New South Wales Supreme Court CITATION : Blackshaw Services Pty Ltd and Ors v. Cureton [2001] NSWSC 548 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3750/92 HEARING DATE(S) : 18 to 22, and 27 June, 2001 JUDGMENT DATE : 4 July 2001 Blackshaw Services Pty Ltd (First Plaintiff) Jack Hicks (Second Plaintiff) Hinemoa Pty Ltd (Third Plaintiff) PARTIES : Hicks Holdings Pty Ltd (Fourth Plaintiff) Hinemoa Properties Pty Ltd (Fifth Plaintiff) Hinemoa (Sales) Pty Ltd (Sixth Plaintiff) William H. Cureton (Defendant) JUDGMENT OF : Palmer J COUNSEL : M.J. Slattery QC, R. Marshall (Plaintiffs) D.D. Feller, A. Fernon (Defendant) SOLICITORS : Henshaws (Plaintiffs) Grahame W.Howe (Defendant) CATCHWORDS : EQUITY - FIDUCIARY OBLIGATIONS - Defendant one of two directors of corporate plaintiff and a sole signatory of bank account - defendant derives benefit from various transactions with corporate plaintiffs - fails to make full and frank disclosure to other director - breach of fiduciary duty - defendant liable to account as a fiduciary. - EQUITY - UNCONSCIONABLE CONDUCT - Whether contract giving defendant a profit share in the business of the corporate plaintiffs enforceable - defendant places controller of corporate plaintiffs in position of special disadvantage - plaintiffs cannot adequately conserve their own interests - unconscionable conduct by the defendant - contract should be set aside in equity. - INTEREST - COMPOUND INTEREST - Defendant in breach of fiduciary duty - breach not of a minor or technical nature - plaintiffs deprived of use of the money - compound interest awarded. LEGISLATION CITED : Supreme Court Rules 1970 Blomley v. Ryan (1956) 99 CLR 362 Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447 CASES CITED : Garcia v. National Australia Bank Ltd (1998) 72 ALJR 1243. Hungerfords v. Walker (1990) 171 CLR 125 Louth v. Diprose (1992) 175 CLR 621 Schipp v. Cameron (unrep. SCNSW 12 October 1998, Einstein J) DECISION : Defendant ordered to account. Cross claim dismissed. 1 The First and Third to Sixth Plaintiffs comprise a group of companies controlled by the Second Plaintiff, Mr Hicks. The Defendant, Mr Cureton, is an accountant who worked as in-house accountant for the Group from February 1987 until May 1992. He was a director of the corporate plaintiffs from November 1987 until he ceased employment. 2 These proceedings were commenced in 1992, the plaintiffs originally seeking the return by Mr Cureton of documents of the plaintiffs taken by him when he left his employment. Most of the documents were eventually returned. 3 The proceedings were revived by the plaintiffs by the filing of a Statement of Claim in February 1999. The defendant responded with a Cross Claim. 4 The plaintiffs' Statement of Claim has undergone a number of amendments, most of them during the course of the trial. By their Fourth Further Amended Statement of Claim the plaintiffs claim, in broad outline, as follows. 5 The Third Plaintiff claims repayment of the sum of $29,500 said to have been misappropriated in March 1989 by Mr Cureton from a superannuation fund of which the Third Plaintiff was trustee. 6 The Fourth Plaintiff claims repayment of various amounts totalling $19,407 debited to a loan account of Mr Cureton in the books of the Fourth Plaintiff, those amounts being alleged to have been paid to Mr Cureton or for his benefit without the knowledge and consent of the Board of the Fourth Plaintiff or of Mr Hicks. 7 The First Plaintiff claims repayment of amounts totalling $19,012.31 charged to the First Plaintiff by Mr Cureton in respect of services said to have been rendered by staff of Mr Cureton's accountancy practice, those payments being alleged to have been procured by Mr Cureton without the knowledge and consent of the Board of the First Plaintiff and Mr Hicks. 8 The Third Plaintiff claims repayment of amounts totalling $16,973.25 said to have been paid from the funds of the Third Plaintiff for CCH subscriptions, a life insurance premium and other minor matters for the benefit of Mr Cureton, those payments being alleged to have been procured by Mr Cureton without the knowledge and consent of the Board of the Third Plaintiff and Mr Hicks. 9 In respect of all of these payments, the plaintiffs claim that Mr Cureton is liable to account as a fiduciary in that at the times of the payments he was not only an employee but also a director of the relevant plaintiffs and a sole signatory to the Group's bank account. 10 By his defence Mr Cureton alleges that all of the payments to him or for his benefit said to have been unauthorised were in fact made with the full knowledge and consent of Mr Hicks, as the controller of the plaintiff companies. He says further that it was part of the terms of his contract of employment with the plaintiffs that his CCH subscriptions and subscriptions to professional services and journals would be paid for by his employer. 11 By his cross claim, Mr Cureton seeks to enforce certain terms of an oral contract of employment which he said was made in February 1987 between him and Mr Hicks on behalf of all the corporate plaintiffs and on Mr Hicks' own behalf. Mr Cureton says that the relevant terms of the oral contract were varied by an agreement in writing dated 20 April 1990 signed by Mr Hicks on his behalf and on behalf of the corporate plaintiffs. The relevant terms are said to provide that in addition to his salary and other employee benefits Mr Cureton would be entitled to a certain share of the profits before tax of all of the business operations of the Group and a certain share of the increase in value of the assets of the Group. 12 The plaintiffs deny that an oral contract of employment containing the terms alleged by Mr Cureton was made in February 1987. Further, by their Fourth Further Amended Statement of Claim they say that if a contract containing the alleged terms was made in February 1987 it was procured by breach of fiduciary duty on the part of Mr Cureton. In respect of any contract made or varied by the letter dated 20 April 1990 signed by Mr Hicks, they say that that contract or variation was procured by Mr Cureton in breach of fiduciary duty or by unconscionable conduct. Background 13 Mr Hicks was a carpenter and joiner by trade. In 1962 he commenced a small business manufacturing and installing elevator car superstructures. Other partners joined him over time and the venture prospered. 14 By 1978 the business was carried on by a group of companies which I will call the "Elevator Cars Group". The names of the companies have now been changed, but for ease of identification I will continue to call them by their former names. Elevator Cars Pty Ltd (the Third Plaintiff) carried on the manufacture and installation of elevator cars, and was the trustee of a superannuation fund. Elevator Cars (Sales) Pty Ltd (the Sixth Plaintiff) was the sales company, and Elevator Cars (Properties) Pty Ltd (the Fifth Plaintiff) owned the real estate upon which the factory and office premises of the business were situated. Blackshaw Services Pty Ltd (the First Plaintiff) provided administration services to the Group. Hicks Holdings Pty Ltd (the Fourth Plaintiff) held half the shares in the other companies in the Group, the other half being held by the Hicks Family Settlement Trust, of which Mr Hicks was the trustee. 15 Mr Hicks met Mr Cureton in 1978 through their membership of the Port Hacking Businessmen's Club. Mr Cureton was then carrying on practice as an accountant. The two men became good friends. In 1984 Mr Cureton was Mr Hicks' best man when Mr Hicks married his second wife, Loretta. 16 In 1983 Mr Cureton was appointed the accountant for Mr Hicks, Loretta Hicks and Mr Hicks' family company, Hicks Holdings Pty Ltd. In April 1985 Mr Cureton was appointed the external accountant to the Elevator Cars Group, supplanting another firm of accountants. 17 On 1 November 1985 Mr Cureton sold his accountancy practice to the firm of Bowie Wilson Miles & Co ("Bowie Wilson"). Mr and Mrs Hicks and the Elevator Cars Group all became clients of that firm. Mr Cureton continued as a full time employee of Bowie Wilson. 18 In late 1986 or early 1987 Mr Hicks and Mr Cureton had a number of discussions, as a result of which Mr Cureton commenced employment with the Elevator Cars Group as its in-house accountant and office manager on 27 February 1987. The discussions between Mr Hicks and Mr Cureton at this time, which are said to have resulted in a contract of employment in the terms alleged by Mr Cureton, have been a central issue in this case. 19 In November 1987 Mr Hicks and his wife, Loretta, divorced. Mr Cureton was involved in working out a restructuring of the Elevator Cars Group in order to fund the divorce settlement. A substantial part of the settlement funds came from Mr Hicks' superannuation entitlement in the Elevator Cars Pty Ltd Superannuation Fund. Mr Cureton devised a procedure whereby Mr Hicks' employment with Elevator Cars Pty Ltd was terminated and his superannuation entitlement was thereupon paid to him. Mr Hicks was then re-employed by Blackshaw Services Pty Ltd. As part of this restructure Mr Cureton was appointed a director of each of the companies in the Group on 8 November 1987. Mr Cureton had previously been employed by Elevator Cars Pty Ltd but, on and from 8 November 1987, he was employed by Blackshaw Services Pty Ltd. 20 Mr Cureton's primary responsibility as an employee of the Elevator Cars Group was for the financial structure and financial requirements of the Group. In particular, he was charged with the responsibility of ensuring that the financial records were duly kept, financial statements were prepared, tax returns furnished, and other statutory returns lodged. 21 Mr Cureton seems to have involved himself in far more than the financial and accounting requirements of the Group, from the very commencement of his employment. He became involved in office administration, employees' housing assistance loans, superannuation, workers compensation, plant and equipment purchases and performance reviews. He involved himself in industrial relations, management of the Group's real estate holdings, implementation of management systems in the factories and monitoring overall production. 22 Unfortunately, Mr Cureton's attention to his other duties was at the expense of his primary responsibility as the in-house accountant of the Group, that is, the production of proper financial records for the companies in the Group, including the preparation of balance sheets and profit and loss accounts as at the end of each financial year, and the preparation and lodgment of taxation returns for each company in the Group. He did not produce any balance sheets or lodge any tax returns for any company in the Group for the years ended 30 June 1987, 1988, 1989, 1990 and 1991. This became a matter of increasing concern to Mr Hicks and the Group's bank, the ANZ Bank, where the Group had a substantial overdraft account. 23 On 20 April 1990 Mr Hicks was due to depart for an overseas trip. A very short time before he was due to board his plane, Mr Cureton arrived at the airport and presented to Mr Hicks a letter addressed from Mr Hicks to Mr Cureton. The letter purported to confirm Mr Cureton's entitlement to a percentage of profit share of the Group's businesses and a percentage of the growth in value of the assets of the businesses, terms which Mr Cureton says were agreed between himself and Mr Hicks in early 1987 as part of his contract of employment. Mr Hicks signed the letter and his signature was witnessed by a friend of his. What was said by the two men on this occasion is strenuously in dispute. 24 The relationship between Mr Hicks and Mr Cureton appears to have soured by late 1991. Mr Hicks was annoyed that Mr Cureton had never produced balance sheets or lodged tax returns for the Group companies since he began employment in 1987. Relations became increasingly strained in November 1991, when Mr Hicks approached his solicitors to determine whether the affairs of the Group were in order and was informed that no Australian Security & Investment Commission returns or income tax returns had been lodged for the Group since 1987. 25 On 12 March 1992 Mr Cureton and Mr Hicks attended a meeting at the ANZ Bank with Mr Bickerton, the manager responsible for the Group's bank account. Mr Bickerton was critical of Mr Cureton's failure to provide financial statements for the Group to the Bank at any time since 1987, despite his frequent promises to the Bank in that respect. Mr Hicks criticised Mr Cureton's performance. Mr Cureton regarded his integrity as under question. The meeting ended with Mr Cureton departing abruptly. 26 On 21 April 1992 Mr Cureton attended a meeting with Mr Hicks, Mr Hicks' solicitor, Mr Cahill, and Mr Klein, a chartered accountant. Mr Hicks accused Mr Cureton of stealing money from the Group. Mr Cureton was informed that Mr Klein was going to take over as accountant for the Group. Mr Cureton tendered his letter of resignation as a director of the Group companies on 5 May 1992. Credit 27 The determination of the issues in this case depends essentially upon the credit of Mr Hicks and Mr Cureton. There are no contemporaneous records of the conversations between Mr Hicks and Mr Cureton in late 1986 and early 1987 which gave rise to Mr Cureton's contract of employment. There are no contemporaneous records of various conversations between Mr Hicks and Mr Cureton whereby Mr Cureton says that Mr Hicks was informed of Mr Cureton's intention to borrow money from the Group. Neither is there any contemporaneous record of the conversations between Mr Hicks and Mr Cureton pursuant to which Mr Cureton says that he obtained the benefit of a sum of $29,500 remaining to the credit of the Group's superannuation account in November 1987. There were no other witnesses to any of these conversations. 28 Accordingly, it is necessary for me to form a view as to the credit of Mr Hicks and Mr Cureton based upon their demeanour in the witness box, the inherent probability of the competing versions of the facts which they give, and their character as it emerges from other relevant circumstances. 29 I found Mr Hicks to be somewhat inclined to exaggeration. He feels a sense of grievance and betrayal in that he believes that Mr Cureton took advantage of their long-standing friendship in order to derive benefits for himself at the expense of the Group without prior disclosure to Mr Hicks. It is not that Mr Hicks objects so much to matters such as Mr Cureton having the benefit of a loan account with the Group or that minor expenses such as health insurance were paid by the Group for the benefit of Mr Cureton; rather, it is the fact that these benefits were, according to Mr Hicks, taken by Mr Cureton without prior discussion with him which has aroused Mr Hicks' anger. 30 The extent of Mr Hicks' sense of grievance may be gathered from the fact that, at the meeting on 21 April 1992 attended by Messrs Hicks, Cahill, Klein and Cureton, Mr Hicks accused Mr Cureton of stealing money when there was at that time no evidence to support that accusation. Mr Hicks was incensed that Mr Cureton had failed to prepare the financial statements for the Group for some five years and had failed to lodge income tax returns for the Group for that period, despite frequent assurances not only to Mr Hicks but to the ANZ Bank. That sense of grievance on the part of Mr Hicks led him to make an accusation of dishonesty against Mr Cureton which Mr Hicks, frankly and with some embarrassment, now accepts was unjustified on the evidence which he then had. 31 Mr Hicks' own honesty was called into question by Mr Feller who, with Mr Fernon, appeared for Mr Cureton. Mr Feller elicited from Mr Hicks that on probably three occasions Mr Hicks sold for cash quantities of scrap metal which had been left over from various projects of the Group and kept in 44 gallon drums in the factory yard. Mr Hicks admitted that he "put that cash in [his] pocket" . The amount of money received from these sales was not revealed in the evidence. Mr Hicks also admitted to having signed directors' minutes relating to the tabling of accounts for the Elevator Cars Group at a time when those accounts, which should have been prepared by Mr Cureton, were not in existence. The minutes had obviously been backdated when Mr Hicks signed them. I have taken these matters into account in assessing Mr Hicks' character and credit. 32 My impression of Mr Hicks is that he is a person of hot and volatile temper, given to moments of generosity but liable to repent of his generosity on later reflection. However, I do not get the impression that he is a man of innate dishonesty or unreliability. He is, as he says, inexperienced in dealing with financial analysis at anything beyond an elementary level. It is possible that in the course of explanations which may have been given from time to time by Mr Cureton Mr Hicks may not have understood fully what was being explained and at a later time may have come to believe that he had not had any relevant explanation about those matters at all. I have to take this into account in determining whether his denials of the explanation said to have been given to him by Mr Cureton as to the matters in dispute should be accepted. 33 I regret to say that my impression of Mr Cureton's credit has been most unfavourable. I take into account the following matters. 34 Mr Cureton carried on practice for many years as an accountant and as a registered tax agent. However, he has not lodged any tax returns for himself since 1980 despite earning assessable income throughout that period which required him to lodge returns. His explanation for his failure to file his own tax returns in the period prior to commencing employment with the Elevator Cars Group in 1987 was that he was distracted from that task by severe difficulties which his daughter was experiencing in her relationship with a man of bad character. Nevertheless, he seems to have been able to devote himself throughout this period to his practice as an accountant. 35 From 1987 onwards, Mr Cureton devoted himself not only to his practice but also to his management duties with the Elevator Cars Group. He did not suggest that difficulties in his personal life interfered with the performance of those duties. His failure to file his tax returns from 1987 to the present time was attributed to "pressure of …a personal and business nature" . He said that once these proceedings had been concluded he hoped to be able to place his tax affairs in order. 36 I find Mr Cureton's explanation of his failure to lodge tax returns for the last twenty years and his statement of intention to rectify his failure entirely unconvincing in the light of his repeated false statements and broken promises to the ANZ Bank in respect of his failure to provide the bank with the Group financial statements from 1987 to 1992: see paragraphs 47-54 below. 37 Because of his failure to file his own tax returns it appears that Mr Cureton permitted his registration as a tax agent to lapse, probably around the early 1980s. He said, however, that he had recently disclosed to officers of the Tax Agents Registration Board the fact that he had filed no tax return since 1980 and the reasons for his failure. When a subpoena was issued by the plaintiffs to the Board to produce any files relating to Mr Cureton, the Board responded that there was no record of Mr Cureton being known to the Board at all. 38 I find it very difficult to accept that if Mr Cureton had made the disclosure to the Board which he says he had made there would be no record of that disclosure, and there would have been no action taken by the Australian Taxation Office to ensure that Mr Cureton paid the appropriate penalties for failure to file tax returns for twenty years. 39 Mr Cureton attempted to substantiate his assertion that he had made full disclosure to the Tax Agents Registration Board by producing a business card of an investigation officer and blank registration forms. It appears that the business card is some six or seven years old. I am satisfied that if Mr Cureton had any contact with investigating officers of the Tax Agents Registration Board that contact was so fleeting and insubstantial that the Board did not open a file in relation to the matter. It is probable that Mr Cureton did no more than make an enquiry from officers of the Board as to the procedures for re-registration, but did not make any disclosures as to the circumstances in which he had let his registration as a tax agent lapse. 40 I am of the view that Mr Cureton was far from frank in his evidence as to the extent of his disclosure to the Tax Agents Registration Board. 41 It is also highly material that while Mr Cureton was not registered as a tax agent and therefore not entitled to charge for work done in completing taxation returns for others, he charged clients for such work, thereby falsely representing that he was lawfully entitled to do so. 42 Another matter seriously damaging Mr Cureton's credit and character is the fact that in October 1998 he deliberately breached an undertaking given by his solicitors on his instructions to the plaintiffs' solicitors not to disburse funds standing to the credit of his National Mutual Superannuation account. Those funds were the subject of the dispute in these proceedings as to whether or not Mr Cureton was entitled to a sum of $29,500 transferred for his benefit from the Elevator Cars Superannuation Fund in 1989. 43 On 16 October 1998 the plaintiffs' solicitors wrote to Mr Cureton's solicitors seeking an undertaking from Mr Cureton not to disburse the money in the National Mutual superannuation account. The plaintiffs' solicitors made it plain that if the undertaking was not given they would be seeking an urgent ex parte injunction to freeze the funds. 44 On 19 October 1998 Mr Cureton's solicitors, on his instructions, gave an undertaking not to disburse the funds subject to a certain condition being fulfilled by the plaintiffs' solicitors within forty-eight hours. The condition to which the undertaking was subject was fulfilled by the plaintiffs' solicitors on 21 October, within the time stipulated. At 11.45am on 21 October, before the time for fulfilling the condition had expired, Mr Cureton sent an urgent facsimile to National Mutual giving directions for the payment of the monies into a nominated bank account. At the time that his undertaking had been given on 19 October, the funds in the National Mutual superannuation account were not yet available for payment to Mr Cureton. Presumably, the funds were paid into his bank account by National Mutual either in the afternoon of 21 October or in the morning of 22 October. On the morning of 22 October Mr Cureton disbursed the funds, having refrained from enquiring of his solicitors as to whether the condition of his undertaking to the plaintiffs had been fulfilled. 45 His reasons for disbursing the funds without prior enquiry of his solicitors were entirely discreditable. He said that he did not understand that receipt by his solicitors of documents satisfying the condition of the undertaking was receipt by him and that he felt no obligation to enquire of his solicitors whether the condition had been fulfilled within the stipulated time. I regard that explanation as dishonest and untruthful. 46 Mr Cureton's attitude as displayed in this episode was that he did not care about fulfilling his own obligations in respect of an undertaking, nor did he care about the position of his solicitors who had given the undertaking. His attitude was that he believed he was entitled to do whatever was necessary to secure what he believed to be in his interest, regardless of whether that involved subterfuge or dishonesty. I am satisfied that he instructed his solicitors to give the undertaking so as to avoid both himself and, possibly, National Mutual or his Bank, being restrained by injunction from disbursing the money, intending that as soon as the funds in the National Mutual account became available to him he would disburse them in breach of the undertaking. 47 Further, I take into account the fact that Mr Cureton deliberately and repeatedly lied to the ANZ bank manager about the state of preparation of the Group's financial accounts. On 13 April 1988, as the bank manager's diary discloses, Mr Cureton told the bank manager that balance sheets up to 30 June 1987 were in their final stages and should be available within three or four weeks. That was completely untrue. There was no prospect of the balance sheets for 30 June 1987 being available in that time or for a considerable period of time. 48 On 31 August 1988 Mr Cureton told the bank manager that the balance sheets and accounts for 30 June 1987 were now available, but those figures were only of historical interest as the balance sheets and accounts for the Group to 30 June 1988 would be available within the next few weeks. Those statements, likewise, were false. 49 On 3 March 1989 Mr Cureton told the bank manager that he expected to have the balance sheets and financial statements for the Group in respect of the year ended 30 June 1988 available by no later than 17 March 1989. That statement was false. 50 On 16 March 1989 Mr Cureton again told the bank manager, untruthfully, that the balance sheets for the Group were all but completed. 51 On 19 May 1989 the bank manager's diary records the following: "Expressed, once again, anguish for not yet receiving balance sheets as promised. Once again [Cureton] advised of many delays, however, pinned him down for a review on 2.6.89, at which time balance sheets will be tabled and discussed." 52 On 2 June 1989 Mr Cureton failed to keep the appointment with the bank manager, without prior explanation. 53 On 3 October 1989 Mr Cureton told the bank manager that the financial accounts would be complete in four or five days time. On 13 December 1990 he said that the balance sheets for the Group would be available on 28 February 1991. On 2 July 1991 he wrote to the bank advising that the balance sheets for the Group would not be completed until 31 July 1991. All of these promises to provide balance sheets by a certain date were made without any expectation on Mr Cureton's part of being able to fulfil those promises. 54 At a meeting which took place on 12 March 1992 between the bank manager, Mr Bickerton, Mr Hicks and Mr Cureton, Mr Cureton stated that the Australian Tax Office was well aware of the fact that the Group had filed no tax returns since 1987. He said that the ATO had given him until 31 March 1991 to forward completed returns and that he was of the opinion that the tax owing was minimal and that only a small fine was payable. 55 There was no documentary evidence whatsoever that Mr Cureton had in fact advised the ATO of the Group's failure to lodge returns. He admitted that it would have been a false statement if he had said that tax owing would be minimal and only a small fine would be payable. He denies having made such a statement to the bank manager. However, that statement is recorded in the bank manager's diary note, and I accept that the statement was made by Mr Cureton. I am satisfied that Mr Cureton deliberately made that false statement in order to protect his own position. 56 Finally, I take into account the evidence which Mr Cureton gave as to the circumstances in which he obtained two payments from the Group of $6,000, the first on 25 November 1991 and the second on 10 April 1992. The payments of $6,000 to Mr Cureton on his loan account were much larger than any other previous drawings by him. 57 By 25 November 1991 the relationship between Mr Hicks and Mr Cureton was very severely strained. Mr Cureton was by that time in the habit of making notes for himself as to Mr Hicks' discourtesies towards him. One such note is dated 25 November 1991 and records an incident which occurred on that day. However, his evidence on affidavit was that he had sought express permission from Mr Hicks before drawing a cheque in his own favour for $6,000 on 25 November 1991. 58 In cross examination he said at first that he did not ask Mr HicksickHiHick about that cheque, then he said that he did make such a request. When pressed as to the time of that request he said that he could not recall the specific date "… but I had arrangements with him after about a year or so that because the accounts were not being prepared, etc., that I be allowed to draw down to a loan account similar to how he was running in anticipation of profits" . He said that he had no recollection of a conversation with Mr Hicks, to which he deposed in his affidavit, to the effect that when he informed Mr Hicks of his desire to draw down $6,000 on 25 November 1991 Mr Hicks said: "That's fine" . A few moments later he said that he did have a recollection of seeking permission from Mr Hicks shortly prior to or at the time of drawing down the payment. His evidence in this respect was contradictory and entirely unconvincing. 59 He gave evidence in his affidavit that he had obtained specific consent from Mr Hicks prior to drawing down a payment of $6,000 on 10 April 1992. By that time it was clear that the relationship between Mr Cureton and Mr Hicks was extremely hostile and was shortly to end. 60 At the meeting with Mr Bickerton on 12 March 1992 Mr Cureton had left abruptly when he believed that Mr Bickerton and Mr Hicks were questioning his integrity. Nevertheless, according to Mr Cureton, less than a month later he asked Mr Hicks for permission to draw down from the Group funds another $6,000 in his favour, and Mr Hicks said simply: "That's fine" . That evidence is so improbable in the light of the state of the relationship between Mr Hicks and Mr Cureton at that time that I cannot accept it. Mr Cureton's demeanour when giving this evidence left me satisfied that he was not telling the truth. 61 In summary, I cannot accept Mr Cureton as a witness of truth. I am not prepared to accept his evidence where it is improbable, unsupported by contemporaneous records, or contrary to evidence given by Mr Hicks which is inherently probable. 1987 contract of employment 62 It is convenient to begin with the issue as to whether there was an oral contract made in late 1986 or early 1987 between Mr Cureton and Mr Hicks on behalf of the Elevator Cars Group in the terms alleged by Mr Cureton. Whether or not such a contract was made will resolve many of the other issues arising in this case. 63 Mr Cureton says that on a number of occasions after his appointment as external accountant to the Elevator Cars Group in 1985, Mr Hicks asked him to become a partner in the Elevator Cars business. He says that Mr Hicks suggested that he should buy 25% of the Group and pay the purchase price out of the profits. Mr Cureton says that he told Mr Hicks that he was not interested. Mr Cureton says that by the end of 1986 he was dissatisfied with his employment at Bowie Wilson, to whom he had sold his practice in November 1985. He says that he had a conversation with Mr Hicks in which Mr Hicks again proposed that he could buy 25% of the Elevator Cars Group and pay the purchase price out of the profits. According to Mr Cureton, on this occasion he responded: "Okay, I'll think about it. But I don't want a minority equity in a private company. I'll take 20% of the profits and growth in assets. The profit and growth should be calculated from when I sold my practice to Bowie Wilson as I have contributed to the growth and financial wellbeing since that time. My share of the profits is to be calculated before tax so that I can arrange my affairs. The profit should be paid as soon as convenient at the end of each financial year on completion of the accounts. The growth in assets need only be paid when I leave or when a major asset is realised. We can agree on unrealised assets or we can have them valued when I leave and I must be entitled to the benefits no matter what the circumstances of my departure are." 64 Mr Cureton says that Mr Hicks replied: "Okay." 65 Shortly afterwards, according to Mr Cureton, Mr Hicks said to him: "Have you considered coming over. I will agree, because of the extra travelling, to throw in your car expenses." 66 Mr Cureton says that he replied: "Okay, I will accept that offer to come and work for Elevator Cars on the profit share basis we discussed instead of the equity. But in addition to the car running expenses, I want the usual employment benefits such as holiday pay, workers compensation, long service leave and sick leave. You are also to keep my CCH and other professional services and journals going." 67 Mr Hicks is said to have responded: "That's acceptable. 68 Mr Cureton says that they then discussed other matters relating to his employment. He says that he told Mr Hicks that he would act as general manager of the Group and otherwise look after the administration of the Group and its financial affairs including the preparation of accounts. He would work twenty hours per week for a salary of $500 per week and would continue to operate his accountancy practice at Caringbah. He says that he expressly stipulated that if he needed to use staff from his accountancy practice to help him in carrying out his duties for the Elevator Car Group he would charge the Group for those services. Mr Cureton says that Mr Hicks accepted those terms. 69 Mr Hicks resolutely denies that any conversation took place between himself and Mr Cureton in which it was agreed that Mr Cureton would be entitled to any form of profit share in the Group's business. Mr Hicks says that in late 1986 he had a conversation with Mr Cureton in which Mr Cureton suggested that the Group's then internal accountant was not performing his job satisfactorily and said that it might be best if he himself started working in the Group's office two and half days a week in order to do the job that the present accountant was trying to do. Mr Hicks says that Mr Cureton made it clear that he would continue to work in his accounting practice for the rest of the week and wanted $500 per week for the time which he would spend in working in the office of the Elevator Cars Group. Mr Hicks says that he agreed to those terms. 70 There is no dispute that Mr Cureton in fact continued to conduct his own accounting practice during the whole period of his employment with the Elevator Cars Group. He maintained a separate office and employed his own staff in that practice. 71 I find that there was no contract made in late 1986 or early 1987 between Mr Cureton and Mr Hicks on behalf of any of the corporate plaintiffs and on his own behalf which contained the terms alleged by Mr Cureton as to a share in the profits of the businesses and a share in the growth in value of their assets. My reasons for so holding are as follows. 72 First, even in the light of the friendship between Mr Hicks and Mr Cureton since 1978, the alleged terms of the agreement were extremely generous and highly uncommercial. Mr Cureton was being paid approximately $50,000 a year as a full time employee of Bowie Wilson. The work which he had been doing for the Elevator Cars Group as an employee of Bowie Wilson was being billed at around $20,000 per year. By the alleged agreement Mr Cureton was to receive approximately $25,000 per year from the Elevator Cars Group for a twenty hour week, and he was to be entitled to carry on his own accounting practice as well. In addition and for no further consideration than the services he was already to perform for $500 a week, he was to receive 20% of the pre-tax profit of an obviously successful business and 20% of the growth in the value of the assets of that business, all back-dated to take effect as at 31 October 1985, when he sold his practice to Bowie Wilson. 73 That back-dating was said to be in consideration of the contribution which Mr Cureton had made to the success of the Elevator Car Group since that time, but in respect of work for which, as an employee of Bowie Wilson, he had already charged at the rate of $20,000 per annum. 74 If the contract included a term that Mr Cureton was entitled to the profit share "no matter what the circumstance of my departure are" , then Mr Cureton could have left his employment with the Group after only a week and still would have been entitled to a share of profits and asset growth for the last fifteen months, as consideration for services for which Bowie Wilson had already been paid. 75 Mr Hicks struck me as a man capable of spontaneous generosity to his friends. Nevertheless, he also gave me the impression of a man very much aware of the value of money and shrewd in business, though not overly sophisticated. On Mr Cureton's own evidence, Mr Hicks had been offering to sell him a 25% interest in the businesses as an inducement to him coming to work for the Group. Yet, according to Mr Cureton, Mr Hicks suddenly agreed without demur, in effect, to give Mr Cureton 20% of the value of the businesses and to pay him in addition a generous remuneration for his part-time work. 76 In my view, even in the light of his friendship with Mr Cureton, it is highly improbable that Mr Hicks would have agreed to such an unrealistically generous remuneration for Mr Cureton's services even before Mr Cureton had commenced employment with the Group and before the benefits of that employment had been tested. 77 Second, Mr Cureton emphasised that the profit share terms of the agreement were of critical importance to him for the protection of himself and his family. He said that the profit share was "the major consideration" in his decision to leave the security of his employment with Bowie Wilson and that he was seeking that the profit share agreement be legally binding. Yet he did not make any contemporaneous record of the agreement with Mr Hicks. He did not seek to clarify or formalise its terms in writing and to have those terms acknowledged by Mr Hicks or the Elevator Cars Group at any time prior to 20 April 1990, in circumstances to which I will come shortly. 78 He says that he did not do so because he trusted Mr Hicks as a friend. I do not think that that is a sufficient explanation. If the agreement had in truth been made in the terms which Mr Cureton alleges, Mr Cureton must have realised that no matter how trusting and close his friendship with Mr Hicks might be in February 1987, the passage of time could blunt memories or affections, Mr Hicks could die suddenly leaving Mr Cureton with no evidence of the agreement, or Mr Hicks could simply change his mind as to remunerating the Group's in-house accountant so handsomely if he found out that that accountant had failed to lodge his own tax returns since 1980. 79 Mr Cureton was diligent in procuring various payments to himself or for his benefit from the Group funds during his employment. He was diligent in instructing solicitors to prepare a will for Mr Hicks in October 1987 under which Mr Hicks left him a substantial bequest. In the light of those circumstances and having seen Mr Cureton at length in the witness box, I am not prepared to accept that he was so careless of his own financial interests in February 1987 as not to have obtained contemporaneous evidence of such an important agreement made with Mr Hicks if, in truth, that agreement had been made. 80 Third, even though it must have been obvious in February 1987 that it was possible that Mr Cureton would continue to work for the Group for many years, perhaps ten or twenty years, so that when he came to retire his percentage of the growth in value of real estate assets pursuant to the alleged agreement would be the difference between a then current valuation and a valuation as at a date perhaps many years earlier, no attempt was ever made by him to procure a valuation of those real estate assets as at 31 October 1985 or as at any other date. 81 Fourth, if a 20% share of the substantial pre-tax profits of the Group was in fact payable to Mr Cureton on completion of the Group's annual financial accounts, there would have been a powerful financial incentive for Mr Cureton to complete those accounts promptly. He never completed any financial accounts for the Group throughout the whole of the period of his employment. No payments were made to him after any financial year expressly on account of his profit share pursuant to the alleged agreement pending the finalisation of the financial accounts. 82 Fifth, when Mr Cureton's employment with the Group was terminated in May 1992 he left careful notes for Mr Klein, the accountant who succeeded him, in order to assist Mr Klein to prepare the financial accounts for the Group for the years ended 30 June 1987, 1988, 1989, 1990 and 1991, those being the accounts which Mr Cureton himself should have finalised. 83 If, as Mr Cureton alleges, the Group companies had a substantial liability to him for his share of profits in each of those years and his share of growth in assets up to the time of his resignation, it was clearly necessary to bring this liability to Mr Klein's attention so that the financial accounts for the Group would truly and fairly reflect their financial position. Yet Mr Cureton made no mention of this liability in his notes to Mr Klein. Instead, he referred to his profit share and asset growth share claims only in a document which he provided to his own solicitors headed "Points for discussion – without prejudice". 84 For those reasons it is inherently improbable, in my view, that Mr Hicks agreed to employ Mr Cureton in February 1987 upon the terms as to profit share and asset growth share which Mr Cureton alleges. Having regard to inherent probabilities, to the demeanour of Messrs Hicks and Cureton in the witness box, and to their character as it emerges from other relevant circumstances, I accept Mr Hicks' evidence that he did not enter into an agreement with Mr Cureton in the terms alleged. The letter of 20 April 1990 85 Mr Cureton says that in April 1990, a few days before Mr Hicks was due to depart on holiday to Gallipoli, he said to Mr Hicks that: "I'm concerned that you are about to travel overseas and we have never formalised our agreement that I am to receive 20% of the profits and 20% of the growth in the Group's assets. I am worried that if anything happens to you there is nothing in writing to protect me and my family." He says that Mr Hicks replied: "Well, you prepare a document. You know what the agreement is. Give it to me and then I will sign it." 86 Mr Cureton says that shortly afterwards he showed Mr Hicks a pencilled draft of a document which he had prepared and discussed the document with him. The document was to exactly the same effect as the letter which Mr Hicks signed a few days later. Mr Cureton says that after he had discussed the draft with Mr Hicks, Mr Hicks said: "That's okay. Write it out in final form and I'll sign it." 87 Mr Cureton says that he took a final form of the document to Mr Hicks at the airport just before Mr Hicks was due to board his plane. He says that Mr Hicks read the document and signed it in the presence of a friend who had been asked by Mr Cureton to witness the signature. He says that Mr Hicks never questioned any aspect of the document prior to his signature. 88 Mr Hicks strongly denies that he had any discussion about the document prior to being shown it for the first time just as he was about to board his plane. He says that just as he was about to walk into Immigration Control Mr Cureton arrived and said: "I want you to have a look at this." He says Mr Cureton then gave him a handwritten document which he read. He says that when he had finished reading it he said: "This is a bit bloody rough putting this on me now when I am just about to board the plane," and that Mr Cureton said something like: "No, I am serious." Mr Hicks says that he responded: "There's not much point in this, Bill. Your interests are looked after in my will. What do you expect me to do? Step on an unexploded ordinance?" According to Mr Hicks, Mr Cureton said: "Jack, this is just a document to tidy things up if you don't get back. When you get back we can talk about entering into a permanent agreement. The arrangements set out in this letter are only to apply in the event of your death whilst overseas." Mr Hicks says that he replied: "Okay Bill, I will sign this just in case the plane crashes and I die." 89 The document is in the following terms: "20th April 1990 Mr W.H. Cureton 14 Gow Avenue Caringbah Dear Bill, This letter is to reflect our arrangements and is being signed by me prior to my departure today in the event of anything occurring that would prevent the formal implementation on my return, as you have not been able to implement the final details & other aspects of the rearrangement of my family and personal affairs so far, for reasons I understand & accept. As from 31st October 1985 you are entitled to twenty per cent (20%) of the profits before tax of all the business operations of the Elevator Cars Group of companies and my holding company and family trust, such profit to be on a consolidated basis each year, including capital profits. You are also entitled to 20% of the growth in the assets of the above including goodwill from that date. For clarification as the property known as 69 Blackshaw Avenue is in my name solely now, that property and the rental or other business thereof forms part of the above. You are aware that in my will I have directed that in the event of my death, the business operations (but not any real estate) it is my wish, be devised and transferred equally to you & Mark Le Fevre. The right to the benefits above is due to you under all circumstances (including your leaving the Group for any reason whatsoever, to be calculated to that date). The benefits are also due to your estate in the event of your death calculated to that date. The profits are to be calculated on the normal accounting basis used to prepare our financial statements. The growth in assets is to be based on actual realisations or where a valuation basis is required, on a value to be agreed between us or our executors or in the event of a dispute by a valuer nominated by the President of the Real Estate Institute of NSW. Any benefits due to you are to be paid within a reasonable time on demand. I acknowledge that as arranged you have written this letter for my consideration and signature. Yours sincerely" 90 I do not accept the evidence of Mr Cureton as to how this letter came into existence. He admitted that he knew of Mr Hicks' intended holiday at least two weeks in advance of the departure date and that at that time he made up his mind that he wanted an agreement in writing signed by Mr Hicks. Nevertheless, he left the signing of a letter which contained terms deserving of careful consideration by Mr Hicks to a time only minutes before Mr Hicks was due to pass through Immigration Control to board his plane. I am satisfied that this was deliberate on the part of Mr Cureton. It was done in order to deprive Mr Hicks of the opportunity of considering the letter carefully. 91 A small exchange in Mr Cureton's cross examination on this aspect of the evidence is illustrative of the impression which he made on me that he had manufactured the evidence which he gave as to his discussions with Mr Hicks about the letter prior to 20 April. He was asked why he had not had the draft which he said he had discussed with Mr Hicks typed up in Elevator Cars' office prior to Mr Hicks' departure. He said that he would not have had the Group's office staff type out a personal arrangement. He was asked: "Q. You could have had it typed in your own office [i.e. the office of his accountancy practice] , couldn't you? A. Who by? Q. You had staff, the same staff you were charging to the plaintiffs? A. They weren't over there in the office that day. Q. How do you know that now? A. Well, how do I know that now? How do you know that now? I can't recall what staff were there but would not have had …" Mr Cureton asserted without hesitation that his own office staff were not present in his office on a certain day eleven years ago. When he was challenged as to his ability to recall that fact, it was clear to me that he realised that he could not justify that answer. It was given with reckless disregard for the truth. He blustered and prevaricated and then went on to give a second explanation to the effect that he would not have had his own office staff type out a personal matter. All of his evidence as to his discussions with Mr Hicks about the letter prior to 20 April was unconvincing. 92 I accept Mr Hicks' account of what happened. It is supported by the terms of the first paragraph of the letter. That paragraph is obscure – probably deliberately so. It refers to "arrangements" rather than to an agreement made in precise terms at a precise time. Mr Cureton said that when he had raised the matter with Mr Hicks a short time previously, he had referred to formalising "our agreement that I am to receive 20% of the profits and 20% of the growth in the Group's assets" . He says that Mr Hicks responded "You know what the agreement is" . If that conversation had indeed taken place, it would have been natural and expected that Mr Cureton would have referred in the first paragraph of the letter to "our agreement" rather than to "our arrangements". 93 Further, the first paragraph conveys the impression that the letter is merely a temporary measure to protect Mr Cureton during Mr Hicks' absence overseas and that some formal document will be drawn up for discussion upon Mr Hicks' return. It suggests that, for that reason, the document in itself is not deserving of elaborate consideration by Mr Hicks. 94 I am satisfied that the vague reference in the first paragraph of the letter to "our arrangements" and the reference in the fourth paragraph to Mr Hicks' will were introduced by Mr Cureton to suggest that the document was conferring on him little more than what Mr Hicks had provided for him in a will dated 6 October 1987. 95 In that will Mr Hicks left to Mr Cureton half of his shares in Hicks Holdings, which owned about 50% of the shares in the operating companies of the Elevator Cars Group. The gift was subject to a proviso that the real estate held by Hicks Holdings and by another Group company be transferred to Mr Hicks' executors upon trust for another beneficiary. Accordingly, under the will Mr Cureton was to receive 25% of the value of the businesses operated by the Elevator Cars Group, excluding their real estate assets. 96 Mr Cureton was fully aware of the terms of the will; it was he who had given instructions to Mr Hicks' solicitors to draw it. Mr Cureton had had a copy of this will in his possession since October 1987. The only copy of the will which could be found had not been executed by Mr Hicks and Mr Hicks himself was unsure whether he had executed it. 97 I accept Mr Hicks' evidence that Mr Cureton said to him at the airport that the letter was "just a document to tidy things up if you don't get back. When you get back we can talk about entering into a more permanent agreement. The arrangements set out in this letter are only to apply in the event of your death whilst overseas." 98 The reference in the letter to "our arrangements" and to Mr Hicks' will together with Mr Cureton's statement that the letter was "just a document to tidy things up if you don't get back" no doubt called to Mr Hicks' mind the October 1987 will which had conferred upon Mr Cureton a share in the Elevator Cars Group business. It was for this reason that Mr Hicks did not protest violently at the terms of the letter when it was shown to him; those terms did not come "out of the blue" – there had been discussions between himself and Mr Cureton along the lines of the letter in 1987 in the context of Mr Hicks' will. That was why Mr Hicks said to Mr Cureton: "There's not much point in this, Bill. Your interests are looked after in my will." 99 I accept Mr Hicks's evidence that he felt that Mr Cureton was imposing on him by presenting the letter to him very shortly before Mr Hicks was due to depart, but that he was willing to sign the letter out of friendship to Mr Cureton, believing that the matter was subject to discussion on his return. At that time the relationship between the two men was still good. I accept that Mr Hicks then regarded Mr Cureton as a good and trusted friend. 100 Although Mr Hicks at this time still regarded Mr Cureton as a trusted friend, Mr Cureton himself must have known that that trust and confidence would come to an end inevitably and, possibly, soon. Mr Cureton knew, but Mr Hicks did not know, that the ANZ Bank was becoming increasingly insistent on the production of the balance sheets and financial statements for the Group which Mr Cureton had been promising for years but had failed to deliver. Mr Cureton knew, but Mr Hicks did not know, that the Australian Taxation Office would probably follow up Mr Cureton's failure to lodge tax returns on behalf of the Group and that the amount of unpaid tax and fines would probably be substantial. Mr Cureton knew, and Mr Hicks did not know, that since 1980 Mr Cureton had failed to file his own tax returns and that he had not been a registered tax agent for a considerable time before he joined the employment of the Elevator Cars Group. 101 I am satisfied that in April 1990 Mr Cureton had become apprehensive that if all of these shortcomings and failures on his part became known to Mr Hicks, Mr Hicks' trust and confidence in him both as a friend and as an employee would very quickly turn to hostility, and that there would be no prospect at all of any provision being made for him in Mr Hicks' will, nor would there be any prospect of obtaining Mr Hicks' agreement that he be entitled to a share in the profits of the businesses or a share in the growth in value of their assets. Mr Cureton knew that a will could be revoked but a contract could not. He therefore determined to exact from Mr Hicks some form of contractual acknowledgment of these "entitlements" in a form which would not arouse Mr Hicks' suspicions and in circumstances when Mr Hicks would be "off guard". 102 Equity intervenes on the ground of unconscionable conduct whenever, by reason of circumstances affecting his or her ability to conserve his or her own interest, one party to a transaction is at a special disadvantage in dealing with the other party and that other party unconscientiously takes advantage of the opportunity this placed in his or her hands. The circumstances by which a party may be placed at a special disadvantage in the ability to conserve his or her own interest are as infinitely various as human relationships. What is necessary for the intervention of equity is exploitation by one party of another's position of special disadvantage in such a manner that the former cannot, in good conscience, retain the benefit of the bargain. The doctrine applies as much to a gift as to a commercial transaction: see Blomley v. Ryan (1956) 99 CLR 362, at 415; Louth v. Diprose (1992) 175 CLR 621, at 630; Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447, at 489; Garcia v. National Australia Bank Ltd (1998) 72 ALJR 1243, at 1249. 103 In my judgment Mr Cureton, in procuring Mr Hicks' signature to the letter of 20 April 1990, took advantage of his relationship of friendship, trust and confidence with Mr Hicks. He relied upon the probability that Mr Hicks would not, out of friendship, refuse a request which, if made by someone at arm's length in the rushed circumstances in which Mr Hicks had been placed, would doubtless have been refused out of hand. He took advantage of the fact that Mr Hicks did not have any time to give proper consideration to the terms of the letter and their legal ramifications. He himself had brought about that situation. He took advantage of Mr Hicks' inability to get independent legal or financial advice about the effects of the letter. He took advantage of the fact that Mr Hicks was, as yet, ignorant of the full extent and ramifications of his failures to produce financial accounts and tax returns for the Group since the commencement of his employment. 104 Mr Cureton thereby placed Mr Hicks in a position of special disadvantage so that Mr Hicks could not adequately conserve his own interests in dealing with Mr Cureton's request that he sign the letter. 105 Mr Cureton relies upon the 20 April 1990 letter as evidence of the alleged terms of his oral contract with Mr Hicks made in February 1987. I have already held that there was no earlier agreement in the terms alleged by Mr Cureton. In any event, the circumstances in which I have found the letter to have been procured by Mr Cureton would have reduced to nil its evidentiary value as to the existence of such terms. 106 Mr Cureton also relies upon the 20 April 1990 letter as a variation of the alleged terms of the earlier oral agreement. If there were no earlier terms as alleged then the letter cannot operate as a variation of those terms. It is submitted, however, that if it be found that there was no earlier oral agreement in the terms alleged, the 20 April 1990 letter nevertheless itself constitutes a contract in those terms between the parties so that it should now be enforced. I cannot accept that submission. 107 First, the letter is not couched in promissory terms. It purports to be merely an acknowledgment of an earlier "arrangement" which I have found did not exist. 108 Second, there is no evidence that in consideration of the execution of the letter by Mr Hicks Mr Cureton did anything by way of providing services to the Group which was in addition to whatever he had been doing for the benefit of the Group from 1987 onwards pursuant to the uncontested terms of his employment contract. For that reason, the suggested contract constituted by the 20 April 1990 letter would be unenforceable for want of consideration. 109 Third, and most importantly, even if the letter of 20 April 1990 does constitute a contract between Mr Cureton of the one part and Mr Hicks and the companies in the Group controlled by him of the other part, then that contract should be set aside in equity as having been procured by the unconscionable conduct of Mr Cureton. Payment of $29,500 from Superannuation Account 110 Pursuant to a Trust Deed dated 17 February 1982 a superannuation benefit fund for the employees of Elevator Cars Pty Ltd (the Third Plaintiff) was established. The Third Plaintiff was the trustee of the fund. 111 On 2 November 1987 several meetings of directors of companies in the Group were held at which Mr Hicks and his then wife Loretta were apparently present. The minutes of those meetings were prepared in advance by Mr Cureton. The effect of those meetings was as follows. 112 Blackshaw Services Pty Ltd (the First Plaintiff) and Elevator Cars (Sales) Pty Ltd (the Sixth Plaintiff) were approved as employers under the Trust Deed of the Trust Fund. Mr Hicks resigned from his employment with the Third Plaintiff in order to enable a payment to him of $214,264.23 from the Trust Fund, that money being required by Mr Hicks to fund his divorce settlement. Mr Hicks and Mr Cureton thereupon became employees of the First Plaintiff and Mr Cureton was admitted as a member of the Trust Fund. 113 The procedure involved in procuring Mr Hicks' payment out of the superannuation fund was complicated. I accept that it was not entirely understood by Mr Hicks and that Mr Hicks relied upon Mr Cureton's advice in signing the relevant minutes and other documentation. 114 Mr Cureton says that while he was putting in place the procedures necessary for Mr Hicks' pay-out from the superannuation fund it became apparent to him that there would be a surplus of funds amounting to about $29,500 in the superannuation fund after Mr Hicks' pay-out. There were at that time nine members of the superannuation fund apart from Mr Hicks, but only two of those members were still employed by the Elevator Cars Group. The other employees had left without taking any superannuation benefits. 115 Mr Cureton says that at about this time he had a discussion with Mr Hicks about the surpluses in the superannuation fund and that Mr Hicks said to him words to the effect: "They [meaning the employees who were members of the fund] all left me and were not entitled to payment of their balances. I'd sooner give the money to you." Mr Cureton says that he responded: "Well that's considerate, but it's only fair that as soon as things settle down and you have been employed by Blackshaw Services for a reasonable period, we should make a similar contribution for you." Mr Cureton says that Mr Hicks said: "Okay, that's fair." 116 Mr Hicks denies that this conversation took place. He says that at about this time he agreed to Mr Cureton becoming a member of the Elevator Cars Superannuation Fund because he was quite agreeable to Mr Cureton receiving "a little bit of super" . However, he says that he never discussed with Mr Cureton transferring the balance of $29,500 remaining in the superannuation fund account after the payment out of Mr Hicks to Mr Cureton or for his benefit. I accept the evidence of Mr Hicks, for the following reasons. 117 It is unlikely that Mr Hicks said to Mr Cureton in November 1987 that Mr Cureton should have all of the balance remaining in the superannuation account because all of the other members of the fund had left and were not entitled to payment of their balances. The fact was that as at November 1987 two of the members of the fund were still employed by the Group; one left some time prior to February 1989, while the other remained in the employment of the Group after February 1989. 118 Next, I consider it to be entirely improbable that less than a year after Mr Cureton became the in-house accountant for the Group, on a part-time basis, Mr Hicks would be prepared, in effect, to make a gift to him of $29,500 by way of superannuation benefits. 119 Further, if Mr Hicks had consented to the transfer of that superannuation benefit to Mr Cureton, one would have expected that Mr Cureton would have taken pains to document the transfer of benefit appropriately in the course of documenting the other transactions which were given effect on 2 November 1987 in order to pay out Mr Hicks' superannuation benefit. No documentation recording the alleged transfer of benefit to Mr Cureton in November 1987 exists. 120 Finally, it is worthy of note that Mr Cureton's alleged suggestion that a similar superannuation contribution should be made in favour of Mr Hicks was never implemented. 121 The sum of $29,500 remaining in the Elevator Cars Superannuation Fund after November 1987 was held in a dedicated ANZ bank account of the Third Plaintiff, of which Mr Cureton was a sole signatory. In early 1989 Mr Cureton drew a cheque dated 24 February 1989 on that bank account in the amount of $29,500 in favour of National Mutual Life Insurance. On 15 March 1989 he caused that cheque to be paid to the credit of his superannuation account with a fund entitled "Blackshaw Services Pty Ltd Superannuation Fund" held with National Mutual. 122 Mr Cureton says that on 24 February 1989 he and Mr Hicks had a meeting with a representative of National Mutual Life at which they signed the forms necessary to transfer the sum of $29,500 from the Elevator Cars Superannuation Fund to the Blackshaw Services Superannuation Fund with National Mutual for the exclusive benefit of Mr Cureton. Mr Cureton says that he had earlier told Mr Hicks: "I want to move my money in the Elevator Cars Super Fund to National Mutual's equity fund for better returns, long term growth and insurance cover." Mr Hicks is said to have agreed. 123 At the meeting with the National Mutual representative the documents necessary to effect this transfer were, according to Mr Cureton's affidavit evidence, completed in the handwriting of the National Mutual representative and the documents were executed by Mr Hicks, Mr Cureton and by Blackshaw Services Pty Ltd at the same time. Mr Cureton says that at the same time a cheque for $29,500 was given to the National Mutual representative. 124 In cross examination Mr Cureton conceded that the only page of the documentation effecting the transfer from one fund to the other which makes reference to a contribution of $29,600 (the cheque was in fact for $29,500) was not signed by Mr Hicks and was filled out in the handwriting of Mr Cureton. 125 A minute of a meeting of directors of Blackshaw Services held on Sunday, 5 March 1989 at Mr Hicks' home, records that: "It was resolved to approve the deed of adoption with the National Mutual Simple Super, the common seal to be affixed by Mr W.H. Cureton, Director, and Mr Jack Hicks, Secretary, and the other documents to be completed ." [Emphasis added] The minute is signed by Mr Hicks. 126 Mr Hicks says that he can recall having a discussion with Mr Cureton about the National Mutual superannuation fund documents and that a National Mutual representative may have been present. Mr Hicks recalls that he had to sign some documents but that the matter was unremarkable. He says that he did not realise that Mr Cureton was seeking to transfer $29,500 from the Elevator Cars Superannuation Trust Fund into the National Mutual Trust Fund for his own benefit. 127 I do not accept the evidence of Mr Cureton. In my opinion, what is likely to have happened is that Mr Cureton and Mr Hicks were attended by a representative of National Mutual on 24 February 1989 and that Mr Cureton and Mr Hicks on that occasion signed a document entitled "Deed of Adoption", but only in the capacity as officers of Blackshaw Services who were authorised by the "Participating Employer" for the purpose of supplying National Mutual with information required to facilitate the administration of the fund. 128 I am satisfied that on a later occasion, probably at the 5 March 1989 meeting at Mr Hicks' home, the seal of Blackshaw Services was affixed to the deed of adoption and counter-signed by Messrs Hicks and Cureton as director and secretary respectively. Thereafter Mr Cureton himself filled out that part of the relevant documentation which notified National Mutual that the sum of $29,600 was to be transferred from the Elevator Cars Superannuation Fund into the National Mutual Superannuation Fund for the benefit of Mr Cureton. 129 The cheque effecting the transfer (for $29,500) was probably then drawn by Mr Cureton, dated the same date as the Deed of Adoption which had been dated 24 February 1989 by the National Mutual representative, and the completed documentation was then transmitted to National Mutual. 130 This sequence of events accords with the fact that it was not until about 15 March 1989 that the cheque for $29,500 was presented. It accords with the terms of the resolution of Messrs Hicks and Cureton as directors of Blackshaw Services as recorded in the minute dated 5 March 1989. 131 I accept Mr Hicks' evidence that Mr Cureton did not expressly inform him at the time that this documentation was executed that its effect would be to transfer for Mr Cureton's exclusive benefit $29,500 from the superannuation fund of the Elevator Cars Group to a superannuation fund held by National Mutual. 132 As at the time of this transaction Mr Cureton was a director of the trustee of the Elevator Cars Group Superannuation Fund (the Third Plaintiff) and a sole signatory to the Group's bank account. He was clearly in a fiduciary relationship to the Third Plaintiff. By means of documents effecting the transfer of funds to National Mutual which he signed or executed as an officer of the Third Plaintiff he was deriving a benefit for himself. As a fiduciary, he was not entitled to derive such a benefit unless he had made full and frank disclosure to Mr Hicks, as the only other director of the Third Plaintiff, of the benefit which he was to receive by the transaction. 133 Mr Cureton has failed to discharge the onus of satisfying me that he made such disclosure. 134 In arriving at this conclusion I do omit to take into account the fact that Mr Hicks said in his affidavit evidence and repeated in the witness box that he had discovered the 24 February 1989 payment of $29,500 to National Mutual in June or July 1992 and was upset by it. Notwithstanding such discovery, in January 1993 Blackshaw Services, through an employee, Mrs Collath, executed a National Mutual request form for the roll over into another superannuation fund of the benefit of Mr Cureton's superannuation account. There was no protest by Blackshaw Services or by the Third Plaintiff at that time that the funds had been transferred into Mr Cureton's account with National Mutual without authority. 135 I note that the roll-over request form does not refer to the amount standing to the benefit of Mr Cureton's account in the National Mutual Superannuation Fund. It may be that Mr Hicks is mistaken in his recollection as to when it was that he discovered the amount of the payment which had been made to National Mutual for Mr Cureton's benefit. It may be that at the time that the roll-over form was received Mrs Collath believed that it related to a relatively small amount which had been contributed by Mr Cureton to his superannuation benefits at the rate of $113 per month. 136 Whatever be the explanation as to why the roll-over request form was signed by Mrs Collath, I am not persuaded that execution of that form by Blackshaw Services in January 1993 outweighs in Mr Cureton's favour the inherent probabilities and the weight which I give to Mr Hicks' evidence in favour of the conclusion which I have reached, that is, that the payment of $29,500 to National Mutual for the benefit of Mr Cureton was made without Mr Hicks' knowledge and consent. 137 The Third Plaintiff remains the trustee of the Elevator Cars Superannuation Fund. The Trust has been inactive for some years but has not been wound up. The Third Plaintiff is still entitled to recover for the benefit of that fund any amount which has been wrongly paid out of the fund. Mr Cureton is, in my judgment, liable to account as a fiduciary to the Third Plaintiff for the sum of $29,500 withdrawn by him from the Elevator Cars Superannuation Trust Fund in 1989. Loan Account Claim 138 During a period from 1 July 1989 to 21 May 1992 Mr Cureton drew cheques on the bank account of the Fourth Plaintiff to cash, in third parties' names or for items relating to his personal expenditure. These amounts totalled $19,407. Mr Cureton admits that he drew these amounts and that they should be debited to his loan account with the Fourth Plaintiff. 139 Mr Hicks says that none of these payments were drawn, nor were they debited to Mr Cureton's loan account, with his knowledge and consent. I do not accept this evidence as inherently probable except in respect of the last two payments, namely a cheque for $6,000 drawn on 25 November 1991 and another cheque for $6,000 drawn on 10 April 1992. The circumstances in which these cheques were drawn have been discussed in paragraphs 56-60 above. 140 In relation to the debits to Mr Cureton's loan account prior to 25 November 1991, I accept as probable Mr Cureton's evidence that at regular intervals he and Mr Hicks sat down together and discussed how cheques drawn by Mr Hicks and by Mr Cureton on the Fourth Plaintiff's account should be apportioned as between company expenses and personal expenses to be debited to their respective loan accounts. I accept that from a relatively early time in Mr Cureton's employment by the Group there was an agreement by Mr Hicks, either express or implied from his conduct, that Mr Cureton would be entitled to debit relatively small amounts to a loan account with the Fourth Defendant. 141 However, a drawing by Mr Cureton of $6,000 to be debited to his own account was much larger than any of his previous drawings. A drawing of such a large amount was not within the scope of the agreement between Mr Hicks and Mr Cureton to which I have referred. That Mr Cureton himself appreciated this is evident from the necessity which he felt to give false evidence that he had obtained Mr Hicks' express prior consent to the two payments of $6,000, as I have recounted in paragraphs 57-60 above. 142 In my opinion, Mr Hicks drew those two cheques for $6,000 knowing very well that his employment with the Elevator Cars Group was soon to come to an end and that if he sought permission to make those payments in favour of himself Mr Hicks would refuse that permission. In those circumstances, I infer that he resolved to extract what he could from the funds of the Group before his authority to sign cheques as a sole signatory was terminated. 143 What Mr Cureton did in drawing the cheques and paying them to his own account he did while he was in a fiduciary relationship with the Fourth Plaintiff as its director and in the exercise of a fiduciary function as a sole signatory on its bank account. He could not retain the benefit of those payments unless they had been made with the fully informed prior consent of Mr Hicks as the only other director of the Fourth Plaintiff, or had been subsequently ratified by Mr Hicks after such disclosure by Mr Cureton. No such consent or ratification was ever obtained. In my judgment Mr Cureton is liable to account to the Fourth Plaintiff as a fiduciary for the two payments of $6,000. Contracts for the benefit of Mr Cureton 144 It is common ground that Mr Cureton was authorised to employ office staff and services to be provided by third parties for the benefit of the Elevator Cars Group. Invoices were raised by Mr Cureton and rendered to the First Plaintiff for the provision of "professional services in relation to office staff" . Those invoices were paid. 145 The additional office staff whose services were invoiced to the Group were in fact casuals engaged by Mr Cureton. He charged those casuals out to the Group at rates which included a profit margin to himself. He did not disclose to Mr Hicks that in charging for additional office staff provided by him to the Group he was taking a profit for himself. 146 At the time that these additional office staff were engaged, Mr Cureton was a director of the First Plaintiff and in exercising his authority to engage staff he was acting in the course of a fiduciary relationship with the First Plaintiff. He was not entitled to derive a benefit for himself in supplying additional office staff to the First Plaintiff unless he had first obtained the fully informed consent of his co-director, Mr Hicks. That consent was never obtained. 147 Mr Cureton must, accordingly, account to the First Plaintiff as a fiduciary for the benefit which he has derived by way of profit in respect of office staff for whose services he has invoiced the First Plaintiff. On the evidence presently available it is not possible to quantify the amount of that profit. After making all just allowances for costs and expenses incurred by Mr Cureton in engaging the casual staff on his own account, his profits are likely to be substantially less than $4,000. The First Plaintiff must consider whether there is any justification in seeking an enquiry as to the amount of such profits. Personal payments 148 Cheques were drawn upon the bank account of the Third Plaintiff to pay for items of expenditure of a nature which was clearly personal to Mr Cureton. Those expenditures included Mr Cureton's CCH subscriptions and a payment to MLC Life Limited. Mr Hicks says that those payments were made without his prior knowledge and consent. Mr Cureton's defence is that those payments were a term of his contract of employment, agreed orally between himself and Mr Hicks in late 1986 or early 1987. Mr Hicks denies that he agreed with Mr Cureton that such personal payments would be made by the Group as part of Mr Cureton's remuneration. 149 The amounts payable in respect of CCH subscriptions totalled $14,455. I am satisfied that Mr Cureton did not expressly inform Mr Hicks at the time of their discussions in late 1986 or early 1987 that he wished CCH or other library subscriptions of such a magnitude to be paid to him as part of his remuneration from the Group. It is inherently improbable that if he had done so Mr Hicks would have agreed in light of the fact that Mr Cureton had reserved to himself the right to carry on his private accountancy practice and would clearly be using his library as much for the benefit of that practice as for the benefit of the Group – very likely, more so. 150 It is quite probable that Mr Hicks would have agreed, if he had been asked, that the Group pay for various small items of professional education such as subscriptions to the Institute of Public Affairs and to the Centre for Professional Development. But he was not asked. In my opinion Mr Cureton believed that it was a fair thing that these expenses should be paid for his benefit by the Group, and as signatory to the Group's bank account he took it upon himself to make those payments without asking Mr Hicks. 151 The amounts so paid did not appear in any loan accounts which were discussed between Mr Hicks and Mr Cureton. These payments have never been ratified by Mr Hicks. They were procured from the funds of the Third Plaintiff by Mr Cureton while in a fiduciary relationship with the Third Plaintiff. Mr Cureton must account for those payments as a fiduciary to the Third Plaintiff. Conclusion 152 The orders which I propose to make are as follows. 153 There will be judgment for the Third Plaintiff against the Defendant in the sum of $29,500, being the amount transferred in March 1989 to the Defendant's superannuation account with National Mutual. As the payment was obtained by the Defendant in breach of fiduciary obligations, the breach was not minor or of a technical nature, and the amount so obtained has been invested for the Defendant's benefit, compound interest should be awarded at the rates specified in Schedule J to the Supreme Court Rules 1970 calculated on quarterly rests from 15 March 1989: see Hungerfords v. Walker (1990) 171 CLR 125, at 148; Schipp v. Cameron (unrep. SCNSW 12 October 1998, Einstein J). 154 There will be judgment for the Fourth Plaintiff against the Defendant in the sum of $19,407, being the total amount debited to the Defendant in his loan account with the Fourth Plaintiff. As payments debited prior to 25 November 1991 were not procured by the Defendant in breach of fiduciary duty, simple interest only on such amounts will be awarded at the rate specified in Schedule J calculated from the dates upon which the relevant amounts were debited to the Defendant's loan account. As the two payments of $6,000 debited on 25 November 1991 and 10 April 1992 were obtained by the Defendant in breach of his fiduciary obligations, the breach was not minor or of a technical nature and the Fourth Plaintiff has been deprived of the use of that money in its business, compound interest should be awarded at the rate specified in Schedule J calculated on quarterly rests from the dates upon which the amounts respectively were debited. 155 There will be a declaration that the Defendant is liable to account to the First Plaintiff in respect of all profits derived by the Defendant from the provision of services rendered to the First Plaintiff by the Defendant's staff, after making all just allowances in favour of the Defendant. I will hear the First Plaintiff further as to whether, and if so on what basis, it claims that an enquiry as to those profits is justified. 156 There will be judgment for the Third Plaintiff against the Defendant in the sum of $16,973.25, being the total of amounts paid from the funds of the Third Plaintiff for the benefit of the Defendant. As those payments were obtained by the Defendant in breach of his fiduciary obligation, the breach was not minor or of a technical nature and the Third Plaintiff has been deprived of the use of those monies in its business, compound interest should be awarded at the rates specified in Schedule J calculated on quarterly rests from the dates upon which the amounts were debited to the account of the Third Plaintiff. 157 There will be judgment for the Plaintiffs on the Defendant's cross claim. 158 I will stand the matter over for a short time to enable the Plaintiffs to bring in Short Minutes of Order reflecting these reasons, the proposed orders and providing for the requisite calculations of interest. Calculations of interest should be agreed the parties by the time the matter is next brought before the Court. On that occasion I will hear argument, if any, as to whether an account of profits should be ordered and as to costs. 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