were appointed under a deed – Objective intention of the parties – Appointment instruments entered at same time as deeds of indemnity – Appointment instruments were not deeds – Whether receivers and managers breached any duties arising under appointment instruments – No breach established EQUITY – Equitable Remedies – Equitable compensation – Causation – Loss of opportunity – No loss of a valuable opportunity established LIMITATION OF ACTIONS – Equity – Whether relevant limitation period had expired – Laches – Unnecessary to decide whether claims statute barred or relief ought to be barred by laches where no claims of wrongdoing have been established CIVIL PROCEDURE – Amendment of pleadings – Power to amend pleadings under ss 64 and 65 of Civil Procedure Act Legislation Cited: Civil Procedure Act 2005 (NSW), ss 64, 65 Conveyancing Act 1919 (NSW), s 38 Corporations Act 2001 (Cth), ss 558FE, 558FF Evidence Act 1995 (NSW), s 140(2) Limitation Act 1969 (NSW), s 23 Partnership Act 1892 (NSW), s 10 Cases Cited: 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 245 Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868 AMP Services Ltd v Manning [2006] FCA 256 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1, [2018] HCA 43 Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58 Atanaskovic Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542; [2021] NSWCA 201 Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286 Australian Securities and Investments Commission v Albarran (No 2) [2008] FCA 386 Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 Bank of Western Australia Ltd v Abdul & Anor [2012] VSC 222 Barnes v Addy (1874) LR 9 Ch 9 Beach Petroleum NL v Abbott Tout Russell Kennedy & Ors (1999) 48 NSWLR 1; [1999] NSWCA 408 Beesly v Hallwood Estates Ltd [1961] 1 All ER 90; [1961] 1 Ch 105 Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27 Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Brisbane South Regional Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445; [2011] FCAFC 55 Comptroller of Stamps v Associated Broadcasting Services Ltd [1990] VR 335 Comptroller of Stamps v Associated Broadcasting Services Ltd [1990] VR 345 Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295; [1993] 2 WLR 86 ET-China.com International Holdings Limited v Cheung [2021] NSWCA 24 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Finance Ltd and Others [1988] 1 WLR 1231; [1989] 1 All ER 261 Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 Gan v Xie [2023] NSWCA 163 Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 Girotto v Phillips Fox (a firm) & Anor [2011] VSC 293 Gomba Holdings UK Ltd v Homan [1986] 1 WLR 1301; [1986] 3 All ER 94 Gomba Holdings UK Ltd and Others v Minories Finance Ltd and Others [1988] 1 WLR 1231; [1989] 1 All ER 261 GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers & Ors [2005] VSCA 113 Greater Lithgow City Council v Wolfenden [2007] NSWCA 180 Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 Haines v Australian Broadcasting Authority (1995) 43 NSWLR 404; [1995] NSWSC 136 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 Herron v McGregor (1986) 6 NSWLR 246 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 Kane's Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 In re Magadi Soda Company Limited (1925) 41 TLR 297 In the matter of Kit Digital Australia Pty Limited (in liq) [2014] NSWSC 1547 Independent Print Media Group Publishing Pty Ltd v Estate Agents Co-operative Ltd [2007] NSWSC 1098 Jaken Properties Australia Pty Ltd v Naaman [2023] NSWCA 214 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118 Longman v The Queen (1989) 168 CLR 79; [1989] HCA 60 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 Malec v J C Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20 McGee v Yeomans [1977] 1 NSWLR 273 Meerkin & Apel v Rossett Pty Limited [1998] 4 VR 54 Modena Imports Pty Ltd (in liq), In the matter of; Leveraged Capital Pty Ltd (R&M app) (in liq) v Modena Imports Pty Ltd (in liq) [2010] NSWSC 739 Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 Mudgee Dolomite & Lime Pty Limited v Robert Francis Murdoch; In the matter of Mudgee Dolomite & Lime Pty Limited [2020] NSWSC 1510 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66 Norberg v Wynrib [1992] 2 SCR 226 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Orr v Ford (1988) 167 CLR 316; [1989] HCA 4 Parker, In the matter of Purcom No 34 Pty Limited (In Liq) (No 2) [2010] FCA 624 Pegrum v Fatharly (1996) 14 WAR 92 Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 169; [2001] HCA 31 Pittmore Pty Ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344 Qantas Airways Ltd v Gama (2008) 167 FCR 537; [2008] FCAFC 69 Ramsay v BigTinCan Pty Ltd [2014] NSWCA 324 Re B Johnson & Co (Builders) Ltd [1955] Ch 634 Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476 Re Just Juice Corporation Pty Limited (recs and mgrs apptd); James v Commonwealth Bank of Australia and Others (1992) 109 ALR 334 Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198, [2001] NSWCA 142 Rottenberg v Monjack [1993] BCLC 374 Sangha v Baxter [2009] NSWCA 78 Segboer & Anor v A J Richardson Properties Pty Ltd & Anor [2012] NSWCA 253 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 South Johnstone Mill Ltd v Dennis and Scales [2007] FCA 1448 State Bank of NSW v Kit Cheng Chia and Peng Tin Chia; Peng Tin Chia v Kenneth John Rennie and Anor (2000) 50 NSWLR 587; [2000] NSWSC 552 Taouk v Ho [2019] NSWCA 156 Trajkovski v Simpson [2019] NSWCA 52 Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609 Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354; [1943] HCA 4 Watson v Foxman (1995) 49 NSWLR 315 Watson & Ors v Ebsworth & Ebsworth (a firm) & Anor [2010] VSCA 335 Wily v Terra Cresta Business Solutions Pty Ltd [2006] NSWSC 1042 Wily v Terra Cresta Business Solutions Pty Ltd (No 2) [2006] NSWSC 1102 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Texts Cited: H Picarda, The Law Relating to Receivers, Managers and Administrators (2nd ed, 1990, Butterworths) P Finn, "Contract and the Fiduciary Principle" [1989] UNSWLJ 76 Category: Principal judgment Parties: Owen Salmon (First Plaintiff) TCBS Group Holdings Pty Ltd (Second Plaintiff) Richard Albarran (First Defendant) Geoffrey McDonald (Second Defendant) Steven Brown (Third Defendant) Joseph Elliott, Anthony Townsend, David Kenney, Luigino Malacco and Andrew Leroy (Fourth, Fifth, Sixth, Seventh and Eighth Defendants) Representation: Counsel: H K Insall SC and J Simpkins (Plaintiffs) M R Elliott SC and N Simone (First, Second, Fourth, Fifth, Sixth, Seventh and Eighth Defendants) M A Karam (Third Defendant) Solicitors: James Legal (Plaintiffs) Hall & Wilcox (First, Second, Fourth, Fifth, Sixth, Seventh and Eighth Defendants) Gilchrist Connell (Third Defendant) File Number(s): 2016/373218 Publication restriction: Nil Judgment 1. These proceedings, which were commenced by a Statement of Claim filed on 13 December 2016, relate primarily to a hearing that occurred in this Court on 18 and 19 September 2006 before Young CJ in Eq. 2. One of the parties to that litigation was a company known as Terra Cresta Business Solutions Pty Ltd (TCBS). All of the shares in TCBS were held by TCBS Group Holdings Pty Ltd (the Second Plaintiff in these proceedings), and all of the shares in TCBS Group Holdings Pty Ltd were held by Owen Salmon (the First Plaintiff), either personally or through entities controlled by him. 3. In August 2006, TCBS appointed Richard Albarran (the First Defendant) and Geoffrey McDonald (the Second Defendant) as the receivers and managers (Receivers) in respect of two related companies, Business Australia Capital Mortgage Pty Limited (BACM) and Business Australia Capital Finance Pty Limited (BACF). This appointment was pursuant to charges which had been given by each of BACM and BACF to TCBS in early 2005. 4. At the time of their appointment, the Receivers were, together with the Fourth to Eighth Defendants, partners in the firm Hall Chadwick. 5. BACM and BACF were members of what was described as the "BA Group" of companies. Prior to the Receivers' appointment, Andrew Wily had been appointed as liquidator of BACM and BACF (the Liquidator), and of other companies in the BA Group. 6. Shortly after the appointment of the Receivers, the Liquidator commenced proceedings in this Court numbered 4200/06 against TCBS and the Receivers, seeking declarations that the charges granted to TCBS and the appointments of the Receivers to each of BACM and BACF were invalid (the 2006 Proceedings). 7. The Third Defendant, Steven Brown, was the principal of Etienne Lawyers, and was retained to act in the 2006 Proceedings. There is an issue as to whether Mr Brown was retained by TCBS and the Receivers, or by the Receivers alone. Nonetheless, Mr Brown was the solicitor on the record for both TCBS and the Receivers in the 2006 Proceedings, and signed numerous documents in that capacity. 8. On 13 September 2006, shortly before the 2006 Proceedings were due to come on for hearing, persons representing the Liquidator raised allegations about payments that had been made to Etienne Lawyers by Mr Albarran and Mr McDonald when they were acting as Deed Administrators of a company known as Given Form Pty Limited (Given Form), which was subject to a Deed of Company Arrangement. Given Form had owed moneys to companies within the BA Group, and the Deed Administrators had, in accordance with irrevocable assignments given by those BA companies, paid moneys out of the deed fund to Etienne Lawyers. Those moneys were paid in respect of unpaid legal fees for work which Mr Brown had performed for the BA Group. The specific allegations raised regarding the Given Form payment, and the persons with whom they were raised, are addressed below. 9. On 18 September 2006, at the end of the first day of the hearing before Young CJ in Eq, the parties to the 2006 Proceedings agreed to settle their dispute "in principle" for the sum of $1.3m, to be paid to TCBS out of moneys which the Liquidator was expecting to receive from the settlement of another dispute. The "in principle" settlement of the 2006 Proceedings was subject to the parties entering into a settlement deed, such that there would be no binding settlement unless and until a deed was agreed and executed. 10. On the evening of 18 September 2006, Mr Brown prepared a draft deed of settlement. The draft deed included a proposed release in the following terms: "The Liquidator releases the BA Companies in respect of the money paid to them jointly and severally by the Deed Administrator of Given Form" (the Given Form release). 11. The Given Form release was included in the draft deed following a discussion between Mr Brown and Mr Albarran. It was not suggested that any instructions had been sought from TCBS in respect of the inclusion of the Given Form release in the draft deed before it was sent to the Liquidator's solicitor, Mr Nikolaidis. 12. Mr Brown sent the draft deed to Mr Nikolaidis, by an email at 7.38pm on 18 September 2006. The email was also addressed to Mr Albarran, Mr Salmon and the Chief Executive Officer of TCBS, Mr Myers, and was copied to counsel for TCBS, Mr Julian O'Sullivan. The email stated that the draft deed was sent to Mr Nikolaidis "at the same time as it is being sent to our clients for their instructions", and asked the addressees to review the draft deed. 13. On 19 September 2006, the Liquidator's representatives indicated that they would not agree to a settlement deed that included the Given Form release. There is a substantial factual dispute as to what then occurred. The Plaintiffs contend that the Receivers and Mr Brown refused to remove the Given Form release from the draft deed, while the Defendants contend that Mr Albarran immediately gave instructions to Mr Brown for the Given Form release to be removed, and another draft was prepared which was provided to the Liquidator's solicitor for his review. 14. It is common ground that, after the Liquidator's representatives had indicated that the Given Form release was not acceptable, the hearing of the 2006 Proceedings continued; and that, in the afternoon of 19 September 2006, the Liquidator's solicitor indicated to Mr Brown that, as a result of the events in court that day, the Liquidator was no longer willing to settle for the amount of $1.3m. 15. On 21 September 2006, judgment was delivered in the 2006 Proceedings. Young CJ in Eq found that the BACM charge was invalid, and upheld the BACF charge. Subsequently, the Liquidator was awarded 80% of his costs of the two-day hearing. 16. The 2006 Proceedings remained on foot to determine the amount of moneys owing to TCBS and secured under the BACF charge. The proceedings continued for another two years without coming on for hearing on that issue. Meanwhile, the costs order in respect of September 2007 was assessed at some $90,543. TCBS was unable to pay this costs order. The Liquidator petitioned for the winding up of TCBS, and was supported by Hall Chadwick. 17. TCBS was placed into liquidation, and its liquidator agreed to settle the claim in respect of BACF for $177,902, inclusive of costs. 18. Mr Salmon became bankrupt in 2009. TCBS was deregistered on 28 April 2012. 19. After Mr Salmon was discharged from bankruptcy in September 2014, steps were taken to re-register TCBS. In September 2016, the liquidator of TCBS entered into a deed, effective 15 December 2015, by which TCBS assigned all of its choses in action to Mr Salmon and TCBS Group Holdings Pty Ltd. The Plaintiffs bring these proceedings as assignees of those claims. The Defendants had, in their pleadings, raised an issue about the validity of the assignment, and the Plaintiffs' standing to bring the claim against them, but no such issue was pressed at the final hearing. 20. The Statement of Claim in these proceedings has gone through numerous iterations, which included a variety of claims, many of which have now been abandoned. On the first day of the hearing, I granted leave for the Plaintiffs to file the current version of the pleading, being the Fourth Further Amended Statement of Claim (FFASOC). In closing submissions, the Plaintiffs pressed three main claims, all of which related primarily to the conduct of Mr Albarran and Mr Brown in respect of the events of 13 to 19 September 2006, namely: 1. First, that Mr Brown dishonestly breached his fiduciary duties to TCBS, by continuing to act when he was in a position of conflict and by pursuing a benefit for himself and the Receivers (the Given Form release), and that Mr Albarran knowingly assisted in that breach; 2. Secondly, that Mr Albarran dishonestly breached his fiduciary duties to TCBS, by continuing to act when he was in a position of conflict and by pursuing a benefit for himself, Mr McDonald and Mr Brown (the Given Form release), and that Mr Brown knowingly assisted in that breach; and 3. Thirdly, that the Receivers breached their duties under the instrument by which they were appointed, which was said to be a deed. The deed was said to be breached by Mr Albarran by reason of his conduct in respect of the Given Form release, with Mr McDonald being jointly liable for that breach. 1. The losses said to flow from those breaches included not only the loss of the opportunity to settle the 2006 Proceedings for $1.3m, but also the loss of the opportunity for TCBS to avoid liquidation and to continue to trade. 2. As well as disputing breach and causation, the Defendants argued that the claims brought against them were barred by limitation periods. 3. Before turning to consider those issues, I set out below some preliminary comments on the evidence in this case, followed by the findings I have made regarding the extensive factual contests concerning the course of events leading up to the conclusion of the hearing on 19 September 2006. A. PRELIMINARY COMMENTS ON EVIDENCE Relevant Principles 1. In deciding whether I am satisfied that the Plaintiffs' case has been proved on the balance of probabilities, I must take into account the nature of the cause of action, the nature of the subject-matter of the proceeding, and the gravity of the matters alleged: Evidence Act 1995 (NSW), s 140(2). 2. In these proceedings, the Plaintiffs are making serious allegations that a solicitor and an insolvency practitioner breached their duties to their client and did so dishonestly. Any finding that those matters have been established could have serious consequences for their ability to practice in their respective professions. 3. In Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, Dixon J (at 361-362) observed that "when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found", and continued: "The seriousness of the allegation made, the inherent likelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony or indirect inferences". 1. In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449-450; [1992] HCA 66, Mason CJ, Brennan, Deane and Gaudron JJ referred to this passage from Dixon J's judgment and explained that: "the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." (citations removed) 1. To similar effect, in Qantas Airways Ltd v Gama (2008) 167 FCR 537; [2008] FCAFC 69 at [126], French, Branson and Jacobson JJ noted that: "Dixon J did not [in Briginshaw] purport to identify any particular standard; rather his Honour made plain that before accepting the truth of evidence of a particular allegation, the tribunal should give consideration to the nature of the allegation and the likely consequences which will follow should it be accepted." 1. Much of the oral testimony at the hearing concerned events, including disputed conversations, that occurred some 17 years ago. When a trial occurs so long after the event, it is inevitable that the memories of those involved will be affected by the passage of time, by the materials which have been reviewed for the purposes of preparing to give evidence, and by the arguments being advanced at the hearing. 2. This is a case in which the well known observations of McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are particularly apt: "… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience." 1. In Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102, Bell P referred to those comments of McClelland CJ in Eq (at [77]), and also a number of observations by McHugh J (at [78]-[83]), as highlighting the "corrosive effect of the passage of time and its consequences for the quality and integrity of the trial process": see Herron v McGregor (1986) 6 NSWLR 246 at 253-255; Longman v The Queen (1989) 168 CLR 79 at 107-108; [1989] HCA 60; and Brisbane South Regional Authority v Taylor (1996) 186 CLR 541 at 551; [1996] HCA 25. 2. In Girotto v Phillips Fox (a firm) & Anor [2011] VSC 293 at [18]-[19], Hollingworth J, when discussing the impact of the passage of time on the recollection of witnesses, added some observations which are particularly relevant to the situation where claims are made regarding the conduct of professional persons in respect of a matter which concluded many years before the trial is heard: "The evidence of the witnesses for both sides suffered to some degree, due to the fact that they were being asked to recall events which had occurred some 11 or 12 years before the trial, and in respect of which most of them had not kept notes. I have no doubt that the passage of time meant that memories were affected to some degree, and the evidence of most of the witnesses involved some degree of reconstruction (even when it was honestly engaged in). Furthermore, for the professional witnesses on both sides, such as lawyers and accountants, this was obviously just one of many transactions they had been involved with over the years." 1. The defendants are busy professionals. Mr Albarran deposed that he had accepted (as of 2019) more than one thousand appointments as a liquidator, administrator or receiver since the events in question. The ability to recall events in detail in respect of any one matter is significantly and understandably impaired in such circumstances. 2. Black J has described the approach that should be adopted to the assessment of oral evidence in a trial heard well after the events in issue (In the matter of Kit Digital Australia Pty Limited (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 NWLR 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….in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10] … 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 [1861] LRSC 1; [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]." Plaintiffs' witnesses 1. The main witnesses called by the Plaintiffs were Mr Salmon, Mr Byrnes and Mr Wily. 2. Mr Salmon is plainly aggrieved by the course of events which lie at the heart of these proceedings. It is common ground that, within the space of a day, a settlement in principle for $1.3m which had been the subject of a handshake 'deal' was off the table. As matters transpired, TCBS's charge over BACM's assets was set aside soon afterwards, with costs; TCBS could not meet that adverse costs order and went into liquidation; and its claim regarding its charge in respect of BACF was settled some two years later for some $177,000. Subsequently, Mr Salmon was declared bankrupt, and was imprisoned. 3. Mr Salmon regards the critical change in his fortunes as being the loss of the "in principle" settlement in September 2006, and he has, over the course of the intervening years, raised serious allegations about the conduct of all those involved. He has blamed the loss of the settlement on Mr Wily and Mr Byrnes, accusing them in a complaint to NSW Police of having engaged in "blackmail" and "stand over tactics" by their conduct in the 2006 Proceedings. In a letter to the Chairman of ASIC in March 2008, Mr Salmon alleged that Mr Wily's conduct in this period included "perjuring himself many times over in affidavits and testimony (can find 20-30 separate items)", "Vote rigging in creditors meetings", "Lying to creditors (can list many of these)", and "acknowledging debts only to later lie about them in court". Mr Salmon has also blamed the loss of the settlement on the Receivers and Mr Brown, including making a complaint to the Office of the Legal Services Commissioner in respect of Mr Brown, and making a complaint to ASIC seeking to have Mr Albarran and Mr McDonald removed as registered liquidators. 4. As the attribution of blame, and the focus of his attack has shifted, Mr Salmon's account of events has also changed. There are multiple earlier statements in evidence concerning the events that lie at the heart of these proceedings and, as identified below when dealing with those events, Mr Salmon's various accounts conflict in multiple ways and are often irreconcilable. 5. Mr Salmon's own counsel recognised that there are "legitimate criticisms that can be made of Mr Salmon's credit in some respects"; that he has "clearly been traumatized by and become obsessed by the events in the years 2006 to 2009", leading to his "subsequent lashing out and attack on professionals"; and that his "desire to exact a remedy for TCBS for the wrongs done to it may have caused him to overstate matters in his affidavits and to avoid including matters negative to his case in limited respects". 6. However, the Plaintiffs contended that these matters do not justify any general rejection of Mr Salmon's evidence, referring to the comments of Basten JA in Sangha v Baxter [2009] NSWCA 78 at [155]-[156] (Handley AJA agreeing): "There are risks in making global findings about credibility of any particular witness. Because a witness has not told the truth with respect to a particular matter does not mean that other parts of his or her evidence are untruthful. Where possible, an assessment should be made of the reasons for the untruthfulness in order to see if other aspects of the evidence are likely to be infected by the same concern. Further, evidence may be rejected because it is apparently unreliable, possibly mistaken or deliberately untruthful or capable of being categorised in a variety of ways which are unlikely to be capable of clear delineation in some cases. Further, findings of credibility are not usually findings with respect to factual issues in the case, but are rather subsidiary findings on the way to determination of issues. Like many aspects of the evidence in a trial, the evidence of a witness who is believed to have lied in a particular respect, will nevertheless be able to bear some weight and should be placed into a balance, with other material evidence, before a conclusion is reached in relation to a critical fact. The rejection of a witness in total, absent corroboration is likely to mean that, even where corroborated, little attention will be paid to the evidence of the witness and less to the possible consequences which might flow from the fact that particular evidence is shown to be truthful: see generally, King v Collins [2007] NSWCA 122 at [44]." 1. The Plaintiffs submitted that, in making findings on disputed issues of fact, the Court should focus upon the contemporaneous documents, the objectively established facts, the apparent logic of events, the existence and nature of corroborative evidence, and the effect of the evidence as a whole: referring to the observations of Bell P (Bathurst CJ and Leeming JA agreeing) in ET-China.com International Holdings Limited v Cheung [2021] NSWCA 24 at [24]-[29] and the cases there cited. 2. That is the approach I have adopted. I have not rejected Mr Salmon's evidence as a whole, despite having serious reservations about his credit, but have instead evaluated his evidence regarding particular events in light of the whole of the evidence and the overall probabilities. 3. One particular feature of Mr Salmon's affidavit evidence is that it contains multiple accounts of lengthy conversations that occurred some 17 years ago. Those are expressed in the conventional (or what had been conventional) formula of recounting "words to the effect of" those which were spoken. I have treated such evidence not as evidence of the actual words spoken, but as Mr Salmon's recollection of the gist of the conversation. In this regard, I refer to the remarks of White JA in Gan v Xie [2023] NSWCA 163 at [118]-[122] (Simpson AJA and Basten AJA agreeing), citing Kane's Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 at [121]-[129] per Jackman J. 4. However, even when Mr Salmon's evidence is read in that way, it is inherently improbable that Mr Salmon could recall, so long after the event, the gist of multiple conversations in this level of detail, sometimes extending over several pages. For example, Mr Salmon gives evidence of a lengthy conversation with Mr McDonald, in which Mr McDonald agreed with Mr Salmon's key allegations regarding the conduct of the Receivers, including acknowledging the wrongfulness of such conduct and its causative effects. I find it inherently unlikely that any such conversation in the nature of an extended confession took place, and note that it is not referred to in any contemporaneous documents. It is perhaps unsurprising that, in Mr Salmon's closing submissions, no reliance was placed on this conversation or on any of Mr McDonald's alleged admissions made in the course of this conversation. 5. The other main witness for the Plaintiffs was Mr Byrnes. He acknowledged in cross-examination that he has a number of convictions for serious criminal offences, and that he has been banned from managing corporations. One of those bans, for a period of five years, was imposed in September 2006, in the same month as the matters in issue in these proceedings. He accepted that his general role in matters in which he was involved, including the dispute between the Liquidator and TCBS, was to "cause chaos", and to do so with the objective of getting a financial return for one of the parties, on the basis that he would then be financially rewarded. For example, he agreed in cross-examination that in one of the letters he sent in relation to the 2006 Proceedings, on 23 November 2007, he was prepared to make statements even though they might be untrue, in order to persuade the Receivers to settle "for the minimal amount [he] could get". In his own affidavit, Mr Byrnes stated that: "I am the same person who unfortunately and regrettably took a baseball bat to [a solicitor's] office during the course of dealings with him" at around the same time as the matters in issue in these proceedings, due to a dispute about moneys which Mr Byrnes claimed to be owing to him. 6. In a 2008 complaint to NSW Police, Mr Salmon described Mr Byrnes as "well known to NSW Police", and attached a newspaper article which reported a number of serious allegations that had been made against Mr Byrnes, as well as the banning order which ASIC had imposed on him based on, among other things, "a lack of commercial morality". In 2011, Mr Salmon made a complaint to ASIC that Mr Byrnes had attempted to arrange a deal to bring about a settlement of matters, including TCBS's dispute with the Liquidator. Mr Salmon said, in cross-examination, that he regarded this conduct of Mr Byrnes as "very dishonest". He also described Mr Byrnes' conduct as threatening, and said that as a result, he feared for his life and for his family. 7. In a letter to the Chairman of ASIC in March 2008, Mr Salmon claimed that Mr Byrnes was a "well known standover man and Sydney identity" who had, in his work for Mr Wily, engaged in "blackmail" and had employed "standover tactics" on his behalf. In 2010, Palmer J described Mr Byrnes as having "a notorious reputation as a stand-over man and associate of major criminals", of which no judge in this State could be unaware: Modena Imports Pty Ltd (in liq), In the matter of; Leveraged Capital Pty Ltd (R&M app) (in liq) v Modena Imports Pty Ltd (in liq) [2010] NSWSC 739 at [2]. 8. Mr Byrnes is not on trial, and it is not necessary for me to determine whether his reputation is deserved or not. The issue in this proceeding is whether his evidence of conversations and events can be accepted or not. I have adopted the same general approach as for Mr Salmon's evidence. That is, I have not rejected his evidence as a whole, despite having serious reservations about his credit, but have instead evaluated the reliability of his evidence of particular events having regard to the available documentary evidence, the objectively established facts and the overall probabilities. Mr Byrnes, like Mr Salmon, gives extensive recollections of conversations which are said to have occurred some 17 years ago, including a number of conversations in which Mr McDonald is said to have made a series of admissions. I approach such evidence with caution, and on the basis that such detailed recollections are improbable, and are of little weight where they are not supported by contemporaneous evidence. 9. A matter of particular concern is that, as acknowledged by Mr Salmon in cross-examination, he and Mr Byrnes have had "many discussions" over the past seven years about this case. As discussed below, there are instances where Mr Salmon's evidence of the key events of September 2006 has changed after 2016, that being the point in time when he started having discussions with Mr Byrnes about those events. Having regard to those matters, while I acknowledge that generally the evidence of one witness is rendered more plausible where corroborated by the independent recollection of another, I have not accepted the evidence of Mr Salmon or Mr Byrnes where the sole support for their version of events is found in each other's affidavit, and where their version of events is not consistent with the other available evidence. 10. Mr Wily was also called by the Plaintiffs. His credit was not at issue in these proceedings. However, there is a dispute regarding the weight that can be attached to his counterfactual evidence as to whether, absent the inclusion of the Given Form release, a settlement would have occurred. Defendants' evidence 1. Each of the First to Third Defendants gave evidence. Each claimed only a limited recall of events, and essentially relied on documents. 2. It was suggested to Mr Albarran and Mr Brown in cross-examination that their limited recall was a convenient way to avoid dealing with inconvenient questions. However, a more likely explanation for their limited recall is the passage of time, particularly given the many other matters on which each has been engaged in the interim. 3. The Plaintiffs sought to make much of the fact that Mr Albarran has previously been found to have wilfully failed to answer questions in proceedings against one of his partners before the Companies Auditors and Liquidators Disciplinary Board: see Australian Securities and Investments Commission v Albarran (No 2) [2008] FCA 386 at [24], [28], [35], [46]-[47] per Jacobson J. However, Mr Albarran did not refuse to answer any questions asked of him in cross-examination in the current proceedings, and my evaluation was that he sought, appropriately, in giving evidence to take care to understand precisely what he was being asked, and to indicate the extent to which he could, given his limited memory, respond to the particular proposition that was being put to him. 4. Nonetheless, I have treated the evidence of the Defendants with the same caution as I have treated the evidence led by the Plaintiffs. Insofar as the Defendants have given evidence of conversations or regarding their state of mind many years ago, I have evaluated such evidence in the light of the available contemporaneous documents, and the evidence of other witnesses, and formed a view as to its probability against that background. 5. For example, I consider Mr Brown's evidence about his state of mind in respect of his retainer to be implausible. The substance of Mr Brown's evidence was that, despite multiple contemporaneous documents indicating that he regarded himself as the solicitor for TCBS in the 2006 Proceedings, he in fact never regarded himself as such, and all of these documents were in error (to his knowledge at the time). It is inherently unlikely that Mr Brown would have signed in 2006 multiple documents which he knew to be incorrect at the time that he signed them, including documents provided to the Court and to other solicitors. It is far more likely that the statements made in 2006 record his state of mind at the time, and that Mr Brown did regard himself as TCBS's solicitor in 2006. 6. As for Mr McDonald, there is no allegation of dishonesty made against him in these proceedings, and the Plaintiffs accepted that he had a relatively limited part to play in the events in question. Documentary evidence 1. In placing reliance on contemporaneous documentary evidence, I am conscious of the fact that the available documentary record is incomplete in significant respects. In particular, Mr Brown's hard copy files are no longer available; many of Hall Chadwick's records are no longer available (including their hard copy files and all of Mr Albarran's emails prior to 2008); and there are only a relatively limited number of documents available from TCBS, the BA Group, and Given Form. Further, there are, on the face of the documents which are in evidence, gaps in the documentary record. There are numerous examples of emails in evidence, which refer to an attachment that is no longer available; or which respond or refer to an earlier communication that is now unavailable; or which ask for, or would likely provoke, a response, but no such response is in evidence. 2. The documents which are available are largely those which have been retained by Mr Salmon. In those circumstances, while it is appropriate given the passage of time to focus on objective documentary evidence, it is also important to recognise that there may well have been an element of subjective decision-making regarding the documentary material that has been retained. I do not mean the following remarks to suggest any conscious dishonesty on behalf of Mr Salmon. However, when a person with a grievance is reviewing documents in order to formulate an argument about how events unfolded, it is natural that he or she will retain those documents which support and advance the narrative that is thought best to explain those events, and not others which are regarded as adverse, neutral or irrelevant to that narrative. 3. I have borne this in mind when drawing inferences from the documentary evidence, and in particular inferences from the absence of documents. By way of illustration, it is difficult to draw an inference that a person to whom an email or attachment is sent did not pay attention to the document, or had nothing to say about its contents, simply because there is no response from them. An alternative inference is that the addressee did review the document and did provide a response (whether approving, rejecting or qualifying what was set out in the original document), but the response has been lost. The determination of which inference is more likely requires an evaluation of the competing inferences in light of all the other evidence. B. THE EVENTS IN ISSUE TCBS, Mr Salmon and Mr Myers 1. Mr Salmon was the sole director of TCBS. 2. TCBS carried on a business that involved the provision of management, accountancy, consulting and bookkeeping services. Mr Salmon did not himself have any accounting training or experience. Mr Salmon had a Master of Business Administration (MBA) which he obtained from Southern Cross University in 2004 or 2005. 3. John Myers, who was the Chief Executive Officer of TCBS, was Mr Salmon's business partner. In July 2004, Mr Myers introduced Mr Salmon to Mr Ian Lazar, who controlled the BA Group of companies. BA Group retains TCBS 1. The BA Group of companies included BACM and BACF, as well as two companies known as BACF Investments Pty Limited (BACF Investments) and Bondedge Pty Limited (Bondedge). Mr Lazar was the sole director and shareholder of BACM and BACF, and George Markos was the sole director and shareholder of Bondedge. 2. According to Mr Salmon, the BA Group obtained funds from investors, who in turn received units in the BACF Investments Unit Trust. Those funds were then used to make loans, with BACM acting as mortgage manager, and BACF preparing the loan and security documents for such transactions. 3. TCBS began providing services to the BA Group in the second half of 2004. This included providing the services of Mr Salmon who, by September 2004, was appointed as General Manager of the BA Group. 4. It was around this time that Mr Salmon met Mr Brown, whom Mr Lazar introduced as the BA Group's solicitor. Mr Brown was the principal of Etienne Lawyers. 5. As general manager, Mr Salmon's role was to manage the day-to-day affairs of the companies in the BA Group. He accepted that, in order to perform this role, he needed a certain degree of knowledge about the affairs of the BA companies, and he gained this information from employees of the companies and Mr Lazar. He attended management meetings of the companies, which were held twice a week. He was also on call on weekends, and Mr Lazar came to his house every Sunday. 6. On 24 February 2005, TCBS entered into separate letter agreements with BACM and BACF, each described as a "Management Service Agreement". The letters, in relevantly identical terms, related both to services previously provided by TCBS to BACM and BACF, as well as to the "continuing services" specified in the letter. Each letter was signed by Mr Lazar and addressed to Mr Myers. 7. The "Services to be provided by TCBS" in relation to each of BACM and BACF included: inputting supplier invoices into MYOB; raising customer invoices in MYOB; completing daily bank reconciliations; completing weekly cash flow management reports; completing monthly management reports; liaising with suppliers; raising payments for and organising payments with suppliers; attending two management meetings weekly and taking minutes at them; dealing with staffing issues and recruitment; liaising with tax agents and year-end auditors; liaising with the Australian Tax Office (ATO), Australian Securities and Investments Commission (ASIC), ASX and other regulatory authorities where required to do so; and liaising with, and project managing legal teams in relation to, various property purchases, settlements and DA applications, as well as coordinating loan agreements and security documents in relation to them. 8. Each of the agreements acknowledged that TCBS's fees for the services detailed in the letters, including for past services, would exceed $1m excluding GST. Each of the agreements further stated that, in consideration for TCBS providing those services, Mr Lazar, in his capacity as sole director of each of BACM and BACF, agreed to "offer full security over the assets and undertakings of [BACM and BACF respectively] … by way of a fixed and floating charge to secure such indebtedness to TCBS". 9. On 18 March 2005, each of BACF and BACM executed a "Deed of Charge". By those deeds, each purported to grant a fixed and floating charge over its assets in favour of TCBS. Each of the charges recorded a "maximum prospective liability" of $1.5m (Schedule, item 3; cl 21), and each gave TCBS the right to appoint a receiver and manager of the Secured Property in an Event of Default (cl 13). On 7 April 2005, each of the charges was registered with ASIC. Given Form 1. Given Form was a company that had received loan funds from companies in the BA Group. Those companies were secured creditors of Given Form. 2. On 3 November 2004, Mr Albarran and Mr McDonald were appointed to act as administrators of Given Form. 3. In late 2004, Etienne Lawyers was owed fees of around $200,000 to $300,000 for legal work that Mr Brown had performed for BA Group. Mr Lazar, on behalf of the BA companies, agreed with Mr Brown that these outstanding fees would be paid from moneys that Given Form owed the BA group. This arrangement was recorded in an email which Mr Brown sent to Mr Lazar on 6 December 2004, and which Mr Lazar forwarded to Mr Salmon on the same day. Relevantly, the email contained the following "Status" report in relation to Given Form: "Under Administration and under Receivership. Ian [Lazar] 22/11/04 advised willing to have matter settled for $300,000 from which Hall Chadwick [the Deed Administrators] are to be paid and Etienne Lawyers receive funds for this matter and other outstanding files. At present first $170,000 to go to Hall Chadwick and Etienne Lawyers." 1. On 6 December 2004, the Administrators of Given Form issued a report to creditors, which contained a proposal that had been put forward by Given Form's directors, for the company to execute a Deed of Company Arrangement (DOCA). The proposal involved, in general terms, the following elements: a sum of $250,000 would be paid into a fund, which would be held by Mr Albarran and Mr McDonald as Deed Administrators; the Deed Fund would be available for distribution to all creditors on a pro rata basis; and a condition precedent for the DOCA would be that BACF Investments would vote in favour of the DOCA, would accept the proposed dividend in full and final settlement of any claim against Given Form or its directors, and would release any security it held over any asset of Given Form. 2. On 14 December 2004, there was a meeting of creditors of Given Form. Mr Brown attended this meeting as the representative of BACF Investments and proposed a resolution, which was carried, that the creditors accept the DOCA proposal. 3. On 20 December 2004, the DOCA was executed. The parties to the DOCA included, among others, BACF Investments and Bondedge. Clause 4.5 of the DOCA provided for the Deed Administrators to distribute the Administration Fund in the following order of priority: firstly, in payment of any claim by the Deed Administrators with respect to their expenses and disbursements; secondly, in payment of any claim by the Deed Administrators with respect to their costs; thirdly, in payment of the claims of priority creditors that are admitted to proof; and fourthly, by distribution among the remaining participating creditors pro rata. Clause 6.1 of the DOCA provided that if the Deed Administrators have paid any participating creditor its full entitlement under the DOCA, its debts or claims arising before the Commencement Date are extinguished. By Clauses 7.1 to 7.5, each of BACF Investments and Bondedge: 1. warranted that no other member of the BA Group had any encumbrance over any asset of, or was owed any money by, Given Form; 2. released and discharged Given Form from any claim it had against Given Form, arising from its securities or otherwise; and 3. released any encumbrance it held over any asset of Given Form. 1. On 22 December 2004, Mr Markos, as sole director of BACF Investments and Bondedge, signed an "irrevocable assignment of monies due" for each of those companies, addressed to the Deed Administrators of Given Form. By those documents, each of BACF Investments and Bondedge agreed to irrevocably assign "the following amount to be paid to Etienne Lawyers … for the payment of legal fees due and owing in the amount of $125,000.00 to be paid from the money due under the [DOCA]". 2. There was also a third irrevocable assignment, in the name of "Business Australia Corporate Mortgage Pty Limited", which was signed on the same day by Mr Lazar. There is no such entity. I find it likely that this was a typographical error for "Business Australia Capital Mortgage Pty Limited" (that is, BACM), of which Mr Lazar was director. In any case, nothing turns on this error, as each of the other two irrevocable assignments was for the sum of $125,000, and the amount ultimately paid to Etienne Lawyers was less than their combined total. Further, there is no pleaded issue that there was any defect in any of the assignments; and the Liquidator did not, when raising issues in relation to Given Form in 2006, raise any allegation of any such defect. 3. On 22 February 2005, the Deed Administrators made a distribution of $125,000 from the Deed Fund in favour of BACF Investments, which was paid, in accordance with the irrevocable assignments, to Etienne Lawyers. On 24 May 2005, a further sum of $34,573.37, representing a further distribution from the Deed Fund was paid to Etienne Lawyers in accordance with the terms of the irrevocable assignments. 4. Separately, payments were made from the Deed Fund in a total amount of some $59,252 to Hall Chadwick for the fees of Mr Albarran and Mr McDonald as Deed Administrators of Given Form, and in an amount of $11,000 to Etienne Lawyers for the fees of Mr Brown, who provided legal services to the Deed Administrators of Given Form. 5. The allegations which were subsequently raised by the Liquidator in the 2006 Proceedings solely concerned the amounts that had been paid to Etienne Lawyers in respect of the outstanding legal fees owed by the BA Group. I deal below with the precise issues that were raised at that time. At this point, it should be noted that there was no allegation raised in September 2006 that the amounts paid for the fees of the Deed Administrators of Given Form, or the fees for legal services provided by Mr Brown to the Deed Administrators, were not properly paid. As set out above, the terms of the DOCA expressly provided for such amounts to be paid. 6. Mr Albarran and Mr McDonald ceased to be administrators of Given Form on 23 June 2005. 7. It is likely that, by early 2005, Mr Salmon was aware of the arrangement between Mr Lazar and Mr Brown for Etienne Lawyers to receive payment for its outstanding legal fees from the moneys that would be paid to the BA Group by way of dividend from the Given Form administration. As I have noted above, this arrangement was explained in Mr Brown's email which Mr Lazar forwarded to Mr Salmon in December 2004. Mr Salmon suggested in cross-examination that it was his practice to ignore emails sent to him by Mr Lazar, unless there was a specific request to him. Given Mr Salmon's role as General Manager of the BA Group and Mr Lazar's role as principal of that group, I find this evidence implausible, particularly where, as here, Mr Lazar sent a document about the BA Group's operations to Mr Salmon alone (rather than to a list of people which included him). Further, the finding that Mr Salmon reviewed this document is supported by the fact that TCBS retained a copy of this document, and later produced it in the 2006 Proceedings (as recorded in Mr Brown's email of 13 September 2006, which is discussed below). 8. In addition, TCBS's role under its retainers with BACM and BACF included liaising with ASIC. In 2005, while Mr Salmon was General Manager of the BA Group, ASIC was conducting an investigation into the group's affairs and, in particular, whether it was operating an unregistered managed investment scheme. Mr Salmon confirmed that both he and TCBS assisted ASIC with its requests. Given his role and TCBS's role at the time, as well as the very significant sums which the BA Group was said to owe TCBS in early 2005, it is likely that Mr Salmon would have been keenly interested in this investigation. That is particularly so where he was of the view that Mr Lazar was being very secretive about what information ASIC was being given. Mr Salmon agreed that he read at this time an affidavit prepared by Ms Taneski, an officer of ASIC. This affidavit sets out a conversation with Mr Melluish, a consultant to BACF, in which he stated that the funds owed by Given Form "have been assigned to Steve Brown (BACF's solicitor)". 9. There was some suggestion in the Plaintiffs' closing submissions that the moneys payable by Given Form to the BA companies were either payable to the BA companies as moneys to be held on trust for specific investors in the BACF Investments Unit Trust, or payable by Given Form directly to the investors. No such allegation was pleaded. Instead, the Plaintiffs pleaded that the payments in question "were at risk of clawback or being set aside as uncommercial transactions or as preferential payments following the appointment of Mr Wily as liquidator of Bondedge and BACF Invest on 8 June 2005" (FFASC, paragraph 43). In his own affidavit, Mr Wily indicates that the issue which he, as Liquidator of the BA companies, identified was that the payments made to Etienne Lawyers at the direction of the BA Companies were "preferential payments" which were potentially recoverable by him. What matters for the present claim is the nature of the allegations that were in fact made in September 2006, and how the Defendants responded to those allegations. I deal with those matters below. In those circumstances, it is unnecessary for me to consider the source of the moneys that were loaned by the BA companies to Given Form, or the nature of any arrangements between any BA company and any investor or investors regarding those funds. Appointment of the Liquidator 1. On 17 May 2005, BACM went into voluntary liquidation, and Mr Wily was appointed as its liquidator. On 16 November 2005, he was appointed liquidator of BACF, when it was wound up on insolvency grounds. He was also appointed liquidator of Bondedge and of BACF Investments on 8 June 2005. 2. On 12 October 2005, Mr Wily sent a letter to the directors of Given Form, in which he claimed that a loan amount of $100,000 was owing from Given Form to BACM and BACF, together with a "Default Fee" of $540,000 (calculated as $20,000 per month for 27 months), and requested payment within seven days. On 30 October 2005, a letter in relevantly identical terms was sent to the Deed Administrators of Given Form. 3. The Plaintiffs pleaded that, by his 30 October 2005 letter, the Liquidator "made demand on [the Receivers] and [Mr Brown] for repayment of the amounts paid to [Mr Brown]". That is incorrect. The only claim made was that Given Form had "borrowed money from [BACM/BACF] which has not been repaid. There was no mention of any payment by the Deed Administrators to Mr Brown, let alone any claim in respect of any such payment. Further, the claim outlined in Mr Wily's letters of October 2005 made no reference to the fact that a DOCA had been entered with the support of the BA group, and that the Deed Administrators had, pursuant to the DOCA, declared and paid dividends in return for the release by the BA group of claims against Given Form, including in respect of the debts owing to them. It may be inferred that the Liquidator was unaware of those matters. 4. There is no evidence of any response, or of any follow up letter. So far as the evidence reveals, no other email or letter appears to have been sent by Mr Wily about Given Form at any time during the liquidation of the BA companies. 5. Mr Wily retained Mr Byrnes to assist him in relation to debt recovery for the BA companies. According to Mr Byrnes' affidavit, Mr Wily arranged for him to be appointed to the committee of inspection, even though he was not a creditor, so that he could "keep the committee in check": "Essentially I was placed onto the committee to do what I do best – cause chaos." Mr Wily also entered into a litigation funding agreement with Mr Byrnes' company, Australian Litigation Funding. Pursuant to the agreement, the funder was to fund the costs of any recovery action and, after payment of any expenses incurred, the funds recovered would be paid on a pro-rata basis (50:50) to the funder and the Liquidator. 6. One set of proceedings in which Mr Wily, as liquidator of the BA companies, became involved was a long running dispute in the Federal Court in relation to claims by the BA companies and various other entities against the Nauru Phosphate Royalties Trust and the Republic of Nauru Finance Corporation (Nauru Proceedings). On 10 September 2004, those entities, including BACM and BACF, had entered into a Heads of Agreement. The Liquidator, following his appointment, sought to recover funds pursuant to that agreement, but the Nauruan entities contended that the agreement could be set aside. On around 8 December 2005, the Nauru Phosphate Royalties Trust paid the sum of $6.5m into Court, with the rights of competing claimants to be determined in the Nauru Proceedings. Those competing claimants included a company called HLBC Pty Ltd (HLBC). Mr Byrnes acknowledged that, at the same time as working for the BA companies in relation to the Nauruan funds, he had also agreed to assist HLBC in advancing its claim to the same funds, in return for a payment in the event of a successful outcome. In his affidavit, Mr Byrnes stated that, in acting for two competing claimants for the same fund, "I was aware of my own conflict but had no obligation otherwise as the professionals did". Initial advice by Mr Brown and Appointment of Receivers 1. On 1 August 2006, Mr Brown provided an advice to TCBS on the validity of the BACF and BACM charges "based upon the facts as we understand them". The advice referred to various provisions of the Corporations Act 2001 (Cth), and observed that, so far s 588FE was concerned, until such time as the Liquidator obtained a court order that voided a charge as a preference or uncommercial transaction, the charge was valid. The advice concluded as follows: "There not being any orders voiding the charges of TCBS at this time the charges are on their face valid and enforceable". Mr Brown recommended that it would be better for TCBS to act through a receiver rather than by itself as a mortgagee in possession. Mr Brown's advice did not, contrary to Mr Salmon's evidence, express any view about the quantum secured by the charge. Nor did a short supplementary advice provided by Mr Brown on 9 August 2006 express any such view. 2. On 4 August 2006, Mr Salmon, Mr Albarran, Mr McDonald and Mr Brown met at Mr Brown's offices. The fact of the meeting is uncontroversial, but there is substantial disagreement as to what was said. Mr Salmon's evidence of the conversation extended over some three pages of his affidavit. In particular, he gave evidence that Mr Brown advised at this meeting that TCBS would receive $3m from the BA companies. I do not accept this evidence, which is unsupported by any contemporaneous documents, and is improbable, since Mr Brown had at this stage been given no documents beyond the charges, and therefore could not express any view on quantum. Significantly, it was not put to Mr Brown in cross-examination that he expressed any such view. Further, as noted above, neither of his written advices expressed any such view. 3. Mr Salmon's assertions that Mr Brown gave advice that TCBS had a valid claim for $3m were likely advanced in support of a narrative, which was developed by Mr Salmon in his affidavit, to the effect that the Defendants had advised Mr Salmon that he would recover $3m until the Given Form issue was raised, and then quickly changed their tune and pressured him into accepting a much lower sum by way of settlement. Instead, as the documentary evidence which I summarise below plainly shows, TCBS made a series of offers to the Liquidator, at figures well below $3m, prior to the Given Form issue first being raised on 13 September 2006. I find no support for any suggestion that Mr Brown and the Receivers changed advice on quantum or settlement, or pressured Mr Salmon to accept a figure well below their genuine estimates of the value of his claim, let alone that they did so because they were pursuing their own self interest. The Plaintiffs confirmed in their opening address that they were not pursuing any allegation to the effect that the Receivers or Mr Brown breached their duties by pressuring TCBS to settle the 2006 Proceedings. 4. Following this initial meeting, TCBS appointed Mr Albarran and Mr McDonald as Receivers in respect of BACM and BACF. 5. Each appointment was effected by a separate document headed "Appointment of Receivers & Managers", one in respect of BACM as Mortgagor and the other in respect of BACF as Mortgagor. Each document provided that Mr Albarran and Mr McDonald were appointed "to be Receivers and Managers of the property of the Mortgagor referred to in the Schedule", and authorised them "so far as the law provides, to act jointly and severally". The Schedule referred to "All of the assets and undertakings of the Mortgagor". The instruments of appointment further provided that: "The Receivers and Managers shall be invested with and have all the powers, authorities and discretions available to a Receiver and Manager or Receiver under the provisions of the Charge". 6. Each of the instruments of appointment provided that the Receivers were appointed as the agent of each of BACM and BACF respectively, and not as the agent of TCBS; and provided that "The Receivers and Managers hereby accept this appointment". 7. Each document was executed by Mr Salmon, Mr Albarran and Mr McDonald. The signature blocks stated that the documents were "signed sealed and delivered" by each of the Receivers and by TCBS. 8. On 4 August 2006, the Receivers and TCBS also entered into a deed of indemnity in relation to each appointment. By each of these deeds, TCBS undertook as follows: "1. To indemnify the Receivers and keep them indemnified against any and all claims, demands, suits, actions, proceedings, costs or debts of whatsoever nature and wherever made or instituted, incurred or claimed pursuant to Sections 419 and 419A of the Corporations Act or any provision in any Statute which may replace that Act or otherwise arising out of or in the course of or relating to their receivership. 2. To indemnify the Receivers and keep them indemnified for all payments made or liabilities incurred by them arising out of their acceptance of appointment or during the course of or incidental to their receivership including any monies properly payable to them, their partners and staff by way of remuneration calculated at the rate charged by Hall Chadwick Sydney and to the extent that the same shall not have been otherwise recovered from the assets of the Company. 3. To indemnify the Receivers as aforesaid notwithstanding that the Deed of Charge for any reasons whatsoever may be or deemed to be void, unenforceable or inoperative or in any way defective and whether or not the Receivers are deemed to have been duly and validly appointed or whether or not they shall have had the power to act as such. 4. Notwithstanding anything contained in this Deed it is confirmed that the indemnities hereby granted shall not extend to any claims, demands, suits, actions, proceedings, costs or debts arising out of any wilful (sic) default or wilful (sic) neglect of the Receivers or any person for whose actions or omission they are responsible." 2006 Proceedings commenced by the Liquidator 1. On 7 August 2006, Mr Albarran informed the Liquidator that he and Mr McDonald had been appointed as receivers and managers of BACF and BACM. 2. On 10 August 2006, the Liquidator commenced the 2006 Proceedings against TCBS (as first defendant) and the Receivers (as second defendant) by way of a summons, together with a supporting affidavit sworn on the same date. 3. The summons sought declarations that TCBS was not entitled to appoint receivers and managers with respect to either BACF or BACM until after the Liquidator had received the proceeds of any settlement or verdict in the Nauru Proceedings; an order for the removal of the Receivers; interim relief restraining the Receivers from taking steps in the Nauru Proceedings; and costs. 4. The Liquidator's affidavit outlined various matters, including that the BACM charge was voidable, having been created within six months of the commencement of winding up; that TCBS had made representations that it would not act on the charges until funds were recovered by the Liquidator in the Nauru Proceedings; that the Liquidator relied on those representations in entering funding arrangements as well as indemnity and costs agreements conditional on a successful recovery in the Nauru Proceedings; and that the Receivers had been appointed shortly prior to a hearing on 9 October 2006 in the Nauru Proceedings. The Liquidator deposed that he had, as at 10 August 2006, incurred legal expenses in excess of $900,000 and had incurred his own professional costs in running and managing the litigation in excess of $600,000, those sums being exclusive of GST. Mr Brown acts as solicitor for defendants in the 2006 Proceedings 1. On 11 August 2006, Mr Brown filed an appearance for each of TCBS and the Receivers in the 2006 Proceedings. 2. Despite having taken that step, Mr Brown gave evidence that he was not in fact retained as solicitor for TCBS, but only for the Receivers, and that he did not regard TCBS as his client. 3. Mr Brown's evidence is at odds with an extensive array of contemporaneous documents. For example, the documentary record includes: other Court documents signed by Mr Brown which expressly stated that he was "solicitor for the First and Second Defendant" (that is, TCBS and the Receivers); the s 347 Certificate which Mr Brown signed in relation to TCBS's defence; various affidavits sworn by him in which he deposed that he was the solicitor who had carriage of the 2006 Proceedings on behalf of TCBS and the Receivers; and an email he drafted on 7 September 2006 which stated "We act for TCBS and the Receivers and Managers". In addition, there are various documents in evidence in which Mr Brown reports to TCBS in relation to the 2006 Proceedings, and seeks, and acts on, instructions from TCBS in the 2006 Proceedings. 4. Mr Salmon gave unchallenged evidence of a conversation with Mr Brown in which Mr Brown proposed, and Mr Salmon agreed, that he would act for both TCBS and the Receivers, and would act in the 2006 Proceedings on a speculative basis with his fees being paid by the Receivers on a recovery from BACM and BACF. 5. This evidence is consistent with the documentary record that I have summarised above. Further, the existence of such an arrangement is supported by an email which Mr Brown sent to Mr Salmon on 23 March 2007, in which he stated: "There are two clients in this matter the Receivers and Managers and the company [TCBS]. Both clients are receiving excellent assistance and legal service. While we cannot take away the way you feel the service that this matter is getting given we are looking after Messrs Albarran and McDonald as well as TCBS is not lessened by the matter being on spec." 1. Having regard to those matters, I find that an express retainer was entered, as a result of the conversations to which Mr Salmon deposes, whereby Mr Brown would act for both the Receivers and TCBS in the 2006 Proceedings "on spec", that is, on the basis that his fees would be billed to the Receivers and would be paid only in the event of, and from, any successful recovery by the Receivers. 2. On 7 August 2006, Etienne Lawyers sent a written retainer to the Receivers, setting out the work that Mr Brown would perform on their behalf in the 2006 Proceedings, the charges for his work, and an estimate of the total fees for the matter. The fact that a written retainer was sent only to the Receivers does not detract from, but is consistent with, the finding I have made regarding the basis on which he acted in the 2006 Proceedings. There was an evident advantage for Mr Brown in an arrangement whereby the Receivers would be liable for all of the fees payable to Etienne Lawyers in respect of work done by Mr Brown in the 2006 Proceedings, since this arrangement would give rise to a priority for the payment of those fees from any funds recovered in the receivership. 3. Even if I had rejected this evidence of an express retainer, I would have found that a retainer to act for TCBS in the 2006 Proceedings is implied from conduct. The relevant conduct of Mr Brown included, in the period prior to the critical events of 18 and 19 September 2006, the following matters: filing a notice of appearance for TCBS on 11 August 2006; obtaining instructions to make, on 11 August 2006, an offer to settle the proceedings against TCBS; proposing a timetable for the service of TCBS's evidence; swearing an affidavit on 29 August 2006 which was filed for TCBS and the Receivers, in which he deposed that he was "the solicitor who has carriage of these proceedings"; instructing counsel who appeared for TCBS at a hearing on 31 August 2006; signing the defence in the 2006 Proceedings as solicitor for TCBS; signing the s 347 Certificate in respect of TCBS's defence; signing a Notice of Motion on 31 August 2006 as solicitor for TCBS; attending Court on 30 and 31 August 2006 on behalf of TCBS, and reporting to TCBS on the hearing; confirming on 31 August 2006 instructions from TCBS to make an offer on its behalf to resolve the 2006 Proceedings, and acting in accordance with those instructions by making an offer on 1 September 2006; and signing an Amended Defence on 17 September 2006 that was filed for TCBS, as well as signing a further s 347 Certificate in respect of that pleading. Settlement proposals in August 2006 1. On 11 August 2006, being the day after the Liquidator commenced proceedings, Mr Brown sent an email to the Liquidator's solicitor, Mr Nikolaidis, stating that he had instructions to make an offer to settle the proceedings for a sum of $2.2m, with TCBS potentially receiving a further $600,000 depending on the extent of the Liquidator's recovery from the Nauruan funds. Mr Salmon accepted in cross-examination that TCBS was willing to settle for this amount at this time. 2. This offer was not accepted. Instead, Mr Brown was approached by Mr Byrnes about resolving the 2006 Proceedings. In response, Mr Brown wrote to Mr Byrnes on 15 August 2006 proposing that the 2006 Proceedings could settle on one of the following alternative bases: the Liquidator acknowledges the validity of the charges, and pays $2.2m to the Receivers in cleared funds; or the Liquidator arranges for $2m to be placed into a joint trust account, with the current proceedings being "amended to resolve the validity of the charges and the quantum to be paid to TCBS". It is likely that Mr Salmon was aware of these proposals, and that TCBS was willing to resolve the proceedings on this basis. 3. On 16 August 2006, Mr Byrnes responded with a settlement proposal on terms which would limit the maximum exposure of BACF and BACM to $1.5m in total, with this sum to be set aside and fought over. On 17 August 2006, Mr Ekes, who was solicitor for HLBC (which, as noted above, was a claimant in the Nauru Proceedings) wrote to Mr Brown stating that the Liquidator had "instructed" him, "no less than 30 minutes ago", to put forward an offer which included $1.5m being paid into Court on a without admissions basis, to enable the Receivers and the Liquidator to argue the charges and the value of the charges. In a further email later on the same day, Mr Ekes clarified that he was not acting for the Liquidator, but had spoken to the Liquidator, who had indicated that these were terms which he believed the committee of inspection would approve. 4. On the evening of 17 August 2006, Mr Nikolaidis telephoned Mr Brown and stated that the Liquidator had no offer to put to the Receivers and TCBS, either orally or in writing (as recorded in an email of that date from Mr Brown which was copied to Mr Salmon). 5. It is not clear what position was being adopted by the Liquidator at this time. It might be the case that he did indicate to Mr Byrnes and Mr Ekes that he was willing to make an offer to TCBS and the Receivers along the lines proposed, or it might be that these offers were made without his knowledge, and the true position was as stated by Mr Nikolaidis. Or it might be that the Liquidator was indicating different positions to different people. Whatever the position, it does seem that differing and inconsistent messages were coming from the Liquidator's camp about settlement. 6. In August 2006, Mr Salmon learnt that there had been a finding of professional misconduct against Mr Nikolaidis for deliberately charging "grossly excessive amounts". Mr Salmon indicated that, in August 2006, he was unable to know whether or not Mr Nikolaidis was telling the truth about the Liquidator's position on settlement. Mr Salmon gave evidence that Mr Nikolaidis was later imprisoned for crimes of dishonesty. Mr Byrnes, who was in the Liquidator's camp in August and September 2006, described Mr Nikolaidis as an "aggressive bully", stating that "every time he opened his mouth he could not be trusted", including by his own clients: "I can tell you that Mr Nikolaidis was fast and loose, loose with the truth and fast to try and get money". These matters assume significance when it comes to considering Mr Nikolaidis' strategy in respect of the potential settlement on 18 and 19 September 2006 and, in particular, whether he was genuinely committed to reaching a settlement at the earliest available opportunity, or was pursuing a strategy that involved delaying in committing to a position on settlement until the evidence was concluded in the hearing before Young CJ in Eq. Amended Statement of Claim and Further settlement discussions 1. On 29 August 2006, the Liquidator served an Amended Statement of Claim in the 2006 Proceedings. The pleading expanded the relief sought, including adding declarations pursuant to s 588FF of the Corporations Act 2001 that the BACF and BACM charges were void and unenforceable; a declaration that the BACM charge had been satisfied; and a declaration that the amount outstanding with respect to the BACF charge was no more than $300,000. The pleading contained statements that, at all times since November 2005, the only substantial asset of BACM, BACF and Bondedge was their interest in the settlement sum in, or alternatively their claim in, the Nauru Proceedings, and that they had insufficient funds to meet the legal costs of taking any proceedings to enforce payment of the settlement sum; that TCBS had represented that it would not appoint a receiver to BACM and BACF until some time after the Liquidator had received moneys from the Nauru Proceedings; that the Liquidator had relied on this representation in entering into a funding agreement and causing the claim to be prosecuted in the Nauru Proceedings; and that TCBS was estopped from relying on its rights to appoint a receiver to BACM or BACF. 2. On the same day, the Liquidator also swore a further affidavit, that put in issue the accuracy of the general ledgers of BACM and BACF, which had been prepared by TCBS pursuant to its retainer, and the quantum secured by the charges. In addition, the Liquidator expressed the view that BACF and BACM were insolvent from at least December 2004. 3. Mr Salmon read this material, and understood by the end of August 2006 that there was a substantial claim being advanced by the Liquidator, the outcome of which depended on a range of controversial legal and factual issues. 4. On 31 August 2006, Mr Brown wrote to the Receivers and to Mr Salmon and Mr Myers of TCBS, reporting on the proceedings in Court that day. Mr Brown contrasted the clear position of the Receivers and TCBS ("We have always indicated our willingness to settle") with the lack of clarity from their opponents ("However, when Wily was willing HLBC wasn't and now we understand it is vice versa or a combination of both"). Mr Brown confirmed in this email that his instructions "from TCBS and Hall Chadwick" were to "focus the minds of the others on settling" by making an offer. The offer was framed in terms of two alternative options: the first was that BACM and BACF would receive $2.3m from the Nauru settlement moneys, with the Liquidator acknowledging the validity of the charges, and TCBS and the Receivers limiting their claims to that $2.3m fund; and the second was that the parties in the Nauru Proceedings settle with the Nauruan entities, and then the Liquidator, HLBC, the Receivers and TCBS all argue about who is entitled to what percentage of those settlement moneys. 5. This offer was sent to Mr Nikolaidis and Mr Ekes on 1 September 2006. 6. Given the terms of Mr Brown's email to the Receivers and TCBS, it is likely that the purpose of putting forward this proposal to the Liquidator was to obtain some clarity from the Liquidator about his position, and to elicit some counteroffer, in circumstances where there were mixed messages from the Liquidator's camp and no confirmed offer had yet been made, despite a number of approaches from TCBS. 7. On 6 September 2006, each of Mr Myers and Mr Salmon swore an affidavit in the 2006 Proceedings. Mr Salmon stated in his affidavit, notwithstanding the terms of TCBS's retainer with the BA Group, that TCBS "did not do the accounts at all" for the BA companies, and that the only work done by TCBS was in relation to the preparation of the weekly cash report. This pointed to a tension in the position of TCBS which, on the one hand, was seeking substantial amounts said to be owing in respect of the fees for its work under the retainer with the BA group and, on the other, was arguing that it had performed a much narrower set of tasks for the BA group than was specified in its retainer. Draft settlement deed – 12 September 2006 1. It is common ground between the parties that Mr Salmon was shown a draft settlement deed that was prepared by Mr Brown on 12 September 2006. Mr Salmon gave evidence that Mr Brown stepped him through the deed, and told him that it would need to be adjusted in the event that there was a settlement, in order to account for terms later agreed. At this stage, it was only a matter of days until the hearing, and the Liquidator had not made any offer, orally or in writing, let alone proposed any terms of settlement. 2. There are two different versions of the settlement deed created on 12 September 2006 in evidence, and they vary in both appearance and content. 3. Mr Salmon claimed that he could remember which version of the deed he had been shown, and that he was able to do so by reference to a small footer on the bottom of one of the versions of the deed. The footer on one version read "060912 Deed of Release", and on the other read "060912 1814 DRAFT Deed of Release". I find it improbable that any person could, 17 years after the event, remember the precise terms of a footer that was in small font, in entirely unremarkable terms, and was located at the bottom of a document seen either on screen or in hard copy at a single meeting. The evidence is even more implausible when account is taken of the fact that the two footers in question are substantially similar, and the wording of the footer would have been, at the time of the meeting between Mr Brown and Mr Salmon, a matter of no consequence whatsoever. 4. The explanation for Mr Salmon's adherence to this evidence, despite its inherent improbability, appears to be that the draft deed which he claimed not to have seen, with the footer "060912 1814 DRAFT Deed of Release", described Mr Wily as liquidator of Bondedge, as well as of BACM and BACF, and included a release by him in his capacity as liquidator of all three companies in favour of the Receivers "from and all claims howsoever arising". Bondedge was one of the companies that had given an irrevocable assignment to the Deed Administrators of Given Form in respect of moneys owing to them. The fact that this form of release was included in a draft prepared on 12 September 2006 is at odds with Mr Salmon's contention that the reference to Mr Wily as liquidator of Bondedge, and the inclusion of a release given by him in that capacity in favour of the Receivers, were inserted into the draft deed in response to the Given Form issue being raised on 13 September 2006. The likely reason, at this point in time, for including these references to Bondedge in the 12 September draft deed is that each of BACM, BACF and Bondedge was a claimant in respect of the moneys paid into Court in the Nauru Proceedings, and the draft deed contained provisions regarding the Nauru Proceedings and the division of settlement moneys received from them. 5. Mr Salmon was concerned to maintain the position that, in September 2006, he was at all times unaware of the Given Form issue and of any amendments made to the draft deed in response to the Given Form issue (which were said to include the release given by Mr Wily as liquidator of Bondedge in favour of the Receivers). Mr Salmon's adherence to his evidence about the footer indicated an unwillingness to acknowledge or concede any matter that was at odds with this position, and was one of a number of matters which undermined the credibility and reliability of his evidence. 6. It is likely that Mr Salmon reviewed the version of the 12 September 2006 settlement deed which contained the reference to Bondedge, and the release by the liquidator of Bondedge in favour of the Receivers. That is because Mr Salmon accepted that the draft deed which he was discussing with Mr Brown had terms relating to different possible scenarios for settlement of the Nauru Proceedings, with the moneys to be paid to TCBS varying according to those scenarios; and it is only this version of the 12 September draft deed that contains such terms. Further, the other version of the 12 September draft deed is in a form unlikely to be shown to a client, since there is an obvious error in formatting, with the clauses of the draft deed being unnumbered, and instead being designated by letters (F to HHH) which run on from letters A to E used in the recitals. 7. There are two further points to note about the draft settlement deed of 12 September 2006. First, it contemplated settlement for a figure of $1.8m, with some $300,000 being paid to the Receivers, and TCBS receiving the balance. It is likely, in the light of the settlement offers that had been made by the Receivers and TCBS to date, and in light of the subsequent settlement in principle for an amount of $1.3m, that the figures in the 12 September draft deed represented amounts for which TCBS was prepared to settle at this time. Mr Salmon's evidence that these figures did not reflect his thinking at the time, and were inserted into the draft deed without any input from him, is implausible. Such evidence is likely explained by Mr Salmon's desire to maintain the position, despite the evidence of the prior offers set out above, that his state of mind at all times up to 18 September 2006 was that TCBS was going to receive an amount of $3m from the BA Group, and that he was pressured by the Receivers and Mr Brown, acting out of self-interest when the Given Form issue was raised, to accept a much lower sum. 8. Secondly, it is plain that the 12 September draft deed was not a document which could, as Mr Salmon suggested, simply be amended by changing the dollar figure in the event that a settlement figure was subsequently agreed. The draft was incomplete in some respects: for example, clause 6.2 of the draft reads "Federal Court proceedings recovery scenario 1???". In addition, the draft set out a proposed settlement structure which had not been the subject of any discussions. Accordingly, if any settlement was to be agreed, the deed would have to be substantially amended, and Mr Salmon, on behalf of TCBS, would need to review the deed as amended. Given Form issue is raised 1. Mr Salmon gave evidence that, on 13 September 2006, he was sitting outside a court room with Mr Byrnes when he overheard a telephone conversation between the Liquidator and Mr Byrnes. He claimed that the Liquidator made a statement that "We found the payoff to Brown and Albarran where they took (or stole) money from …." (ellipsis in original), and that the Liquidator instructed Mr Byrnes to "Go and fuck with them". Mr Salmon agreed in cross-examination that the colourful instruction given to Mr Byrnes was consistent with Mr Salmon's experience of how the Liquidator and Mr Nikolaidis were prepared to behave in his dealings with them. That is of some significance when considering the course of settlement negotiations on 18 and 19 September 2006. 2. Mr Salmon has provided details of this overheard conversation between the Liquidator and Mr Byrnes in the past, including in a statement to NSW Police in 2008, and in an affidavit prepared in July 2008. These earlier versions of this conversation do not include the words "or stole". It appears those words, which formed no part of Mr Salmon's recollection in 2008, were added in order to suggest that the Liquidator was accusing Mr Brown and the Receivers of theft, despite the contemporaneous documents containing no such allegation. Further, in the earlier versions of the conversation provided by Mr Salmon in 2008, the Liquidator states that money had been taken from "Given Form". In the 2022 affidavit, the words "Given Form" are replaced by an ellipsis, apparently suggesting that Mr Salmon either did not hear, or could not recall, what was said. Mr Salmon offered no satisfactory explanation for the change in his account of the conversation. In cross-examination, he suggested that he had heard the word "Given", but not the word "Form". He did not offer any plausible explanation as to why, if that was the case, he did not include the word "Given" in his 2022 affidavit. Mr Salmon pointed out that he was not a lawyer in 2006, apparently intending to convey that he did not appreciate the importance of accurately recording conversations in an affidavit. However, that does not explain why the omission of "Given" (or "Given Form") appears in his 2022 affidavit, which was sworn after he had qualified as a solicitor. 3. The most likely explanation is that Mr Salmon deliberately left out the words "Given Form" in the 2022 version of his affidavit in order to advance a narrative that he was at all times in September 2006 unaware of the Given Form issue, or the inclusion of a release in order to deal with the issue. However, that narrative is at odds with the contemporaneous documentary evidence, which is discussed below. 4. Mr Salmon gave evidence that, following the overheard conversation between the Liquidator and Mr Byrnes, he saw Mr Byrnes speak to Mr Brown, and they went into a meeting room together. 5. Mr Brown referred to this conversation with Mr Byrnes in an email that he sent on the evening of 13 September 2006. This email was addressed to Mr Julian O'Sullivan, who was counsel for TCBS and the Receivers in the 2006 Proceedings, and was copied to Mr Albarran, Mr Salmon and Mr Myers. Since the email is of critical importance in this case, the relevant text is set out in full below: "Julian, Can you please look at the above four letters from Leon and advise how you suggest we respond. Concerning the issue I raised with you regarding Jim Byrnes, there have been further developments. Before going into the developments which may need to be responded to or dealt with some background. While acting for BACF and BACM, a company which Lazar was interested in (read into this controlled) was placed into administration. Hall Chadwick were the Administrators. The company, Given Form was owed money. I was owed money. I obtained from BACF, BACM and Given Form a direction that money I was owed be paid from funds received by Given Form and payable to these companies. Given Form received funds I got paid. (As advised while I received the funds but prior to disbursing the funds, Given Form was placed into liquidation and Andrew Wily was appointed Liquidator. Hall Chadwick received a letter alleging payments to BACF/BACM may be recoverable. Hall Chadwick dispute this and since that time no more has been heard: until today.) Byrnes said John Meluiss (a partner with Ferrier Hodgson) had in an interview with ASIC said that he had told me that the money might belong to investors and could not be taken. I have no recollection of any such discussion. How Andrew Wily knows this to tell Jim Byrnes is another matter. Leon Nikolaidis telephoned Richard Albarran to raise the same issue. He said that he should get another firm or settle as the Given Form issue would be raised. Richard told him one he had not done anything wrong only used Etienne Lawyers and paid us and paid an amount pursuant to a written direction to pay. If he had done anything wrong then he was willing to answer for it just as he and Wily should be prepared to do if they at any time have done anything wrong. Leon apparently did not like that. Conversation ends. (This afternoon after my conversation with Byrnes I informed John of the issue along the lines [I] did with you.) Later Andrew Wily telephoned John Myers advising him to get a new firm of lawyers as the Given Form issue when it comes to light would not be in his interests. John Myers said he did not know what any of this was about or how it affected him. Should we write letters requiring Leon and Andrew to undertake not to again seek to intentionally interfere with our contractual relations with two clients, setting out the issue in detail so that there is a proper record of the issue and of their inappropriate behaviour. In considering this note, that in the material produced by TCBS under the Notice to Produce is a table of matters in which the Given Form issue is noted and the fact that HC were Administrators is expressly stated along with the fact that from money to be received Etienne was to be paid. Nothing was hidden. Your views please." 1. The "four letters from Leon [Nikolaidis]" are not in evidence. Two appear, from their file names, to have been sent on the evening of 13 September 2006. Given that the second paragraph of Mr Brown's email appears to change the topic, moving to "the issue I raised with you regarding Jim Byrnes", it may be that the letters were not related to the Given Form issue. 2. The text of the email makes clear that, before it was sent, there had been a conversation between Mr Brown and Mr O'Sullivan regarding the matters raised by Mr Byrnes concerning Given Form. This email appears to serve three purposes: to provide an update to counsel on further conversations regarding the issue; to provide an account to each of Mr Salmon and Mr Myers of TCBS, as well as Mr Albarran, of the issues that had been raised by the Liquidator and his representatives; and to seek counsel's advice on the matters in the email. 3. The background provided by Mr Brown in his email concerning the Given Form payments essentially reflects the matters outlined above at paragraphs 72-80. The letter which Mr Brown describes as having been sent by the Liquidator to the Deed Administrator appears to be the letter of 30 October 2005 (referred to in paragraphs 88-89 above. There is no evidence of any other communication having been sent by the Liquidator regarding Given Form prior to 13 September 2006. 4. The terms in which the background facts are framed, and in particular the reference to a payment being made to Etienne Lawyers at the BA companies' direction shortly before Mr Wily was appointed as liquidator, suggest that the substance of what had been conveyed by Mr Byrnes to Mr Brown (and reported by Mr Brown to Mr O'Sullivan) was that the payments were potentially recoverable as a preference. It was put to Mr Albarran in cross-examination by the Plaintiffs' counsel, and he agreed, that this part of Mr Brown's email indicated that Mr Byrnes was raising "effectively a preference claim in relation to the Given Form payment". That is consistent with Mr Wily's own affidavit evidence. He deposed that he had put Mr Brown "on notice that I was pursuing this preferential claim regarding Given Form". 5. There is one significant error in Mr Brown's summary of the background facts. He states that "Given Form was placed into liquidation and Andrew Wily was appointed Liquidator". In fact, Given Form was not wound up, and Mr Wily did not have any role in respect of that company. It may be that Mr Byrnes passed this incorrect information on to Mr Brown when he raised the Given Form issue. In any event, this error probably explains the confused form of the Given Form release that was subsequently inserted by Mr Brown into the draft settlement deed, which is dealt with below. 6. Mr Brown's email also includes some statements made by Mr Byrnes regarding an interview of "Mr Meluiss" (apparently an error for Mr Melluish) with ASIC concerning the BA Group. According to the email, Mr Byrnes relayed to Mr Brown that Mr Melluish had said (to Mr Byrnes) that he had said (to Mr Brown), at a time that is entirely unidentified, that "the money might belong to investors". Mr Brown recorded that he had no recollection of the conversation, and it is not apparent on what basis Mr Melluish considered this "might" be the case. I do not regard these obscure remarks as conveying any allegation that the moneys owed by Given Form were payable to the BA companies to be held on trust for specific investors in the BACF Investments Trust, let alone that the payments made to Etienne Lawyers were in breach of trust. Nor is there any contemporaneous material to indicate that any such allegation was made, or understood to be made. Mr Wily does not, in his affidavit, state that he considered that there was any such claim, or that he took steps to put Mr Brown or Mr Albarran on notice of any such claim. As noted above, Mr Wily refers to the payments made by Given Form as "preferential payments", and asserts that he put Mr Brown on notice of this "preferential claim". 7. Separately, Mr Nikolaidis called Mr Albarran, and said that "he should get another firm or settle as the Given Form issue would be raised". Significantly, Mr Nikolaidis did not state that Mr Albarran himself had a conflict or should step aside. It is implicit in the words used by Mr Nikolaidis that he regarded the only person with a problem as being Mr Brown, since he was advising Mr Albarran to "get another firm". That is, he was of the view that Mr Albarran should continue to have control of the proceedings, but use another firm. 8. Although Mr Albarran responded that "he had not done anything wrong only used Etienne Lawyers and paid [them] … an amount pursuant to a written direction to pay", it does not appear from the documents that there was any allegation raised that Mr Albarran personally had done anything wrong, to which he was responding by making this statement. Instead, I read this remark as a defensive response on the part of Mr Albarran to the issue that was being raised regarding the payment made to Etienne Lawyers, which had been effected by the Deed Administrators. In particular, there is no evidence that the Liquidator or Mr Nikolaidis raised with Mr Albarran any issue regarding the validity of the instructions pursuant to which the Deed Administrators had paid Etienne Lawyers, or regarding his own conduct in making that payment. 9. Significantly, although the Plaintiffs have pleaded that the payments made to Hall Chadwick in respect of the fees of Mr Albarran and Mr McDonald as Deed Administrators of Given Form "were at risk of clawback or being set aside as uncommercial transactions or as preferential payments" (FFASC, paragraphs 42-43), there is no evidence that an issue was ever raised about those fees, let alone that the Liquidator or any of his representatives suggested that any amount paid to Hall Chadwick in respect of the Deed Administrators' fees might be at risk of being set aside or clawed back. 10. The other significance of Mr Nikolaidis' remarks to Mr Albarran is that it appears that the Given Form issue was being raised against Mr Brown, only a few days before the 18 September 2006 hearing, in order to gain a forensic advantage for the Liquidator in the 2006 Proceedings against TCBS and the Receivers. The point being made by the Liquidator's solicitor was that, in circumstances where the matter was coming on for a final hearing on an expedited basis, TCBS and the Receivers were facing the prospect of losing their solicitor, and this was being used as a basis for pressuring TCBS and the Receivers to settle the 2006 Proceedings. 11. That strategy is confirmed by the further conversation between the Liquidator and Mr Myers of TCBS which is also described in Mr Brown's 13 September email. The Liquidator contacted Mr Myers "advising him to get a new firm of lawyers as the Given Form issue when it comes to light would not be in his interests". Again, it is significant that, in the conversation with Mr Myers, there was no suggestion that there was any issue for the Receivers in continuing to act, but only for Mr Brown; and the Liquidator indicated that the Given Form issue would subsequently be raised in a manner that "would not be in [TCBS's] interests". 12. As recorded in Mr Brown's email, Mr Myers said to the Liquidator that he "did not know what any of this was about". However, that is not an atypical response when batting away an adverse comment from an opponent in litigation. In fact, Mr Myers appears to have already been apprised of the allegations before he was contacted by the Liquidator. Mr Brown's email records that, after his conversation with Mr Byrnes, he had spoken to Mr Myers and had informed him of the Given Form issue. 13. It follows that, whatever Mr Salmon's knowledge of the Given Form issue (discussed below), TCBS was, through its CEO Mr Myers, informed of the issue by Mr Brown as soon as it was raised, and was aware that the Liquidator had suggested that TCBS should, as a result, retain a new firm of solicitors. According to the time records of Etienne Lawyers, Mr Myers sent three emails to Mr Brown on 14 September 2006. None of these emails is in evidence. It can be inferred, given that Mr Brown continued to act for TCBS, that in one or more of these emails Mr Myers either expressly consented to Mr Brown's continuing to act in the 2006 Proceedings, or at the very least did not, despite the disclosure of the Given Form issue, express any issue or concern about Mr Brown continuing to act for TCBS. 14. Mr Brown notes that the Given Form issue was in no way hidden, and that the proposed payments were expressly noted in a table which was produced by TCBS. This is likely to be a reference to the email that was sent by Mr Lazar to Mr Salmon (discussed at paragraphs 74 and 84). That document must have been retained, and reviewed, by TCBS in order to be produced in the 2006 Proceedings. 15. Importantly, at the end of the email, Mr Brown seeks Mr O'Sullivan's advice on the matters he has relayed: "Your views please". There is no evidence of any response from Mr O'Sullivan, but it can be inferred that he did not express any reservations about Mr Brown or the Receivers continuing to act for TCBS, since he proceeded to appear for both TCBS and the Receivers, instructed by Mr Brown, at the hearing on 18 September 2006. 16. Mr Salmon claimed in cross-examination that he did not understand what Mr Brown was saying in his 13 September email. I find that evidence to be implausible. The email is in plain terms, and was undoubtedly read by Mr Salmon, since he responded to it the next morning. Mr Salmon was, as at 2006, an experienced manager and business owner. He was aware, from having been General Manager of the BA Group, of the nature of the group's business and was likely aware of the group's dealings with Given Form and the payments made to Mr Brown in the administration of Given Form. 17. In his email sent at 8.19am on 14 September 2006 to Mr Brown and Mr Julian O'Sullivan, and copied to Mr Albarran and Mr Myers, Mr Salmon did not indicate any confusion on his part regarding the matters that had been set out in Mr Brown's email. Instead, he replied as follows: "forget julians response (no offence julian!) go fuck them steve!!!!!!! Can we also give them a notice to produce all their bank statements/trust account statements? Can we please play them at their own game now? I would like to see a payment come in from michael sanchez" 1. Mr Salmon did not need to hear, and was not interested in, Mr O'Sullivan's views on the matters raised by Mr Brown. By the use of the expletive, the aggressive tone of the command, and the multiple exclamation marks, he was plainly signalling that, despite the issues that had been raised in the 13 September email, he wanted "steve" (Mr Brown) to continue to act for TCBS and the Receivers in the 2006 Proceedings. He regarded the Liquidator and Mr Nikolaidis as 'playing games' by raising the Given Form issue at this stage of the 2006 Proceedings, and doing so in an attempt to gain a forensic advantage against TCBS in those proceedings, and he wanted Mr Brown to take steps in the litigation designed to put pressure back on the Liquidator and his team. 2. Mr Salmon's repeated statements in cross-examination that he did not understand the statements made in Mr Brown's email of 13 September were not believable, were at odds with his contemporaneous response, and significantly damaged his credit. It is likely that the claimed inability to understand the statements made in the email was advanced in order to avoid the fact that the disclosures made by Mr Brown were adverse to the narrative which Mr Salmon sought to advance, to the effect that, in September 2006, he remained ignorant of all matters concerning the Given Form issue. 3. The 13 September email was also sent to Mr Albarran. He was informed by the email, and likely understood, that Mr Brown regarded the issue that had been raised as being without substance; that the payments by Given Form to Etienne Lawyers had been disclosed in the documents of the BA companies; that the Given Form payments and the allegations made against Mr Brown had been disclosed to TCBS, as well as to their Senior Counsel; that the allegations were likely being made by the Liquidator and Mr Nikolaidis in order to gain a forensic advantage against TCBS and the Receivers in the 2006 Proceedings; and that counsel's advice had been sought in relation to these matters. He was also aware from the email exchange that neither counsel nor TCBS expressed, in response to Mr Brown's disclosures, any concern about his continuing to act; and that TCBS wanted Mr Brown to act aggressively in responding to the allegations. Those are important matters when it comes to assessing Mr Albarran's state of mind as at 18 and 19 September 2006. 4. In addition, it was put to Mr Brown in cross-examination, and he agreed, that he was conveying by this email that "there was absolutely nothing wrong in what Messrs Albarran and McDonald were doing" and "there was absolutely no need for Messrs Albarran and McDonald to cease to act". Mr Brown was acting as solicitor for the Receivers, as well as for TCBS, and the Receivers were entitled to rely on his advice, including in relation to whether the raising of the Given Form issue put them in a position of conflict, and whether they should cease to act for TCBS. It was not put to Mr Albarran or Mr McDonald that there was any reason for them to doubt, let alone reject, Mr Brown's advice. Events from 14 to 17 September 2006 1. On Thursday, 14 September 2006, the Liquidator filed a further affidavit, attaching two reports as to the solvency of BACF and BACM respectively, each dated 11 September 2006. He expressed the opinion that both companies were insolvent before 18 March 2005, when the charges in favour of TCBS were entered. In dealing with the assets of those companies, neither report referred to, or indicated, that BACM or BACF had an arguable claim against any person in respect of moneys paid by the Deed Administrators of Given Form to Etienne Lawyers or Hall Chadwick. 2. Each of Mr Salmon and Mr Byrnes gave evidence that, in the wake of the Given Form issue being raised, Mr Brown and the Receivers started putting pressure on TCBS to agree to a settlement well below prior estimates of its likely recovery. I find this evidence to be improbable. It is inconsistent with the documentary evidence which shows that TCBS was not given any advice by Mr Brown or the Receivers regarding the quantum of its likely recovery; that TCBS had already, prior to the Given Form issue being raised, made a series of offers to settle the 2006 Proceedings for an amount well below $3m; that Mr Salmon, when the Given Form issue was raised, urged Mr Brown and the Receivers to respond aggressively; and that Mr Brown and the Receivers continued to work diligently from 14 September 2006 in order to be in a position best to advance TCBS's interests at the hearing commencing on 18 September 2006. For example, Mr Salmon agreed that Mr Brown worked hard across the weekend prior to the hearing. The entries set out in the invoice issued by Etienne Lawyers in respect of the 2006 Proceedings indicate that Mr Brown worked some 7.5 hours on Saturday, 16 September, and 5.5 hours on Sunday, 17 September, with similar hours being worked on those days by Mr Davis of Etienne Lawyers. Events of 18 September 2006 1. On 18 September 2006, the 2006 Proceedings came on for hearing before Young CJ in Eq. The matter had been listed on an expedited basis by Brereton J to deal with two issues: first, whether the charges were voidable transactions under s 588FE of the Corporations Act 2001 by reason of having been entered within six months of the relation back date; and secondly, what sums, if any, were secured by the charges. 2. Mr O'Sullivan appeared for TCBS and the Receivers. Much of the day was spent dealing with evidentiary matters. At the end of the day, Mr Hale SC, who appeared for the Liquidator, indicated that he intended to call further evidence from his client in relation to his solvency report, and Young CJ in Eq indicated that this evidence should be put in an affidavit that was served by 8.30am on 19 September 2006, with a copy provided to the Court. 3. As the hearing was progressing on 18 September, there were discussions outside Court. It is common ground that, by around the end of the first day in Court, the parties had agreed to an "in principle" settlement on the basis that the Liquidator would pay, out of any funds to be received by him in the Nauru proceedings, an amount of $1.3m in respect of the TCBS charges. 4. The negotiations appear to have focussed on price and costs. The Plaintiffs plead that the agreement reached was "an oral agreement in principle to settle the proceedings on the basis that TCBS was to be paid $1.3m on the basis that each party pay their own costs of the proceedings" (FFASC, paragraph 46). Mr Wily deposed in his affidavit that the "deal" that was "struck with TCBS" was "on receipt of the Nauru funds I would pay to TCBS within a certain number of days $1,300,000 in full and final settlement and the Receivers and Managers would retire on that basis". Along similar lines, Mr Albarran deposed that the settlement in principle involved a payment by the Liquidator of $1.3m inclusive of costs and interest, the settlement money would come out of the Nauruan settlement funds, the Receivers would withdraw as receivers and managers upon finalisation of the settlement, and that the settlement would be subject to a signed deed. 5. Whatever the precise terms that were agreed, it was understood by all parties that a deed had to be agreed and executed before there would be any binding settlement. In a letter sent on 28 September 2006, referring to the events that had occurred on 18 and 19 September, Mr Nikolaidis stated that: "During the course of all settlement discussions, the writer made it perfectly clear that there was no settlement until there was a signed deed". 6. Further, it is plain from the draft deed of 12 September 2006 which Mr Brown had discussed with Mr Salmon that it was always intended by TCBS and the Receivers that they would, as part of any settlement, seek releases. To underscore the point, the draft of 12 September (and each of the subsequent drafts) was entitled "Deed of Release". There is no evidence that the terms of any releases were discussed between the parties as part of the "in principle" settlement negotiations that occurred on 18 September 2006. 7. There was some evidence from Mr Byrnes to the effect that Mr Brown and Mr Albarran had sought, in the course of settlement discussions during 18 September 2006, to obtain an assurance from the Liquidator's team about Given Form. However, in cross-examination, Mr Byrnes accepted that Given Form had not even been mentioned on that day, and acknowledged that he never in fact spoke to Mr Albarran. 8. Mr Salmon gave evidence of various conversations in which he participated during the course of 18 September 2006. I have already indicated above that I do not accept Mr Salmon's evidence that he only agreed to a settlement in principle for $1.3m due to significant pressure placed on him by the Receivers and Mr Brown to come down substantially from their previous estimates of the amount that TCBS was likely to recover pursuant to the charges. When Mr Salmon communicated with NSW Police about these events in 2008, in a context where he was alleging "blackmail" had occurred, he did not suggest that he was in any way coerced or pressured by the Receivers or Mr Brown in accepting an "in principle" settlement for $1.3m. Instead, he stated that his agreement to settle at this figure, though "far less than what I was owed", was "a commercial decision given 30 days already in [the] court system". This account of Mr Salmon's reasoning at the time is consistent with the evidence summarised above regarding TCBS's willingness to seek a commercial resolution from the moment that the 2006 Proceedings were commenced, with a series of offers being made as the hearing approached. 9. Mr Salmon's evidence of the events of 18 September 2006 is unreliable in other respects, as demonstrated by significant variations in his evidence over time, and its inconsistency with the documentary evidence. For example: 1. In 2008, Mr Salmon said, in a statement to NSW Police, that Young CJ in Eq had granted several adjournments on 18 September 2006 for the purposes of settlement discussions; that a settlement being reached by lunchtime; and that his Honour was informed that this had occurred. In fact, the transcript shows that the only adjournments were at morning tea, lunch and the end of the day; that the hearing ran all day; and that there was no reference at all to settlement in the course of that day in Court. The first time that the Court appears to have been informed of a settlement in principle was on the afternoon of 19 September 2006. I deal below with the significance of the statements made at that time. 2. In 2007, Mr Salmon told ASIC that a settlement deed had been drawn up to be signed on 18 September while the parties were at Court. In an affidavit sworn in 2008, Mr Salmon deposed that Mr Brown had prepared a settlement deed at Court in the afternoon of 18 September 2006, and that Mr Salmon reviewed this draft and confirmed it was an amended version of the 12 September deed. This is at odds with his evidence in these proceedings, to the effect that he did not review any other draft after 12 September 2006. 3. In 2015, in a statement to NSW Police in support of a complaint of fraudulent overcharging by Mr Wily, Mr Salmon said that Mr Wily was not present at Court on 18 September 2006. However, in his affidavit in these proceedings, Mr Salmon not only deposes to Mr Wily's attendance on that day, but also gives evidence of a number of meetings and conversations in which he was involved in the course of that day at Court. Inclusion of the Given Form release 1. After the "in principle" settlement was reached on the afternoon of 18 September, it was agreed that a draft deed would be prepared by Mr Brown and circulated to the parties that evening. 2. As Mr Brown was leaving Court on 18 September 2006, he heard Mr Wily say: "We will deal with Given Form later". Mr Brown agreed in cross-examination that Mr Wily did not refer to Mr Albarran or Mr McDonald when making these remarks, but nonetheless claimed in his affidavit that he understood Mr Wily to be threatening "to take action against Mr Albarran and Mr McDonald in their capacity as administrators of Given Form". I find it unlikely that this was Mr Brown's state of mind. He was aware at this time that the issues which had been raised in relation to the payment made by Given Form were issues which were said to affect his own position (since Etienne Lawyers was the recipient of the alleged preference payment), and that there had been no suggestion of any basis for a claim against the Deed Administrators in respect of either the payments made to Etienne Lawyers or the payment of their own fees. It is more likely that any comment by the Liquidator concerned a possible claim against Etienne Lawyers, and that Mr Brown understood this to be the case. 3. Mr Brown gave unchallenged evidence that, having heard the Liquidator's remark, he advised Mr Albarran that there should be a release in the settlement deed which dealt with Given Form, in order to prevent the Liquidator from using that issue to hold up any payment of the settlement sum in the 2006 Proceedings. I find it likely that advice to this effect was given by Mr Brown to Mr Albarran. It is common ground between the parties that Mr Albarran agreed to the inclusion of the Given Form release in the draft deed, and the advice from Mr Brown provides a rational explanation for why Mr Albarran agreed to its inclusion, in circumstances where he was aware, from the 13 September email, that the Liquidator and Mr Nikolaidis were threatening to raise the issue in a manner that was adverse to TCBS's interests in the 2006 Proceedings. Mr Wily was the liquidator of the BA group of companies, and as such had a priority in respect of his costs and expenses (which, as noted above, were in excess of $1.5m as at the time the 2006 Proceedings commenced), and had control over the timing of payments in the liquidation of the BA companies. It was Mr Salmon's view, as expressed in a statement to NSW Police, that Mr Wily had in the past stalled matters so as "to ensure a larger portion of payment to him and Nikolaidis". Consistently with those matters, there was reason to be concerned that the Liquidator would not pay any amounts from the Nauru funds, including to TCBS, until he had concluded any investigations and recovery actions, and his fees in respect of those matters had been paid. 4. When examined about these matters on 16 December 2009, Mr Albarran could not offer an explanation as to why the Given Form release was in TCBS's interests. But that evidence appears to have been given without Mr Albarran being taken, in the course of his 2009 examination, to the 13 September 2006 email, which set out the manner in which the Liquidator sought to deploy the Given Form issue against TCBS's interests in the 2006 Proceedings. I consider that Mr Albarran's failure in December 2009 to offer an explanation as to why the inclusion of the Given Form release in the draft deed was in TCBS's interests is consistent with his being unable to recall the relevant events in any detail at the time of his examination. In the course of the same proceeding, Mr Brown gave evidence consistent with the explanation for the inclusion of the release that is set out above. That is, he gave evidence that he and Mr Albarran had a concern that, if action were taken in respect of Given Form, then the moneys payable to the Receivers pursuant to the settlement: "could have been held up and frozen whilst the liquidators took that action [in relation to Given Form] which would have meant that TCBS would not have been able to get its hands on the money as quickly … Therefore in an effort to resolve all matters once and for all it was discussed as to whether we should suggest putting the given form [release] in to get rid of any further litigation because it had [been] going on as long as it was." 1. Similarly, in these proceedings, Mr Brown indicated that he and Mr Albarran agreed to insert the Given Form release into the deed because of uncertainty regarding how the Given Form issue might be deployed, in circumstances where the issue had only recently been raised by the Liquidator: "we were concerned that if Given Form wasn't put in and released, there might be a holdup in some way, shape or form which we didn't have time to process, whereby TCBS might not have got its money quickly. And so we were concerned to make sure that the money could be released as soon as possible without any further holdups". 2. I accept that, in proposing the Given Form release to Mr Albarran, Mr Brown was, at least in part, motivated by the concern described above regarding the potential impact for TCBS if claims regarding Given Form were pursued, particularly given that the Liquidator had raised the issue in order to obtain a forensic advantage in his dispute with TCBS. Nonetheless, I find that Mr Brown was at the same time seeking a benefit for himself. In circumstances where the issue had been raised in relation to a payment to Etienne Lawyers, and he stood to lose if that payment was set aside as a preference, he had an interest in the Liquidator agreeing not to pursue such a claim. 3. In contrast, I do not find that Mr Albarran, in agreeing with Mr Brown's recommendation regarding the Given Form release, was seeking a benefit for himself and Mr McDonald. As outlined above, no allegations had been made regarding any moneys paid to Hall Chadwick in respect of the fees of the Deed Administrators of Given Form. The only allegations that had been made by the Liquidator or his representatives were in respect of the payment of moneys to Etienne Lawyers. Mr Wily describes the issue about those payments being whether they were liable to be set aside as preferential payments. Mr Albarran states in his affidavit, and I accept, that although Mr Brown had told him that Mr Wily was "apparently intending to press a recovery against Brown, McDonald and myself in separate proceedings", Mr Albarran was satisfied that he had acted in accordance with the irrevocable assignments given by the BA companies in favour of Etienne Lawyers, "and if there were any issues in relation to the preference payment it was ultimately between Wily (as liquidator of the BA group) and Brown": "if it was subsequently found there was a preference payment it was not my problem". 4. The draft deed that was prepared by Mr Brown on the evening of 18 September 2006 bore a time stamp "060918 1700". In opening submissions, the Plaintiffs referred to the fact that this draft deed included Mr Wily in his capacity as liquidator of Bondedge, and provided for a release in the following terms (cl 3.3): "The Liquidator releases TCBS and the Receivers and Managers from any and all claims howsoever arising which the Liquidator or any company of which the Liquidator has control of as at the date of this Deed has against TCBS, the Receivers and Managers BACM and/or BACF". However, as I have noted above, a similar (though differently worded) release had appeared in the draft deed of 12 September 2006. This earlier draft also provided a release by the liquidators of Bondedge in favour of the Receivers, and was created before the Given Form issue was raised. Further, the release by the Liquidator in the 18 September draft was given in favour of the "Receivers and Managers", being defined as "Richard Albarran and Geoffrey McDonald in their capacity as receivers and managers of BACM and BACF", and not in their capacity as Deed Administrators of Given Form. 5. Instead, the release which appears to have been inserted into the 18 September draft deed in response to the Given Form issue being raised was clause 3.5, which provided as follows: "The Liquidator [defined as meaning Mr Wily and Mr Hurst in their capacity as liquidators of BACM and BACF, as well as Bondedge and Given Form] releases the BA Companies [defined as BACM, BACF and Bondedge] in respect of the money paid to them jointly and severally by the Deed Administrator of Given Form". The allegations in the Fourth Further Amended Statement of Claim focus only on this particular release. In that pleading, it is labelled "the Given Form release" (FFASC, paragraphs 49-50). 1. The Plaintiffs plead (FFASC, paragraph 49) that the 18 September draft deed added Given Form as a party, and proposed that Given Form itself provide the Given Form release. But Given Form was never involved in any negotiations, and plainly could not be bound by the proposed settlement deed. Although the drafting is unclear, it appears that the intention of Mr Brown was to include, as parties, Mr Wily and Mr Hurst in their capacity as liquidators of Given Form. The front page of the deed, and the execution page, seem to envisage that they would sign in such a capacity. That is, the drafting is probably explained by the mistaken understanding of Mr Brown, as recorded in his 13 September email, that Mr Wily had been appointed as liquidator of Given Form, and was raising a potential preference claim in that capacity. 2. This mistaken understanding explains why Mr Brown proposed that the liquidator of Given Form release the BA companies in respect of any preference claim regarding the moneys paid by the Deed Administrators (which, at the direction of the BA companies, were paid to Etienne Lawyers). 3. Given those matters, it is plain that the Given Form release proposed in the 18 September deed was not in a form that could have been accepted. It was incapable of operating according to its terms. 4. As matters unfolded, the precise drafting of the Given Form release did not need to be considered at the time because, as outlined below, the Liquidator indicated that he would not agree to any release in respect of Given Form. 5. Significantly, the draft deed included various clauses which dealt with matters that do not appear to have been the subject of any prior discussions between the parties. The Defendants submitted, and I accept, that a number of these clauses would likely, or may, have been controversial so far as the Liquidator was concerned. For example: 1. Clause 3.1.2 proposed that the statutory order of priority of payments under the Corporations Act 2001 for money received by a liquidator would not be applicable to the sum of $1.3m recovered by the Liquidator in the Nauru Proceedings. Before the 2006 Proceedings commenced, the Liquidator had already incurred costs of over $1.5m excluding GST (as set out in paragraph 104 above). There were competing claimants for the Nauru funds of $6.5m, such that BACM and BACF would only likely receive a portion of that amount, and the BA companies had no other assets from which the Liquidator's fees and expenses could be paid. In those circumstances, the effect of this proposed clause was that the Liquidator would be placed at risk in the event that the funds recovered in the Nauru Proceedings were, after the proposed payment to TCBS, not sufficient to cover his fees and costs; 2. Clause 3.1.2 also provided for an assignment by the Liquidator to the Receivers of $1.3m of the moneys received in the Nauru Proceedings (see also cl 3.2.1). Insofar as any assignment of a right to receive the Nauruan funds would lead to notice being given to the Nauruan entities, this would appear to be at odds with the desire to maintain secrecy regarding the terms of the deal between the Liquidator, TCBS and the Receivers (cl 4); and 3. Clause 3.1.3 provided that, pending receipt by TCBS of the sum of $1.3m, the Liquidator would grant a charge over his chose in action in the Nauru Proceedings as security for the payment of that amount. As outlined above, the Liquidator was keen to remove the Receivers, out of concern that their involvement might adversely affect the prosecution of his claims in the Nauru Proceedings. He agreed in cross-examination that he was motivated to ensure that there was no risk of the Receivers interfering in his pursuit of the Nauru claims. Draft Deed sent to the Liquidator, TCBS and Receivers 1. On 18 September 2006 at 7.48pm, Mr Brown sent an email attaching the draft deed, which was addressed to Mr Nikolaidis, Mr Albarran, Mr Myers and Mr Salmon, and was copied to Mr O'Sullivan. The subject line of the email was "Please review 060918 1700 DRAFT Deed of Release". This matched the footer of the document which was attached, that being the 18 September draft deed with the Given Form release. The email was in the following terms: "Please review the attached document. The document has been sent to you at the same time as it is being sent to our clients for their instructions. We understand that this document has to be signed this evening. We are waiting in our office. If that is not correct please advise us so we can go home." 1. It is apparent from the text of the email that the request for the document to be reviewed was a request directed at each of the recipients of the email (including Mr Salmon, Mr Myers and Mr Albarran), since Mr Brown explained that he was sending it to Mr Nikolaidis for review at the same time as he was sending it to his clients "for their instructions". 2. There is no documentary evidence of any draft deed being exchanged before this point in time. Mr Brown's email does not refer to the attached deed as an amended document, does not provide a document with any tracked changes and does not state that instructions were being sought on "amendments" (all of which would be expected if a previous version had already been reviewed by the other side and by his clients earlier that day, or agreement had been reached on substantial parts of a previous draft). 3. Mr Brown accepted that he did not speak to Mr Salmon about the decision to put the Given Form release into the draft deed that was sent to Mr Nikolaidis on the evening of 18 September. However, Mr Brown was aware, having regard to the terms of his email, that he needed his clients' instructions on the draft deed, which included the Given Form release, before it could be put forward to the Liquidator as being capable of being accepted. 4. There is no evidence that Mr Albarran had reviewed the terms of the 18 September draft deed before it was sent to him by Mr Brown on the evening of 18 September 2006. The email attaching the draft deed (discussed below) asked Mr Albarran to review it and provide his instructions. As the person providing instructions to Mr Brown, it is likely that Mr Albarran would have reviewed it. He is an experienced insolvency practitioner who must have reviewed many documents containing releases, and considered the terms of such releases, in exercising his functions. It would have been apparent to him, on the review of the deed, that the Given Form release is not a release in favour of the Deed Administrators of Given Form, but a release only of the BA Companies. Further, whereas Mr Wily and Mr Hurst are proposed to be parties to the deed in their capacity as liquidators of various companies, Mr Albarran and Mr McDonald are proposed to be parties to the deed only in their capacity as Receivers of BACM and BACF, and not in their capacity as Deed Administrators of Given Form. If Mr Albarran had been seeking a benefit for himself and Mr McDonald, in their capacity as Deed Administrators of Given Form, he would likely have realised that the document did not provide any release to himself or Mr McDonald in that capacity, and would have required further amendments. There is no evidence that any such amendments were requested or made to the form of the release. Those matters further support the conclusion that Mr Albarran was not, in accepting Mr Brown's recommendation that the Given Form release be included in the draft deed seeking a benefit for himself and Mr McDonald, or a benefit for Mr Brown, but was instead acting on Mr Brown's advice that such a release was in the interests of TCBS. 5. While Mr Albarran would likely have appreciated that the Given Form release might be of benefit to Mr Brown, he was informed by this email, and would likely have understood, that Mr Brown was seeking instructions on the draft deed from Mr Myers and Mr Salmon of TCBS; and that Mr Brown was also providing the draft deed to counsel for TCBS for his review and comment, in circumstances where he had been briefed regarding the issues raised concerning the Given Form payments. Mr Albarran was entitled to proceed on the basis that each of those individuals would review the deed, and would respond to Mr Brown if they had any issue with any of its contents, including the Given Form release. 6. Mr Salmon contended that he never read this draft deed. I address his evidence below. However, it is of limited consequence. The document was also sent to Mr Myers, who was the CEO of TCBS, and the email sought TCBS's instructions. Mr Myers was aware of the Given Form issue, since each of Mr Brown and the Liquidator had spoken to him about it, and he was a recipient of the 13 September 2006 email. Given the importance of the settlement deed, the desire on the part of TCBS and the Receivers to have the matter concluded before the hearing resumed the next day, and the fact that (as discussed below) Mr Myers was planning to meet the Liquidator at 7.45am on 19 September 2006 to discuss the settlement, I find it likely that Mr Myers would have reviewed, and been aware of, the contents of the deed, including the Given Form release. There is no evidence that he expressed any disagreement with its inclusion. 7. Similarly, it is likely that counsel for TCBS would have reviewed the draft deed carefully, and that if he had expressed any disagreement, the deed would have been withdrawn in this form. It follows that counsel likely did not raise any issue with the Given Form release being included in this draft, in circumstances where he was aware that the Liquidator and Mr Nikolaidis had sought to deploy the Given Form release against TCBS in the 2006 Proceedings. Accordingly, irrespective of Mr Salmon's position, I find that TCBS and its independent counsel were aware of, and agreed with, the inclusion of the Given Form release in the draft deed. 8. In any case, it is likely that Mr Salmon also reviewed and approved the draft deed, including the Given Form release. Plainly the draft deed was a matter of great significance to him, since he would have known that, without agreement on the terms of a deed, there would be no settlement. Further, Mr Salmon acknowledged in cross-examination that the 12 September draft deed which he had reviewed with Mr Brown was an "early draft", which "would need a number of additions depending on the terms that we agreed", and that the "in principle" terms agreed on 18 September "were quite different from the deal" in the 12 September draft deed. Accordingly, Mr Salmon must have been aware that the draft deed to be circulated on the evening of 18 September was not simply going to be the 12 September draft with the settlement figure changed, but was going to be a substantially different document. 9. Mr Salmon claimed that he did not read the draft deed because it was sent in the evening, by which time he had gone home. He said that he did not, in September 2006, have the technology to read emails at home. However, in cross-examination, he accepted that during the time he was TCBS's director, he used a desktop computer at home in Sydney for reading and responding to emails on TCBS matters. Further, there were, among the limited emails in evidence, examples of Mr Salmon sending emails outside business hours. 10. If Mr Salmon had been unable to review the draft deed on the evening of 18 September 2006, I find it implausible that he would not have reviewed it as soon as possible the next morning. However, on Mr Salmon's evidence, he walked into a meeting room at Court with a pen in his hand ready to sign a settlement document that he had not read, and in circumstances where he had not even had a report on its contents. Further, on his evidence, he did not ask to see a copy of the settlement deed, even when he became aware that there was heated and protracted disagreement about its contents, and he was told that the sticking point was something "unlawful" which needed to be "removed" immediately. That is inherently improbable. It is more likely, and I find, that given the importance of the draft deed, Mr Salmon did carefully review it, whether at home or at the office, before attending Court on the morning of 19 September 2006; that he was aware of its contents, including the Given Form release; and that, in the context of the communications about Given Form on 13 September 2006 and his response of 14 September 2006, he did not have any issue with the Given Form release being included. 11. In his 18 September email attaching the draft deed, Mr Brown indicated that he was waiting in his office for any response. None was forthcoming from Mr Nikolaidis that evening. The terms of Mr Brown's email indicate that he was plainly conscious of the time pressure. However, there was little apparent urgency from the other side. In an email sent to Mr Nikolaidis on 22 September 2006 concerning the events of 18 and 19 September, Mr Brown stated that: "On Monday night [that is, 18 September] we offered after drafting a deed of settlement to meet with you and your client at your home if necessary", but "you refused". He expressed frustration in his 22 September email that, by indicating an agreement in principle had been reached, the Liquidator and Mr Nikolaidis had caused "people to work around the clock to produce documents", and then "simply refused to do what was needed to get the documentation that you and your client required put in place and executed by the relevant parties". 12. Mr Brown's email of 22 September 2006, which is discussed further below, was identified by each of Mr Brown and Mr Albarran in their respective affidavits as a contemporaneous account of the events of 18 and 19 September, and neither was cross-examined on its contents. Events of 19 September 2006 1. There was extensive dispute regarding the course of the critical events of 19 September 2006. The matters which are common ground are that the Liquidator indicated that he would not agree to a release in respect of Given Form; a deed was subsequently prepared that removed the Given Form release; and by the end of the day in Court, Mr Nikolaidis had formed the view that the proceedings had turned in the Liquidator's favour, and indicated that a settlement was no longer available at a figure of $1.3m. 2. The matters at issue concern the precise timing of events, and the conversations that occurred about those matters. Given Form release is rejected 1. According to Mr Wily, he and Mr Nikolaidis had a brief exchange about the draft deed either on the evening of 18 September or on the morning of 19 September 2006. At this time, Mr Wily was focussed on preparing his further affidavit which had been foreshadowed at the close of the hearing on 18 September 2006. He was likely under time pressure in respect of this affidavit because it was meant to be served by 8.30am, but only became available at around the time that the hearing started. 2. Mr Wily agreed in cross-examination that he did not himself read the draft deed. He gave no evidence that he had ever reviewed its contents, either on 18 or 19 September 2006, or for the purposes of this proceeding. 3. He was informed by Mr Nikolaidis that the draft deed included a release regarding what Mr Wily described as the "preference" payment to Etienne Lawyers. Mr Nikolaidis advised Mr Wily that he could not agree to any deed which included such a release, and he accepted that advice. He understood that Mr Nikolaidis would go back to the other side and see whether they would agree to remove the clause, and this needed to happen before consideration of settlement could be taken any further. 4. Mr Salmon gave evidence that there were extended arguments before Court on the morning of 19 September 2006, in which Mr Nikolaidis was insisting that something be removed from the draft deed, and Mr Albarran and Mr Brown were arguing in a heated way that they would not remove "it". This exchange outside Court was said to involve shouting and yelling, and to be "rife" with "obscenities". Despite this, Mr Salmon claimed that he did not, at any stage, know what was being discussed. His evidence that such an argument occurred was supported by Mr Byrnes. In contrast, the evidence of Mr Albarran was that as soon as he was told that the Given Form release was a problem, he instructed Mr Brown to amend the draft deed by removing the release, and Mr Brown agreed to do so. 5. The evidence of Mr Albarran is more plausible than that of Mr Salmon. As I have set out above, Mr Albarran did not have any personal interest in the Given Form release. There was no reason for him to require that it be retained, let alone to argue in a heated and sustained manner for it to be retained in the draft deed, once he was aware that it was a potential obstacle to any settlement. When being asked in cross-examination why he wanted "to get the deal done without the Given Form release as soon as possible", Mr Albarran gave the following explanation for his conduct, which I find plausible: "I can't recall [my thinking] at that point of time, but I would assume that as any receiver, my job is to get in, realise the asset on behalf of my appointor and get out of my appointment as soon as possible", and in that context, it "was in TCBS's interest to get the deal sorted". 6. Further, the sequence of events described by Mr Salmon and Mr Byrnes would have been extraordinary, involving solicitors having a heated and extended argument outside Court about allegedly unlawful conduct. Yet the Plaintiffs did not point to any contemporaneous document which records that such an argument occurred. I find it implausible that such events, had they occurred, would not have been referred to in any of the contemporaneous written communications about the failed settlement. 7. Mr Wily, after recounting that he required that the Given Form release be removed from the draft deed, deposed in his affidavit that: "For some reason there continued to be a delay in providing a redrafted deed." If the events of 19 September described by Mr Salmon had occurred, they would have been reported by Mr Nikolaidis to Mr Wily. It is implausible that if Mr Nikolaidis had told Mr Wily that there had been a shouting match for an extended period about whether the Given Form release would be removed, Mr Wily would have forgotten that this was the reason for the delay. It is more likely that he was not told any such thing because it did not happen. 8. Despite making various statements about the events of 19 September 2006 over a number of years, Mr Salmon did not suggest there was any such protracted argument about the removal of the Given Form release until after he met Mr Byrnes in 2016, and had a discussion with him about the events that had occurred around a decade earlier. This supports the conclusion that Mr Salmon's evidence of these events is an unreliable reconstruction. That conclusion is also supported by the fact that there are a number of inconsistencies in the accounts Mr Salmon has given, over the years, of the events of 19 September 2006. By way of example: 1. In his first account, in a complaint submitted to ASIC on 19 November 2007 seeking that the Receivers be stripped of their entitlement to practice, Mr Salmon recounted that the Liquidator had attended a meeting room to sign the deed, and "not long after" had stormed out saying that he would not sign. There was no suggestion of any protracted argument about the issue. 2. In an account to NSW Police in 2008, Mr Salmon again claimed that the Liquidator was present, but added that the Liquidator said "we are never signing those releases on Given Form", with the negotiations lasting only some 10 minutes; 3. In an affidavit sworn in 2008, Mr Salmon now had Mr Hurst present in the meeting room, and again referred to a meeting that lasted only "5 to 10 minutes". Mr Salmon deposed that at the end of this meeting he asked Mr Nikolaidis what had happened, and that Mr Nikolaidis indicated precisely what the issue was: "They want us to sign a release on Given Form which we will just not do. Your lawyer and the receivers refuse to remove the reference to Given Form". The refusal to remove the releases was new. There was nothing in the affidavit to the effect that there was an extended argument on the issue, and nothing to the effect that anyone accused Mr Brown or the Receivers of acting unlawfully. 4. By the time of Mr Salmon's 2022 affidavit, his account had changed considerably. All references to "Given Form" were gone, and now Mr Salmon claimed to have no idea what element of the draft deed was being discussed. At the same time, and somewhat inconsistently, he claimed that the arguments about this clause were protracted, deposing that he heard Mr Albarran and Mr Brown state on multiple occasions that they would not settle "without it". In this version, Mr Nikolaidis made allegations of unlawful and dishonest behaviour, all conveyed in obscure terms that did not allow Mr Salmon to know what was occurring. 1. Given the passage of time, the extent of the changes in Mr Salmon's account over time, and the inconsistencies in his various accounts, I am of the view that his evidence of the events of 19 September 2006 is not reliable, and is largely a reconstruction coloured by his grievance about the outcome of the 2006 Proceedings and subsequent events. 2. The Plaintiffs sought to find support for Mr Salmon's version of events from the fact that it would have been a simple matter to amend the deed to remove the Given Form release, and yet no further draft was prepared until around the luncheon adjournment on 19 September 2006. This was said to indicate that there had been sustained resistance to this amendment being made. 3. There is an alternative explanation for the second draft only being prepared at that time, namely: that the position of the Liquidator was only communicated shortly before Court resumed on the morning of 19 September; that Mr Brown was then busy with the hearing, which included the cross-examination of the Liquidator during the morning session; and that Mr Brown made the necessary amendments when the Court adjourned for lunch. 4. This latter version of events is supported by the following matters: 1. Mr Wily and Mr Nikolaidis did not provide any response to the draft deed on the evening of 18 September 2006; 2. Mr Wily was busy with his affidavit on the morning of 19 September 2006, and did not attend Court until shortly before he gave evidence at around 11am; 3. According to Mr Brown's email of 22 September 2006 (dealing with the events of 18 and 19 September), Mr Albarran, Mr Myers and Mr Davis of Etienne Lawyers had attended the Liquidator's office at around 7.45am on 19 September 2006, but the Liquidator had denied agreeing to meet them at that time. It is not clear whether or not the Liquidator had, by that time, spoken to Mr Nikolaidis (which may explain why he refused to discuss the draft deed); and 4. Mr Brown gave evidence that he arrived at Court at around 9.45am, having been trying unsuccessfully to get a response from Mr Nikolaidis; that Mr Nikolaidis only told him in Court and shortly before the hearing resumed, that the Liquidator would not agree to any deed that included the Given Form release; and that Mr Brown indicated that he was happy to get rid of the release, but that the judge came on the bench and they could not continue the conversation. 1. The Plaintiffs sought support for Mr Salmon's account of events by referring to Mr Albarran's time records for 19 September 2006. According to those records, Mr Albarran spent some 2.4 hours on that day "attending settlement meetings & court". The Plaintiffs contended that this period of time did not match up with Mr Albarran's evidence that he immediately agreed to the Given Form release being removed, and instead was consistent with Mr Salmon's evidence of a protracted dispute about that issue. 2. The terms of Mr Albarran's time entry do not render Mr Salmon's account more plausible, particularly having regard to the issues with his account that I have outlined above. Instead, this time entry is likely to be, as Mr Albarran explained, an aggregated amount of time that he spent over the course of the day attending to both settlement and court related matters, particularly given that Mr Albarran had attended the Liquidator's offices early in the morning for a meeting, had attended Court before the hearing to discuss the deed, was likely provided with updates from Mr Brown about developments both as regards the hearing and settlement during the course of the day, including in the morning and luncheon adjournments, and at the end of the day, and likely spent time reviewing the affidavit that the Liquidator served that morning, and the second draft deed that Mr Brown produced that afternoon. New version of settlement deed 1. A further draft of the settlement deed, without the Given Form release, appears to have been produced by Mr Brown around 2pm or so. Mr Brown gave unchallenged evidence that he amended the 18 September draft during the luncheon adjournment on 19 September 2006 on his laptop, by removing the references to Given Form. He saved the amended draft on a thumb drive and instructed Mr Davis of Etienne Lawyers to have the document printed by Mr O'Sullivan's clerk. The amended draft was then handed by Mr Davis to Mr Nikolaidis at Court around the time that the hearing resumed at 2.30pm. Mr Brown asked Mr Nikolaidis to "get this deal done now", and Mr Nikolaidis responded that he would not consider the draft deed until after Mr Salmon's cross-examination had concluded. 2. The Plaintiffs accepted that a further draft deed was produced by Mr Brown on the afternoon of 19 September 2006, and was provided to Mr Nikolaidis at Court. This was acknowledged by Mr Salmon in cross-examination, despite being a matter which was not referred to in any of his prior accounts of the events, or in his affidavit in these proceedings (which instead maintained a narrative that Mr Brown and the Receivers refused to remove the Given Form release). Mr Salmon indicated that, because the new draft was "timestamped 2 o'clock", Mr Brown "wouldn't likely have appeared [with the draft] before 2.15". That is consistent with Mr Brown's evidence. 3. The Plaintiffs' closing submissions proceeded on the basis that there was a draft produced on 19 September 2006 which had a time stamp "060919 1400". The Plaintiffs made no submissions on the contents of the draft deed bearing with this time stamp which was exhibited to the affidavit of Mr Salmon. It bears the footer "060919 1400 DRAFT Deed of Release". 4. Although the document bears that footer, and is accepted to have been created around 2pm on 19 September 2006, it continues to bear the date "18 September 2006" on its covering page and is described on its first page as "Deed of Release made 18 September 2006". 5. A further copy of this 19 September draft deed was exhibited to Mr Brown's affidavit, but was incorrectly described by Mr Brown. He identified the document with the timestamp "060919 1400" as being the document that was attached to his email of 18 September 2006 at 7.48pm. That is an obvious error. It is common ground that the version which was in fact attached to Mr Brown's email was the version with a footer "060918 1700 DRAFT Deed of Release" (which includes the Given Form release). The version stamped "060919 1400" does not include this release. 6. It is apparent from a comparison of the text of the two drafts that the changes made by the draft deed produced around 2pm on 19 September are as follows: 1. in the 19 September draft, Mr Wily and Mr Hurst are parties in their capacity only as liquidators of BACM and BACF (and not in their capacity as liquidators of Bondedge and Given Form, as was the case in the 18 September draft); 2. there is an amended description in recital A of the 19 September draft of the relief that is sought by the Plaintiffs in the 2006 Proceedings; 3. Bondedge and Given Form have been removed from the definitions in the 19 September draft; 4. clause 3.1.2 has been substantially amended in the 19 September draft deed by deleting the provision that the "Liquidator hereby assigns to the Receivers and Managers $1,300,000.00 of all money recovered by the Liquidator from the Federal Court Proceedings". Instead, this has been replaced by an acknowledgement that TCBS has a fixed charge over $1.3m of all money recovered by the Liquidator from the Nauru Proceedings; 5. clause 3.2.1 has been substantially amended in the 19 September draft. Whereas the 18 September draft stated that consideration from TCBS and the Receivers shall be "Accepting the assignment of $1,300,000.00 from all moneys received from the Federal Court Proceedings", the 19 September draft deed states that the consideration from TCBS and the Receivers shall be "Accepting the acknowledgement of the Plaintiff contained in clause 3.1.2"; 6. the Given Form release (which had been cl 3.5 of the 18 September draft deed) has been deleted in the 19 September draft deed; 7. there is a significant change proposed to the releases given by TCBS and the Receivers in cl 3.4 of the 19 September draft, such that these releases only take effect upon receipt of $1.3m from the Nauru Proceedings (rather than upon execution of the draft, as was the case with the 18 September draft deed); 8. there is a change to the warranties given by TCBS and Numsbar Investments Pty Ltd. In cll 3.7 and 3.8 of the 18 September draft, each warranted to the Liquidator that it had not received from any third party a payment in reduction of the money owed to TCBS and claimed by TCBS as being owed in the 2006 Proceedings. In cl 3.4.3 of the 19 September draft, each warrants that "it has not received from any third party any payment owed to BACM or BACF"; 9. there is a change to the terms regarding retirement of the Receivers. Clause 3.9 of the 18 September draft provided that "TCBS and the Receivers and Managers will take such actions as is required to have the Receivers and Managers retire as receivers and managers of BACM and BACF". In contrast, clause 3.5 of the 19 September draft provided that "The Receivers and Managers will retire upon the execution hereof"; 10. the 19 September draft included a new clause 3.5.1, which did not have any counterpart in the 18 September draft, and which was as follows: "TCBS and the Receivers and Managers shall limit all claims under the Charges now or in the future to a fixed sum of $1,300,000.00 and no more"; 11. the 19 September draft included an entirely new clause 4, which was in the following terms: "4 Federal Court Proceedings 4.1 If the Liquidator cannot negotiate a settlement of the Federal Court Proceedings on terms whereby the BA Companies receive an equal distribution of the settlement monies the Liquidator will not and shall not settle the Federal Court Proceedings until the Liquidator has give[n] TCBS 4 Business Days written notice of the Liquidators intention to settle or inability to settle as the case may be. 4.2 Should TCBS receive a notice under clause 4.1 above, TCBS may immediately appoint receivers and managers and or take such other action as it may think fit to protect its interest under the Charges. 4.3 If TCBS reappoints receivers and managers under the Charges the Receivers and Managers sole asset shall be the interest of $1,300,000.00 in the Federal Court Proceedings and nothing more." 1. the execution blocks in the 19 September draft remove the reference to Mr Wily and Mr Hurst in their capacity as liquidators of Bondedge and Given Form, which had appeared in the 18 September draft. 1. Although the draft deed stamped "060919 1400" was accepted by the Plaintiffs to be the version produced by Mr Brown on 19 September 2006 and provided to Mr Nikolaidis, its contents were not the subject of any evidence by any of the witnesses called in the proceedings. In particular, leaving aside the removal of the Given Form release, there was no evidence regarding who had proposed which changes, or whether any or all of the changes were the subject of negotiation between the parties prior to the draft containing those changes being provided to Mr Nikolaidis. 2. In those circumstances, the issue arises as to what inferences can be drawn from the document, in light of the surrounding evidence, regarding any negotiations that occurred between the 18 September draft and the 19 September draft, and regarding the extent of agreement, or lack thereof, between the parties in relation to the proposed settlement terms. This was a matter that was not addressed in the submissions of any of the parties. 3. One immediate point is that if, as the Plaintiffs contended, there was, or was likely to be, agreement on all terms of the 18 September draft deed other than the Given Form release, there would be no rational reason for the other significant changes that were made to those terms by the 19 September draft. 4. A key element of the Plaintiffs' case in closing submissions was that "removal of the references to Given Form in the deed was, at most, a five minute exercise". The Plaintiffs submitted that: "There is simply no credible explanation by the defendants as to why they did not simply take out a pen, cross out the minimal references to Given Form and execute the deed". This submission was in turn based on the proposition that there was "no suggestion that anyone objected to anything in the deed on the morning of the 19th, other than the Given Form release". 5. However, the changes made to the 19 September draft deed indicate that the parties' differences regarding the 18 September draft deed extended beyond the inclusion of the Given Form release. It can be inferred from the changes made in the 19 September draft that the Liquidator had objected to any assignment of the moneys recovered in the Nauru Proceedings; that the Liquidator had also required the immediate removal of the Receivers; and that the Liquidator probably required the clause limiting TCBS's claims under the charges to a maximum of $1.3m. In contrast, some of the changes appear to have been proposed by TCBS and the Receivers, possibly in response to the deletion of the proposed assignment. For example, the proposal that the releases by TCBS and the Receivers only take effect on receipt of the sum of $1.3m, and the proposed new clause 4 in the 19 September draft deed (which has no counterpart in the 18 September draft), appear to be inserted for the benefit of TCBS and the Receivers. 6. It can be inferred that, just as the 18 September draft deed was sent to TCBS and the Receivers for their instructions, and to Mr O'Sullivan for his review, the 19 September draft deed was likely reviewed by each of Mr Albarran, Mr Salmon and Mr O'Sullivan, and possibly Mr Myers. Mr Salmon did not, in his affidavit, acknowledge the existence of this draft, let alone give any evidence of any discussion regarding its contents. 7. Having regard to the extent of the changes made, and the fact that Mr O'Sullivan was cross-examining the Liquidator during the morning session at Court, it becomes apparent why a revised draft was only provided to the other side around 2.30pm. The time over the luncheon adjournment was necessary for TCBS, the Receivers and Mr O'Sullivan to review the changes to the draft that had been made by Mr Brown in response to the issues raised by Mr Nikolaidis regarding the draft deed; to consider the further changes that were proposed to be made as a result of the amendments requested by the Liquidator; and to obtain instructions on those matters. It is likely that Mr Salmon and Mr Albarran gave instructions in the luncheon adjournment for a deed in the form of the 19 September draft to be put forward to Mr Nikolaidis when Court resumed, given that this in fact occurred. 8. This likely timeline removes any suggestion of delay on the part of Mr Brown and the Receivers in producing a revised draft deed, and also may explain why Mr Albarran's time records show that he spent around two-and-a-half hours attending to settlement and court during the course of 19 September 2006. Events of afternoon of 19 September 2006 1. The transcript of the 2006 Proceedings records that, after the luncheon adjournment on 19 September, Senior Counsel for the Liquidator informed the Court that the "parties were talking and sought a half-hour adjournment to pursue those discussions". This was supported by counsel for the defendants, who "indicated settlement was very close". However, it is unclear whether there was an adjournment immediately after this exchange, since none is recorded as having occurred at this point in the transcript. Instead, the transcript records that, after this exchange, Senior Counsel for the Liquidator stated that there "had been agreement in principle but what was being negotiated was a matter of complexity and his preference was to continue the evidence." 2. There are two points to note. First, the statement that "what was being negotiated was a matter of complexity" is at odds with the Plaintiffs' contention in these proceedings that the only issue of concern on 19 September 2006 was the Given Form release (which Mr Albarran had agreed to remove as soon as an objection was raised). Instead, the statement likely reflects the fact that there remained significant issues between the parties regarding the terms of the settlement, as suggested by the changes made between the 18 September draft and the 19 September draft, in addition to the removal of the Given Form release. For example, as far as the evidence reveals, the proposal in the new clause 4 of the 19 September draft had not been the subject of any prior discussion between the parties before the draft deed was presented by Mr Brown to Mr Nikolaidis. Secondly, the Liquidator's team made the forensic decision that, rather than adjourn in order for the draft deed to be reviewed and discussed, their "preference was to continue the evidence". That is consistent with the statement that Mr Brown records having been made by Mr Nikolaidis when handed the 19 September draft deed, namely, that he was focused on Mr Salmon's cross-examination, and was not going to deal with the revised draft until after his cross-examination was completed. 3. Following the indication by Senior Counsel for the Liquidator that his client's "preference was to continue the evidence", there was an argument about an affidavit of Mr Pleash on which the Defendants relied in response to the Liquidator's evidence and then, shortly after 2.30pm, Mr Salmon was cross-examined. 4. The transcript records that there was an adjournment to discuss settlement after Mr Salmon had completed his evidence, and before closing addresses commenced. At this point, Senior Counsel for the Liquidator asked: "for half an hour for the parties to see how they are going in terms of negotiation at this point. He indicated his understanding of what has occurred is there's an agreement in principle and that the problems are concerned with the matter of implementation; that dollars have been agreed. If nothing can be resolved, he indicated, parties may need to address tomorrow morning." 1. The statement that "the problems are concerned with matters of implementation" provides further evidence that the concerns of the Liquidator's team were not confined to the Given Form release, which by this stage had been removed from the draft deed. The parties had only agreed the "dollars", and it was not clear whether terms regarding the implementation of any settlement were capable of being agreed. That conclusion is supported by the extent of the changes made in the 19 September draft deed, and the lack of any evidence regarding agreement by the parties on the substance of those changes (such as the proposed new clause 4). The statement that the parties "may need to address tomorrow morning" suggested that it was anticipated that the discussion of the terms of the amended deed might take a significant period of time. Again, that points to the complexity of the issues that were perceived to separate the parties. If the only issue from the Liquidator's perspective had been whether or not the Given Form release had been removed, this would have taken a matter of moments to ascertain. 2. As matters transpired, the agreement on the "dollars" was short-lived, and no negotiations on the new draft terms in fact ensued. Mr Wily gave evidence that, in the afternoon of 19 September 2006, Mr Nikolaidis contacted him, conveyed that he thought the cross-examination of Mr Salmon had gone well, and advised that the case had turned in the Liquidator's favour as a result. As a result, Mr Wily was no longer prepared to settle for $1.3m. 3. According to Mr Brown's email of 22 September 2006, when the adjournment to discuss the proposed terms of settlement was taken on the afternoon of 19 September, Mr Nikolaidis took no steps to talk to the Defendants: "We prepared a document and you had Mr Hale SC obtain a 30 minute adjournment for us to discuss the terms of settlement. You went to the conference room adjacent to Court 8A and did not leave it until His Honour Chief Justice Young returned to the bench. Rather than seek to comply with your clients instructions you took no steps with us to advance or achieve those instructions. We have never come across such behaviour before." 1. It is likely that, in this period, Mr Nikolaidis was making a call to the Liquidator, from the conference room outside Court, to update him on the day's events. It was this call which, according to Mr Wily, led to the recommendation, and decision, not to proceed with negotiations for a settlement at $1.3m. This would explain why there was no engagement with the Defendants on the terms of the deed during this adjournment. 2. According to the transcript, when Court resumed, Senior Counsel for the Liquidator "indicated that the parties had come to no conclusion and that, rather than wasting time, he would commence his closing address". Young CJ in Eq reserved his decision. It appears from his Honour's subsequent judgment that he indicated to the parties when reserving his decision that he would delay in delivering his judgment until 21 September 2006, in order to provide the parties with an opportunity to see if a resolution could be achieved in the course of the following day. In Wily v Terra Cresta Business Solutions Pty Ltd [2006] NSWSC 1042, which was delivered on 21 September 2006, his Honour made the following remarks (at [8]): "The case was heard by me on 18 and 19 September 2006. The argument finished at 4.45pm on the latter day. However, much time was wasted on the second day by settlement negotiations, which ultimately proved to be fruitless. However, in case those discussions did bear fruit, I indicated that I would give judgment today, rather than yesterday, but I was told yesterday that those settlement discussions had broken down. Accordingly, I must give judgment." 1. Mr Brown gave unchallenged evidence that Mr Nikolaidis conveyed to him after Court that there would no longer be any settlement for BACM, and that the Liquidator was still interested in settling BACF, but that there "is no settlement until we have a signed deed – and this deed is not in an acceptable form". That is, Mr Nikolaidis conveyed that the terms proposed in the amended draft deed provided after 2pm on 19 September 2006, which did not include the Given Form release, were not acceptable to the Liquidator. Mr Wily gave evidence that he left it to Mr Nikolaidis to contact him when and if Mr Nikolaidis thought there existed a deed in terms suitable to recommend to him. There is no evidence that Mr Nikolaidis ever reached this view, or forwarded a further draft deed to Mr Wily. 2. In a letter sent on 28 September 2006 in relation to the events of 19 September, Mr Nikolaidis made the following statement: "During the course of all settlement negotiations, the writer made it perfectly clear that there was no settlement until there was a signed Deed. Your Mr Brown tried to re-negotiate our client's offer in the hope of achieving a better result for his client, but failed to do so. The counter offers made had the effect of rejecting our client's offer. For the sake of clarity, our client confirmed that the offers he has previously made were withdrawn." 1. This contemporaneous account of the failure of the settlement, from the perspective of the Liquidator's solicitor, does not contain any statement to the effect that the settlement failed because a single term was inserted which was unrelated to the dispute with TCBS, and which was for the benefit of Mr Brown, let alone that it failed because Mr Brown refused to remove that extraneous term. Instead, Mr Nikolaidis indicates that no agreement was reached because the terms put forward by Mr Brown, which were aimed at "achieving a better result for his client" in the 2006 Proceedings, were not acceptable. This, and the reference to "counter offers" (plural) being put forward by Mr Brown and being rejected by Mr Nikolaidis, support the conclusion that the terms in each version of the settlement deed proposed by Mr Brown, including the version put forward after the Given Form release was removed, were regarded as unacceptable by Mr Nikolaidis and were rejected. The statement by Mr Nikolaidis that, in these "counter offers", Mr Brown had sought to renegotiate the Liquidator's offer "in the hope of achieving a better result for his client" is likely a reference to the clauses proposed in the 18 September draft whereby the Liquidator would assign $1.3m of all moneys recovered in the Nauru Proceedings (which was presumably rejected, given the changes that were made in the next draft), and possibly the new clause 4 proposed in the 19 September draft whereby it was proposed that, if a settlement was proposed in the Nauru Proceedings which did not involve equal distribution, and TCBS did not agree with a proposed settlement, it could reappoint receivers and managers and take over the Liquidator's claims in those proceedings. It can be inferred, from Mr Nikolaidis' letter, that these proposals were unacceptable. 2. In closing submissions in these proceedings, the Plaintiffs contended that there was no rational reason why the Liquidator, having agreed to the settlement in principle on 18 September, would not have signed a deed embodying that agreement on the morning of 19 September, before Court. However, as Senior Counsel for the Liquidator explained to the Court, only the "dollars" had been agreed, with the "problems" being "concerned with the matter of implementation", and the subject of the negotiations being "a matter of complexity". There is no evidence that there was ever any agreement reached on this complex issue of implementation. Instead, the differences between the draft deeds of 18 and 19 September, and Mr Nikolaidis' rejection of the latter as being unacceptable, indicate that there was a lack of consensus between the parties. 3. Further, given the conduct by the Liquidator and Mr Nikolaidis described above, including their delay in indicating any position on the draft deed provided on the evening of 18 September 2006 until shortly before the hearing resumed on 19 September 2006 (despite Mr Brown's offer to talk on the evening of 18 September, and the failed attempt to meet early on the morning of 19 September), and the forensic decision to press on with the cross-examination of Mr Salmon, I find it likely that Mr Nikolaidis was avoiding committing his client to any position on settlement prior to seeing how Mr Salmon fared in cross-examination. That is, he was likely proceeding on the basis that there was potential upside in the cross-examination of Mr Salmon, and he wanted to know how this evidence played out before providing any detailed response to the proposed settlement terms. That is consistent with both the order of events set out above, and with the perception of those involved in the 2006 Proceedings that Mr Nikolaidis could not be trusted and liked to play games. I do not suggest that there was anything improper about his conduct on 19 September 2006. There plainly was disagreement between the parties on the "implementation" of the settlement, which was "a matter of complexity", and in that context Mr Nikolaidis was likely stalling for time in committing to a position on the proposed settlement terms on the basis of a view, which proved correct, that his client's fortunes might improve during the day. Correspondence on 20 September 2006 1. These conclusions regarding how matters unfolded on 19 September 2006 are supported by the correspondence exchanged between the parties on the following day. In none of that correspondence was there any statement either that the Given Form release was a factor in the settlement not proceeding, or that the parties had agreed, or were likely to agree, on all terms other than the Given Form release. 2. On 20 September 2006, Mr Brown sent an email to Mr Nikolaidis (which was forwarded to Mr Myers and Mr Salmon) in which he complained about the "delaying tactics employed by the liquidators" in the 2006 Proceedings. In particular, Mr Brown stated that, although the Liquidator had advised the Defendants that he had reached a settlement with them, "rather than Mr Wily instructing his solicitors to finalise the settlement he wasted the courts time and those of this solicitor and the defendants to contemporaneously run the case and engage in deliberately fruitless negotiations". That is, Mr Brown expressed the view, immediately after the events, that the Liquidator's team had engaged in deliberate stalling tactics, and had played games on settlement, while pushing forward with the case at the same time. 3. If Mr Salmon's account of the events of 19 September were correct, it would be expected that Mr Nikolaidis would have written a strong response, indicating that it was Mr Brown who had played games by seeking a clause for his own benefit on an unrelated matter, and by repeatedly refusing to remove this clause despite being informed that it would not be accepted, causing the settlement to be lost, in circumstances where the Liquidator was ready, willing and able to proceed. However, there is no evidence of any such response. 4. Instead, Mr Nikolaidis wrote on 20 September 2006 with a further settlement offer. His letter commenced by referring to discussions held on the evening of 19 September 2006 between two members of the Liquidator's staff and Mr Myers and Mr Salmon of TCBS, in order "to look at means of resolving the present litigation". Despite purporting to give detailed evidence of the events of 19 September, Mr Salmon makes no reference to this meeting in his affidavit. It would be difficult to reconcile this meeting with his evidence, which is to the effect that he was relying on Mr Brown and Mr Albarran to tell him what was going on in the negotiations and why they had failed. He could hardly have been kept in the dark on these matters, as he claims to have occurred, if he and Mr Myers had a meeting with the Liquidator's staff at the conclusion of the day's events, without any lawyers present. 5. Mr Nikolaidis' letter indicated that, based on the events in Court on 19 September, and the likelihood that the charge in respect of BACM would be set aside, the Liquidator could not see how he could justify maintaining the offer previously made in respect of BACM. Mr Nikolaidis also expressed the view, based on the evidence, that the amount owing by BACF to TCBS would be in the order of $352,902.68, and this sum could not, with interest and costs added, exceed $650,000. 6. Mr Nikolaidis indicated that the Liquidator nonetheless maintained his offer to settle the claim in relation to BACF for $650,000, that is, one half of the $1.3m sum that had been agreed in respect of BACF and BACM. He added that the Liquidator was prepared to increase the offer if TCBS and the Receivers could demonstrate an entitlement to more than $650,000. 7. Mr Nikolaidis also indicated that his client was prepared to settle the BACM claim on the basis that the charge be set aside, the Receivers be removed, and there be no order as to costs. 8. Significantly, it is plain from the terms of Mr Nikolaidis' letter that he was of the view that the terms of the settlement still needed to be worked out, stating that those terms "are to be more fully set out in a Deed", and confirming that "there is no settlement of this matter until such time there is a signed document". 9. According to an email sent by Mr Brown to Mr O'Sullivan at 2.57pm on 20 September 2006, Mr Myers of TCBS was willing to accept the reduced offer made by Mr Nikolaidis. Mr Salmon had "not totally rejected it but both he and Richard [Albarran] want to see the deed that Leon [Nikolaidis] proposes be signed before accepting anything only to have Leon yet again say no deal and re negotiate [them] down for 5th time". Mr Brown added that he had told Mr Nikolaidis that "if Wily was serious about settling we would have a deed and none has turned up". In those circumstances, he instructed Mr O'Sullivan to inform Young CJ in Eq that the judgment should be delivered. 10. This email again expresses a contemporaneous perception, from the perspective of TCBS and the Receivers, that the Liquidator's team had been playing games on settlement and had been delaying or resisting putting forward any terms of settlement in response to their draft deeds. On the evidence available, neither Mr Myers nor Mr Salmon – both of whom had spoken directly to members of the Liquidator's staff – disagreed with Mr Brown's suggestion that the Liquidator was not serious about settlement. Further, the email is inconsistent with the Plaintiffs' contention that there was, or would readily have been, consensus on all terms of settlement other than the Given Form release. The Liquidator's solicitor had indicated that the terms which had been proposed in the draft deeds put forward by TCBS and the Receivers were unacceptable, even after the Given Form release was removed, but had not proposed any terms in response. 11. Mr Brown sent a further email to Mr Nikolaidis at around 5.30pm on 20 September 2006. This email is not in evidence, but it is referred to, and statements from it are repeated, in Mr Brown's email to Mr Nikolaidis sent on 22 September 2006 (which was copied to Mr Salmon and Mr Myers). Mr Brown acknowledged, apparently in response to a statement made by Mr Nikolaidis, that there had not been any settlement reached as a matter of law, but repeated his complaint that Mr Wily and Mr Nikolaidis had failed to "do what was needed to put the settlement in place", and had instead gone "out of their way to give lip service to there being a settlement but never getting it documented". 12. It is for this reason that, at the end of his email, Mr Brown indicated that if the Liquidator's team did have any "serious proposal", they should put it "in a form that can be immediately accepted without the need for further documentation". No such offer was forthcoming from the Liquidator, either on 19 September 2006 or subsequently. Judgment and Subsequent Events 1. On 21 September 2006, Young CJ in Eq delivered judgment: Wily v Terra Cresta Business Solutions Pty Ltd [2006] NSWSC 1042. His Honour found (at [59]), as Mr Nikolaidis had predicted, that the BACM charge was voidable by virtue of s 588E of the Corporations Act 2001. His Honour also indicated (at [78]) that he was minded to advise the Liquidator that he would be justified in treating the BACF charge as being security for no more than $177,902.66, unless the Liquidator was convinced by material placed before him by the defendants that he should treat the charge for a higher amount. His Honour (at [80]) expressed the view that the defendants should be liable to pay costs, but that he would consider this issue when short minutes were brought in. Costs were subsequently dealt with in a further judgment: Wily v Terra Cresta Business Solutions Pty Ltd (No 2) [2006] NSWSC 1102. His Honour there ordered that the defendants pay 80% of the Liquidator's costs of the expedited hearing. 2. On 21 September 2006, Mr McDonald recorded, in a time sheet entry for that day, a statement by Mr Albarran in the following terms: "Leave it with me, it will be alright". The Plaintiffs put to Mr Albarran that this entry reflected a conversation in which Mr McDonald had expressed concern about Mr Albarran's actions in trying to insert the Given Form release into the deed. However, Mr McDonald had no involvement in the events of 18 and 19 September 2006. There is no evidence he was aware that the Given Form release had been inserted into the deed, and therefore it is unlikely he raised this conduct as a cause of concern. It is more likely that the concern being discussed was that, on the day of this entry, Young CJ in Eq had found that the BACM charge should be set aside, and had expressed the view that no more than around $177,000 would be covered by the remaining charge, in circumstances where the Receivers had incurred some $300,000 of fees and costs to date. The statement attributed to Mr Albarran was likely to have been made in response to such a concern. That is, his comment that it "will be alright" was probably a statement to the effect that he expected that enough would be recovered from BACF to ensure that the Receivers' fees and costs would be met. That is consistent with Mr McDonald's evidence when asked about this entry in cross-examination, to the effect that he could recall being informed that "the judge indicated that he didn't think the proof would come up to more than 177[,000], but did not rule on the quantum", which "remained outstanding, it was an issue to be resolved". 3. At one point in time, the Plaintiffs had advanced allegations that, following the judgment on 21 September 2006, the Receivers and Mr Brown "ran dead" in the 2006 Proceedings, resulting in a recovery much lower than what would otherwise have been achieved. Those claims were abandoned on the first day of the hearing. As a result, the events after 21 September 2006 are now of relevance only on the issue of damages. In that regard, the following matters are of some significance. 4. Soon after the costs judgment was handed down, TCBS effectively stopped trading. According to a statement made to NSW Police by Mr Salmon in 2015, there was a "strained relationship" between Mr Salmon and Mr Myers by December 2006, as a result of which TCBS "effectively ceased trading actively", with each of Mr Salmon and Mr Myers becoming "involved in other businesses". Further, Mr Salmon indicated that by this time TCBS owed the ATO approximately $600,000. 5. The 2006 Proceedings continued, with service of evidence and with a protracted dispute regarding whether the Liquidator could amend his claim to challenge the validity of the BACF charge once more. 6. On 7 April 2008, the costs payable in respect of the order that had been made in the Liquidator's favour by Young CJ in Eq were assessed as being in the sum of $90,543.12. Orders were subsequently entered on 15 May 2008 for that sum to be paid to the Liquidator. On 23 April 2008, Mr McDonald sought confirmation that TCBS would be paying this costs order, and that a cheque would be drawn by the end of the month. Mr Salmon responded on the same day: "No not in a position to pay the costs order". Mr McDonald expressed concern that he was "going to be stuck with [TCBS's] bill" and this was not acceptable. On 8 May 2008, Mr Salmon wrote to Mr McDonald stating: "I can't and won't pay the costs order". He also stated that TCBS would refuse to indemnify the Receivers for the costs order, "due to the willful neglect of the [Receivers] and Etienne Law in relation to the Given Form matter". The Liquidator sent a demand for payment on 19 May 2008, and Mr Salmon told Mr Brown on 29 May 2008 that TCBS "couldn't pay this order" and that "Hall Chadwick would have to pay it". 7. On 29 May 2018, the Liquidator issued a statutory demand to TCBS for payment of the costs debt, and on 27 June 2008, the Liquidator commenced proceedings to wind up TCBS. On 16 July 2018, the Receivers joined the winding up proceedings, supporting the Liquidator's application. On 31 July 2008, the Court made an order winding up TCBS on insolvency grounds. 8. The liquidator of TCBS, Mr Levi, who was appointed on 5 August 2008, proceeded to conduct investigations, including as to the value of the BACF claim. On around 13 November 2006, the Defendants had served a report of Mr Pleash, who was an Associate at Hall Chadwick, which put the amount owing to TCBS under the BACF charge as ranging, on three alternative bases, from around $1.126m to $2.381m. However, the liquidator of TCBS subsequently agreed to settle the BACF claim for $177,902. As noted above, Young CJ in Eq had expressed the view, in September 2006, that Mr Wily would be justified in treating the charge as securing no more than this amount, unless he was convinced by material placed before him by TCBS and the Receivers that he should treat the charge as being for some higher amount. The liquidator of TCBS reviewed the Pleash report, identified issues with it, and relied on counsel's advice to conclude that insufficient evidence was available to support a claim for a greater amount. On 19 August 2008, the Court made orders in the 2006 Proceedings for payment by BACF to TCBS of $177,902.62. On 16 December 2009, the 2006 Proceedings were brought to an end with an order that the Receivers be paid $120,000 in respect of their fees, with no order as to costs. 9. TCBS was deregistered on 28 April 2012. 10. As regards the subsequent progress of the liquidation of the BA companies, on 23 October 2006 consent orders were made in the Nauru Proceedings providing for the disbursement of the sum of $6.5m which had been paid into the Federal Court in the Nauru Proceedings. The payments ordered to be made from those funds included a payment of $1.625m to BACM, and a payment of $1.625m into this Court on behalf of BACF in respect of the 2006 Proceedings. On 16 December 2009, orders were made in the 2006 Proceedings that $120,000 of the moneys paid into Court on behalf of BACF be paid to the trust account of the solicitor for the Receivers, with the balance including interest being paid to the Liquidator. There was evidence, in the form of reports filed with ASIC, showing that the entirety of the amounts received in the liquidation of BACM and BACF (totalling around $3.25m) was expended on meeting the fees and costs of the Liquidator, with no dividend expected to be paid to any class of creditor. 11. Mr Salmon became bankrupt on 25 August 2009. He was subsequently imprisoned for larceny and assault. 12. After Mr Salmon was released from prison, and discharged from bankruptcy, he entered, on 9 September 2016, into a deed of sale of chose of action with the liquidator of TCBS (which had been re-registered). By this deed, effective 15 December 2015, TCBS assigned all of its choses in action to Mr Salmon and TCBS Group Holdings Pty Ltd. These proceedings were then commenced on 13 December 2016. C. EXISTENCE OF FIDUCIARY RELATIONSHIP Did Mr Brown owe fiduciary duties to TCBS? 1. A solicitor is "classically a fiduciary to the client": Maguire v Makaronis (1997) 188 CLR 449 at 463 per Brennan CJ, Gaudron, McHugh and Gummow JJ; [1997] HCA 23; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 68 per Gibbs CJ; [1984] HCA 64. 2. In Atanaskovic Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542; [2021] NSWCA 201 at [43], Gleeson JA (Basten and McCallum JJA agreeing) observed that the fiduciary duty owed by a solicitor to a client is a duty of "absolute and disinterested loyalty", and that this "fundamental rule embodies two themes: the 'conflict rule' and the 'profit rule'". 3. Those rules were set out in the judgment of Gaudron and McHugh JJ in Breen v Williams (1996) 186 CLR 71 at 113; [1996] HCA 57: "equity imposes on the fiduciary proscriptive obligations – not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. If these obligations are breached, the fiduciary must account for any profits and make good any losses arising from the breach." 1. In Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 169; [2001] HCA 31, McHugh, Gummow, Hayne and Callinan JJ quoted (at [74]) the above passage with approval, and commented (at [78]): "In particular, the 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 personal interests of the fiduciary and those to whom the duty is owed. That is how the matter was put by Mason J in Hospital Products. Similar reasoning applies where the alleged conflict is between competing duties, for example, where a solicitor acts on both sides of a transaction." 1. As regards the "conflict rule", Gleeson JA summarised the relevant principles as follows in Atanaskovic Hartnell v Birketu at [44]-[45]: "The conflict rule precludes 'any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict': Chan v Zacharia (1984) 154 CLR 178 at 198 (Deane J); [1984] HCA 36; Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 at [68] (Gageler J). The objective of the rule is 'to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage': Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557; [1995] HCA 18 (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ). In National Mutual Holdings Pty Ltd v The Sentry Corporation (1989) 22 FCR 209 at 229, Gummow J, after referring to the statement by Deane J in Chan v Zacharia at 199 concerning a conflict or significant possibility of conflict, observed that whilst his Honour was speaking of fiduciaries generally (in that case between partners, not solicitor and former client): … even among fiduciaries solicitors stand in a special position. There is an underlying principle that a person should be entitled to seek and obtain legal advice in the conduct of his affairs without the apprehension of his being thereby prejudiced; the concern is with the general preservation of confidentiality and encouragement of full and frank disclosure between client and solicitor: Baker v Campbell (1983) 153 CLR 52 at 114-115, per Deane J." 1. Mr Brown did not dispute that, if he acted as TCBS's solicitor in the 2006 Proceedings, then he owed fiduciary duties to TCBS. However, he disputed that he did act as solicitor for TCBS, arguing that he was retained only by the Receivers. In that regard, he relied on the written retainer relating to the 2006 Proceedings which was in evidence, and which named only the Receivers as his clients. 2. A formal retainer is not necessary for fiduciary obligations to be imposed upon solicitors. Such duties may be imposed by a less formal arrangement, or by self appointment: Beach Petroleum NL v Abbott Tout Russell Kennedy & Ors (1999) 48 NSWLR 1; [1999] NSWCA 408 at [192] per Spigelman CJ, Sheller and Stein JJA. 3. A retainer does not need to be express, but may be implied from the contemporaneous documentation: Trajkovski v Simpson [2019] NSWCA 52 at [13] per Basten JA and Sackville AJA and at [100] per Brereton JA. It is well established that a professional engagement may be implied if it can be shown that the conduct of the parties demonstrated such a relationship had in fact been established: Meerkin & Apel v Rossett Pty Limited [1998] 4 VR 54 at 62 per Charles JA (Callaway and Batt JJA agreeing). 4. In Watson & Ors v Ebsworth & Ebsworth (a firm) & Anor [2010] VSCA 335 at [111], the Victorian Court of Appeal (Neave, Mandie and Hansen JJA) observed that: "A solicitor and client relationship arises, if, on the balance of probabilities, the conduct of the parties shows that such a relationship has come into existence. In his book Lawyers' Professional Responsibility, Professor G E Dal Pont summarises the law on implied retainers as follows: Retainers, like other contracts, need not be created by express words, whether written or oral; their existence can be inferred or implied from the circumstances. In this context it is the existence of the retainer that is implied, not its terms ... Proof of an implied retainer rests on proof of facts and circumstances sufficient to establish a tacit agreement to provide legal services. Its existence is determined by inference from objective facts, not merely by the lawyer's belief as to which clients he or she was acting for. The reasonable expectations of the alleged client carry significant weight here, as the lawyer may always take steps to dissuade any person from a belief that the lawyer acts for that person. The lawyer's file (including letters and other correspondence) and diary notes, specifically regarding how he or she has referred to and dealt with the claimant, may prove useful. Aspects that may impact upon a client's reasonable expectations of a retainer include the capacity in which the lawyer acted (say, giving advice in a non-legal capacity), who instructed the lawyer, who is liable for the lawyer's charges, and whether a contractual relationship existed with the claimant in the past (as the court may be readier to assume that the parties intended to resume that relationship in such a case)." 1. In Pegrum v Fatharly (1996) 14 WAR 92 at 102, Anderson J (Kennedy and Ipp JJ agreeing) observed that: "When both parties to a transaction consult the same solicitor and together give him the information needed to prepare the documents in which their respective rights and obligations are to be set out and the solicitor accepts responsibility to prepare the documents without any indication that he cannot fully discharge his professional duties to them both there is a strong bias towards finding that the solicitor tacitly agrees to act for both parties and to undertake the usual professional responsibilities to them both. ... In the absence of a clear indication by the solicitor that the solicitor does not accept one of the parties as his client it is natural in such a case to assume both are relying on him for professional advice and assistance. This follows from the mere fact that both have consulted him. There may be other circumstances which show that there is no reliance by one or other of the parties on the solicitor, but, if not, reliance should be inferred as a fact." 1. I have found that Mr Brown was retained to act as solicitor for TCBS in the 2006 Proceedings. I have found that the retainer was express; and have indicated that, in any case, I would have found that the retainer was implied from Mr Brown's conduct referred to at paragraphs 105-112 above. 2. Pursuant to orders made by Parker J on 31 July 2023, the amendments to the Plaintiffs' pleading by which the allegation, in the alternative, of an implied retainer was raised were permitted "for the sole purpose of enabling the Court [to be] provided with a document reflecting the claims the plaintiffs intend to make", and was "conditional upon the trial judge considering the limitation issues that arise and whether the grant of leave to amend should be revoked, and the Plaintiffs' claims dismissed". Mr Brown argued that the amendments to raise the implied retainer should not be allowed, having been made at a time when pleadings and evidence were closed, and no meaningful opportunity was afforded to Mr Brown to address the allegations. 3. It is not necessary to resolve this issue, given that I have found that an express retainer has been established. However, if I am wrong in that regard, I would have granted leave to the Plaintiffs to contend, in the alternative, for an implied retainer, which I have also found to be established. I do not consider that the pleading of the implied retainer raises any substantive new issues of fact. In assessing whether or not there was, as Mr Salmon asserted, an oral retainer, it was necessary to consider the contemporaneous documentation to determine whether the existence of such an arrangement was borne out by that material. The determination of whether a retainer was implied from conduct required consideration of that same material. No further evidence was required to address this alternative basis for the pleaded retainer. 4. For those reasons, I have found that Mr Brown was in a fiduciary relationship with, and owed fiduciary duties to, TCBS. Did Mr Albarran owe fiduciary duties to TCBS? 1. TCBS appointed Mr Albarran as a receiver and manager in respect of BACM and BACF. 2. Each appointment instrument invested the Receivers with "all the powers, authorities and discretions available to a Receiver and Manager or Receiver under the provisions of the Charge". Clause 14 of the charges executed by each of BACM and BACF provided the receivers and managers with extensive powers, such as the power to take possession of the Secured Property; to manage the Secured Property; to receive rents and profits derived from the Secured Property; to institute proceedings in connection with the Secured Property; to sell or agree to sell the Secured Property; to do or cause to be done anything to enforce the Charges or to recover the Secured Money; and to expend money and incur liabilities in exercising the powers conferred. 3. Each of the instruments of appointment provided that the Receivers were appointed as the agent of each of BACM and BACF respectively, and not as the agent of TCBS. 4. The Plaintiffs submitted that receivers and managers owe fiduciary duties to their appointors. The Receivers acknowledged that a court appointed receiver owes fiduciary duties, but contended that there is no considered judicial analysis of the question whether a privately appointed receiver and manager owes such duties to his or her appointor. At the same time, the Receivers did not identify any authority which has held that fiduciary duties are not owed in that situation. 5. In the case of In re Magadi Soda Company Limited (1925) 41 TLR 297 at 300, Eve J expressed the view that a court-appointed receiver owed fiduciary duties to debenture holders. His Honour said that: "The receiver not only fills a fiduciary position towards all the debenture-holders, but his appointment to an office of such responsibility presupposes that he will discharge his duties with punctilious rectitude". 6. Significantly, this view did not appear to be based upon the fact of appointment by the Court, but instead on the fact of appointment "to an office of such responsibility". In Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354; [1943] HCA 4, Williams J (at 384) expressed the view that the position was the same for a privately appointed receiver, having regard to the responsibility of the office of receiver: "It has been held that a receiver appointed by the court occupies a fiduciary position (In re Gent; Gent-Davis v. Harris; In re Magadi Soda Co. Ltd.); and there would appear to be no distinction in principle in this respect between the position of a receiver appointed by the court and a receiver appointed by the mortgage deed. In each case he holds a particular fund in which, whether it consists of principal or of interest or partly of one and partly of the other, both the mortgagor and the mortgagee are interested, the mortgagee having the prior claim and the balance belonging to the mortgagor after these claims have been satisfied." 1. In Re Just Juice Corporation Pty Limited (recs and mgrs apptd); James v Commonwealth Bank of Australia and Others (1992) 109 ALR 334, Gummow J considered the duties owed by a receiver and manager who was appointed by two banks pursuant to equitable mortgages that had been granted by the company. His Honour explained (at 336) that the practice of appointing a receiver as the agent of the mortgagor had developed in the nineteenth century as a conveyancing device designed to assist the position of the mortgagee, in circumstances where the liabilities of a mortgagee in possession under the general law were "almost penal". The device was a means by which the mortgagee could place a person whom the mortgagee had selected in control of the mortgaged premises, without thereby becoming liable as a mortgagee in possession. His Honour held that, although nominally the agent of the company, the primary duty of the receiver is to realise the assets in the interests of the debenture holder, citing Gomba Holdings UK Ltd v Homan [1986] 1 WLR 1301; [1986] 3 All ER 94 at 97 per Hoffmann J. 2. Against that background, Gummow J (at 336) quoted with approval the following passage from Hubert Picarda, The Law Relating to Receivers, Managers and Administrators (2nd ed, 1990, Butterworths), describing it as "an English work in which may Australian decisions are referred to": "A receiver plainly owes duties to the debenture holder who appointed him. And he owes those duties to his appointor both in contract and in tort. His appointment on acceptance becomes a contract between his appointor and himself giving rise to contractual and tortious duties. He will also owe fiduciary duties to his appointor in respect of the realisation of charged assets." 1. The English Court of Appeal came to a similar view in an appeal from the decision of Hoffman J in the Gomba Holdings litigation: Gomba Holdings UK Ltd and Others v Minories Finance Ltd and Others [1988] 1 WLR 1231; [1989] 1 All ER 261. Fox LJ (with whom Stocker and Butler-Sloss LJJ agreed) again focused on the responsibilities of the receiver, and the purpose for which the receiver was appointed, and expressed (at 1233) the view that the receiver owed fiduciary duties to the appointor: "The agency of a receiver is not an ordinary agency. It is primarily a device to protect the mortgagee or debenture holder. Thus, the receiver acts as agent for the mortgagor in that he has power to affect the mortgagor's position by acts which, though done for the benefit of the debenture holder, are treated as if they were the acts of the mortgagor. The relationship set up by the debenture and the appointment of the receiver, however, is not simply between the mortgagor and the receiver. It is tripartite and involves the mortgagor, the receiver and the debenture holder. The receiver is appointed by the debenture holder, upon the happening of specified events, and becomes the mortgagor's agent whether the mortgagor likes it or not. And, as a matter of contract between the mortgagor and the debenture holder, the mortgagor will have to pay the receiver's fees. Further, the mortgagor cannot dismiss the receiver since that power is reserved to the debenture holder as another of the contractual terms of the loan. It is to be noted also that the mortgagor cannot instruct the receiver how to act in the conduct of the receivership. All this is far removed from the ordinary principal and agent situation so far as the mortgagor and receiver are concerned. Whilst the receiver is the agent of the mortgagor he is the appointee of the debenture holder and, in practical terms, has a close association with him. Moreover he owes fiduciary duties to the debenture holder who has a right, as against the receiver, to be put in the possession of all the information concerning the receivership available to the receiver: see In re Magadi Soda Co Ltd (1925) 41 TLR 297." 1. In Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295; [1993] 2 WLR 86, the Privy Council held (at 298) that a receiver's primary function is to take control of the company's property for the purpose of repaying the debt owed to the appointing debenture holder, and the receiver "does not have to consider the interests of the company which he is managing except in the way recognised by section 345B of the Companies Act 1955" (upon which s 420A of the Corporations Act 2001 (Cth) was modelled). The Privy Council continued (at 299): "A receiver appointed out of court will invariably be appointed as agent for the company, and he takes possession of the company's assets in that capacity. … The receiver owes duties to the company of a modified agency nature. In addition he owes duties to the appointing debenture holder of a contractual nature arising out of his contract of appointment and of a fiduciary nature because the debenture holder has a crystallised charge over the company's assets." 1. In State Bank of NSW v Kit Cheng Chia and Peng Tin Chia; Peng Tin Chia v Kenneth John Rennie and Anor (2000) 50 NSWLR 587; [2000] NSWSC 552, Einstein J again focussed on the nature of the tripartite relationship between the company, the receiver and the appointor, and the historical development and purpose of the receivership. His Honour observed (at [868]) that a receiver is "not appointed for the benefit of the company but for the purpose of realising the security held by the appointer". The purpose and effect of rendering the receiver as the agent of the mortgagor is to relieve the mortgagee from the liabilities which the law casts upon a mortgagee going into possession and to place upon the mortgagor the liability for the acts and defaults of the receiver (ibid). 2. Einstein J acknowledged that to make the receiver the agent of the company is something of a contrivance, but observed that it is a contrivance which has the effect of removing a receiver appointed out of court from those classes of persons who may be said to be fiduciaries (at [869]). That is, although the receiver is the agent of the company, the receiver is not, when regard is had to the nature of the agency, a fiduciary of the company: "As Professor Finn explained in his work Fiduciary Obligations (1977, p12), there are no reasons for the imposition of fiduciary obligations where, although one party agrees to act for or on behalf of another, the other party is able to control what powers are exercised for or on his or her behalf or able to control the manner of its exercise. Because the receiver is made the agent of the mortgagee, 'the receiver-mortgagor relationship becomes one founded upon agreement and escapes the imposition of general fiduciary obligations' (see p13). Accordingly, it is said in Meagher, Gummow and Lehane, Equity: Doctrines and Remedies (3rd edition, para 2845) that the receiver appointed out of court is the only genuinely non-fiduciary agency: see also Ostrander v Niagara Helicopters Ltd (supra, at 167)." 1. However, the position as between the receiver and appointor is different. Einstein J noted (at [881]) that whereas the company has no power to direct the receiver in the performance of the receiver's task, "there is no doubt that the law allows, and even requires, interaction between a receiver and his or her appointors". His Honour stated that the receiver "occupies a fiduciary relationship with his or her appointors", citing Magadi Soda and Gomba Holdings. 2. These observations were repeated, with approval, in South Johnstone Mill Ltd v Dennis and Scales [2007] FCA 1448 at [109]-[110] per Middleton J; Bank of Western Australia Ltd v Abdul & Anor [2012] VSC 222 at [35]-[40] per Croft J; and Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868 at [725] per Robb J. In the latter case, Robb J, having reviewed those authorities, said (at [726]): "The receiver is not generally a fiduciary of the mortgagor, although the receiver may be so in relation to any surplus held after repayment of the mortgage debt. The receiver is a fiduciary of the mortgagee." 3. In resisting the proposition that he owed fiduciary duties to TCBS, Mr Albarran contended that a fiduciary relationship arises where there exists a duty of undivided loyalty (Breen v Williams at 108), and that receivers appointed pursuant to the terms of a corporate charge, such as TCBS, do not hold a position of undivided loyalty, since they owe duties not only to the appointor, but also owe statutory, legal and equitable duties to the companies over whose assets they are appointed, both as agents of those companies and as officers. While it may be accepted that a receiver owes duties to the mortgagor company (see State Bank v Chia at [870]), it does not follow that there is 'divided' loyalty, so as to negate the existence of any fiduciary duty to the appointor. In Re B Johnson & Co (Builders) Ltd [1955] Ch 634, Evershed MR (at 646) observed that: "…a receiver and manager appointed by debenture holders is appointed not with any duties to carry on the business of the company, in the best interests of the company, but in order to realise, for the debenture holders or mortgagees, the security which they have got; and only for that limited purpose is he given powers of management." 1. As was observed in Gomba Holdings (at 1234), the receiver "in practical terms, has a close association with" the appointor, and the appointment of the receiver as agent of the company is a device adopted in order to advance and protect the interests of the appointor. The appointment is made irrespective of the wishes of the company; the company cannot dismiss the receiver or direct the conduct of the receivership; and the receiver owes no fiduciary duties to the company. Instead, although nominally the agent of the company, the primary duty of the receiver is to realise the assets in the interests of the debenture holder (Just Juice at 336). As Evershed MR remarked in Re B Johnson (at 644): "It is quite plain that a person appointed as receiver and manager is concerned, not for the benefit of the company but for the benefit of the mortgagee bank, to realise the security; that is the whole purpose of his appointment". 2. In Rottenberg v Monjack [1993] BCLC 374 at 379, Roger Cooke J identified the principle arising from Re B Johnson as being that: "in general a receiver is not somebody whom the court can control at the instance of the company or whose duty is to act for the company's benefit. He owes that duty to the mortgagee." His Honour expressed the view (at 377-378) that, having regard to "the purpose for which the receiver is appointed and the job they are called on to do", their duty "must be to the secured creditor": "They cannot be put in the position, negligence and dishonesty apart, of having to weigh discretions between the secured creditor and the debtor. If they behave efficiently and honestly, the secured creditor must come first." 3. Having regard to those authorities, I do not consider that the receiver is in a position of divided loyalty, where the interests of the appointor must be balanced against those of the company. The receiver's role and responsibility is to act in the best interests of the appointor. 4. In Hospital Products v United States Surgical Corp at 96-97, Mason J, after referring to the well recognised fiduciary relationships of trustee and beneficiary, agent and principal, solicitor and client, director and company, and partners, observed that the critical feature of those relationships was the undertaking or agreement by the fiduciary to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect, in a legal or practical sense, the interests of that other person. This statement has been subsequently endorsed on many occasions, including in the joint judgment in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [87] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ). 5. In Hospital Products, Mason J added (at 97): "The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position … It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed." 1. In Pilmer v Duke Group, the majority quoted with approval (at 196) this passage from Mason J's judgment, and referred also to the observation of McLachlin J in Norberg v Wynrib [1992] 2 SCR 226 at 272 that: "The essence of a fiduciary relationship … is that one party exercises power on behalf of another and pledges himself or herself to act in the best interests of the other". A similar statement was made by Gummow J in Breen v Williams at 137: "Fiduciary obligations arise (albeit perhaps not exclusively) in various situations where it may be seen that one person is under an obligation to act in the interests of another". 2. In Jaken Properties Australia Pty Ltd v Naaman [2023] NSWCA 214 at [8], Bell CJ set out the following propositions which go to the question of when a fiduciary duty or obligation will be recognised or imposed: * "the categories of fiduciary duty are not closed: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96; [1984] HCA 64 (Hospital Products); * various relationships have been recognised as giving rise to fiduciary duties including trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company and partners: Hospital Products at 96; Breen at 92, 107. As Professor Finn observed, these are sometimes described as relationships which are 'fiduciary per se': PD Finn, 'The Fiduciary Principle' in TG Youdan, Equity, Fiduciaries and Trusts (Carswell, 1989) at 32 (Finn); * other relationships may not give rise to fiduciary obligations in any general sense but aspects of a particular relationship may do so. Thus, a person may stand in a fiduciary relationship to another for one purpose but not for others: Hospital Products at 98; Breen at 108. See also Bofinger v Kingsway Group Limited (2009) 239 CLR 269; [2009] HCA 44 (Bofinger) where a mortgagee who sold the mortgaged property was held to become subject to a fiduciary obligation to those entitled to surplus proceeds after its debt was paid; * as such, it has been said that the finding that a legal relationship in itself is not fiduciary in whole or in part by no means concludes the fiduciary question: Finn at 40. * attention should be paid to the subject matter over which it is contended that fiduciary obligations extend: Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 409; [1929] HCA 24. * various circumstances may point to the existence of a fiduciary duty or obligation without being determinative of the issue. McHugh and Gaudron JJ identified some such circumstances in Breen at 107 as including: ○ the existence of a relation of confidence: Hospital Products at 69; ○ inequality of bargaining power: Hospital Products at 69-70; ○ an undertaking by one party to perform a task or fulfil a duty in the interests of another party: Hospital Products at 96-97; Reading v The King [1949] 2 KB 232 at 236; ○ the scope for one party to unilaterally exercise a discretion or power which may affect the rights or interests of another: Frame v Smith [1987] 2 SCR 99; (1987) 42 DLR (4th) 81 cited in LAC Minerals v International Corona Resources [1989] 2 SCR 574; (1989) 61 DLR (4th) 14 at 62-63; and ○ a dependency or vulnerability on the part of one party that causes that party to rely on another: Johnson v Buttress (1936) 56 CLR 113 at 134-135; [1936] HCA 41 (Johnson)." 1. Although his Honour was in dissent in Jaken on the issue whether fiduciary duties were owed in the circumstances of that case, the other members of the Court (Leeming and Kirk JJA) did not disagree with the statement of principles set out above. Bell CJ referred also (at [12]) to the observations of the late Professor Finn that the concern of fiduciary law is to "impose standards of acceptable conduct on one party to a relationship for the benefit of the other, where the one has a responsibility for the preservation of the other's interests"; and quoted with approval (at [13]) Professor Finn's conception of what must be shown for a relationship to be characterized as giving rise to a fiduciary obligation: "the actual circumstances of a relationship are such that one party is entitled to expect that the other will act in his interests in and for the purposes of the relationship. Ascendancy, influence, vulnerability, trust, confidence or dependence doubtless will be of importance in making this out, but they will be important only to the extent that they evidence a relationship suggesting that entitlement." 1. Professor Finn has described the hallmark of a fiduciary relationship as one "in which one party has in fact relaxed, or is justified in believing he can relax, his self-interested vigilance or independent judgment because, in the circumstances of the relationship, he reasonably believes or is entitled to assume that the other is acting or will act in his (or in their joint) interests": P Finn, "Contract and the Fiduciary Principle" [1989] UNSWLJ 76, 94. 2. The relationship of appointor and receiver is a relationship of the type described in the passages quoted above as giving rise to fiduciary obligations. The receiver is appointed to a role that provides the receiver with powers and discretions, the exercise of which will necessarily affect the appointor's interests. By accepting the role, the receiver assumes a responsibility to act for the benefit of, and in the best interests of, the appointor in exercising those powers and discretions. That is the whole purpose of the appointment. The receiver therefore has the opportunity to exercise those powers or discretions to the detriment of the appointor, who is accordingly vulnerable to abuse by the fiduciary of his position. 3. Having regard to the history and purpose of the development of the role of a privately appointed receiver, the nature of the tripartite relationship between the receiver, appointor and company, and the responsibilities of the office of receiver, I consider that the receiver is in a fiduciary relationship with the appointor. 4. For those reasons, Mr Albarran was in a fiduciary relationship with TCBS when acting as receiver and manager of each of BACF and BACM. 5. Some of the cases referred to above have suggested that one aspect of the fiduciary relationship between the receiver and the appointor is "the duty of the receiver to keep his or her appointors informed about the progress of the receivership" (State Bank v Chia at [881] per Einstein J, citing Magadi Soda and Gomba Holdings). 6. The High Court has emphasised in a number of decisions that fiduciary obligations are proscriptive rather than prescriptive in nature: Breen v Williams at 93-94 (Dawson and Toohey JJ), 113 (Gaudron and McHugh JJ); Pilmer v Duke Group Limited at [74] (McHugh, Gummow, Hayne and Callinan JJ); Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 at [84] (French CJ, Gummow, Hayne and Bell JJ); and Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 at [31]-[32] (French CJ and Keane J); at [56] (Hayne and Crennan JJ). 7. Those authorities are at odds with the proposition that the receiver, as a fiduciary of the appointor, owes any prescriptive duty to keep the appointor informed about the progress of the receivership. Instead, the duty that a receiver owes to the appointor is, as with any other fiduciary, a duty of "absolute and disinterested loyalty", which "embodies two themes: the 'conflict rule' and the 'profit rule'": Atanaskovic Hartnell v Birketu at [43] per Gleeson JA (Basten and McCallum JJA agreeing); Hospital Products v United States Surgical Corp at 104 per Mason J. D. BREACH OF FIDUCIARY DUTIES 1. Although the pleading is wide-ranging, the Plaintiffs, in closing submissions, contended that each of Mr Brown and Mr Albarran dishonestly breached his fiduciary duties to TCBS: 1. by continuing to act in circumstances where, at least by 14 September 2006 (after the Given Form issue was raised), each was in a position of conflict between their duties to TCBS and their personal interests and/or duties to the other; and 2. by pursuing a benefit for each of them, by inserting the Given Form release into the draft settlement deed that was circulated on the evening of 18 September 2006. Continuing to act after Given Form issue raised 1. The Plaintiffs submitted that TCBS's interests were to enforce its charges against BACM and BACF, and either to succeed in its litigation against the Liquidator or to obtain a settlement of its claims. So much may be accepted. 2. The Plaintiffs contended that, from at least 14 September 2006, each of Mr Brown and Mr Albarran knew that the Liquidator had "a pressure point capable of influencing them" and had raised that pressure point in the litigation. The Plaintiffs submitted that, from this time, it was in the interests of Mr Brown and Mr Albarran to use their position in dealing with the Liquidator in the 2006 Proceedings to resolve the claims against them in relation to Given Form. The conflict that arose was described as a conflict between their duty to TCBS to obtain the best possible outcome in the 2006 Proceedings, regardless of the impact on their personal exposure to claims in respect of Given Form; and their interest in achieving an outcome with the Liquidator whereby their position in respect of Given Form was protected. In those circumstances, each was said to be in a position of actual conflict, or in a position of potential conflict, being a real or substantial possibility of conflict; and each breached his fiduciary duties by continuing to act for TCBS after the Given Form issue was raised. 3. In response, the Receivers submitted that there has never been any sensible explanation given by the Plaintiffs as to how Mr Albarran would have ever thought himself and Mr McDonald to be at risk of any claim in respect of the payments made by them as Deed Administrators of Given Form to Etienne Lawyers, given that the direction pursuant to which those payments were made was not, and was not said to be, invalid. 4. The position was different for Mr Brown, given that there had been a suggestion that the payment which had been made to Etienne Lawyers may be recoverable. However, Mr Brown submitted that Mr Salmon was already aware of the facts relating to the payment (by reason of those matters having been disclosed to him when he was General Manager of the BA Group), and that Mr Brown's email of 13 September 2006 set out the issues that had been raised in relation to Given Form by the Liquidator's team. In those circumstances, Mr Brown argued that Mr Salmon was fully apprised of the Given Form issue and the manner in which it had arisen and gave his express consent for Mr Brown to continue to act. Similarly, the Receivers submitted that, in the event that they were (contrary to the arguments outlined above) in a position of conflict when the Given Form issue was raised, TCBS gave informed consent to their continuing to act. Continuing to Act – Mr Albarran 1. Based on the findings I have made in Section B above, I accept the Receivers' position that, as at 14 September 2006, there was no reason for Mr Albarran to believe that there was any material risk of a claim against him and Mr McDonald in respect of their conduct as Deed Administrators of Given Form. 2. In particular, I have found that: 1. the only written communication from the Liquidator to Mr Albarran or Mr McDonald regarding Given Form was a letter of October 2005 in which the Liquidator sought repayment of a loan from Given Form. This letter was sent at a time when the Deed Administrators of Given Form had already declared and paid a dividend in favour of the BA companies from the Deed Fund, in return for which the BA companies released Given Form from claims in respect of the debt. There was no mention in this letter of any payment to Etienne Lawyers, let alone any issue raised in respect of any such payment or the direction pursuant to which it was made. There was no follow up communication from the Liquidator to the Deed Administrators regarding the matters in this letter; 2. in a telephone conversation with Mr Albarran on 13 September 2006, Mr Nikolaidis raised the payment made to Mr Brown, suggesting that Mr Albarran "should get another firm". That is, the issue was said to create a problem for Mr Brown, not for Mr Albarran. There is no evidence that Mr Nikolaidis indicated that there was any basis to challenge the conduct of the Deed Administrators in making the payment, or that Mr Albarran had a difficulty in continuing to act. Further, Mr Brown's email of 13 September records that Mr Albarran's state of mind was that "he had not done anything wrong only … paid [Etienne Lawyers] … pursuant to a written direction to pay"; and 3. the other conversations regarding Given Form reported in Mr Brown's email of 13 September 2006, being the conversations between Mr Byrnes and Mr Brown, and between the Liquidator and Mr Myers, likewise focussed upon the position of Mr Brown, and did not contain any suggestion of a claim against Mr Albarran or Mr McDonald, or that the Receivers had any difficulty in continuing to act. 1. The allegation that Mr Albarran was in a position of actual conflict, or in a position where there was a real or substantial possibility of conflict, is premised on the allegation that he and Mr McDonald were "persons actually or potentially liable at the suit of Mr Wily as liquidator of Bondedge" (FFASC, paragraph 45I). 2. As the Court of Appeal observed in Beach Petroleum v Kennedy at [425]: "In a situation of alleged conflict of duty and duty, there must be 'a real sensible possibility of conflict'. It is not enough to identify 'some conceivable possibility' which may result in a conflict. (Boardman v Phipps at 124 per Lord Upjohn, frequently cited with approval, eg by the Privy Council in Queensland Mines Ltd v Hudson (1978) 52 ALJR 399 at 400G and in Hospital Products Ltd at 103 per Mason J)." 1. There is no documentary evidence that Mr Wily in his capacity as liquidator of Bondedge (or for that matter in any other capacity) foreshadowed a claim against the Deed Administrators of Given Form for the recovery of moneys from them personally, or identified to Mr Albarran any basis on which the Liquidator considered there might be such a claim against them, or identified to Mr Albarran any matter that might give rise to a real possibility of a claim in respect of his and Mr McDonald's performance of their functions as Deed Administrators of Given Form. As a result, I find that Mr Albarran had no reason to believe that he and Mr McDonald were "persons actually or potentially liable at the suit of Mr Wily as liquidator of Bondedge" (as pleaded in FFASC, paragraph 45I), or that he was in a position of actual conflict, or a position where there was a real or substantial possibility of conflict. Continuing to Act – Mr Brown 1. Mr Brown is in a different position, since the payments that were at issue were payments made to Etienne Lawyers, and were alleged to be preferential payments. The implication of the statements made by Mr Byrnes to Mr Brown, by Mr Nikolaidis to Mr Albarran, and by Mr Wily to Mr Myers was that the Given Form issue raised a problem for Mr Brown, and in particular, for his ability to continue to act for TCBS in the 2006 Proceedings. He was in a position where there was a real or substantial possibility of conflict between his duty to act in the best interests of TCBS in his dealings with the Liquidator, and his personal interest in protecting and improving his own position in those dealings, so far as the Given Form issue was concerned. 2. This raises the issue whether, as Mr Brown contended, there was fully informed consent by TCBS to his continuing to act after the Given Form issue was raised. 3. Informed consent is a defence. There is no duty on a fiduciary to obtain informed consent, but rather the existence of informed consent will go to negate what was otherwise a breach of duty: Atanaskovic Hartnell v Birketu at [46]. 4. The Plaintiffs contended that any defence of fully informed consent needed to be, and was not, pleaded by the Defendants. However, in raising this point, the Plaintiffs ignored that they themselves had pleaded that Mr Albarran and Mr Brown failed to obtain informed consent, and thereby put this matter in issue. In particular, in respect of Mr Brown continuing to act after the Given Form issue was raised, the Plaintiffs pleaded that at no time did Mr Brown disclose his conflict to TCBS, "or explain the nature and basis of the conflict and/or seek to obtain TCBS's fully informed consent to him continuing to act [in the 2006 Proceedings], but continued to act in the matter knowing of the conflict and knowing that he had not done so" (FFASC, paragraph 45M(ak)). A similar pleading was made in respect of Mr Albarran (FFASC, paragraph 45OC(ak)). Further, as regards the inclusion of the Given Form release in the draft deed (discussed below), the Plaintiffs pleaded that: "Neither the first defendant nor the third defendant obtained the informed consent of TCBS for the inclusion of the Given Form release in the proposed Deed of Settlement" (FFASC, paragraph 52). Each of those allegations was denied by the Defendants. 5. The Defendants made clear in their opening submissions that they were raising an issue of informed consent, in respect of both their continuing to act after the Given Form issue was raised and the inclusion of the Given Form release in the settlement deed. Further, the Defendants' contention that informed consent was provided was based on documentary material (in particular, the emails of 13, 14 and 18 September 2006), which has always been a focus of these proceedings, and has been addressed by Mr Salmon in his affidavit evidence. The hearing was conducted on the basis that the issue of fully informed consent had been raised, with cross-examination of Mr Salmon proceeding, without objection, on the issues concerning the extent of his knowledge of the Given Form issue and whether, with that knowledge, he consented to the Defendants continuing to act. In those circumstances, I do not consider there is any substance to the pleading point. 6. It is for the fiduciary to prove informed consent. The consent must be "fully informed", and what is required is a question of fact in all the circumstances of each case: Atanaskovic Hartnell v Birketu at [47]-[48]. In Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 at 170, Street CJ said that there must be "a conscientious disclosure of all material circumstances, and everything known to [the solicitor] relating to the proposed transaction which might influence the conduct of the client or anybody from whom he might seek advice". 7. The plurality of the High Court observed, in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [107] that consent can be established "at different times and in different ways", and what is required will depend on the sophistication and intelligence of the persons to whom disclosure was made. Fully informed consent would require, at least, that the client has been provided with full disclosure of the facts and of "all material circumstances, including the character of the transactions and the nature of the relevant conflict": Mudgee Dolomite & Lime Pty Limited v Robert Francis Murdoch; In the matter of Mudgee Dolomite & Lime Pty Limited [2020] NSWSC 1510 at [141] per Black J, citing Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [381] and Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476 at [119]-[120]. 8. In terms of the disclosure provided by Mr Brown to TCBS of the Given Form issue, I have found that: 1. Mr Brown disclosed in his 13 September 2006 email the background facts concerning the payment made to Etienne Lawyers by the Deed Administrators of Given Form. In any case, Mr Salmon was likely already aware of those matters as he was General Manager of the BA Group at the time that the relevant BA Companies had entered into the DOCA with Given Form and had executed the assignments in favour of Etienne Lawyers, and Mr Salmon was sent by Mr Lazar an email which explained the arrangement that had been made; 2. Mr Brown disclosed the matters which had been raised with him by Mr Byrnes, not only in the email of 13 September 2006, but also in conversations which he had earlier that day with each of Mr O'Sullivan and Mr Myers (as referred to in Mr Brown's email); 3. Mr Brown disclosed the content of the conversation between Mr Nikolaidis and Mr Albarran concerning the implications for the position of Etienne Lawyers, including Mr Nikolaidis' suggestion that it was not in the Receivers' interests for Mr Brown to continue to act in the 2006 Proceedings; 4. Mr Brown disclosed the content of the conversation between Mr Wily and Mr Myers, including the Liquidator's suggestion that it would not be in TCBS's interests for Mr Brown to continue to act for TCBS; and 5. Mr Brown disclosed all of those matters to each of his clients in the 2006 Proceedings (namely, Mr Albarran, and Mr Myers and Mr Salmon of TCBS), as well as to counsel acting for his clients, and specifically sought the advice of counsel on the matters he had raised. 1. In circumstances where those matters were disclosed to TCBS, I have found that Mr Salmon, by his email of 14 September 2006 in response to Mr Brown, gave his consent to Mr Brown continuing to act for TCBS in the 2006 Proceedings. In addition, I have found it likely that: 1. Mr Myers (who sent a number of emails to Mr Brown the following day, which have been lost) also gave his consent to Mr Brown continuing to act, or at least did not express any view contrary to that of Mr Salmon on this issue; and 2. Mr O'Sullivan either formed the view that there was no problem with Mr Brown continuing to act in the 2006 Proceedings, or that informed consent had been given for Mr Brown continuing to act, since he proceeded to appear for TCBS in the 2006 Proceedings, instructed by Mr Brown. 1. By reason of those matters, TCBS gave its fully informed consent to Mr Brown continuing to act in the 2006 Proceedings after the Given Form issue was raised. 2. Further, having regard to those matters, if I had concluded that the Receivers were in a position of actual or potential conflict, by reason of the Given Form issue having been raised, I would have found that TCBS also gave informed consent to the Receivers continuing to act. 3. It follows that the claim for breach of fiduciary duty against Mr Brown and Mr Albarran, based on each continuing to act after the Given Form issue was raised, is rejected. 4. Even if (contrary to my findings) either Mr Brown or Mr Albarran had breached his fiduciary duties by continuing to act after the Given Form issue was raised, I reject the allegation that any such breach was dishonest. 5. Mr Brown did not seek to hide or ignore the allegations in relation to Given Form which Mr Byrnes raised with him in a private conversation outside Court. Instead, he immediately reported the substance of that conversation to Mr Myers of TCBS and to counsel for TCBS. He then set out, in his 13 September email, the allegations that had been made by Mr Byrnes, together with the statements made by Mr Nikolaidis to Mr Albarran, and by Mr Wily to Mr Myers, that these matters raised a problem for Mr Brown continuing to act. 6. Similarly, Mr Albarran did not hide or ignore the matters raised with him by Mr Nikolaidis in relation to Given Form, but immediately reported them to Mr Brown, and Mr Albarran was aware that those matters were then reported to TCBS and counsel for TCBS (via the 13 September email). 7. In addition, Mr Albarran was aware that Mr Brown had formed the view, as conveyed by his 13 September email, that none of the allegations recorded in that email raised an issue for his continuing to act in the 2006 Proceedings, or for the Receivers continuing to act for TCBS; and that Mr Brown sought, in relation to those matters, the advice of the counsel who acted for both the Receivers and TCBS. 8. Further, each of Mr Brown and Mr Albarran was aware that Mr Salmon responded that Mr Brown should continue aggressively to pursue the 2006 Proceedings on TCBS's behalf, notwithstanding the issues that had been raised; and it is likely each knew that Mr Myers and counsel likewise either agreed that Mr Brown should continue to act, or did not express any view to the contrary. 9. The finding of a lack of any dishonesty provides an independent basis for these claims of breach of duty to be dismissed. The Plaintiffs accepted that any claim for breach of fiduciary duty, which did not involve a dishonest breach of duty, was statute barred, pursuant to section 23 of the Limitation Act 1969 (NSW). Insertion of Given Form release into draft deed 1. The Plaintiffs contended that, by Mr Brown inserting the Given Form release into the draft settlement deed with Mr Albarran's agreement, each was seeking to obtain a release of any personal liability he or the other had in respect of a matter unrelated to the 2006 Proceedings; and each was thereby placed in a position of actual conflict, and was pursuing a benefit for himself, or a benefit for the other, from his fiduciary position in breach of his fiduciary duties. Further, each was acting dishonestly, in that each knew that he (or the other) was not entitled to this benefit; and no honest solicitor or receiver would have used their fiduciary position to obtain such a personal benefit in this way. 2. The Receivers submitted that there did not exist a real and sensible possibility of conflict for Mr Albarran arising in respect of Given Form; that Mr Albarran did not instruct Mr Brown to insert the Given Form release, but instead accepted Mr Brown's advice that it would be prudent for TCBS to include the Given Form release because of the potential for the Liquidator to drag out the liquidation of the BA companies and delay payment to TCBS; and that Mr Albarran was aware that instructions were being sought on the draft deed. 3. Mr Brown submitted that Mr Salmon had given express consent for him to continue to act after the Given Form issue was raised and, given the obstructive and difficult positions taken by Mr Wily in the 2006 Proceedings, the inclusion of the Given Form release was in the interests of TCBS, if agreed. Given Form release – Mr Brown 1. I have found that Mr Brown was, at least in part, acting to pursue a benefit for himself in inserting the Given Form release into the draft settlement deed. He cannot rely on Mr Salmon's consent to his continuing to act in the 2006 Proceedings, as consent to his pursuing this benefit. Mr Brown did not seek the prior consent of TCBS before proffering the draft deed, with this release, to the Liquidator. In those circumstances, I find that he was in breach of his fiduciary duties by putting forward that proposal to the Liquidator. 2. The issue then arises whether such breach was dishonest. The requisite element of dishonesty and fraud on the part of the fiduciary is met "where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour": Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1, [2018] HCA 43 at [71] per Gageler J, citing Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [124]. It is not necessary to demonstrate that the person thought about what those standards were: Hasler v Singtel Optus at [124] per Leeming JA (Barrett and Gleeson JJA agreeing). 3. Although Mr Brown did not seek prior consent from TCBS before inserting the Given Form release into the draft deed, he did seek prior consent from Mr Albarran. That is, he sought specific instructions in advance of including the release from a receiver appointed by TCBS, who was conducting the litigation on TCBS's behalf, and was required to act in TCBS's best interests. Mr Brown explained to Mr Albarran why he considered the clause to be in TCBS's interests, referring to the potential for the issues raised by the Liquidator in relation to Given Form to delay the distribution of moneys in the liquidation of the BA companies. 4. I have found that Mr Brown was, at least in part, motivated by that concern in proposing the Given Form release, and that he believed the inclusion of the release to be in TCBS's interests (though it was also in his own interests). The Plaintiffs disputed that this concern formed any part of the thinking behind the inclusion of the Given Form release, contending that Mr Brown and Mr Albarran had "already dealt with the issue of potential delay in clause 3.1.2 and 3.1.3, whereby Mr Wily was bound to assign $1.3m from the proceeds of the Federal Court litigation, was required to agree to no set-off, and was required to agree to secure the payment by means of a charge on the chose in action in the Federal Court proceedings". However, the Liquidator was not "bound" to any of those matters. These were proposals in a draft deed on the evening of 18 September 2006. There is no evidence that any of those particular proposals had been discussed with the Liquidator before the draft was sent, let alone that they were likely to be acceptable to him. Further, given the changes made by the 19 September draft deed, it is likely that the proposal for an assignment by the Liquidator was rejected and, from Mr Nikolaidis' rejection of the 19 September draft deed, it may be that the other proposed arrangements were likewise unacceptable as far as the Liquidator was concerned. In circumstances where there was no agreement on how the settlement would be implemented, or when the moneys would be paid to TCBS, or on priority of payment, and where the Given Form issue had been raised by the Liquidator and his representatives as a means of putting pressure on TCBS in the 2006 Proceedings, there was a rational reason to conclude that a release in respect of the Given Form issue might assist in reducing the risk of any further dispute and delay in the payment of the settlement moneys to TCBS. That is, there was reason for Mr Brown to adopt what he described as a "belts and braces approach" in the negotiations seeking to "put the best possible deed we could to protect everyone's interests and ensure that the money could be released as soon as possible". 5. As well as seeking Mr Albarran's agreement to the inclusion of the Given Form release in the draft deed, Mr Brown sought instructions on the draft deed that included the release. On the evening of 18 September, Mr Brown sent the draft deed to each of Mr Salmon, Mr Myers, Mr Albarran and Mr O'Sullivan, specifically asking them to "review the attached document", and indicating that he was seeking "their instructions". The deed was a short document and Mr Brown would have expected, particularly given the terms of his email, that each of his clients, as well as counsel for his clients, would review the document carefully. As indicated by Mr Brown's covering email of 18 September, he was aware that the deed could not be put forward as a document capable of being accepted by the Liquidator unless and until his clients, following their review (and any advice from their counsel), gave instructions approving the deed in that form. 6. In addition, those instructions were sought in circumstances where, just a few days earlier, Mr Brown had informed his clients and counsel of the issues that had been raised in respect of the Given Form payment to Etienne Lawyers, and that the Liquidator was using those issues in an attempt to gain a forensic advantage against TCBS in the 2006 Proceedings. Mr Brown would have expected that his clients and counsel would understand that the Given Form release was being proposed in response to those issues having been raised on 13 September. 7. Given those matters, I am not satisfied that the Plaintiffs have established that Mr Brown dishonestly breached his fiduciary duties by inserting the Given Form release into the draft deed that was provided, by his 18 September email, to both the Liquidator's solicitor for review and to his own clients for instructions. It follows that any claim in respect of this breach is statute-barred. Given Form release – Mr Albarran 1. I have found that Mr Albarran was not acting to pursue a benefit for himself and Mr McDonald, or a benefit for Mr Brown, in accepting Mr Brown's advice that it was in TCBS's interests for the Given Form release to be inserted into the draft settlement deed. It follows that the claim that he breached his fiduciary duties by so doing must be rejected. 2. Even if I had found that Mr Albarran did breach his fiduciary duties by agreeing to the insertion of the Given Form release, I would not have found any such breach to be dishonest, particularly having regard to the following matters: 1. Mr Albarran had been advised by his solicitor, Mr Brown, that the inclusion of the clause was in TCBS's interests, and it was not suggested to Mr Albarran that he ought to have rejected that advice or that he knew or ought to have known that it was not soundly based; and 2. Mr Albarran was informed, by Mr Brown's email of 18 September 2006, that the draft deed was being sent to each of Mr Salmon and Mr Myers of TCBS for their review and instructions, as well as to counsel for TCBS. In those circumstances, it is likely that Mr Albarran expected that each of those persons would review the draft deed, including the proposed Given Form release; and that the deed, including that release, would not be put forward as capable of acceptance by the Liquidator unless and until TCBS confirmed their instructions, and counsel confirmed that there was no issue with the draft. 1. Insofar as the Plaintiffs based any claim for breach of fiduciary duty on Mr Brown and Mr Albarran having allegedly insisted that the Given Form release be retained in the deed, after Mr Nikolaidis had indicated that it was unacceptable, I have found that no such conduct occurred. Instead, instructions were promptly given by Mr Albarran to remove the clause as soon as opposition was expressed to its inclusion (see paragraphs 199-212 above). E. KNOWING ASSISTANCE 1. The Plaintiffs have brought a claim against each of Mr Brown and Mr Albarran under the second limb of Barnes v Addy (1874) LR 9 Ch 9. 2. In order to succeed in this claim, the Plaintiffs must establish that Mr Brown assisted Mr Albarran (or Mr Albarran assisted Mr Brown) with knowledge of a dishonest and fraudulent design on the part of the other: Farah Constructions Pty Ltd v Say-Dee Pty Ltd at [160] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. A dishonest and fraudulent design includes a dishonest and fraudulent breach of fiduciary duty: Farah Constructions v Say-Dee at [179]. 3. Nothing falling short of dishonest conduct is sufficient to engage the second limb of Barnes v Addy: Hasler v Singtel Optus Pty Ltd at [9] per Gleeson JA; at [125] per Leeming JA. 4. An accessory has sufficient knowledge for the purposes of the second limb of Barnes v Addy if he or she has knowledge of facts and circumstances which would indicate the fact of the dishonesty on the part of the fiduciary to an honest and reasonable person: Ancient Order of Foresters v Lifeplan at [71] per Gageler J, citing Farah Constructions v Say-Dee at [174]-[177]. 5. Having regard to the findings I have made, these claims may be dealt with briefly. I have found that Mr Albarran did not breach, let alone dishonestly breach, any fiduciary duty. It follows that Mr Brown cannot be liable for having knowingly assisted in any such breach. 6. While I have determined that Mr Brown breached his fiduciary duties by including the Given Form release in the draft deed that he sent to Mr Nikolaidis on the evening of 18 September 2006, I have found that he did not act dishonestly in doing so. Further, by reason of the findings I have made in Section B above, even if dishonesty on the part of Mr Brown had been established, Mr Albarran did not have knowledge of facts and circumstances which would indicate to an honest and reasonable person that Mr Brown was acting dishonestly in advising that the Given Form release should be included in that deed. 7. The claims for knowing assistance against Mr Brown and Mr Albarran are therefore rejected. F. CLAIMS FOR BREACH OF DEED Is TCBS's claim founded on a deed? 1. It was common ground that the Receivers were appointed by TCBS in respect of each of BACM and BACF pursuant to the written "Appointment" instruments that I have described in paragraphs 97-99 above. However, there was a dispute as to whether each of those "Appointment" instruments was a deed. 2. This issue was important for the application of limitation periods. These proceedings were commenced more than ten years after the alleged breach by the Receivers of their duties under their Appointment instruments. Any claim for breach of contract had a limitation period of six years, and was therefore statute-barred when the proceedings commenced. In contrast, any claim founded on a deed had a limitation period of twelve years. (There was a separate issue, which is addressed below, regarding the amendments by which the claims based on a "deed" were first raised, and whether those amendments could be, or should be, allowed.) Was each of the Appointment instruments a deed? 1. The Plaintiffs contended that each of the "Appointment" instruments was a deed because: 1. Mr Albarran and Mr McDonald referred to these documents as "deeds" in their respective affidavits; 2. each was an important document, by which significant powers were bestowed upon the Receivers, and both the appointor and Receivers would be expected to intend that there be no question as to each document's efficacy; 3. each document was described as "signed, sealed and delivered" by the parties thereto, and was executed in accordance with the requirements of s 38 of the Conveyancing Act 1919 (NSW); and 4. the set of documents relating to each of the Receivers' two appointments (comprising, for each appointment, an Appointment instrument and a corresponding Deed of Indemnity) should be read together as a single deed in relation to BACM and a single deed in relation to BACF. 1. The question whether a document such as the "Appointment" instrument is intended to take effect as a deed is to be decided principally by reference to the contents of the instrument under consideration: 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 245 at [30]-[32] per Muir JA (Fraser JA and Mullins J agreeing). 2. In that regard, I accept that the phrase "signed, sealed and delivered" is language traditionally employed when an instrument is executed as a deed: 400 George Street v BG International at [33]. While this is a relevant matter, the weight to be attributed to such a matter "needs to be assessed by reference to all other indicia in the document, applying conventional canons of contractual construction, and having regard to the question of delivery": 400 George Street v BG International at [29]. 3. Because the Appointment instruments are "expressed … to be sealed" by each of the Receivers, and are signed by each of Receivers and attested by a witness, they are deemed to be sealed: Conveyancing Act 1919 (NSW), s 38(1), (3). But the fact that each instrument is "sealed" does not mean that each was intended to take effect as a deed. In Comptroller of Stamps v Associated Broadcasting Services Ltd [1990] VR 335, Tadgell J considered whether a supplemental loan agreement, which was executed under the common seal of each of the parties, but was not expressed to have been made as a deed, was a deed or an agreement under hand. His Honour, who found it was not a deed, commented (at 341): "A corporation ought not to have a deed attributed to it merely because it executes an agreement under its common seal. The better view appears to be that even a contractual document made under seal is not properly to be regarded as a deed unless the seal has been affixed with the intention that the instrument should operate as a deed: Elphinstone, Introduction to Conveyancing, 7th Edition, pp 52-53; and see for example, Domb v Owler [1924] NZLR 532, at p 537, per Salmond J." On appeal, his Honour's decision was upheld ([1990] VR 345), with the Full Court of the Supreme Court of Victoria agreeing with his reasoning (at 347 per Murphy J, with whom Gobbo and Southwell JJ agreed). 1. In Pittmore Pty Ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344 at [67], Leeming JA (Bell P and Brereton JA agreeing) referred to s 38(3) of the Conveyancing Act 1919 (NSW) and noted that the contemporary essentiality of signing, as opposed to sealing, reverses the historical position. But, even with signing and sealing, what is necessary before a deed is binding is delivery (at [68]). His Honour described this as "ancient law". While delivery has been an essential requirement of deeds for centuries, its meaning has radically changed. The fact that the Appointment instruments were signed (and thereby sealed) and handed over to TCBS is not determinative of whether those instruments were "delivered" and thereby took effect as a deed (at [71]). His Honour referred to the following statement by Sackville AJA (Allsop P and Campbell JA agreeing) in Segboer & Anor v A J Richardson Properties Pty Ltd & Anor [2012] NSWCA 253 at [58]: "Physical delivery is not required for a deed to be effective. The critical question is whether the party executing the deed has evinced an intention to be bound immediately." 1. The question of intention is to be determined objectively. In Segboer v A J Richardson Properties at [59], Sackville AJA observed: "In Xenos v Wickham, it was said that the question of whether a party had evinced an intention to be bound by a deed was a question of fact for the jury: at 309, per Piggott B; Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps [1985] VR 70, at 78, per Tadgell J. Both parties in the present case accepted that the Bank's intention, for the purpose of determining whether the deed had been delivered, was to be ascertained objectively by reference to the words used by and conduct of the Bank and the facts attending the execution. This approach is consistent with the statements of principle in Norton on Deeds and in Xenos v Wickham, where Blackburn J emphasised the significance of the acts or words of the promisor: see also Ansett v Comptroller, at 79, citing Bowker v Burdekin (1843) 11 M & W 128, at 147; 152 ER 744, at 751, per Parke B: Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310, at 355, per Kennedy J." 1. Similarly, in Taouk v Ho [2019] NSWCA 156 at [47], Gleeson JA said (Emmett AJA agreeing) that the question of the party's intention in respect of delivery "is to be determined on the basis of the words used by and the conduct of the promisor, taking into account the circumstances attending the executing of the deed" (citing Segboer v A J Richardson Properties at [73] per Sackville AJA). 2. Having regard to those principles, the fact that each of Mr Albarran and Mr McDonald, in their respective affidavits sworn in 2019, described the Appointment documents which were executed in 2006 as "deeds" is besides the point. The use of that language cannot be determinative of the Receivers' intentions in 2006, nor does the use of such a term, by a witness well after the event (though before any issue as to whether the instruments were deeds was even pleaded) amount to an admission in respect of their legal effect. In any case, even if subjective intention were relevant, Mr McDonald indicated in cross-examination that it was not his intention, at the time he signed the Appointment instruments, that they take effect as a deed. 3. As identified above, and in accordance with the well known principles for construing commercial documents, the focus of the analysis must be on the objective intentions of the parties, having regard to their words and conduct at the time, and taking into account the circumstances attending the execution. 4. One of the relevant circumstances attending the execution of the Appointment instruments is that, at the same time, two corresponding Deeds of Indemnity were executed, one in respect of the appointment for BACM, and the other for BACF. 5. There are significant differences between the Appointment Documents and the Deeds of Indemnity. In particular: 1. Each of the Deeds of Indemnity was entitled "DEED". Neither of the Appointment instruments was so entitled. 2. The recitals to each of the Deeds of Indemnity began with the words "NOW THIS DEED WITNESSETH…". No such words appear in the Appointment Instruments. 3. Clause 4 of each Deed of Indemnity referred to the document as a "Deed". Neither of the Appointment instruments is described in that way. 4. Above the attestations on each Deed of Indemnity appear the words "IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals on the day and year first hereinbefore written." Those words do not appear in the Appointment instruments. 1. In Comptroller of Stamps v Associated Broadcasting Services Ltd at 347, Murphy J, in determining that the supplemental loan agreement in question was not a deed, noted that this agreement was "not expressed to be a deed, in sharp contrast to the debenture executed on the same day as the original agreement between the same parties as those who executed the supplemental loan agreement". His Honour concluded that: "the surrounding circumstances, such as the contrasting words of the debenture deed, with which the agreement is intimately connected, militate against a conclusion that the agreement was intended as a deed". 2. The significant differences between the form of the Deeds of Indemnity and the form of the Appointment instruments, which were executed at the same time, support the conclusion that it was only the former, and not the latter, that were intended to take effect as deeds. 3. The essential difference between executing a document as a deed rather than as a mere contract is that the party which has executed a deed is unable to withdraw from the transaction while waiting for the other parties to execute it: 400 George Street v BG International at [9], Muir JA observed (Fraser JA and Mullins J agreeing); citing Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609 at 619 per Lord Denning MR. Even where the deed is executed and delivered in escrow, subject to some condition being satisfied, the party which has executed the instrument cannot withdraw pending the satisfaction of the condition: ibid at [10], citing Beesly v Hallwood Estates Ltd [1961] 1 All ER 90; [1961] 1 Ch 105 at 118 per Harman LJ and at 120 per Lord Evershed MR; see also Pittmore v Chan at [72]-[73] per Leeming JA. 4. There is nothing about the Appointment documents to indicate that the parties intended each to operate such that TCBS or the Receivers would be immediately bound upon execution of the document, before the other party had done so. Instead, the Appointment documents record an agreement on the part of TCBS to appoint the Receivers to perform a specified function, namely, "to be Receivers and Managers of the property of the Mortgagor referred to in the Schedule", investing them with "all the powers, authorities and discretions available to a Receiver and Manager or Receiver under the provisions of the Charge"; and an agreement on the part of the Receivers to "hereby accept this appointment". The objective intention is that this instrument, and the appointment, would take effect once all parties had executed that document. 5. Having regard to the form, terms and purpose of each Appointment document, compared to each corresponding Deed of Indemnity, I conclude that the parties' objective intention was that the Appointment documents took effect as contracts and not as deeds. 6. It follows that all claims by the Plaintiffs against Mr Albarran and Mr McDonald for breach of the terms of the Appointment instruments were statute-barred when these proceedings were commenced. Did the Receivers breach their duties under the instruments of appointment? 1. In the event that I am wrong in determining that the Appointment instruments were not deeds, I have considered whether the Receivers breached any term of those instruments. 2. In closing submissions, the Plaintiffs contended that, by reason of their appointment as receivers and managers, the Receivers were obliged to realise the Secured Property, to produce cash, and to apply such cash in or towards payment of the preferential creditors, meeting their own expenses and remuneration, paying off any security ranking ahead of the Charge and repaying the amount owing to TCBS under the Charge, citing re Just Juice Corporation at 342 per Gummow J. That may be so, but there was no allegation, and no submission in closing address, that any such obligation was breached. 3. The Plaintiffs further contended that, in the course of performing these obligations, the Receivers owed to TCBS fiduciary obligations not to be in a position of conflict and not to pursue any benefit for themselves or a third party in acting in connection with their role as, and in the performance of their obligations as, receivers and managers of BACM and BACF. I have already addressed above the allegations that Mr Albarran breached those fiduciary obligations, and my reasons for rejecting those claims. 4. Finally, the Plaintiffs contended that an appointor "has a right, as against the receiver, to be put in possession of all the information concerning the receivership available to the receiver", quoting Gomba Holdings UK Ltd v Minories Finance Ltd at 1233 per Fox LJ. As I have observed above, I do not consider that any such obligation to inform the appointor regarding the progress of the receivership is a fiduciary obligation, since it is of a prescriptive rather than a proscriptive character. But I accept that there is authority that a receiver and manager owes such an obligation to keep his or her appointor informed about the progress of the receivership: see State Bank v Chia at [881] per Einstein J. 5. I do not need to determine whether such an obligation is implied by law as a term of the receiver's appointment. That is because the factual foundation for the breach of this obligation for which the Plaintiffs contended has not been established. The Plaintiffs argued that Mr Albarran breached this obligation by failing to inform TCBS that he had sought, in the context of the settlement negotiations, a personal benefit by agreeing to include the Given Form release in the draft settlement deed, and that this had caused TCBS to lose the settlement. 6. I have found that Mr Albarran was not pursuing a benefit for himself, or a benefit for Mr McDonald or Mr Brown, by agreeing to the insertion of the Given Form release; and that TCBS was aware (through Mr Salmon and Mr Myers) of the inclusion of the Given Form release in the draft settlement deed, and of the rejection of that clause by the Liquidator. In any event, I have found, as set out in Section H below, that the inclusion of the Given Form release did not cause TCBS to lose a $1.3m settlement of its claims. 7. Even if the Plaintiffs had established a breach of the reporting obligation, they led no evidence to establish that the opportunity which was allegedly thereby lost, namely, the opportunity to appoint new receivers and solicitors to pursue the 2006 Proceedings, was an opportunity that had any value. I address this issue in Section H below. 8. For those reasons, even if the Appointment instruments were deeds, I would have found that each of the claims against the Receivers based upon those instruments should be rejected. G. CLAIMS AGAINST THE PARTNERSHIP DEFENDANTS 1. As at September 2006, the Fourth to Eighth Defendants (the Partnership Defendants) were partners with the Receivers in the firm Hall Chadwick. 2. The only claim advanced against the Partnership Defendants in the Fourth Further Amended Statement of Claim is that they are liable to pay damages "for breaches of contractual obligations under a deed and for breaches of good faith and honesty owed as receivers" (prayer C of the Relief Claimed). 3. However, none of the Partnership Defendants was appointed as a receiver and manager by TCBS, and none of them owed any duty to TCBS under the Appointment instruments. Each of those instruments appointed specified persons to be receivers and managers, and those specified persons accepted the appointment. This was not a situation where a firm of accountants was retained to perform a task, with the retainer identifying the partners with primary responsibility for performing the task on behalf of the retained firm. Any claim that any of the Partnership Defendants owed any duty as a receiver and manager, or under the Appointment instrument, is unsound. 4. Paragraph 8 of the FFASC pleads that the Partnership Defendants were, with the Receivers, equity partners of Hall Chadwick, and that it was a term of their partnership agreement that they agreed to indemnify one another for the liabilities of the partnership. However, any such indemnity is an obligation of the partners inter se, which could not give rise to any liability to the Plaintiffs and in any case, is not the subject of any claim for relief. 5. In their opening written submissions and oral address, the Plaintiffs did not identify any basis for a claim against the Partnership Defendants. Similarly, in their closing written submissions, the Plaintiffs did not outline any claim against the Partnership Defendants. 6. The Partnership Defendants pointed out in closing submissions that, despite this claim being on foot for many years, the Plaintiffs had not identified any basis for a viable claim against any of them. When this issue was raised with Senior Counsel for the Plaintiffs in closing address, he made the following submissions: "We say that the liability arises as a matter of law under s 10 of the Partnership Act because as a liability carried out in the ordinary course of the business, we are missing an application for relief, in the sense that we don't seek an order for compensation in relation to the defendants, we only seek in relation to the first and second defendants. But the issue, we would say, is raised in para 160 and we would seek to amend the claim to seek an order as against the Hall Chadwick defendants." 1. The reference to paragraph 160 of the FFASC does not advance matters. It is in the following terms: "In the circumstances the Defendants are bound to pay to the plaintiffs a sum by way of compensation or damages sufficient to restore TCBS to the position it would have been in but for the breaches of duty by the third defendant which should be compensation in the order of a capital sum about $1.3m together with interest as and from 19 September 2006 or 13 November 2006." 1. That is simply a statement that the "Defendants" are bound to pay compensation for the losses suffered as a result of Mr Brown's breach of duties. There is no identification of how the Partnership Defendants could be liable for such losses, let alone any identification of any cause of action or any material facts in support of any such cause of action. 2. Further, the Partnership Defendants pointed out that the suggestion that liability could arise under s 10 of the Partnership Act 1892 (NSW) cannot go anywhere in circumstances where no such claim is pleaded. 3. The Plaintiffs sought leave to expand upon the submissions made in their closing address by a supplementary written submission delivered after the trial was concluded and judgment was reserved. I gave leave for this submission, provided that it was limited to a response to the matter in respect of which leave was sought, namely, the Partnership Defendants' contention that there was no pleaded claim that they are liable under any principle of joint liability for work undertaken by a partner in the course of the business of a partnership, and no occasion to consider the factual issues which would arise in respect of such a claim given the way in which the case was framed. 4. The supplementary submission of the Plaintiffs contended that it was clear, on a fair reading of their claim, that they were alleging that the actions of the Receivers were undertaken with the authority of the Partnership Defendants or in the ordinary course of the business of Hall Chadwick, referring to paragraphs 6, 8, 22, 27A, 60DR and 60DU of the FFASC. As regards those matters: 1. Paragraphs 6 and 8 refer to the indemnity in the partnership agreement, which I have already considered above; 2. Paragraph 22 merely states that TCBS appointed Mr Albarran and Mr McDonald, who were "members of the firm of Hall Chadwick", as receivers and managers; 3. Paragraph 27A does no more than identify the partners of the firm; and 4. Paragraphs 60DR and 60DU plead that Hall Chadwick were potential supporting creditors in the winding up of TCBS, and that the 2006 Proceedings continued, after the settlement of TCBS's claim, on the question of the costs payable to Hall Chadwick for the receivership. 1. In their supplementary submission, the only claim for damages against the Partnership Defendants which is identified by the Plaintiffs is the claim made in paragraph 160 of their pleading, which I have addressed above. 2. Having referred to those matters, the Plaintiffs submitted that "they have pleaded a basis for a finding of liability of the Hall Chadwick partners under s 10 of the Partnership Act or if there is a need to formalise the position by a short amended pleading, leave should be permitted to do so". 3. For the reasons given above, I reject the contention that any basis for a liability of the Partnership Defendants under s 10 of the Partnership Act has been pleaded. 4. I consider it would be necessary for the pleading to be amended in order for such a claim to be advanced. No such application has been made. I do not consider it sufficient merely to indicate that such an application could be made if required. 5. If any such application had been made, I would have refused leave to amend, on the basis of the prejudice caused by the Plaintiffs' unexplained delay in raising the issue only after the conclusion of the evidence and hearing. In this regard, I accept the submissions of the Partnership Defendants in their written response to the supplementary submission: "Such a claim would have not only needed to be identified in the pleading and prayers for relief, but would have required a pleading of material facts, including as why it was claimed that the Receivers' conduct, said by the plaintiffs to be positively dishonest and outside the scope of their function as receivers, could nevertheless be said to have been undertaken 'in the ordinary course of the business' of the partnership or 'with the authority of' any (let alone all) of the four individual defendants in question (as s 10 requires). No such pleadings exist. These are all intensely factual questions, which have never had to be addressed in the defendants' evidence for trial given the limited nature of the claims against them, and which were not addressed in evidence." 1. Finally, I would have dismissed any such amendment application as futile, because any such claim against the Partnership Defendants would necessarily have failed, given that I have found that Mr Albarran did not breach his fiduciary duties or any duty arising under the Appointment instrument. 2. For those reasons, no claim has been established against the Partnership Defendants. H. CAUSATION AND DAMAGE 1. In case I have erred in rejecting the claims for dishonest breach of fiduciary duties, the claims for knowing assistance, or the claims for breach of duties arising under the Appointment instruments, I have considered whether, if any such breach were established, it caused the loss claimed by the Plaintiffs. The only relief sought in respect of the claims for breach of fiduciary duties and knowing assistance was equitable compensation. The Plaintiffs sought damages for the breach of the duties said to be "founded on a deed". 2. The Plaintiffs claimed three main types of loss as flowing from those breaches: 1. the loss of an opportunity for TCBS to replace the Receivers and Mr Brown, and to pursue the 2006 Proceedings with new receivers and solicitors; 2. the loss of an opportunity for TCBS to settle the 2006 Proceedings for $1.3m; and 3. the loss of an opportunity for TCBS, consequent upon receiving a $1.3m settlement in the 2006 Proceedings, to avoid liquidation and to continue to trade. Relevant Principles Equitable compensation 1. Equitable compensation is a remedy available to the victim of a breach of fiduciary duty against both the fiduciary and any other person who knowingly participated in that breach and has thereby become subject to a personal liability as a "constructive trustee" by application of the principles derived from Barnes v Addy: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at 153 per McLelland AJA (Priestley and Meagher JJA agreeing). 2. The object of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation: O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272 per Spigelman CJ (Priestley and Meagher JJA agreeing). In that case, Spigelman CJ quoted (at 273) with approval the following passage from the judgment of McLachlin J in Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 at 163 as representing the law in Australia: "In summary, compensation is an equitable monetary remedy which is available when the equitable remedies of restitution and account are not appropriate. By analogy with restitution, it attempts to restore to the plaintiff what has been lost as a result of the breach, ie the plaintiff's lost opportunity. The plaintiff's actual loss as a consequence of the breach is to be assessed with the full benefit of hindsight. Foreseeability is not a concern in assessing compensation, but it is essential that the losses made good are only those which on a common sense view of causation, were caused by the breach." 1. There is "no equitable by-pass of the need to establish causation": Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [44]. 2. In order to obtain equitable compensation for breach of a fiduciary duty, it is necessary for the plaintiff to establish "a sufficient connection (or 'causation') between breach of duty and … the loss sustained": Maguire v Makaronis at 468 per Brennan CJ, Gaudron, McHugh and Gummow JJ. When assessing causation for the purposes of equitable compensation, the "true inquiry is whether the loss would have happened had there been no breach, not whether the loss was caused by or flowed from the breach": O'Halloran at NSWLR 276–7 per Spigelman CJ (with whom Priestley and Meagher JJA agreed); Parker, In the matter of Purcom No 34 Pty Limited (In Liq) (No 2) [2010] FCA 624 at [23]–[24] per Gordon J; Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58 at [2497] per Ward CJ in Eq. 3. In establishing a sufficient connection, the plaintiff need not show that the breach was the cause of the loss. It is enough that it was a cause of the loss: Ramsay v BigTinCan Pty Ltd [2014] NSWCA 324 at [62] per Macfarlan JA (McColl JA agreeing). Thus, once a sufficient connection is found, causation is established irrespective of the identification of a separate and concurrent cause (provided that the loss would not have occurred if there had been no breach of duty): Anderson v Canaccord Genuity Financial at [2498] per Ward CJ in Eq. 4. It has been said that, in a case of breach of fiduciary duty, the Court is entitled not to speculate against the interest of the plaintiff, and that equity should strive to repair the breach of fiduciary duty lest the fiduciary in default could be exonerated too easily and the Courts be seen to wink at wrong-doing: GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers & Ors [2005] VSCA 113 at [71] per Warren CJ (Chernov JA and Dodds-Streeton AJA agreeing), quoting observations by Kirby J in Maguire v Makaronis at 492-493. 5. However, as the Victorian Court of Appeal (Kyrou, McLeish and Walker JJA) observed in Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118 at [87]-[88]: "the entitlement to not speculate against the plaintiff does not justify making assumptions of fact that are otherwise necessary to establish the sufficient 'but for' connection between the breach and loss" (their Honours approving as correct the statement to this effect by the primary judge, Macaulay J). 6. Equitable compensation is available for the loss of an opportunity. While this has been described as an "elusive loss … that defies precise measurement" (AMP Services Ltd v Manning at [69] per Finkelstein J), it remains "essential that the losses made good are only those which … were caused by the breach" (O'Halloran v RT Thomas at 273). Loss of opportunity 1. As set out above, the Plaintiffs' claims for equitable compensation and for damages all consist of claims in respect of opportunities which TCBS allegedly lost as a result of the Defendants' breach of duty. 2. When dealing with a claim for loss of opportunity, it is necessary to keep distinct the concepts of causation and assessment. 3. A person claiming loss of an opportunity must establish on the balance of probabilities that he or she has lost a valuable opportunity. "An opportunity will be of value where there is a substantial, and not a merely speculative, prospect that a benefit will be acquired or a detriment avoided": Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 at [39] per French CJ, Kiefel and Keane JJ. 4. In assessing the question of causation, the usual onus and standard of proof applies, such that a plaintiff must establish on the balance of probabilities that there was a substantial prospect of a beneficial outcome: Badenach v Calvert at [40]. In that case, French CJ, Kiefel and Keane JJ observed (at [41]) that: "The onus of proving causation of loss is not discharged by a finding that there was more than a negligible chance that the outcome would be favourable, or even by a finding that there was a substantial chance of such an outcome. The onus is only discharged where a plaintiff can prove that it was more probable than not that they would have received a valuable opportunity." 1. In Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4, Mason CJ, Dawson, Toohey and Gaudron JJ emphasised (at 353) that: "When the issue of causation turns on what the plaintiff would have done, there is no particular reason for departing from proof on the balance of probabilities notwithstanding that the question is hypothetical." 1. In Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445; [2011] FCAFC 55 at [166], Keane CJ, Lander and Besanko JJ quoted this statement from Sellars and made the following observation which is of particular relevance for this case: "That authoritative statement applies with no less force where the issue is not only what the plaintiff would have done, but also involves questions as to what others would have been disposed to do in relation to reaching an agreement with the plaintiff." 1. Once it has been established that it is more probable than not that a claimant would have received a valuable opportunity, the Court may then proceed to assess the value of that opportunity by reference to probabilities or possibilities of various factual hypotheses. "If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring": Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643 per Deane, Gaudron and McHugh JJ; [1990] HCA 20. 2. In Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 at [101], Barrett AJA noted that: "An assessment made at the second stage by reference to the degree of probabilities and possibilities of factual hypotheses may require a process of estimation extending even to a degree of guesswork and may lie at any point within a broad range". 1. Similarly, in Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27 at [32], Bell, Keane and Nettle JJ observed that the value of a lost opportunity must be ascertained "by reference to hypotheses and possibilities" which, though "speculative and therefore not capable of proof on the balance of probabilities, could be evaluated as a matter of informed estimation." Loss of opportunity for a better outcome in the 2006 Proceedings 1. The Plaintiffs contended that, as a result of the Receivers and Mr Brown continuing to act in the 2006 Proceedings despite the existence of a conflict of interest arising from the Given Form issue, TCBS lost the opportunity to appoint new solicitors and receivers, and to recover moneys owed by BACF and BACM in the 2006 Proceedings. 2. This contention ignores that Young CJ in Eq found the BACM charge to be voidable. There was no appeal from his Honour's judgment. The Plaintiffs, who claim as assignees of TCBS, cannot mount a collateral attack on the judgment, or the orders made, regarding the BACM charge by contending that different receivers or solicitors could have obtained a different result: Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142 at [31]; Haines v Australian Broadcasting Authority (1995) 43 NSWLR 404 at 414; [1995] NSWSC 136. 3. As regards the claims in respect of the BACF charge, the Plaintiffs have not established that TCBS lost an opportunity of substantial value to recover a sum greater than the sum that was in fact recovered. The Plaintiffs have abandoned their claims that the Receivers and Mr Brown failed properly to pursue TCBS's claim in those proceedings, by "running dead". The Plaintiffs have not identified any step which could have been taken by different receivers or solicitors, which was not taken by the Receivers and Mr Brown in the 2006 Proceedings. 4. The Receivers and Mr Brown caused evidence to be filed in the 2006 Proceedings regarding the quantum of TCBS's claim under the BACF charge. That evidence was settled by Mr O'Sullivan. The Plaintiffs did not make any submission, let alone establish, that the evidence which was filed omitted any matters of significance. 5. The liquidator of TCBS reviewed all of the evidence available regarding the quantum of TCBS's claim in respect of BACF, and invited Mr Salmon to identify any material relevant to that issue. Having reviewed the material available, and in reliance on advice of Counsel, the liquidator made an independent assessment that the value of the claim against BACF was no more than around $177,902. He subsequently reached a settlement with Mr Wily for this amount. This sum was in line with the amount which Young CJ in Eq concluded was the maximum payable in respect of the BACF charge, based on the evidence available before him at the hearing on 18 and 19 September 2006. 6. No expert evidence was led in these proceedings to support any contention that TCBS's claim against BACF had a value higher than that which the liquidator of TCBS had ascribed to the claim after his investigations. Nor did the Plaintiffs, in closing submissions, point to any material capable of establishing such a contention. Given that Mr Salmon was the controller of TCBS and the General Manager of the BA Group, it can readily be inferred that, if such material had been available, the Plaintiffs would have been able to identify it. 7. For those reasons, the Plaintiffs have failed to establish on the balance of probabilities that, by the alleged failure of Mr Brown and the Receivers to disclose their conflict, TCBS lost a substantial, and not a merely speculative, prospect of continuing the 2006 Proceedings with new solicitors and receivers and thereby recovering moneys owed by BACM and BACF. Loss of opportunity to settle for $1.3m 1. It is common ground that a settlement "in principle" for $1.3m was reached on the afternoon of 18 September 2006 in respect of the 2006 Proceedings and that, by the afternoon of 19 September 2006, a settlement for that sum was no longer on the table because the Liquidator's team had formed the view that the day's events in Court had been in his favour. 2. The issue that arises is whether a valuable opportunity to achieve a binding settlement for the sum of $1.3m was, on the balance of probabilities, lost by the inclusion of the Given Form release in the first draft of the settlement deed that was sent by Mr Brown to the Liquidator at 7.48pm on 18 September 2006. 3. The description of the deal struck between the parties as being a settlement "in principle" involves an acknowledgement that no binding agreement had been concluded. Instead, there was to be no binding agreement unless and until terms for the settlement were agreed, documented and signed. 4. As Brereton J observed in Independent Print Media Group Publishing Pty Ltd v Estate Agents Co-operative Ltd [2007] NSWSC 1098 at [33]: "An agreement 'in principle' is, in the vernacular, usually a Clayton's agreement: the agreement one has when there is not an agreement. It is terminology well-familiar to lawyers as indicating that consensus has been reached on the main terms, but the parties do not intend yet to be bound, because that consensus needs to be properly recorded, documented and approved. Accordingly, the references in the evidence given on behalf of IPMG to agreement in principle tend to detract from rather than to assist the case that a final binding agreement had been made." 1. From the moment that the draft deed was sent, at 7.48pm on 18 September 2006, there was, in effect, a period from then until around 2.30pm on the following day (when Mr Salmon's cross-examination commenced) in which the terms of the proposed deed might potentially be agreed, so that a binding settlement for $1.3m could be concluded. The question is whether the opportunity to reach a binding settlement for $1.3m in that window of some 18 hours was lost because of the decision by Mr Brown and Mr Albarran to insert the Given Form release into the first draft deed that was proffered after the conclusion of the "in principle" negotiations. 2. There is some suggestion that the window of opportunity for a settlement may have been even less than 18 hours. The Plaintiffs plead in their Reply to the Third Defendant's Amended Defence (paragraph 4) that by the time that the morning session of Court concluded on 19 September 2006, the hearing of the 2006 Proceedings had gone in the Liquidator's interest and he was "no longer willing, as he had been that morning, to settle the case on the terms agreed by the parties on the previous afternoon". If that is so, then the window in which the 2006 Proceedings could have settled might have lasted until only 10am on 19 September 2006. 3. The deed was not a complicated document. On Mr Wily's evidence, the task of considering the Given Form release did not take any time at all. He deposed in his affidavit that, as soon as he was told that it had been proposed (without having even seen the text), he responded: "You've got to be kidding. I'm not having anything to do with that." If there was an urgency and a desire to get the matter settled, it would be expected that this would be immediately relayed. 4. Whether the conversation between Mr Nikolaidis and Mr Wily occurred in the evening of 18 September or the morning of 19 September (which was not clear on Mr Wily's evidence), the Liquidator's position was not communicated to the other side until shortly before Court resumed on 19 September 2006. 5. Mr Brown had indicated he was waiting in his office for a response on the evening of 18 September, and told Mr Nikolaidis he was willing to come to his home that night to discuss the draft deed. But Mr Nikolaidis did not, assuming he reviewed the deed that evening, communicate any position to him. 6. Further, Mr Albarran, together with Mr Myers of TCBS and Mr Davis of Etienne Lawyers, went to the Liquidator's offices on the morning of 19 September at around 7.45am, on the understanding that Mr Wily had agreed to meet them at that time to discuss the settlement. But when they arrived, Mr Wily denied agreeing to the meeting, and it did not go ahead. 7. It was a simple matter for Mr Nikolaidis or Mr Wily to indicate to Mr Brown or Mr Albarran that the Given Form release was not acceptable, and that a new deed would need to be prepared for review which did not include that release. Yet, for reasons that are unexplained, this position was not conveyed until shortly before Young CJ in Eq came on the bench for the resumption of the hearing. 8. The reason that those matters are unexplained is, in part, because there is no evidence from Mr Nikolaidis, who was best placed to address the strategy adopted on behalf of the Liquidator on 18 and 19 September 2006. The Liquidator himself played a limited role in the negotiations on 19 September 2006. He does not appear to have reviewed the draft deed, but relied on Mr Nikolaidis to review it and communicate with the other side. He was busy in the morning finalising his affidavit and preparing for Court, and he does not seem to have said anything to Mr Brown or the Receivers, other than to cancel the proposed meeting at 7.45am on 19 September 2006. Likewise, after giving evidence in Court during the morning, he appears to have left matters in the hands of Mr Nikolaidis. 9. The unexplained delay of some 13 hours (from 8pm on 18 September to 9am on 19 September) in communicating to Mr Brown the rejection of the Given Form release supports an inference that Mr Nikolaidis was pursuing a strategy of delaying in responding to the Receivers and TCBS on the proposed settlement terms. 10. The conclusion that the Liquidator's team had no real desire to press on with negotiating the terms of a settlement is supported by their conduct in the afternoon of 19 September. When presented at around the end of the luncheon adjournment with a draft deed without the Given Form release, the Liquidator's counsel indicated that his client's preference was to press on with the cross-examination of Mr Salmon. When an adjournment was taken at the conclusion of the cross-examination, for the stated purpose of settlement negotiations, the Liquidator's representatives went into a meeting room for the whole of the adjournment and did not discuss any part of the deed with the Receivers and Mr Brown. 11. It was on the basis of those matters that Mr Brown formed the view, as expressed in contemporaneous documents, that the Liquidator and Mr Nikolaidis were playing games, and stalling for time, and had no genuine intention to progress a settlement. That perception is consistent with the views of the witnesses who were called by the Plaintiffs, Mr Salmon and Mr Byrnes (who were on either side of the 2006 Proceedings), to the effect that Mr Nikolaidis was a person who could not be trusted. 12. Having regard to the course of events on 18 and 19 September 2006, I consider that there is a basis to infer that Mr Nikolaidis was not genuinely committed to seeking, if at all possible, to achieve a settlement before Court resumed on 19 September 2006, and that instead he regarded it as in his client's interests to delay in committing to a position on the particular terms of settlement proposed by the Receivers and TCBS. This view may have been bolstered by his perception that there was, even leaving aside the Given Form release, a lack of consensus on the terms of implementation of any settlement (as shown by the changes between the draft deeds of 18 and 19 September, and Mr Nikolaidis' rejection of the latter), and it was unlikely that any such consensus would be reached. 13. The Plaintiffs argued that it could be inferred, from the fact that objection was raised only to the Given Form release, that the remainder of the terms were acceptable to the Liquidator. 14. There are a number of difficulties with any such inference. 15. First, the fact that the inclusion of the Given Form release was identified by the Liquidator and Mr Nikolaidis as a matter which was unrelated to the TCBS dispute and therefore was off the table in the context of the TCBS settlement negotiations does not mean that each of the other terms put forward in the draft deed was considered to be acceptable. Although the Plaintiffs called Mr Wily to give evidence on the causation issue, it does not appear that he read the proposed settlement terms, and he did not express any view on the acceptability of those terms. That was a matter on which Mr Wily was plainly well placed to give evidence. 16. Secondly, as I have identified, there were aspects of the 18 September draft deed which, on the evidence, had not been the subject of any discussion between the Liquidator and the Receivers, or between Mr Nikolaidis and Mr Brown, and which would likely, or may, have raised concerns for the Liquidator. One of those was the proposal that the Liquidator assign to the Receivers $1.3m of all money recovered by him in the Nauru Proceedings. There is no evidence that any such term had been discussed prior to the 18 September draft being circulated. It can be inferred, from the fact that it was deleted in the 19 September draft, that this proposal was unacceptable as far as the Liquidator was concerned. In addition, there is no evidence of the Liquidator's attitude to the proposal that he give up the statutory priority for his fees and costs in favour of TCBS (clause 3.1.2), which would place him at risk in the event the funds recovered in the Nauru Proceedings were insufficient to cover both the TCBS payment and his own fees and costs. There is nothing in Mr Wily's evidence to indicate that he was aware that this term was proposed, or that he would have agreed with it. 17. Thirdly, there is unchallenged evidence from Mr Brown that Mr Nikolaidis indicated to him that, even after the Given Form release was removed, the draft settlement deed remained unacceptable. Consistently with that evidence, the statements made in Court by Senior Counsel for the Liquidator on 19 September 2006 make clear that even after there was agreement to the removal of the Given Form release, there remained issues regarding the terms of the settlement proposed by the Receivers and TCBS. The statements made included that, although there had been "agreement in principle" on "the dollars", there remained "problems" with "matters of implementation", and what was being negotiated was "a matter of complexity". Those statements are borne out by the extent of the changes between the 18 and 19 September drafts, and the lack of any evidence of negotiation or agreement regarding the amended terms of the 19 September draft. For example, there is no evidence of any discussion between the parties regarding the proposal in the 19 September draft deed that receivers and managers might be reappointed by TCBS in the event that the Liquidator proposed to settle the Nauru Proceedings on some basis other than equal distribution, and TCBS disagreed with the proposed settlement (cl 4). 18. Fourthly, the terms of the correspondence which was subsequently sent in relation to the Liquidator's reduced offer of $650,000 (in respect of the BACF charge only) show that the parties had not, after the removal of the Given Form release, reached any consensus on the terms of settlement. In his letter setting out this offer, Mr Nikolaidis indicated that the terms of the settlement still needed to be worked out, stating that those terms "are to be more fully set out in a Deed", and confirming that "there is no settlement of this matter until such time there is a signed document". In response to the offer, Mr Brown told Mr Nikolaidis (as recorded in his 20 September email to TCBS and the Receivers) that "if Wily was serious about settling we would have a deed and none has turned up". The parties understood that there could be no settlement without the terms of a deed being agreed and that, after the removal of the Given Form release, it remained the case that there were no agreed terms. 19. Finally, the Plaintiffs in closing submissions contended that it was a relatively simple matter to make amendments to the draft deed to remove the Given Form release. However, if that were so, it must follow that it would have been a simple matter for Mr Nikolaidis, to whom the draft had been sent, to make amendments removing the Given Form release, and to send it back to the other side, indicating that the Liquidator was prepared to sign a deed in that amended form. That step was not taken. I consider that is either because the Liquidator did not agree to the other terms in the draft deed, or because the Liquidator's representatives were stalling for time on settlement to see how events unfolded in the course of the day, or perhaps both. In any case, the submission by the Plaintiffs fails to address the extent of the changes made by the 19 September draft deed, which suggest that the disagreements concerning the 18 September draft went beyond the Given Form release, and the rejection by Mr Nikolaidis of the terms of the amended draft. 20. The Plaintiffs' case on causation rested primarily on Mr Wily, who did not review or express any view on the terms of the draft deed, and who deposed as follows: "I believe had it not been for the actions of Mr Brown and Mr Albarran in inserting clauses into the settlement deed with TCBS in an attempt to avoid my further recovery of preferential payments from Given Form the TCBS matter would [have] settled on the morning of 19 September 2006." 1. That evidence is of limited weight. It amounts to an expression by Mr Wily, in June 2019, of a belief as to how matters would have unfolded on 19 September 2006, without apparently having been shown the terms of the 18 September draft deed proposed by the Receivers and TCBS, or for that matter the terms of the 19 September draft deed, and without indicating the basis for his belief. 2. Shortly after the relevant events, Mr Nikolaidis identified, from his point of view, the reason why the settlement did not proceed. He did not state that the settlement fell over because Mr Brown had inserted the Given Form release into the draft deed. Instead, in his letter of 28 September 2006, he stated that the problem was that "Mr Brown tried to re-negotiate our client's offer in the hope of achieving a better result for his client, but failed to do so". That is, Mr Nikolaidis' perception was that the problem was not that Mr Brown was pushing hard to achieve a benefit for himself, but was pushing hard to achieve a better deal for his client on the terms of settlement. Mr Nikolaidis also stated that the "counter offers made" (the plural apparently referring to the two forms of the draft deed put forward by Mr Brown, with and without the Given Form release) had the effect of rejecting the Liquidator's offer. That evidence tells against the proposition, which is central to the Plaintiffs' case, that the settlement terms were agreed, or were capable of being readily agreed, with the single exception of the Given Form release. Instead, the terms of Mr Nikolaidis' letter, read in the context of the changes made between the draft deeds of 18 and 19 September 2006, and his rejection of the latter, are consistent with there being, irrespective of the Given Form release, a lack of consensus between the parties on the terms of any settlement. 3. For those reasons, and having regard to the findings of fact outlined in section B of this judgment, the Plaintiffs have not established on the balance of probabilities that the insertion of the Given Form release caused TCBS to lose a substantial, and not merely speculative, opportunity to settle the 2006 Proceedings on 19 September 2006 for a sum of $1.3m. 4. Similarly, the Plaintiffs have not established any loss flowing from the alleged failure of Mr Brown or Mr Albarran to cease to act for TCBS on the evening of 18 September 2006. The Plaintiffs contended that "at the latest, once Mr Brown and Mr Albarran agreed to pursue the benefit [by inserting the Given Form release into the 18 September draft deed], Mr Brown and the receivers should have ceased to act", since they were at that point "acting in a position of conflict"; and that their "continuing to act caused the loss of the opportunity to settle for $1.3m before court". Given the matters I have outlined above, and in particular the lack of consensus between the parties on the terms regarding the settlement and its implementation, and the delay by Mr Nikolaidis in committing to any position on the settlement terms, the Plaintiffs have not established on the balance of probabilities that, if Mr Brown and Mr Albarran had ceased to act on the evening of 18 September 2006, there was a substantial, and not merely a speculative, opportunity for TCBS and the Liquidator to agree on settlement terms before court resumed at 10am on 19 September 2006. 5. If, contrary to these findings, I had determined that an actionable breach of duty had caused the loss of the opportunity for TCBS to settle the 2006 Proceedings for $1.3m on 19 September 2006, it would not have followed that TCBS was entitled to the sum of $1.3m by way of equitable compensation. 6. If a settlement had been achieved at that figure, TCBS would have been liable to pay the Receivers' fees and costs, which included the fees of Etienne Lawyers, from that sum. There is evidence that, by early November 2006, the costs of the receivership were some $459,000. It may be inferred that at a point in time some eight weeks earlier (that is, as at 19 September 2006), those fees were probably in excess of $300,000, such that the net amount which would have been received from any settlement was likely less than $1m. 7. Further, the amount that TCBS would have received may have depended on whether the Liquidator was willing (as proposed in the draft deed) to accept that the statutory priority not apply in respect of moneys received from the Nauru Proceedings, such that the amount to TCBS be paid in priority to his own costs and fees. That is because, as outlined in paragraph 262 above, the accounts prepared in the liquidation of BACM and BACF indicate that substantially all of the funds received from the Nauru Proceedings were expended on meeting the Liquidators' fees and costs. The fact that the Plaintiffs did not, through Mr Wily's evidence, indicate whether or not he was prepared to agree to the proposed priority of payments in the draft deed is a matter which, as discussed above, goes to the issue of causation, and also raises significant doubt on the issue of quantification. Loss of Opportunity to Continue to Trade 1. The Plaintiffs claim that, as a result of having lost the opportunity to settle the 2006 Proceedings for the sum of $1.3m on 19 September 2006, TCBS lost the opportunity to avoid liquidation and to continue trading. 2. Given the findings made above, this claim also fails. 3. Further, even if I had determined that an actionable wrong on the part of the Defendants caused the loss of the $1.3m settlement, I would have concluded that this claim for loss of an opportunity to avoid liquidation and to continue to trade was not established. That is for several main reasons which are identified briefly below. 4. First, by late 2006, the business partnership between Mr Salmon and Mr Myers had broken down. As a result, TCBS effectively ceased trading actively at that time, with each of Mr Salmon and Mr Myers becoming involved in other businesses. There was no evidence that this strained relationship was caused by the loss of the settlement. Accordingly, whether or not the settlement funds had been received, TCBS would likely not have continued to trade from late 2006. 5. Secondly, given that terms were not agreed for settlement, it is unclear when the settlement sum would have been paid (and this would, as identified above, likely depend on what was agreed in respect of priority). The Plaintiffs have not led evidence of TCBS's cash position at various points in time from late 2006 onwards, or its creditors in late 2006. Nor have the Plaintiffs explained, by reference to any such cash position, the basis on which it is contended that, if the settlement sum had been received by a particular point in time, it would have provided TCBS with the opportunity to avoid liquidation. Without knowing those matters, it may have been the case that the receipt of an amount less than $1m (after the Receivers' fees and costs) would not have changed TCBS's fortunes, but would only have meant that TCBS received a sum which would have been wholly expended on decreasing, but not eliminating, the shortfall in payments to creditors. 6. Thirdly, the Plaintiffs have not led any expert evidence regarding the question of TCBS's solvency, or regarding the profits that could have been earned from its trading. Instead, they have relied on evidence of the profits disclosed by TCBS's accounts as at 2006, and Mr Salmon's evidence, often without supporting documents, of plans for the business and the earnings that could have been achieved. 7. In particular, the figures claimed by the Plaintiffs for TCBS's loss of the opportunity to trade from 2006 onwards are based on the fact that TCBS's accounts disclose that its net profit before tax for the 2006 financial year was $673,737.79. That profit figure is extrapolated for future years through to the date of trial, with an increase applied year-on-year, such that a company which was, as a matter of fact, unable to pay a costs order of some $90,000 is said to have lost the opportunity to make profits of some $48.75m (excluding interest). This claim does not grapple with the fact that the liquidator of TCBS concluded, following his investigations, that one of the reasons for the company's failure was that, although TCBS had engaged in the business of making loans, it "was not satisfactorily capitalised for that purpose". Further, the liquidator concluded that "TCBS had a history of failing to pay its obligations to the ATO when due and payable (or at all)". 8. Finally, the 2006 accounts of TCBS were unaudited and the liquidator of TCBS, following his investigations, concluded that revenues were overstated, and that TCBS had in fact incurred trading losses in 2006 as well as 2007. In those circumstances, I do not consider that those accounts provide any sufficient basis (assuming TCBS would have continued to trade) for estimating its maintainable earnings, and no other basis was identified for any such estimation. Conclusion on causation and loss 1. For those reasons, even if (contrary to my findings) Mr Brown or the Receivers had dishonestly breached their fiduciary duties, or had knowingly assisted in such a breach, or that the Receivers had breached their duties under the "deed" by which they were appointed, the Plaintiffs have not established that any such breach caused the losses which they claim by way of equitable compensation and damages. I. LIMITATION ISSUES Equitable Claims 1. Given my findings on the issues of breach and causation, the remaining issues concerning limitation periods, the dates on which amendments take effect, and the defence of laches can be dealt with briefly. 2. I have already addressed above Mr Brown's contentions regarding the amendments to the pleading which were made in order to raise, in the alternative to the existing allegation of an express retainer, an allegation of an implied retainer. If necessary, I would have allowed such amendments to be made, and to take effect from the date of commencement of the proceedings (see paragraphs 276-277 above). 3. Whether or not those amendments took effect from the date of the commencement of the proceedings, I have found that Mr Brown did not dishonestly breach his fiduciary duties. I have made a similar finding against Mr Albarran. The Plaintiffs accepted that, if I did not find a dishonest breach, the claim for breach of fiduciary duties was statute-barred pursuant to s 23 of the Limitations Act 1969 (NSW). 4. The Defendants argued that, even if I had made a finding of dishonest breach of fiduciary duty, such a claim would have been statute-barred by application of that provision. In that regard, the Defendants relied on the observations by Handley JA (Giles and Bryson JJA agreeing) in Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286 at [22]-[24]: "The claims were for compensation for breach of fiduciary duty, even if the breaches involved elements of dishonesty. The analogy in such a case, as the Judge found, is with actions for breach of professional duty in contract or in tort where the applicable period is 6 years. The question is covered by the decision in Cia de Seguros Imperio v Heath Ltd [2000] EWCA Civ 219; [2001] 1 WLR 112 which neither counsel cited. The Court of Appeal there applied the statute by analogy to claims by a client against its insurance broker for dishonest breaches of fiduciary duty. Waller LJ said (121): '… equity would have taken the view that it should apply the statute by analogy to a claim for damages or compensation for a dishonest breach of fiduciary duty. I say that because what is alleged against Heath's as giving rise to the dishonest breach of fiduciary duty are precisely those facts which are also relied on for alleging breach of contract or breach of duty in tort.' Clarke LJ said (125): '… the essential nature of the pleaded case is the same whether it is put as damages for breach of contract, damages for breach of duty or damages (or compensation) for breach of fiduciary duty.'" 1. In response, the Plaintiffs submitted that there is, for the purposes of section 23 of the Limitations Act 1969 (NSW), no analogous limitation period where it is claimed that the breach of fiduciary duty formed part of a dishonest and fraudulent design and, a fortiori, no analogous limitation period where a claim for knowing assistance is made. In this regard, the Plaintiffs relied on Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118 at [34]-[35], [60]-[65], [70]-[71] per Leeming JA (with whom Sackville AJA agreed at [98]) and at [216]-[217] per Emmett JA. 2. Given that this raises a legal question, which is unnecessary to decide having regard to the findings I have made, I do not express any views on the issue. 3. Similarly, it is unnecessary to decide whether, if the Plaintiffs had established a claim for dishonest breach of fiduciary duty or a claim for knowing assistance in any such dishonest breach, and had established that TCBS's claim in respect of such breach was not statute-barred, relief should be refused by reason of the delay in bringing that claim. 4. There is evidence that Mr Salmon was of the view in around 2008 that there was a claim available against the Receivers and Mr Brown for the loss of the $1.3m settlement as a result of the Given Form release being inserted into the settlement deed. Further, TCBS investigated and considered bringing such a claim in 2008, but no such claim was pursued at any time before December 2016. In addition, as I have already observed, there is evidence that substantial documentary records relevant to the matters in issue (such as the files of Etienne Lawyers and most of the files of Hall Chadwick) are no longer available. 5. Nonetheless, the issue whether relief in respect of particular wrongdoing should be barred by laches is difficult to determine in the abstract, in circumstances where no claims of wrongdoing have been established. The doctrine of laches is directed to the question "whether, as between the parties, it would be practically unjust to give relief which otherwise would be just": Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 at [73] per Meagher JA (Beazley P and Emmett JA agreeing). Any assessment of this question of practical injustice should be made against the background of the particular matters which support an entitlement to relief "which otherwise would be just", with a specific focus on whether, by reason of the passage of time, evidence may have been lost which would have been relevant to those particular matters. The question which then arises is whether the delay in pursuing the claim has caused prejudice to the Defendants such that it would be inequitable to grant the relief sought: Orr v Ford (1988) 167 CLR 316 at 341 per Deane J; [1989] HCA 4. 6. Having determined that none of the Plaintiffs' claims of wrongdoing have been established, I do not consider that it is useful or desirable to embark on any such analysis. Claims founded on 'deed' 1. As set out in section F of this judgment, I have determined that the Appointment instruments were not deeds. The Plaintiffs accepted that, if that was the position, it necessarily followed that all claims based on a breach of those instruments were statute-barred. 2. The amendments by which the Plaintiffs raised the allegation that the appointment instruments were "deeds", and that the Receivers breached duties arising under those deeds, were made by the Second Further Amended Statement of Claim, which was filed on 22 October 2021. The Receivers submitted, and the Plaintiffs did not dispute, that this amended pleading was permitted to be filed so that the new claims could be set out along with the date of their inclusion, with the question as to whether those new claims could or should be allowed to form part of the proceedings, and the date from which they were to commence if added, being reserved for the trial judge (referring to the transcript of the hearing before Parker J on 7 December 2020). 3. The Receivers submitted that there was no power to allow these amendments; and, if there was such power, I should refuse leave for these amendments, or alternatively I should order that such amendments take effect from the date of the order granting leave, rather than from the date of the commencement of the proceedings (with the effect that, even allowing for the 12-year limitation period in respect of claims founded upon a deed, the claims would be statute-barred). 4. The Receivers contended that the conditions for the power to amend a pleading under s 65(1) of the Civil Procedure Act 2005 (NSW) were not satisfied. That section provides as follows: "This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings." 1. The Receivers submitted that at the time these proceedings were commenced in December 2016, the "relevant limitation period" had already expired in respect of each of the causes of action which was pleaded against the Receivers in the initial Statement of Claim. In response, the Plaintiffs submitted that the issue for s 65(1) of the Civil Procedure Act is whether the "relevant limitation period" for the cause of action proposed to be added by the amendments (here, a claim under a deed) had expired at the time of the commencement of the proceedings in December 2016; and, because the limitation period for a claim founded upon a deed is 12 years (Limitation Act, s 16), it had not expired at that time. 2. That is, the parties were in dispute as to whether the "relevant limitation period" in s 65(1) of the Civil Procedure Act was the "relevant limitation period" in respect of each cause of action in the pleading at the time that the proceedings were commenced; or the "relevant limitation period" in respect of the cause of action to be added by the proposed amendment. 3. I do not need to resolve this issue because, irrespective of whether the conditions for the exercise of the power in s 65(1) were satisfied, there was a power to amend the pleading under s 64 of the Civil Procedure Act. Section 65(4) stipulates that s 65 does not limit the powers of the Court under s 64. 4. Section 64(1) provides as follows: "At any stage of proceedings, the court may order – (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings." 1. The power under s 64 is available where the conditions for the exercise of the power under s 65 are not satisfied: Greater Lithgow City Council v Wolfenden [2007] NSWCA 180 at [12]-[18] per Handley AJA (Campbell JA and Young CJ in Eq agreeing). In that case, the Court held that the Parliament must be taken to have endorsed, as applicable to ss 64 and 65, the settled construction of the similarly worded predecessor rules that was outlined by Glass JA in McGee v Yeomans [1977] 1 NSWLR 273 at 280, namely, that the effect of these provisions is to provide "a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires". 2. Section 64(2) provides that: "Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings." 1. At the time that the twelve-year limitation period in respect of claims founded on a deed expired, the existing pleading was the Further Amended Statement of Claim (FASC), which was filed on 25 May 2017. It included allegations that the Receivers had been appointed by TCBS as receivers and managers in respect of BACM and BACF pursuant to the Appointment instruments (FASC, [22], [23]); that, in the course of performing that role, the Receivers owed duties to TCBS (FACS [87]); and that they breached those duties, inter alia, by inserting the Given Form release into the draft settlement deed, by insisting on the release remaining when the Liquidator objected to its inclusion, and by concealing from Mr Salmon that this was the reason for the settlement failing to occur (FASC [88(a)-(d)]). I consider that the allegations made in respect of the Appointment instruments by the October 2021 amendments arise from substantially the same facts as those previously pleaded claims. 2. For those reasons, I would have been minded to exercise the discretion under s 64 of the Civil Procedure Act to allow the amendments, with effect from the date of the commencement of the proceedings. However, having determined that the Appointment instruments are not deeds and any claim in respect of them is statute-barred, and having determined that in any case the Receivers did not breach any duty arising under those instruments, and no loss has been suffered by any such breach, I am of the view that such amendments would be futile. CONCLUSION 1. The Plaintiffs have not established their claims against any of the Defendants. 2. It follows that the proceedings must be dismissed with costs. In the event that the terms of the costs order are not agreed, I will give directions for the parties to make submissions regarding that issue. 3. Accordingly, I make the following orders. The Court: 1. Orders that the Fourth Further Amended Statement of Claim be dismissed. 2. Directs that, by 4pm on 2 November 2023, the parties bring in short minutes of order that deal with costs, if they can be agreed. 3. Directs that, if the parties cannot agree on the form of orders in relation to costs: 1. the Defendants file and serve any written submission, limited to 5 pages, in respect of the terms of the order for costs, together with any affidavit in support, by 4pm on 2 November 2023; and 2. the Plaintiffs file and serve any written submission in response on costs, limited to 5 pages, together with any affidavit in support, by 4pm on 9 November 2023. ********** Amendments 19 October 2023 - Amended the text in the Decision where Julian O'Sullivan is mentioned - removed SC from after his name. 19 October 2023 - Removed 'Senior' from references to Mr O'Sullivan as Senior Counsel 20 October 2023 - Issues with paragraph numbering amended 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: 20 October 2023